Friday, October 12, 2012

Zaist v. Olson case brief

Zaist v. Olson
(Conn. 1967)

        1. P owed 23K from EH (controlled by Olson), brings claim to pierce corporate veil and recover money from Olson
          1. 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
          2. Three prong instrumentality test used
            1. 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
            2. Control used to commit fraud or wrong
            3. Control and breach of duty must proximately cause the injury or loss
          3. 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.
          4. Justice would not be served by denying to the ’s the amount found due to them because of the inadequate resources of EH
          5. Zaist differs from a closely held corporation that is bad at business (i.e. making no profits)


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