Jones v. H. F. Ahmanson Co.

H. F. Ahmanson Company and three other corporations (defendants) were the controlling stockholders of the United Savings and Loan Association of California (association). In the late 1950s, there was a thriving public market for shares of savings and loan associations. However, there was no public market for association stock due to its high book value, a lack of public information, and the fact that the association was closely held. In an attempt to take advantage of the bull market, the defendants created the United Financial Corporation of California (defendant) as a holding company for association stock. The defendants then exchanged their association shares for United Financial shares before offering United Financial shares to the public. The result of this procedure was a vibrant public market for United Financial shares, and United Financial holding 85 percent of the association’s stock. United Financial did not offer June Jones and other minority association stockholders (plaintiffs) an opportunity to exchange their association stock for United Financial stock before it went public. The public offering of the more marketable and less expensive United Financial shares ensured that there would be no chance that association stock would ever become marketable. Jones brought suit, alleging that the defendants breached their fiduciary duties as the controlling stockholders of the association.