be collected by assessments under the statutory provisions.132

So a judgment creditor of a corporation may sue his garnishee-stockholder, directly, to recover the amount of an assessment made by the corporation on the full paid stock of the stockholder, the corporation having waived a sale of the stock and elected to proceed against the stockholder personally;133 the stockholder's liability in such a case arises upon an implied contract, and hence comes within the provisions of the statutes concerning garnishment. The same rule applies to attachment in a suit by a creditor to recover the amount unpaid upon a subscription. 134

A resolution of the directors authorizing the officers to commence suit for the collection of the assessment is a waiver of the further proceeding to sell the stock therefor, provided in the foregoing sections.135

132 Union Savings Bank v. Leiter, 145 Cal. 696, 700, 79 Pac. 441.

133 Marshall v. Wentz, 28 Cal. App. -, 153 Pac. 244.

134 Kohler v. Agassiz, 99 Cal. 9, 33 Pac. 741; Kennedy v. California Sav. Bank, 97 Cal. 93, 33 Am. St. Rep. 163, 31 Pac. 846; Tulare Sav. Bank v. Talbot, 131 Cal. 45, 63 Pac. 172.

135 San Gabriel Valley Land etc. Co. v. Dennis, 4 Cal. Unrep. 272, 34 Pac. 441.

CHAPTER XX

CORPORATION RECORDS TO BE KEPT

Section 377 of the Civil Code is as follows:

§ 377. All corporations for profit are required to keep a record of all their business transactions; a journal of all meetings of their directors, members, or stockholders, with the time and place of holding the same, whether regular or special, and, if special, its object, how authorized, and the notice thereof given.

The record must embrace every act done or ordered to be done; who were present, and who absent; and, if requested by any director, member, or stockholder, the time shall be noted when he entered the meeting or obtained leave of absence therefrom.

On a similar request, the ayes and noes must be taken on any proposition, and a record thereof made.

On similar request, the protest of any director, member, or stockholder, to any action or proposed action, must be entered in full-all such records to be open to the inspection of any director, member, stockholder, or creditor of the corporation. (Enacted March 21, 1872.)

TRANSACTIONS MAY BE PROVED BY PAROL

A treasurer paid out money without previous authority, but afterwards the directors ratified his act by resolution. It was held that if the secretary by mistake or oversight failed to enter the resolution of record, or if for any reason the formal entry in the record had been postponed by the president and directors, the passage of the resolution may be proved by parol.1

The rough memoranda of its proceedings, made during the progress of a meeting, are not original evidence

1 Bay View etc. Ass'n v. Williams, 50 Cal. 353-357.

of what transpired at the meeting, but secondary only; the duly authenticated record in the books of the corporation are the best evidence, and, in the absence of such a record, testimony of witnesses may be heard to prove what transpired.2

The mere fact that the resolution authorizing the execution of a mortgage does not appear on the books of the corporation does not sufficiently disprove that such a resolution was duly passed, when the mortgage is executed by the proper officers and is under seal.3

In another case it was said: "It is likewise immaterial that the minutes failed to disclose the action of the board taken in regard to certain matters. At most, the minutes of the proceedings of the board of directors are prima facie evidence only of its acts. In the absence of minute entry of its proceedings, they may be proved by parol evidence." Also that "no duty devolves on the purchaser of stock [from the corporation] to see that not only his name, but the names of all other purchasers. . . are entered on the corporate books. . . To hold that a creditor of a corporation can not recover from the owner of the stock upon a statutory liability because the corporation has neglected to make the proper book entries of his holdings, showing him to be a stockholder, would nullify the provisions of both the constitution and statute.'

But strong and most convincing evidence should be required, we think-usually corroborating circumstances, as existed in most of these cases. In a case shortly after the first case decided, without citing it and

2 Boggs v. Lakeport etc. Ass'n, 111 Cal. 354, 43 Pac. 1106.

8 Schallard v. Eel River Steam Nav. Co., 70 Cal. 144, 11 Pac. 590. As to an assignment of account, McKee v. Cunningham, 2 Cal. App. 684-687, 84 Pac. 260.

4 Hughes Mfg. etc. Co. v. Wilcox, 13 Cal. App. 22, 29, 108 Pac. 871.

by a divided court, a judgment, founded upon oral testimony to the effect that the record did not express correctly the proposition voted on by the board, was affirmed without comment or discussion.5

The record of the secretary of an annual meeting of stockholders is prima facie evidence of what was done at the meeting, and of who were present or absent, but oral testimony may be introduced to contradict its contents; moreover, his statement to the meeting, recited in the minutes, that those present constituted or did not constitute two-thirds of the stockholders, is not even prima facie evidence of that fact. The "stock and transfer book," in connection with the names of the parties present, conclusively determines that fact. It was further said in this case that, in the absence of evidence from the "stock books," the stockholder's testimony as to the number of shares owned by him at that time must prevail over the unsupported recital of the secretary in his minutes of the meeting.

RIGHT TO INSPECT

A stockholder (and a creditor) has the absolute right, without limitations or conditions, and without regard to his motives, to inspect during office hours all the records of the corporation; and this right will be, if necessary, enforced by mandamus. The common law rule that mandamus would not issue to gratify mere idle curiosity, but that some specific interest at stake or some beneficial purpose must be shown, is abrogated by

5 Gilson Quartz M. Co. v. Gilson, 51 Cal. 341. And also a resolution authorizing the secretary to borrow money, which was not entered in the minutes, nevertheless is valid, Bank of Yolo v. Weaver, 3 Cal. Unrep. 569, 31 Pac. 160.

• Middleton v. Arastraville M. Co., 146 Cal. 219, 79 Pac. 889.

the unconditional right given by the statute," and it is the duty of the secretary, or other custodian of the records, to allow the inspection upon demand.

And this rule applies even to a list of stockholders with their addresses, prepared by the secretary on the order of and for the convenience of the directors, although such a list be not one specifically required by law to be made-being so made it is part of the record of the acts done or ordered to be done by the directors. But creditors of stockholders do not have any right of inspection of the books of the corporation."

8

If a corporation seeks to exclude a member from inspecting and taking copies of its records, etc., on the ground that it is a benevolent corporation (under the exceptions mentioned in article 12, section 14, of the constitution) it must allege and prove that fact.1o

The refusal to allow an inspection of vouchers, obligations and financial affairs of a corporation which is doing a losing business and approaching insolvency, is not a ground, along with these, for dissolving the corporation.11

But if any officer refuses permission to any stockholder to inspect and take copies during office hours of 7 Johnson v. Langdon, 135 Cal. 624, 87 Am. St. Rep. 156, 67 Pac. 1050. See, also, constitution, article 12, section 14. As to right to require books, etc., to be produced in court, see Ex parte Clarke, 126 Cal. 235, 238, 77 Am. St. Rep. 176, 46 L. R. A. 835, 58 Pac. 546. For a discussion, generally, of the right to compel the production of a corporation's books and papers, see Kullman etc. Co. v. Superior Court, 15 Cal. App. 276, 282, et seq., 114 Pac. 589.

Poor v. Yarnell, 28 Cal. App. —, 153 Pac. 976.

9 National Bank etc. v. Western Pacific Ry. Co., 157 Cal. 573-581, 21 Ann. Cas. 1391, 27 L. R. A. (N. S.) 987, 108 Pac. 676.

10 Gavin v. Pacific Coast etc. Co., 2 Cal. App. 638, 84 Pac. 270.

11 Burham v. San Francisco Fuse Co., 76 Cal. 24, 17 Pac. 940.