Corporations – Officers and Directors – Acquistion of Corporate Opportunity After Rejection by Board of Directors
Defendant Odlum, president and director of Airfleets, Inc., was privately offered the opportunity to buy patents for a self-locking nut and the stock of the company which held an exclusive license to manufacture it. The board of directors, when offered the opportunity by Odlum, approved purchase of the stock but rejected the patent rights. Odlum then purchased these rights for himself and a minority stockholder brought a derivative suit for an accounting. Held, a director is absolutely disqualified from purchasing a corporate opportunity for himself, even after the opportunity has been rejected by a disinterested majority of the board of directors. Any other rule would necessitate an attack upon and judicial evaluation of the subjective business judgment of the board. Greene v. Allen, (Del. Ch. 1955) 114 A. (2d) 916.