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Law School Case Brief

Goodwin v. Agassiz - 283 Mass. 358, 186 N.E. 659 (1933)

Rule:

The directors of a commercial corporation stand in a relation of trust to the corporation and are bound to exercise the strictest good faith in respect to its property and business.

Facts:

Plaintiff stockholder, Homer Goodwin, brought an action against defendants, Agassiz and MacNaughton, for alleged breach of fiduciary duty by failing to disclose information regarding the company's mining assets, specifically, geological surveys that identified possible copper deposits in Michigan. Plaintiff suffered losses in selling his stock shares in the mining company, which he would not have done had he known about the results of the geological surveys. The supreme court of Massachusetts dismissed the action.

Issue:

Were the defendant directors dutybound to disclose geographical survey results to plaintiff stockholder?

Answer:

No.

Conclusion:

The court affirmed the dismissal of bill that challenged defendants' purchase of stocks. The 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.

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