A corporation wished to obtain a lease owned by B corporation. Unable to purchase the lease, A corporation contracted with C and D, holders of a majority of the stock of B corporation, and officers and directors therein, whereby C and D were to exchange their stock in B corporation for an equivalent of $15.95 a share. C and D further agreed to recommend to the minority an offer of an equivalent of $14.12 a share. On the recommendation of C and D, but without knowledge that they were receiving less for their stock, the other shareholders accepted the offer. A former minority stockholder brought suit in his own behalf and in behalf of all others similarly situated to recover as for loss of profits against C and D, among others. Held, the transaction was nothing more in essence than a sale of the entire corporate assets; and the individual stockholders are entitled to share rateably in the proceeds in proportion to their stock holdings. Dunnett v. Arn, (C. C. A. 10th, 1934) 71 F. (2d) 912.
CORPORATIONS -ACCOUNTABILITY OF MAJORITY SHAREHOLDERS FOR SECRET PROFITS,
Mich. L. Rev.
Available at: https://repository.law.umich.edu/mlr/vol34/iss1/18