Wight v. Heublein

Briscoe, J., delivered the opinion of the Court. This is an appeal from an order of the Superior Court of Baltimore City passed on the 14th day of May, 1909, sustaining the plaintiff’s demurrer to the respondents’ answer to a petition for mandamus, and directing the writ of mandamus to issue in accordance with the prayer of the plaintiff’s petition filed in the case. The plaintiff below and the appellee here is the owner of five hundred and eighty-three shares of the capital stock of the Sherwood Distilling Company of Baltimore City, a corporation duly incorporated under the laws of Maryland, and operating a distillery at Cockeysville, Maryland. The defendants below, and the appellants here, are its President, John H. Wight, and its Secretary and Treasurer, William H. Wight, officers of the company.

The Sherwood Distilling Company was incorporated in the year 1882, for the purpose of engaging, in the manufacture and sale of whiskies, its cap ⁶⁵¹ ital stock being divided into seven thousand shares of the par value of $100 each. Subsequently, the company was managed by John J. Wight and his brother-in-law Edward Hyatt, who owned and controlled the entire stock of the company. Upon the death of Edward Hyatt and sometime in the year 1905, his interest in the company was acquired by the petitioner, and his brother, Louis E. Heublein, and at the date of the institution of these proceedings, each of them held and owned 583 shares, of the capital stock of the company, that is, eleven hundred and sixty-six shares, of the entire capital stock of seven thousand shares. The petition then is filed by a stockholder of the company, owning five hundred and eighty-three shares of its stock, to assert what he claims to be an absolute statutory right on his part, to have the books, accounts and records of the transactions of the company, examined, and a full report made thereon by the Baltimore Audit Company, at the expense of the petitioner. •The substantive averment of the petition and the one upon which the plaintiff relies, to sustain his application for the writ of mandamus, is set out in the sixth paragraph of the petition and is to this effect: That not being satisfied with the annual report of the Sherwood Distilling Company, nor with answers to certain enquiries propounded to the officers of the Sherwood Distilling Company, your petitioner and his brother, Louis F. Heublein, wrote a letter to the Sherwood Distilling Company on Kovember 9th, 1908, in which was stated that this petitioner and his brother, Louis F. Heublein. had decided to have the books of the Sherwood Distilling Company regularly audited because the annual report and subsequent answers to a list of questions propounded were not sufficiently clear and intelligent for your petitioner and his brother, Louis F. Heublein, to comprehend the standing of the said Sherwood Distilling Company to their satisfaction. ⁶⁵² The specific prayer of the petition is, that a wilt of mandamus may be issued directed to John H. Wight, President of the Company, and to Wm.

H. Wight, its secretary and treasurer, commanding them and each of them to suffer and permit Charles L. Hehl and the Baltimore Audit Company, its agents, servants and employees to have access to the books, accounts and records of the transactions of the company for the purpose of examining the same and of making a full report thereon to the petitioner, at his expense. To the petition, the defendants interposed a demurrer and upon hearing, on February 23rd, 1909, the demurrer was overruled .with leave to the respondents to answer within fifteen (15) days. Subsequently, on the 9th of March, 1909, the defendants answered the petition, and as the matters relied upon in defense, are fully disclosed by this answer, and for the purposes of the case, the substantial averments thereof, are admitted by the demurrer to be true, they will be set out in this opinion, in so far as they are material. The allegations, of the first, second, third, fourth, fifth; seventh, eighth and ninth paragraphs of the petition are admitted, but the matters contained in the remaining paragraphs are practically denied by the answer in resisting the ' application for the mandamus.

By the third paragraph it is averred that prior to making the purchase of their stock from the widow of the late Edward Hyatt in the year 1905, the petitioner and his brother called upon the defendants and inquired of them in regard to the affairs of the company and visited the distillery which was and is operated by the company. The defendants talked to the petitioner and his brother fully and freely in regai’d to the company’s affairs, and the petitioner and his brother were fully advised of its business and financial condition, not only through the defendants, but as well, the defendants presume, through full and complete figures and data which were in the possession of the widow of Edward Hyatt. ⁶⁵³ It further avers that the petitioner and his brother were prior to the year 1905, and still are, engaged in the wholesale whiskey business under the firm name of G. E. Heublein and Brother, the firm having its principal office in the City of Hartford, Connecticut. The firm is very extensively engaged in the business, and has been and is a large customer of the Sherwood Distilling Company, and deals very extensively in Sherwqod whiskey, selling the same to the trade, ostensibly as straight Sherwood whiskey, and also blending or compounding the same with other liquors. By the fourth paragraph, it is also averred that the prime object of the petitioners in acquiring their stock in the Sherwood Distilling Company was to enhance their own business as G. F. Heublein and Brother, through the close connection which they hoped to establish between its firm and the Sherwood Distilling Company.

The defendants have done what they believed to be their duty to the Sherwood Distilling Company in firmly resisting all advances of the petitioner and his brother to the end aforesaid, and have continued their uniform course with regard to their customers of treating all alike, and giving to none special favors or advantages. That the petitioner and his brother have been greatly disappointed at this attitude on the part of the Sherwood Distilling Company and its officers, and in addition to their disappointment on this score, have been furthermore very naturally disappointed' at the falling off in profits of the company. That such disappointment, together with the decrease in profits above referred to, has made the petitioners dissatisfied with their purchase of stock in the Sherwood Distilling Company, for which reason they desire to sell the same. On account of the Prohibition movement, which has gained great force of late, it is extremely difficult at the present time to market the petitioner’s stock in the Sherwood Distilling Company, or to market an interest in any other liquor business.

The petitioners therefore have adopted a course which they believe calculated to compel these defendants to purchase the stock by constantly harassing them with demands for detailed in ⁶⁵⁴ formation which will involve a disclosure by the company of its prices and customers, and finally by this proceeding which carries with it a veiled threat of irreparable injury to the business of the company. By. the fifth paragraph, it is further alleged that the business of the manufacture and sale of whiskey, like most other industrial operations, has its .peculiarities, all of which are very well known to the petitioner, they being extensively engaged in the business. The defendants show that the books of the Sherwood Distilling Company contain the names of all of its customers, and the prices, at which goods have been sold to the customers from time to time, and other matters in relation to its business transactions, and while it might not directly harm the Sherwood Distilling Company, were they made public, such a course would in many cases result to the injury and disadvantage of the customers of the company, and would inevitably lead the customers to cease dealing with the company. In order to illustrate this matter further, the defendants show that the Sherwood Distilling Company deals extensively in its own whiskies after said whiskies have been sold by them originally, frequently going into the market and buying .up large quantities of Sherwood whiskey in order to uphold the price as well as to make a legitimate profit thereon.

Were the precise figures at which said company buys its goods and at which it resells its goods to its customers to get in the petitioner’s possession, the petitioner and his brother could, and these defendants aver that they intend to and would make use of such information to the great detriment and harm of the defendant corporation and to the special advantage and benefit of themselves, to wit, the firm of G. E. Heublein and Brother. Furthermore, the petitioner could, were he accorded the right to make copies of the matters and facts contained in the books of account of the Sherwood Distilling Company, ascertain therefrom not only the affairs of the Sherwood Distilling Company, but of its customers, for the reason that the greater part of the whiskey manufactured by ⁶⁵⁵ the company is held hy them in bond for a number of years before the Government taxes are paid thereon. The goods are generally sold shortly after their manufacture, the evidences of their ownership being warehouse certificates, which are delivered to the purchasers thereof. When the purchasers of the goods in bond eventually resell the same, the record of such sales is placed upon the books of the Sherwood Distilling Company, and the warehouse certificates are returned to said