DeBaun

This appeal primarily concerns the duty of 'a majority shareholder to the corporation whose shares he holds in selling the shares when possessed of facts establishing a reasonable likelihood that the purchaser intends to exercise the control to be acquired by him to loot the corporation of its assets. We conclude that in those circumstances the majority shareholder owes a duty of reasonable investigation and due care to the corporation.

Facts

Alfred S. Johnson Incorporated (Corporation) was incorporated by Alfred S. Johnson in 1955 to process color photographs to be reproduced in printed form. All of the 100 outstanding shares of Corporation were originally owned by Johnson. Subsequently, Johnson sold 20 of his shares to James DeBaun, Corporation’s primary salesman, and 10 shares to Walter Stephens, its production manager. In November of 1964, Johnson was seriously ill so that managerial control of Corporation was assumed by DeBaun, Stephens, and Jack Hawkins, Corporation’s estimator.

Johnson died testate on January 15, 1965. His will named appellant First Western Bank and Trust Company (Bank) as executor and trustee of a trust created by the will. The 70 shares of…