Compaq Computer Corp. v. Horton, 631 A.2d 1 (Del. 1993)

Facts

Compaq refused to allow Horton to inspect its stock ledger and other related materials.  Horton had submitted a demand letter and Compaq refused, citing that the letter did not state a proper purpose under § 220(b).

Procedural History

Both parties submitted cross-motions for summary judgment and the only issue remaining was whether Horton stated a proper purpose?

Issue(s)

Was the purpose for which Horton was requesting records proper enough to compel the production?

Holding(s)

Yes.

Reasoning/Analysis

The Court found that a stockholder’s right to inspect is not absolute and rather is qualified depending on the facts presented.  Horton has nothing to gain by harming the legitimate interests of the company yet Compaq has no legitimate interest in avoiding payment of compensatory damages which it may owe to those who own the enterprise.  The purpose for which Horton seeks the documents is proper.  So long as Horton establishes a single proper purpose related to his role as a stockholder, all other purposes are irrelevant.