Crane Co. v. Anaconda Co.
N.E.2d 507 (N.Y. 1976)


Facts:Crane (P) announced a proposal to exchange $100 million in subordinated debentures for 5 million common shares of Anaconda (D) stock, and Anaconda's (D) management opposed the proposal. Anaconda (D) sent four letters to its shareholders, asking them to resist Crane's proposal. Anaconda sued Crane in an action that limited Crane to acquiring no more than 5 million shares, prohibited it from pursuing representation on Anaconda's board, and reminded Crane of its obligations under the antitrust laws. Crane began distributing its prospectus to help it obtain the Anaconda stock, and it asked Anaconda for a list of its shareholders. Crane claimed Anaconda had a fiduciary duty to inform its shareholders of Crane's offer. Crane owned no Anaconda stock at the time, although more than two million shares had been tendered. Crane renewed its demand for the shareholder list, and provided Anaconda with an affidavit supporting its statement that it was not seeking the list for a purpose unrelated to Anaconda's business. Anaconda again refused, and Crane filed this action, emphasizing its desire to communicate with Anaconda shareholders to explain the tender offer and to respond to Anaconda's shareholders' misconceptions. The Special Term found that Crane's request was not proper, and it dismissed Crane's petition. The appellate court reversed the Special Term's decision, and Anaconda appealed.

Issue:Whether or not a qualified stockholder inspect the corporation's stock register to ascertain the identity of fellow stockholders for the purpose of soliciting them for a stock tender offer?

Rule:A stockholder may inspect the corporation’s list of stockholders to ascertain the identity of fellow stockholders for the purposes of communicating a tender offer.

Holding:Order modified and affirmed.
The Supreme Court, denied the application and stockholder appealed. The Supreme Court, reversed and directed corporation to produce the records and corporation appealed. The Court of Appeals, held that qualified stockholder may inspect 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; and that stockholder's pending tender offer involving over one-fifth of the corporation's common stock was not a purpose other than the business of the corporation.

Analysis:investment. At common law, the shareholder had to prove the request was made in good faith for a proper purpose. As long as the shareholder properly pleaded good faith and proper purpose, the court granted the request. Early legislation in the area eliminated the "proper purpose" requirement, creating an absolute right to the list, but that right has been abandoned in favor of requiring the list to be
released only to advance one of the corporation's business purposes. The current statute requires access to the list if the demand is accompanied by an affidavit stating that the only purpose for which the shareholder is seeking the list is the "business of the corporation" and that "the petitioner has not been involved in the sale of stock lists within the last five years." Anaconda (D) argues that if the plaintiff seeks to use the list in conjunction with an attempt to buy the corporation's stock, the "business of the
corporation" is not involved. However, if a corporation faces a take-over attempt, the shareholders' welfare is involved. The defendant may not sustain its argument that an attempt to acquire more than twenty percent of a company's shares does not involve the company's business. Inspection of list compelled.