Supreme Judicial Court of Massachusetts
186 N.E. 659 (Mass. 1933)
Goodwin (plaintiff) owned stock in Cliff Mining Company (Cliff). Exploration on some of Cliff’s property was undertaken in 1925 in an attempt to find copper deposits. In March 1926, Agassiz and MacNaughton (defendants), directors of Cliff, learned of a geologist’s theory as to the existence of copper deposits in another part of Cliff’s property. The defendants thought that if the geologist’s theory was correct, Cliff’s stock would go up. Soon thereafter, in May 1926, the initial exploration was stopped because it was unsuccessful. At that time, Goodwin, with no knowledge of the geologist’s report, sold his stock in Cliff through a broker. The stock ended up being bought by the defendants. Goodwin brought suit against the defendants on the ground that the defendants’ nondisclosure of the geologist’s theory to Cliff’s stockholders was improper. The nondisclosure did not harm Cliff, but Goodwin claimed that he personally would not have sold his stock if he had known about the geologist’s theory.
Rule of Law
Holding and Reasoning (Rugg, C.J.)
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