Delaware Supreme Court
361 A.2d 218 (Del. 1976)
John Lawrence acquired certain properties under a lease-option. Lawrence was the president of Agau Mines (Agau) and offered to transfer the lease option to Agau, but Agau’s board of directors determined that the acquisition would not be prudent for the corporation at the time. Instead, Lawrence and the Agau directors created the United States Antimony Corporation (USAC), and Lawrence transferred the lease option to USAC. USAC then granted Agau a long-term option to purchase USAC if it ever became financially viable for Agau. Subsequently, the Agau board of directors resolved to exercise the option and the resolution was approved by a majority of the Agau shareholders—although the majority of shares that voted in favor of exercising the option were held by directors of Agau who were also directors of USAC. In fact, only about one-third of disinterested shareholders voted. The plaintiffs brought a shareholder derivative action on behalf of Agau against the officers and directors of USAC for usurping a corporate opportunity of Agau and for wrongfully profiting by causing Agau to exercise the purchase option. The lower court found in favor of the defendants. The plaintiffs appealed.
Rule of Law
Holding and Reasoning (McNeilly, J.)
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