Oregon Supreme Court
229 P.2d 251 (1951)
Richard Smith (defendant) was president and director of First National Bank of Eugene, Oregon (First National), a privately held corporation. Smith and his family controlled roughly 70 percent of First National’s stock. Transamerica Corporation approached Smith and offered to purchase all of First National’s outstanding stock. Smith told Transamerica that he could only sell shares that he owned, and that Transamerica would have to negotiate with the minority shareholders in order to buy their shares. Smith said he believed the minority shareholders were entitled to $220 per share, a $20 premium over book value. Transamerica then approached the minority shareholders and offered them all $220 per share. It told some that Smith was going to receive more than $220 per share. They all sold at the $220 price. Smith had no communication with the minority shareholders and none of the minority shareholders asked him what price he was going to receive for his shares. Smith and his family ultimately sold their stock to Transamerica at $460 per share. Some minority shareholders (plaintiffs) sued Smith, arguing that he had a fiduciary duty as a majority stockholder to inform the minority of the deal he was offered by Transamerica. The trial court ruled in Smith’s favor. The minority shareholders appealed.
Rule of Law
Holding and Reasoning (Latourette, J.)
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