State ex rel. Pillsbury v. Honeywell, Inc

Brief Fact Summary.

Petitioner, Charles Pillsbury, sought to inspect corporate records to identify other shareholders for the purpose of informing them of Respondent’s involvement in the Vietnam War.

Synopsis of Rule of Law.

A shareholder can only demand corporate investor identification information when the purpose is related to investment concerns traditionally associated with shareholder concerns.

Facts.

Petitioner was part of an anti-war group that decided to target Respondent, Honeywell, Inc., for their manufacturing of weaponry that would be used in the Vietnam War. Petitioner decided to purchase shares (for the purpose of this suit, he only owned one share) of Respondent for the purpose of requesting corporate documents, as a shareholder, in order to identify other Respondent shareholders in order to inform them of Respondent’s involvement. Petitioner made two formal demands for the records that were both denied. Petitioner then filed a writ of mandamus, and he explained his reasons for the inspection. The trial court agreed with Respondent in finding that there was no proper purpose related to his interest as a stockholder.

Issue.

The issue is whether Petitioner’s demand for records for the purpose of informing them of Respondent’s involvement in the Vietnam War is a proper purpose that would allow for the inspection.

Held.

The court held that Petitioner’s purpose was not proper. The proper purpose has to pertain to investment purposes rather than just simply whenever a stockholder has any grievance with a company’s management. The court will not allow an absolute right of inspection.

Discussion.

The court is concerned that allowing an inspection by simply being able to be identified as a shareholder puts an enormous burden on corporations, which can have thousands of shareholders at any given point, to maintain their corporate records.