Respondent is a corporation with — the figures being approximate — 3,000,000 outstanding shares of common stock held by 1,300 persons, and 240,000 outstanding shares óf preferred stock held by 4,000 persons. Petitioner, who holds 100 shares of the common stock, brought this proceeding pursuant to section 624 of the Business Corporation Law, following an unsuccessful demand upon respondent for an inspection of the record of shareholders. His petition was granted, and respondent appeals.
As a shareholder of record for at least six months, thus qualifying under subdivision (b) of section 624 petitioner had written respondent a letter requesting that the record of shareholders *154be made available to Mm for inspection. Subdivision (c) of section 624 provides that such an inspection may be denied upon refusal of the shareholder to furnish an affidavit stating, so far as here pertinent, ‘ ‘ that such inspection is not desired for a purpose wMch is in the interest of a business or object other than the business of the corporation ”. Evidently anticipating that respondent might request such an affidavit, petitioner enclosed one with his letter, couched in the literal words of the statute. Respondent asked petitioner for “ the purpose of your inspection,” and as petitioner did not supplement the. statement in Ms affidavit, the record was not made available to him. He then applied .at Special Term, pursuant to subdivision (d) of section 624, for an order directing respondent to permit the inspection, repeating in his petition the statement contained in his affidavit, but without further disclosure of his purpose. In opposing the application respondent did not assert that petitioner’s purpose was improper. It contended that, in view of petitioner’s refusal to comply with respondent’s request for information about Ms purpose, the petition was premature and should be denied “ without prejudice to either party to apply for relief once petitioner has indicated his purpose ”.
The petition was not premature. Subdivision (d) provides for judicial intervention at the instance of the shareholder upon refusal of the corporation to permit an inspection. There was a refusal here. Respondent declined to allow the inspection unless informed by petitioner of his purpose. But under the statute the corporation may not constitute itself the judge of the propriety of the shareholder’s purpose; its right in this regard is limited to a demand for a subdivision (c) affidavit.
Judicial intervention upon refusal by the corporation is imtiated by an application by the shareholder for an order directing the corporation to show cause why an order should not be granted permitting the inspection. ‘ ‘ Upon the return day of the order to show cause,” the statute provides, “ the court shall hear the parties summarily, by affidavit or otherwise, and if it appears that the applicant is qualified and entitled to such inspection, the court shall grant an order compelling such inspection and awarding such further relief as to the court may seem just and proper. ’ ’ The basic issue concerns the proper function of the court under tMs mandate. Petitioner says the court may inqMre whether the shareholder demanding inspection was a shareholder of record for at least six months immediately preceding his demand, whether he gave at least five days’ written demand, and whether he furnished a subdivision (c) affidavit if one had been requested. If these matters of fact are found in the shareholder’s favor, *155then, according to petitioner, the court has no choice but to order the inspection. Respondent’s view is that, if the corporation has asked the purpose of the inspection and received no response, judicial inquiry into the purpose is proper, and that the court should require the shareholder to state his purpose, although respondent would concede that the burden of proving impropriety of the stated purpose should rest on the corporation (cf. Matter of Tate v. Sonotone Corp., 272 App. Div. 103; Matter of Hausner v. Hopewell Prods., 10 A D 2d 876).
The Legislature, it scarcely needs saying, disapproves of an inspection “ desired for a purpose which is in the interest of a business or object other than the business of the corporation ”; otherwise it would not have insisted that the shareholder upon request furnish an affidavit disclaiming such a purpose. Subdivision (d) is to be read with this legislative policy in mind. It did not mandate in all circumstances compliance by a corporation upon the mere uttering of a negative ritual so subjective in content that it fastens little, if any, responsibility on the shareholder. It is not sufficient that the shareholder appear to the court to be "qualified, ’ ’ which is petitioner’s contention; he must also appear to the court to be “ entitled ’ ’ to the inspection.
Having directed the Supreme Court to intervene in an area involving a discernible legislative policy, it is hardly likely that the Legislature intended the court to forego any consideration of that policy in determining whether the shareholder, though qualified, was entitled to inspect. If, for example, the corporation submitted factual allegations indicating that the shareholder was prompted by a purpose which was improper or debatably so, the court would doubtless be expected to ask him to state his purpose (Matter of Bernstein v. Garden Hill Estates, 24 A D 2d 972). In short, section 624 is not the type of statute at one time in effect in this State.so absolute in terms that the courts were required to say that the person demanding the inspection ‘ ‘ must be a stockholder and must prefer his request during business hours; that is all ” (Henry v. Babcock & Wilcox Co., 196 N. Y. 302, 305); and that "the motives of a stockholder, however sinister, constitute no answer to an action by him to recover the penalty prescribed by statute for the refusal of a corporation to exhibit its stock book upon a proper demand ” (People ex rel. Britton v. American Press Assn., 148 App. Div. 651, 652).
In the instant case the corporation proffers no facts pointing to improper purpose, unless the reluctance to disclose the purpose to the corporation is a fact always to be taken as in itself indicative of impropriety. We think otherwise. A purpose, for instance, may be in the interest of the corporate business yet *156hostile to the tenure of the management, or it may in any event, in its judgment, seem suspect. The shareholder need not subject himself to the debate and delay foreseeable; he may proceed to court for an order. But refusal to disclose in private dealings with the corporation is not the same as refusal to disclose to the court. The court is the impartial arm designated by the Legislature to execute the policy of section 624. If it is to function intelligently, and not as a virtual automaton, it must be told the shareholder’s purpose, when the information would be relevant. It may not be relevant when all that appears is a refusal to allow the inspection. But in our view it becomes relevant, not only when the corporation is able to make a factual showing of impropriety of purpose, but also when, in apparent good faith, it conditioned its refusal on disclosure of purpose. This does not strip the subdivision (c) affidavit of its intended usefulness. A request that a statement be made under oath tends to deter the unscrupulous and fosters a desirable caution in the hasty and the careless, even though the statement need be only conclusory. The very fact that the statement is permitted to be conclusory suggests the value of revealing its basis to the court. The shareholder would suffer no material prejudice, and, however honest, he may have been mistaken in thinking his purpose was not “ in the interest of a business or object other than the business of the corporation ”. It would be unfortunate if the mistake became evident only from its consequences.
The provisions of section 624 here considered are a revision of section 10 of the Stock Corporation Law (Joint Legis. Committee to Study Revision of Corp. Laws; N. Y. Legis. Doc., 1963, No. 29, p. 132), which had imposed money penalties for refusal to permit inspection. Actions to collect the penalties were seldom brought (id., p. 133), reliance having been placed on proceedings in the nature of mandamus under article 78 of the Civil Practice Act to enforce the right of inspection (see Matter of Ochs v. Washington Hgts. Fed. Sav. & Loan Assn., 17 N Y 2d 82, 86). In such proceedings, it was held, “ ‘ the court may consider the purpose of such an examination * * * and may, in its discretion, deny such an application where the purpose is not consonant with law, the business of the corporation or good faith ’ ” (Matter of Tate v. Sonotone Corp., 272 App. Div. 103, 104, supra; Bresnick v. Saypol, 57 N. Y. S. 2d 904, 908, 909, mod. 270 App. Div. 837). In construing subdivision (d) of section 624 it is fair to give some weight, we think, to the fact that the Legislature replaced a provision for penalties with a provision for a remedy not without resemblance to a proceeding in the nature of mandamus. (But, see, Hoffman, The Status of Share*157holders and Directors Under New York’s Business Corporation Law: A Comparative View, 11 Buffalo L. Rev. 496, 539, 540.)
Accordingly, the order dated August 8, 1968, should be reversed, on the law, without costs or disbursements, and the petition dismissed, without prejudice to renewal upon a showing of the purpose for which the inspection is desired.