DeBaun v. First Western Bank and Trust Co.

First Western Bank (defendant), holding a majority stake in a successful corporation as trustee, sold its shares to Mattison despite knowing of his history of failed corporate ventures, pending litigation, unsatisfied judgments and tax liens, and even a prior fraud judgment against him held by the bank's own predecessor that remained unpaid; the bank never checked publicly available court records, which would have revealed extensive further negative information, and after the sale Mattison looted the corporation's assets, leaving it insolvent. Minority shareholders DeBaun and Stephens (plaintiffs) brought a derivative suit, the trial court found the bank breached its duties, and the bank appealed.