Old Dominion Copper Mining and Smelting Co. v. Lewisohn Case Brief Summary | Law Case Explained

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Old Dominion Copper Mining and Smelting Co. v. Lewisohn | 210 U.S. 206 (1908)
Corporate promoters are individuals or entities who take the initiative to establish and incorporate a company. Due to their ability to issue stock and engage in transactions with the corporation before there are other shareholders, promoters are uniquely positioned to engage in self-dealing. In Old Dominion versus Lewisohn, we explore whether a corporation can challenge its promoter’s self-dealing.
Leonard Lewisohn and Albert Bigelow devised a plan to form Old Dominion Copper Mining and Smelting Company and sell certain assets and land to the company at a profit. After the sale, the men planned to cause Old Dominion to issue more shares to the public at a par value reflecting the inflated price Old Dominion paid for the assets rather than those assets’ actual value.
Lewisohn and Bigelow successfully executed their plan, selling assets and land to Old Dominion in exchange for all its issued stock. Old Dominion agreed to the sale with full knowledge of the facts and the plan. After the sale was consummated, Old Dominion offered shares to the public. Neither Old Dominion, Lewisohn, nor Bigelow disclosed the profit the latter two had made on the sale to the public subscribers.
Old Dominion filed suit against Lewisohn to rescind the sale or recover damages. The trial court dismissed the action. The Second Circuit affirmed. The United States Supreme Court granted cert .
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