Created attachment 91302 [details]
A testcase

I got

cd pkg; \
aclocal-1.4; \
automake-1.4 --cygnus Makefile --add-missing --copy; \
autoconf; \
./configure
automake: configure.in: installing `./install-sh'
automake: configure.in: installing `./mkinstalldirs'
automake: configure.in: installing `./missing'
checking for a BSD-compatible install... /usr/bin/install -c
checking whether build environment is sane... yes
checking whether make sets $(MAKE)... yes
checking for working aclocal-1.4... found
checking for working autoconf... found
checking for working automake-1.4... found
checking for working autoheader... found
checking for working makeinfo... found
checking whether to enable maintainer-specific portions of Makefiles... no
configure: creating ./config.status
config.status: creating Makefile
make -C pkg 'WINDRES=$(WINDRES_FOR_TARGET)'
make[1]: Entering directory `/export/home/hjl/bugs/automake/subdir/pkg'
Making all in lib
make[2]: Entering directory `/export/home/hjl/bugs/automake/subdir/pkg/lib'
make[2]: Leaving directory `/export/home/hjl/bugs/automake/subdir/pkg/lib'
make[2]: Entering directory `/export/home/hjl/bugs/automake/subdir/pkg'
make[2]: Nothing to be done for `all-am'.
make[2]: Leaving directory `/export/home/hjl/bugs/automake/subdir/pkg'
make[1]: Leaving directory `/export/home/hjl/bugs/automake/subdir/pkg'

Created attachment 91303 [details]
A testcase

This patch seems to work for me.

Thanks - should get fixed in automake14-1.4p6-7.