Donahue v. Rodd Electrotype Co.

Facts

In 1935, the defendant, Harry C. Rodd, began his employment with Rodd Electrotype. In the years preceding 1955, the parent company, Royal Electrotype, made available to Harry Rodd and Joseph Donahue shares of the common stock in its subsidiary, Royal of New England. A special meeting of the stockholders of the company was held on March 1971, tentative results of an audit conducted by the company auditors and reported generally on the company events of the year. For the first time, Donahue learned that the corporation had purchased Harry Rodd’s shares. According to the minutes of the meeting, the Donahues raised questions about the purchase. They then voted against a resolution, ultimately adopted by the remaining stockholders, to approve Charles Rodd’s report.A few weeks after the meeting, the Donahues offered their shares to the corporation on the same terms given to Harry Rodd. Plaintiff has characterized the corporate purchase of Harry Rodd’s shares as an unlawful distribution of corporate assets to controlling stockholders. She urges that the distribution constitutes a breach of the fiduciary duty owed by the Rodds, as controlling stockholders, to her, a minority stockholder in the enterprise, because the Rodds failed to accord her an equal opportunity to sell her shares to the corporation.