Litwin v. Allen

25 N.Y.S.2d 667 (1940)

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Nature of the Case

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Facts

The four transaction at issue are: (1) The purchase by certain individual Ds from J. P. Morgan & Co. about January 30, 1929, of Alleghany Corporation common stock at $20 a share and the profits made by those Ds as a result thereof. (2) The purchase $3,000,000 of Missouri Pacific convertible debenture 5 1/2% bonds at par and interest, with an option to the seller, Alleghany Corporation, to repurchase them at the same price within six months. (3) Participation of $11,000,000 in a $39,500,000 loan to Vaness Company and Cleveland Terminals Building Company and (4) The auction sale of the collateral under the loan, which took place September 30, 1935. Guaranty Trust Co. (D) agreed to buy convertible debentures in Missouri Pacific Company from Litwin (P) owned 36 of 900,000 outstanding shares and sued to hold the directors liable for this loss. Ps have conceded that in all but the four questioned transactions Ds exercised an unusual degree of care in the management of the Trust Company.