Brown, the president and director of a corporation engaged in owning and operating a chain of...

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Brown, the president and director of a corporation engaged in owning and operating a chain of motels, was advised, upon what seemed to be good authority, that a superhighway was to be constructed through the town of X, which would be a most desirable location for a motel. Brown presented these facts to the board of directors of the motel corporation and recommended that the corporation build a motel in the town of X at the location described. The board of directors agreed, and the new motel was constructed. The superhighway plans were changed, however, after the motel was constructed, and the highway was never built. Later, a packinghouse was built on property adjoining the motel, and the corporation sustained a considerable loss as a result. The shareholders brought an appropriate action against Brown, charging that his proposal had caused a substantial loss to the corporation and seeking recovery of that loss from Brown. What result?

Robert · Accepted Answer

Question: Brown, the president and director of a corporation engaged in owning and operating a 
chain of motels, was advised, upon what seemed to be good authority, that a superhighway was 
to be constructed through the town of X, which would be a most desirable location for a motel. 
Brown presented these facts to the board of directors of the motel corporation and recommended 
that the corporation build a motel in the town of X at the location described. The board of 
directors agreed, and the new motel was constructed. The superhighway plans were changed, 
however, after the motel was constructed, and the highway was never built. Later, a 
packinghouse was built on property adjoining the motel, and the corporation sustained a 
considerable loss as a result.

Brown, the president and director of a corporation engaged in owning and operating a chain of motels, was advised, upon what seemed to be good authority, that a superhighway was to be constructed...

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