Brief Fact Summary. DeWitt Truck Brokers (P) sought to impose individual liability on Flemming (D) by piercing the corporate veil of his company, Ray Flemming Fruit Co. (D).
Synopsis of Rule of Law. A court will pierce the corporate veil to eliminate injustices or inequitable consequences.
Issue. Will a court â€œpierce the corporate veilâ€ to eliminate injustices or inequitable consequences?
Held. (Russell, J.) Yes. A court will pierce the corporate veil to eliminate injustices or inequitable consequences. Significant to the decision (particularly in the case of a one-man or closely held corporation) is whether the corporation was grossly undercapitalized in corporate operation. Here, the combination of factors diminishing the corporate image of the entity allowed it be dismissed as a separate legal entity. Affirmed.
But when substantial ownership of all the stock of a corporation in a single individual is combined with other factors clearly supporting disregard of the corporate fiction on grounds of fundamental equity and fairness, courts have experienced little difficulty and have shown no hesitancy in applying what is described as the alter ego or instrumentality theory in order to cast aside the corporate shield and to fasten liability on the individual stockholder.View Full Point of Law