The Academic Contribution to the Shaping of American Director Fiduciary Duty

Abstract

Scholarly assertions may be misconceived, yet nevertheless influential. One significant example is found in the corporate context. In the nineteenth century there were conflicting judicial views in both England and the United States as to whether directors were accountable as status fiduciaries to shareholders. The inconsistency was resolved in England at the turn of the century. The English courts concluded that directors were status fiduciaries only to their corporation. That conclusion was not concurrently adopted in the United States. There was no comparable judicial examination of the matter. The issue essentially was still unresolved in the United States when, in the 1930s, certain American scholars exploring broader concerns assumed in the course of their work, without proper investigation of the prior jurisprudence, that it was accepted that directors were accountable as fiduciaries directly to shareholders. Their unified assumption, though mistaken, likely was the accessory or adjacent thrust that effectively sealed the rupture of the English and American positions that today continues to disorient judges and writers.

Keywords: director fiduciary duty, separation of ownership and control, stakeholder debate, Adolf Berle, Merrick Dodd, The Modern Corporation and Private Property