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Crane Co. v. Anaconda Co., 39 N.Y.2d 14, 346 N.E.2d 507, 382 N.Y.S.2d 707

Facts

In August 1975, Crane Company announced a tender offer to exchange debentures for Anaconda Company stock, which Anaconda's management opposed. Crane, having become Anaconda's largest stockholder by December 1975, requested access to Anaconda's shareholder list to inform them about the tender offer and counter misleading statements from Anaconda. Anaconda denied the request, leading Crane to file an article 78 proceeding to compel inspection of the stock register.

In its petition Crane stated that it held in excess of 11% Of Anaconda's common stock and that its request conformed to the requirements of the Business Corporation Law in that the inspection was not required for a purpose other than the business of Anaconda.

Issue

Whether a qualified stockholder may inspect the corporation's stock register to ascertain the identity of fellow stockholders for the purpose of informing them of its exchange offer and soliciting tenders of stock.

Succinctly put, the issue here is whether a qualified stockholder may inspect the corporation's stock register to ascertain the identity of fellow stockholders for the avowed purpose of informing them directly of its exchange offer and soliciting tenders of stock?

Rule

A qualified stockholder has the right to inspect corporate records, including the stock register, unless the request is for a purpose that is inimical to the corporation or its stockholders.

A shareholder desiring to discuss relevant aspects of a tender offer should be granted access to the shareholder list unless it is sought for a purpose inimical to the corporation or its stockholders.

Analysis

The court determined that Crane's request to inspect the stock register was justified as it aimed to inform fellow shareholders about the tender offer, which was a matter of significant interest to them. The court noted that the potential impact of the tender offer on the corporation's future and the shareholders' investments warranted access to the records. The court rejected Anaconda's argument that Crane's motives were improper, emphasizing that the interests of the shareholders and the corporation were intertwined.

Whenever the corporation faces a situation having potential substantial effect on its well-being or value, the shareholders qua shareholders are necessarily affected and the business of the corporation is involved within the purview of section 1315 of the Business Corporation Law.

Conclusion

The Court of Appeals modified the Appellate Division's order to extend the date for inspection and affirmed the decision, allowing Crane to inspect Anaconda's stock register.

The order of the Appellate Division should be modified by substituting the date of February 24, 1976 for the expired February 2, 1976 date and, as so modified, affirmed.

Who won?

Crane Company prevailed in the case because the court recognized its right to inspect the stock register for a purpose related to the business of the corporation, which was to inform fellow shareholders about the tender offer.

Crane was and is interested in pursuing a selective and direct approach by other means to stockholders. This is not by itself improper and is due to the pragmatics of soliciting tenders from likely prospects who hold sufficient shares.

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