Brown v. Halbert
California Court of Appeal
271 Cal. App. 2d 252, 76 Cal. Rptr. 781 (1969)
Edward Halbert (defendant) and his wife owned 53 percent of the shares of Tulare Savings & Loan Association (Tulare). Halbert was the president, chairman of the board of directors, and manager of Tulare. Lincoln Savings & Loan Association of Los Angeles (Lincoln) contacted Halbert to determine if Tulare was for sale. Halbert explained to Lincoln that while Tulare was not for sale, he and his wife would be willing to sell their shares—a majority of Tulare’s shares—for two and one-half times the book value. Halbert and Lincoln then negotiated the terms of the sale, including that Tulare would no longer pay dividends and that Halbert would allow Lincoln to examine Tulare’s records. Tulare minority shareholder Harrington Brown (plaintiff) and other minority shareholders were not informed of the terms of the sale until after it was negotiated. Brown filed suit against Halbert, seeking to impose a trust on funds realized by Halbert after the sale of his majority stock in alleged violation of Halbert’s fiduciary duty to the minority shareholders. The trial court determined that Halbert had not violated any fiduciary duty. Brown appealed.
Rule of Law
Holding and Reasoning (Brown, J.)
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