Klein et.al.

vs Scranton Life Insurance Company

AUTHOR: Enriquez
1940
NOTES:
TOPIC: The Right of Inspection
PONENTE:
FACTS:
Klein et.al. are stockholders of the Scranton Life Insurance Company (Scranton).
They stated in a letter a request to examine the books, ascertain the value of their shares and also to copy a list of the
shareholders in order that he might solicit proxies for voting at the annual meeting of the corporations shareholders.
However, the officers of Scranton refused to do so.
Hence, Klein et.al. filed a bill in equity (complaint) praying that the officers of Scranton be directed to permit them to
examine the books and records of the corporation and to make a copy of the list of shareholders for the solicitation of
proxies.
The Court of Common Pleas of Lackwanna County (Lower Court) dismissed the bill in equity (complaint) on the
ground that Klein et.al. are motivated by some speculative purpose. That Klein et.al. at no time have set forth any
complaint or averment of mismanagement, wrongdoing, unlawful activity or any violation of law of sound principle
of management.
ISSUE(S): Whether Klein et.al. should be allowed to examine the books of Scranton
HELD: Yes.
RATIO:
It is not necessary for a stockholder to aver mismanagement or fraud to obtain his right to inspect

corporate records.
The writ should not be granted for speculative purposes, or to gratify idle curiosity, or to aid a
blackmailer, but it may not be denied to a stockholder who seeks the information for legitimate purposes.
A stockholder has, without question, the right to inspect the books of the company, at a proper time, and
in a proper way, even though his only object be to ascertain whether the business has been properly
conducted. Such a right is necessary for the protection of stockholders. The books and papers of a
corporation are the common property of all the stockholders
In this case, there is no evidence to sustain a finding that the examination of the books was sought for
speculative purposes, rather than for the reasons ( to make a copy of the list of shareholders for the solicitation
of proxies) averred in the bill in equity (complaint).

CASE LAW/ DOCTRINE:

DISSENTING/CONCURRING OPINION(S):