Kinney Shoe Corp v Polan

Kinney Shoe Corp v Polan
Citation(s) 939 F2d 209 (4th Cir 1991)
Case opinions
Chapman J

Kinney Shoe Corp v Polan, 939 F2d 209 (4th Cir 1991) is a US corporate law case, concerning piercing the corporate veil.

Facts

Kinney Shoe Corp sued Mr Lincoln M Polan to pay money outstanding on a sub-lease by the "Industrial Realty Company". Polan wholly owned "Industrial", but had never held any corporate meetings or elected officers.

The question is whether Kinney could pursue Mr Polan for the debt.

Judgment

Chapman J quoted from Sanders v Roselawn Memorial Gardens, Inc.[1] that the "fiction" of separate legal personality,

"should be disregarded when it is urged with an intent not within its reason and purpose, and in such a way that its retention would produce injustices or inequitable consequences."

It emphasized that each case should be decided on its facts, and pointed to a number of relevant factors.

He concluded by saying,

This corporation was no more than a shell - a transparent shell. When nothing is invested in the corporation, the corporation provides no protection to its owner; nothing in, nothing out, no protection. If Polan wishes the protection of a corporation to limit his liability, he must follow the simple formalities of maintaining the corporation. This he failed to do, and he may not relieve his circumstances by saying Kinney should have known better.

See also

Notes

  1. 152, W. Va 91, 159 S.E.2d 784, 786 (1968)
  2. quoting, Laya v Erin Homes, Inc., 352 SE2d 93, 101-2 (W Va 1986) "grossly inadequate capitalization combined with disregard of corporate formalities, causing basic unfairness, are sufficient to pierce the corporate veil in order to hold the shareholder(s) actively participating in the operation of the business personally liable for a breach of contract to the party who entered into the contract with the corporation."
  3. quoting, Labadie Coal Co v Black 672 F2d 92, 96-8 (DD Cir 1982) "Individuals who wish to enjoy limited personal liability for business activities under a corporate umbrella should be expected to adhere to the relatively simple formalities of creating and maintaining a corporate entity"

References

External links

This article is issued from Wikipedia - version of the Wednesday, August 13, 2014. The text is available under the Creative Commons Attribution/Share Alike but additional terms may apply for the media files.