Zaist v. Olson
(Conn. 1967)
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(Conn. 1967)
- P owed 23K from EH (controlled by Olson), brings claim to pierce corporate veil and recover money from Olson
- Olson dominated and controlled EH, Olson, Inc, and his other corporate entities; transaction was done for the benefit of Olson and Olson, inc, not EH... if EH can’t pay it is because Olson hasn’t provided the money
- Three prong instrumentality test used
- Control not mere majority, but complete domination of finances, policy, and business practice such that corporate entity that entered into transaction had no mind of its own
- Control used to commit fraud or wrong
- Control and breach of duty must proximately cause the injury or loss
- Fraud prong suspicion derives from the fact that EH only contracted with parties under control of Olson, deal not at arms length; Olson doesn’t really care whether EH is profitable; he is assigning liability to EH and then reaping profit with Olsen, Inc.
- Justice would not be served by denying to the ’s the amount found due to them because of the inadequate resources of EH
- Zaist differs from a closely held corporation that is bad at business (i.e. making no profits)
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Interested in learning how to get the top grades in your law school classes? Want to learn how to study smarter than your competition? Interested in transferring to a high ranked school?
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