Answer:
Facts to this case
• Plaintiff leased his property to a corporation.
• The lease required tenants maintain the premises with repairs.
• The owner of the corporation sold his corporation to B.
• The plaintiff later saw defects in his property and contended that the new owner B should be held personally liable for the lease terms.
Case Issue
The issue is whether the new owner can be personally liable for breach in the lease terms.
Relevant Terms, Laws, and Cases
Corporation - a company that limits liability (owners lose their investment only) of their owners. Corporations are treated as a separate person from their owners; debts owed by the corporations are not necessarily owed by the owners.
Piercing the corporate veil - a tactic courts use to hold owners of limited liability companies personally liable for the company's debts. Courts consider factors such as:
• Fraud by owners
• Lack of corporate formalities (lack of meetings, no bookkeeping)
• Mingling assets between company and the shareholder
• Undercapitalization of business, etc.
Analysis and Conclusion
The court held for the new owners. They argued that:
• The owners can only be held personally liable when the corporate veil is pierced.
• The plaintiff failed to show any reason to pierce the corporate veil, instead the contrary was shown.
• For example, plaintiff admitted he undoubtedly contracted with a corporate party.
• The new owners pertained to corporate formalities, and there was a lack of showing of fraud.
Thus, the new owners can't be held personally liable for their corporation's debt.
Answer:
Facts to this case
• A shareholder of corporation C opened a new corporation O.
• The shareholder proposed the directors of corporation O to purchase C 's stocks at $19, when the value was only at $0.47.
Case Issue
The issue is whether the purchase is legitimate.
Relevant Terms, Laws, and Cases
Corporation - a company that limits liability (owners lose their investment only) of their owners. Corporations are treated as a separate person from their owners.
Analysis and Conclusion
Judgment against the shareholder, the court found a lack of fiduciary duty by the shareholder:
• The shareholder made an arbitrary high offer of $19 to C.
• The court found that when the shareholder was informed that C 's stock price was later to be reduced to less than $10.
• The shareholder did not inform O 's other owners of this information.
• Furthermore, the shareholder was a president at O and had a duty to disclose these pertinent information.
Thus, the court found that he had a conflict of interest and the purchase price of $19 had "no basis in fact".
Answer:
Facts to this case
• Two owners with equal share of their corporation wishes to dissolve it.
• The owners had a deadlock with disagreement on the business's management.
• Based on procedure set forth by the Revised Model Business Corporation Act (RMBCA) the court was unable to sell the corporation.
• The court proceeded to liquidate the corporation based on procedures of the RMBCA.
• One of the owners appealed to stop the liquidation of the corporation.
Case Issue
The issue is whether the corporation can be prevented from liquidation.
Relevant Terms, Laws, and Cases
Corporation - a company that limits liability (owners lose their investment only) of their owners. Corporations are treated as a separate person from their owners; debts owed by the corporations are not necessarily owed by the owners.
Piercing the corporate veil - a tactic courts use to hold owners of limited liability companies personally liable for the company's debts. Courts consider factors such as:
• Fraud by owners
• Lack of corporate formalities (lack of meetings, no bookkeeping)
• Mingling assets between company and the shareholder
• Undercapitalization of business, etc.
Revised Model Business Corporation Act (RMBCA) - a set of laws adopted by some states in the U.S. concerning corporations.
RMBCA Section 14.30 - concerns the dissolution of a corporation.
Analysis and Conclusion
The court affirmed the liquidation procedures. They argued that:
• The owners were in a deadlocked position with both having equal shares in the company.
• The procedure set by their state's RMBCA allowed sale of the company to the highest bidder.
• However, this sale failed.
• Then, the proper procedure was for the court to commence liquidation.
Liquidation of the business w as affirmed.