"As a matter of general law, it may be said that the officers and directors of a corporation owe fiduciary duties to their corporation and to the other shareholders. These fiduciary duties possibly extend to controlling shareholders."
How later courts described this case
- "As a matter of general law, it may be said that the officers and directors of a corporation owe fiduciary duties to their corporation and to the other shareholders. These fiduciary duties possibly extend to controlling shareholders."
Written by the judges who cited it.
The opinion
PREWITT, Chief Judge,
dissenting.
I respectfully dissent.
Stockholders often have their interests adversely affected by those in control, possibly to a greater extent in a “close” corporation, or perhaps stockholders of a close corporation are more aware of the activities affecting them. A cause of action should not exist against those in control unless they breached a duty to the other shareholders. On the basis submitted, I see no such duty.
The directors and officers are to manage and provide for the management of the corporation, and to protect the interests of the shareholders in the assets of the eorpo- *308 ration. Liability is asserted against defendants for depreciating the value of the plaintiffs’ shares by selling “controlling interest” without notice to plaintiffs of the offer to purchase. Notice of the offer is not within the duties the defendants were obligated to perform and was beyond what should have been required of them. See Ritchie v. McGrath, 1 Kan.App.2d 481 , 571 P.2d 17 (1977), following McDaniel v. Painter, 418 F.2d 545 (10th Cir.1969). See also Goode v. Powers, 97 Ariz. 75 , 397 P.2d 56 (1964); Benson v. Braun, 8 Misc.2d 67 , 155 N.Y.S.2d 622 (1956); Levy v. American Beverage Corp., 265 App.Div. 208 , 38 N.Y.S.2d 517 (1942).
I would reverse the judgment.