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State ex rel. Pillsbury v. Honeywell, Inc. - 291 Minn. 322, 191 N.W.2d 406, 1971 Minn. LEXIS 1035, 50 A.L.R.3d 1046

Rule:

That a shareholder must have proper standing to demand inspection has been recognized by statutes in several jurisdictions. Courts have also balked at compelling inspection by a shareholder holding an insignificant amount of stock in the corporation.

Facts:

Upon discovering that anti-personnel fragmentation bombs used in the Vietnam War were produced by Honeywell, Inc., petitioner, State ex rel. Charles Pillsbury ordered his fiscal agent to purchase 100 shares of the aforementioned company. He admitted that the sole purpose of the purchase was to give himself a voice in Honeywell's affairs so he could persuade Honeywell to cease producing munitions. Apparently not aware of that purpose, petitioner's agent registered the stock in the name of a Pillsbury family nominee, Quad & Co. Upon discovering the nature of the registration, Pillsbury bought one share of Honeywell in his own name on August 11, 1969. Subsequently, Pillsbury discovered that he had a contingent beneficial interest under the terms of the trust formed for his benefit by his grandmother in 242 shares of Honeywell. Thereafter, Pillsbury submitted two formal demands to Honeywell requesting that it produce its original shareholder ledger, current shareholder ledger, and all corporate records dealing with weapons and munitions manufacture, for the purpose of knowing the identity of shareholders so he could speak to them about Honeywell’s participation in the war; Honeywell refused. As a response Pillsbury filed for writs of mandamus ordering Honeywell to produce the above mentioned records; this petition was denied by the trial court.

Issue:

Can Pillsbury request Honeywell to produce its shareholder ledger in order for the former to communicate with the latter’s shareholder regarding the company’s participation in the Vietnam War?

Answer:

No.

Conclusion:

The Court held that Pillsbury’s purpose was improper to obtain an inspection of Honeywell’s records. According to the Court, the law required Pillsbury to have proper purpose in seeking inspection of corporate records. The Court opined that mere desire to communicate with other shareholders was not proper because it gave an almost absolute right to compel inspection. Furthermore, Pillsbury’s status as a stockholder was shaky. He had only one definitive share, purchased for the purpose of the present suit.

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