Donahue v. Rodd Electrotype Co.

367 Mass. 578, 328 N.E.2d 505 (1975)

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Nature of the Case

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Facts

Harry Rodd and Joseph Danahue were employed by Royal Electrotype (the predecessor of Rodd Electrotype). Soon Rodd became general manager and acquired 200 shares and Donahue acquired 50. Later Rodd and Donahue became sole shareholders owning 80% and 20% respectively. Rodd had distributed 117 out of 200 shares among his children and returned 2 to the corporate treasury. Then he insisted that some arrangement be made regarding his 81 shares. His son, Charles, a president of the corporation, negotiated a purchase of 45 shares at $800 a share. The board subsequently voted for the purchase. Harry sold two shares to each of his three children at $800/share and gave each 10 shares as a gift. Donahue's 50 shares passed to his wife and son. When P learned of the transaction, she offered her shares on the same terms, but the offer was rejected. This suit followed. The trial judge dismissed P's bill on the merits. The Appeals Court affirmed with costs. The case is before this court on the P's application for further review.