De Witt Truck Brokers, Inc. v. W. Ray Flemming Fruit Co.

De Witt Truck Brokers, Inc. v. W. Ray Flemming Fruit Co.

Opinion

 [*683]  RUSSELL, CIRCUIT JUDGE:

In this action on debt, the plaintiff seeks, by piercing the corporate veil under the law of South Carolina, to impose individual liability on the president of the indebted corporation individually. ² The District Court, making findings of fact which may be overturned only if clearly erroneous, pierced the corporate veil and imposed individual liability. The individual defendant appeals. We affirm.

At the outset, it is recognized that ] a corporation is an entity, separate and distinct from its officers [**2]  and stockholders, and that its debts are not the individual indebtedness of its stockholders. This is expressed in the presumption that the corporation and its stockholders are separate and distinct.  Fishman v. State (1973), 128 Ga. App. 505, 197 S.E. 2d 467, 473. And this oft-stated principle is equally applicable, whether the corporation has many or only one stockholder. ³ [**4]  But this concept of separate entity is merely a legal theory, "introduced for purposes of convenience and to subserve the ends of justice," ⁴ and the courts "decline to recognize [it] whenever recognition of the corporate form would extend the principle of incorporation 'beyond its legitimate purposes and [would] produce injustices or inequitable consequences.'" Krivo Industrial Supp. Co. v. National Distill. & Chem. Corp. (5th Cir. 1973), 483 F.2d 1098, 1106, modified factually 490 F.2d 916; Sell v. United States (10th Cir. 1964), 336 F.2d 467, 472; Stone v. Eacho (4th Cir. 1942), 127 F.2d 284, 288-9, cert. denied, 317 U.S. 635, 87 L. Ed. 512, 63 S. Ct. 54 (1942); Jennings v. Automobile Sales Co. (1917), 107 S.C. 514, 515, 93 S.E. 188. [**3]  Accordingly, "in an appropriate case and in furtherance of the ends of justice," the corporate veil will be pierced and the corporation and its stockholders "will be treated as identical." 18 Am. Juris. 2d at 559.

] This power to pierce the corporate veil, though, is to be exercised "reluctantly" ⁵ [**5]  and "cautiously" ⁶ and the burden of establishing a basis for the disregard of the corporate fiction rests on the party asserting such claim. Coryell v. Phipps (5th Cir. 1942), 128 F.2d 702, 704, aff., 317 U.S. 406, 87 L. Ed. 363, 63 S. Ct. 291 (1943); Aamco Automatic Transmissions, Inc. v. Tayloe (E.D. Pa. 1973), 368 F. Supp. 1283, 1299; Haynes v. Champagne Tile Corporation  [*684]  (E.D. La. 1964), 228 F. Supp. 157, 159.

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