McDonald, a potential buyer of financial institutions, visited Halbert at the Tulane Savings and Loan Association. Halbert was president, manager, and chairman of the board, and, along with his wife, the owner of 53 percent of the stock of the association. McDonald asked if the association was for sale. Halbert replied that it was not for sale but that he and his wife would sell their controlling stock for $1,548 per share. Halbert did not tell the association’s board of directors or its shareholders about McDonald’s interest in acquiring the association.

In addition to agreeing to sell his stock, Halbert also agreed to cause the association to withhold the payment of dividends. After Halbert’s shares were purchased, Halbert, who had not yet relinquished his corporate offices, helped McDonald solicit the minority shareholders’ shares and even advised them that, because McDonald was going to withhold dividends for ten to twenty years, they ought to take his offer of $300 per share. McDonald bought some of the minority shares at $300 and others for between $611 and $650.

Did Halbert owe the minority shareholders a fiduciary duty? If so, what was his duty in selling his minority stock position? Was his conduct ethical? [Brown v. Halbert, 76 Cal. Rptr. 781 (Cal. App. Ct. 1969).]