Goodwin v. Agassiz

283 Mass. 358, 186 N.E. 659 (1933)

Facts:

  • P was a shareholder of a mining company.
  • The mining company used certain surveys in an attempt to mine copper, but were ultimately unsuccessful.
  • An article disclosing the failure to find copper was published, which caused P to sell his shares in the company.
  • D, the President of the Company, was a former geologist and had a belief that there was still copper to be found in the mining territory.
  • D bought shares in the company before the news was published.
  • P argued that D, as president of the company, had a duty to disclose the pertinent information that more copper could be found.

Issue:

  • Whether D had a duty to disclose to shareholders the information regarding potential future discovery of copper.

Holding:

  • No, the president of the company D had no duty to disclose.
    • D bought the shares from a neutral broker.
    • There was no relationship between P and D which required full disclosure.  The duty instead (if the information were pertinent) belonged to the company, rather than the president.
    • Most importantly, the information that might have been disclosed was only his opinion.  There was no certainty in the President’s opinion.
  • As president of the company, he really didn’t have any fiduciary duty to disclose that he may know.
    • In this case, the duty is for the company to disclose information, not the president who is also a shareholder.
  • Note that generally, a P must show the information is material.  In this case all that’s required is to show the stock price moved.

Comments are closed.