Brief Fact Summary. Plaintiff, Homer Goodwin, brought a suit against Defendant, Rodolphe Agassiz, after Defendant used information not disclosed to Plaintiff when buying Plaintiff’s shares in Cliff Mining Company.
Synopsis of Rule of Law. A purchaser of stock on the market does not owe a fiduciary duty to a seller to disclose the information that the purchaser may know, even when the purchaser is in a position that provides insider information.
Issue. The issue is whether Defendant, as president and the purchaser of Plaintiff’s shares, owed Plaintiff a duty to disclose information that would affect the value of the shares.
Held. The Supreme Judicial Court of Massachusetts held that Defendant did not owe Plaintiff a fiduciary duty to disclose what Defendant knew. First, Defendant did not buy the shares from Plaintiff directly – they were purchased through a broker. Second, the information did not disclose an absolute certainty that copper would be found, but rather was only an opinion.
Discussion. The court believed that the facts of this case did not disclose a direct relationship between the parties that would have made a full disclosure necessary. The opinion does not concentrate on whether Defendant was unfairly benefiting from the information but just whether Plaintiff unfairly lost his shares.