Goodwin v. Agassiz

[chrisrs]

Goodwin v. Agassiz
186 N.E. 659

PROCEDURE: Plaintiff appealed a final decree of the Superior Court of Massachusetts dismissing action regarding losses suffered when he sold stock to defendants, directors of a corporation. Plaintiff alleged defendants had breached their fiduciary duty by failing to disclose information regarding the company's mining assets.


FACTS: Agassiz (D) was president and one of the directors of the Cliff Mining Company, which had not been very productive. D and other insiders had received a geologist's report indicating a strong possibility that one of their properties contained major copper deposits. Goodwin (P), thinking exploratory operations for the company a bust, sold his stock on the open stock exchange and D bought it anonymously. Copper deposits were found and the stock consequently increased in value. There was no communication between the parties. P would not have sold his stock if he had known of the geologist's theory. P alleged D breached his fiduciary duty as a director by not disclosing the information.

ISSUE: Do directors' actions keeping secret knowledge regarding the corporation's condition constitute an actionable wrong when the director is dealing in the stock?

RULE:Directors of commercial corporation do not stand in a relation of trust to individual stockholders


HOLDING:Court held that no fiduciary relationship was created between them in regards to the stock sale and there existed no circumstances requiring the court to set aside the transfer of stock. Court held that silence on the part of the director buyer usually does not amount to a breach of duty and that here, although defendants knew the survey results, the report was not conclusive, and thus defendants were not obligated to inform the shareholders of survey results.

ANALYSIS: Court affirmed dismissal of bill which challenged defendants' purchase of stocks. Court held defendants' knowledge of information not available to plaintiff did not create an added duty to disclose information; defendants were allowed to keep silent regarding the survey and to purchase stocks from plaintiff.