Corporations: Majority Shareholder's Fraud in the Purchase of Stock
1952; University of Michigan Law School; Volume: 50; Issue: 5 Linguagem: Inglês
10.2307/1284066
ISSN1939-8557
Autores Tópico(s)Corruption and Economic Development
ResumoSTOCK-Whether or not there has been fraud in the purchase of property, due to either affirmative statements or mere non-disclosure, may well depend upon the relation of the purchaser to the vendor.The recent case of Speed v. Transamerica Corporation 1 presents two questions relative to this problem in the purchase of corporation shares: first, whether the price quoted in an offer to purchase can ever be the basis of an action for fraud and deceit; and second, whether the majority shareholder of a corporation occupies a fiduciary relation to minority shareholders in the purchase of their stock.Defendant was the majority stockholder of the Axton-Fisher Tobacco Company and had, pursuant to its written offer, purchased stock of plaintiff, a minority stockholder in such company, at a price quoted in the offer.From the evidence presented in a deceit action brought by plaintiff, the court found that the defendant had devised a scheme whereby it intended to acquire the holdings of the minority shareholders at a price much less than the real value thereof and thereafter to capture for itself the appreciated value of the leaf tobacco inventory of Axton-Fisher by liquidation.The court felt that in making the offer the defendant had impliedly represented the price quoted to be fair, when in the presence of an existing intent to liquidate, the true value of the shares was far greater.The offer, therefore, viewed as a representation as to value, was false and as such was held to be a
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