Donahue v. Rodd Electrotype Co.

Harry Rodd (defendant), longtime president of the closely-held Rodd Electrotype Co., held an 80 percent stake, while Euphemia Donahue (plaintiff) and her son held the remaining minority shares inherited from her husband. As Harry's sons Charles and Frederick (defendants) took control of the board, they caused the corporation to repurchase 45 of Harry's shares at $800 each, but when the Donahues offered to sell their own minority shares on the same terms, the board refused. Euphemia sued the Rodds for breaching fiduciary duties owed to minority shareholders, and the trial and appellate courts found the transaction inherently fair and ruled for the defendants.