Walkovszky v. Carlton (N.Y.1966)
FACTS
Defendant was an individual shareholder in several corporations, each of which
owned only two taxi cabs.
RULES
“Broadly speaking, the courts will disregard the corporate form whenever necessary
to prevent fraud or to achieve equity.”
“It is one thing to assert that a corporation is a fragment of a larger corporate
combine which actually conducts the business … It is quite another to claim that the
corporation is a “dummy” for its individual stockholders who are in reality carrying
on corporate ends … Either circumstance would justify treating the corporation as
an agent and piercing the corporate veil to reach the principal but a different result
would follow in each case. In the first, only a larger corporate entity would be held
financially responsible … while in the other the stockholder would be personally
liable … Either the stockholder is conducting the business in his individual capacity
or he is not.”
NOTES:
Dissent sees the equities of the case in terms of the legislature’s intent in granting
limited liability.
Note: the individual corporations could have been sued as partners.
FACTS
Defendant was an individual shareholder in several corporations, each of which
owned only two taxi cabs.
RULES
“Broadly speaking, the courts will disregard the corporate form whenever necessary
to prevent fraud or to achieve equity.”
“It is one thing to assert that a corporation is a fragment of a larger corporate
combine which actually conducts the business … It is quite another to claim that the
corporation is a “dummy” for its individual stockholders who are in reality carrying
on corporate ends … Either circumstance would justify treating the corporation as
an agent and piercing the corporate veil to reach the principal but a different result
would follow in each case. In the first, only a larger corporate entity would be held
financially responsible … while in the other the stockholder would be personally
liable … Either the stockholder is conducting the business in his individual capacity
or he is not.”
NOTES:
Dissent sees the equities of the case in terms of the legislature’s intent in granting
limited liability.
Note: the individual corporations could have been sued as partners.
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