Tom C. Clark

“ There is no component of unfair dealing or bad faith. [8] The findings negative any misrepresentation or deception, any utilization of inside knowledge or strategic position, or any rivalry with the corporation. [9] During the period of the purchases the conduct of the Becker directors and of respondents with reference to the affairs of the debtor was to its substantial benefit and to the advantage of the other debenture holders. And there is nothing to suggest that had the debentures been acquired by the Becker directors, they would have been unjustly enriched. ”

“ Petitioner urges broadly that directors are precluded from profiting by the purchase of claims against an insolvent corporation. And, it contends, if directors may claim only the cost of debt securities acquired at a discount during a debtor's insolvency, those related as respondents are to the Becker directors should not be permitted to do more. ”

“ Likewise a standard of good faith and fair dealing has been found applicable, where not superseded by a differing legislative or administrative rule, to purchases by directors of corporate shares, in the over-the-counter market, at less than book value on conversion under a plan of public utility reorganization. Securities and Exchange Commission v. Chenery Corporation, 1943, 318 U.S. 80, 63 S.Ct. ”

“ In this case, which lies between, it is unnecessary to determine precisely at what point the probability of conflict requires that equity declare ended the opportunity for profitable trading. It could hardly have been prior to the latest purchases of Regine and Emily Becker. [16]
The nature of the relation between Fribourg and the Becker directors makes immaterial that some of Fribourg's debentures may have been purchased after the corporation ceased to have the potency of a going concern, in expectation of or even after bankruptcy. ”

“ In such proceedings the Securities and Exchange Commission, acting as the statutory advisor to the court, would be within its rightful function in submitting to the court the light of its experience on dealings of the general kind disclosed in this case. Here we have proven facts in a particular case, and not a body of evidence submitted by the Securities and Exchange Commission, presumably informed by expert understanding. ”

“ Chenery Corporation, 1943, 318 U.S. 80, 89, 63 S.Ct. 454, 460, 87 L.Ed. 626, and there distinguished on grounds which are also dispositive here.↑ Courts of equity, in defining the responsibility of officers of a corporation which is insolvent and yet a going concern, have frequently assigned greater importance to the corporation's vitality than to its insolvency. ”

“ Henry B. Petters Importing Co., C.C.E.D.Mo.1887, 30 F. 864.↑ As respondents' purchases of debentures resulted in their securing control of debtor, see note 2 supra, the acquisitions arguably were a factor in preventing further financial deterioration of debtor. See also 62 Harv.L.Rev. 1391, 1392 (1949) : Insolvency 'is the very time when such purchases may be of most benefit to the corporation, since the credit of the corporation may be improved if it is known that directors are purchasing the corporation's securities ”