finding that majority shareholder who was also president, chairman of the board and manager of a bank owed a fiduciary duty that required him to share with the minority shareholders his control premium for his sale of his stock
How later courts described this case
- finding that majority shareholder who was also president, chairman of the board and manager of a bank owed a fiduciary duty that required him to share with the minority shareholders his control premium for his sale of his stock
Written by the judges who cited it.
Distinguished
Distinguished by Martin v. Marlin, 529 So. 2d 1174 (1988)
Brown v. Halbert, 271 Cal. App.2d 252, 76 Cal. Rptr. 781 (1969), is distinguishable because of the assorted egregious and coercive tactics perpetrated by the sellers of control against the minority shareholder which, significantly, caused the minority stock to be devaluated.
The opinion
DRAPER, P. J.
I concur in the judgment.
I would, however, base the decision upon the special facts doctrine.
Defendant Halbert, as president and chairman of the board, was the effective operating head of the corporation, completely controlling the conduct of its business. With his undisputed power over his wife’s shares, he controlled 53 percent of the corporation’s voting stock. This combined control of operations and of voting power goes to show him to be a fiduciary as to the minority shareholders. The special facts which establish this fiduciary capacity and show a breach of his trust consist of his refusal to consider an offer for the corporate assets as a whole, his affirmative effort to persuade minority shareholders to sell for far less than book value, his agreement to secure the necessary resignations to facilitate prompt transfer of operating control, his knowledge of the buyer’s plan to withhold dividends and thus depreciate the value of the minority shares, his opening of the company’s books to the prospective purchaser, and his concealment of all these facts from the minority stockholders. All these facts are established by uncontradicted evidence. It follows that the court’s finding (the jury verdict was but advisory) was unsupported by the evidence and that the liability of defendants is established as a matter of law. This case seems to me to fall within the *274 rule of Low v. Wheeler, 207 Cal.App.2d 477 [ 25 Cal.Rptr. 538 ], or, at most, to require but a moderate and reasonable extension of that rule. Henee I would base the decision upon the special facts doctrine as applied in Low.
On April 25, 1969, the opinion was modified to read as printed above.