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Business Assoctiations Keyed to Gabalson, 3rd Ed.
Donahue v. Rodd Electrotype Co.
Citation:
328 N.E.2d 505 (1975)Facts
Harry Rodd began working for Royal Electrotype Company of New England (later renamed Rodd Electrotype) in 1935 and eventually gained controlling interest. The plaintiff’s husband, Joseph Donahue, was hired in 1936 as a “finisher” and later became plant superintendent and vice president, though he never participated in management decisions. By 1970, Harry Rodd was 77 years old and wished to retire. The company agreed to purchase 45 of his 81 shares for $800 per share ($36,000 total). The remaining shares were distributed to his three children through gifts and sales, giving each 51 shares. The Donahues, who owned 50 shares, were not informed of this transaction until a stockholders’ meeting in March 1971. When they subsequently requested that the company purchase their shares on the same terms, the company refused, claiming it was not in a financial position to do so. The plaintiff sued, alleging that the controlling shareholders breached their fiduciary duty by causing the corporation to purchase Harry Rodd’s shares without offering the same opportunity to her.
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