holding that controlling stockholder and related corporation were liable under "alter ego" theory
How later courts described this case
- holding that controlling stockholder and related corporation were liable under "alter ego" theory
- “[t]here must be such domination of finances, policies and practices that the controlled corporation has, so to speak, no separate mind, will or existence of its own and is but a business conduit for its principal” [internal quotation marks omitted]
- “There must be such domination of finances, policies and practices that the controlled corporation has, so to speak, no separate mind, will or existence of its own and is but a business conduit for its principal.”
- "[W]hen the corporation functions as an entity in the normal manner contemplated and permitted by law ..., there is nothing insidious in ... interlocking directorates or identity of officers."
Written by the judges who cited it.
The opinion
House, J.
(dissenting). I have no quarrel with the statement of legal principles expounded in the majority opinion, but I do not agree that the facts found by the referee support a conclusion that the control which the defendants Martin Olson and Martin Olson, Inc., undoubtedly did exercise over The East Haven Homes, Inc., was used by them or *580 either of them “to commit fraud or wrong, to perpetrate the violation of a statutory or other positive legal duty, or a dishonest and unjust act in contravention of” the plaintiffs’ legal rights. As the majority opinion recognizes, proof that the controlled corporation was so used is a condition precedent to the imposition of liability on the controlling individual or corporation under the instrumentality rule. “It is true that courts will disregard legal fictions, including that of a separate corporate entity, when they are used for fraudulent or illegal purposes. Unless something of the kind is proven, however, to do so is to act in opposition to the public policy of the state as expressed in legislation concerning the formation and regulation of corporations.” Kulukundis v. Dean Stores Holding Co., 132 Conn. 685, 689 , 47 A.2d 183 ; see Humphrey v. Argraves, 145 Conn. 350, 354 , 143 A.2d 432 ; Hoffman Wall Paper Co. v. Hartford, 114 Conn. 531, 534 , 159 A. 346 ; Bartle v. Home Owners Cooperative, Inc., 309 N.Y. 103, 106 , 127 N.E.2d 832 . The referee who heard the evidence in this case did not find that this essential element had been proven, nor, in my opinion, do the facts found support a conclusion that it existed. Accordingly, I believe that there was error in the judgment and it should be reversed.