PATRICIA RUSSELL, APPELLANT,
v.
CHARLES GANS AND MARCELLA GANS, HIS WIFE, APPELLEES
AI-generated. These summaries, headnotes, and key points are machine-generated and may contain errors or omissions. Always verify against the full opinion text below. Not legal advice.
Patricia Russell appeals from an order impleading her as an individual defendant in a supplementary proceeding to satisfy a judgment against her corporation. The court held that appellees failed to make a prima facie case for piercing the corporate veil, requiring a showing of fraud or improper use of corporate funds, not merely that Russell owned and controlled the corporation.
The appellees failed to make a sufficient prima facie case for piercing the corporate veil. At minimum, they were required to show fraud, or circumstances leading to fraud, or that corporate funds were improperly funneled to Russell's personal use. Mere ownership and control of a corporation does not establish it as the alter ego of its owner.
[1] A corporate veil will not be pierced unless it is shown that the corporation was organized or employed to mislead creditors or to perpetrate a fraud upon them.
[2] Ownership and control of a corporation's stock structure do not, in themselves, establish that the corporate entity is a fraud or the alter ego of its owner for the purpo…
Previewing 2 of 6 headnotes on this case. FLexlaw’s editorially structured points of law — every proposition, pinpointed — are reserved for members.
Join FLexlaw to unlock all legal intelligence“the corporate veil will not be penetrated either at law or in equity unless it is shown that the corporation was organized or employed to mislead creditors or to work a fraud upon them”
Establishes the foundational requirement for piercing the corporate veil in Florida law
Previewing 1 of 3 key quotes on this case — the court’s exact language, pinpointed for members.
Join FLexlaw to unlock all legal intelligenceCharles and Marcella Gans obtained a judgment against Patricia Russell Designs, Inc., a Florida corporation wholly owned and controlled by Patricia Ru…
The full statement of facts, procedural history, and disposition for this case are member content.
Join FLexlaw to unlock all legal intelligence© FLexlaw, Inc. — AI-generated enrichments are proprietary. All rights reserved.
Explore caselaw by topic → Browse Impleader cases and more on FLexlaw
This is an interlocutory appeal from an order impleading Patricia Russell as individual defendant and issuance of a rule to show cause why a judgment held by Charles Gans and Marcella Gans against Patricia Russell Designs, Inc., a Florida corporation, should not be satisfied out of the assets of Patricia Russell.
The question involved is whether or not the appellees made a sufficient prima facie case for a rule to show cause to issue. It is this court’s opinion that they did not. Specifically, some showing of fraud should have been made or at least a showing that may lead to fraud or a showing that the funds of the corporation were improperly funneled into Patricia Russell’s control for her personal use.
It is well established that the corporate veil will not be penetrated either at law or in equity unless it is shown that the corporation was organized or employed to mislead creditors or to work a fraud upon them. Delta Air Lines, Inc. v. Wilson, Fla.App.1968, 210 So.2d 761 and cases cited therein.
Further, the mere fact that Patricia Russell owns and controls the stock structure of Patricia Russell Designs, Inc. does not lead inevitably to the conclusion that the corporate entity is a fraud or that it is necessarily the alter ego of Patricia Russell to the extent that the debts of the corporation should be imposed upon her personally. See Advertects, Inc. v. Sawyer Industries, Inc., Fla.1955, 84 So.2d 21.
Our decision is somewhat governed by Riley v. Fatt, Fla.1950, 47 So.2d 769, which is factually similar to the case sub judice. There, Alonzo Riley was the president and sole stockholder of Riley Building, Inc. which was inactive. The corporation failed to maintain any records and keep books. A rule to show cause was issued. However, the Florida Supreme Court reversed and held that there was no indication in the record that the corporation was organized as a subterfuge or for the purpose of enabling its members to escape, avoid or evade personal responsibility other than in a proper and legal manner. This language is equally applicable to the case at bar. Every indication is that throughout the course of the transaction from which the lawsuit and judgment arose, Charles and Marcella Gans considered that they were dealing with Patricia Russell Designs, Inc., a corporate entity, and that they treated it as such even up to the time of filing their affidavit in this supplementary proceeding. In the absence *272of pleading and proof that the corporation was organized for an illegal purpose or to work a fraud upon them, the Gans cannot be heard to question the corporate existence but must confine their efforts to the remedies provided by law for satisfying their judgment from the assets of the corporation, if any can be found. See Riley, supra and cases cited therein.
Similarly we find from the record no evidence upon which one might reasonably conclude that Mrs. Russell disregarded the separate corporate existence of her wholly owned company. See Sapiro v. Levenstein, Fla.App.1972, 266 So.2d 40.
Accordingly, the order appealed from is, therefore, reversed without prejudice to the appellees to inquire further into the whereabouts of any assets of the corporation if they can be found or to pursue such other appropriate remedy in law or in equity as may to appellees seem advisable and as the complete facts may justify.
It is so ordered.
Cases With Similar Vibessemantic neighbors from the corpus
Citator
Cited By
-
Ryan v. Wren, 413 So. 2d 1223 (Fla. 2d DCA 1982)…corporation, but this evidence does not reach the threshold necessary to show that the corporation was organized or employed for fraudulent purposes or was Ryan’s alter ego. It was therefore improper to hold Ryan personally liable. Russell v. Gans, 275 So. 2d 270 (Fla. 3d DCA 1973). Accordingly, the final judgment is REVERSED as to the award of punitive damages against Celtic and Ryan, REVERSED as to the award of compensatory damages against Ryan, and AFFIRMED as to the award of compensatory damages plus in…
-
Anderson v. Hillsborough Sheet Metal, Inc., 513 So. 2d 1359 (Fla. 2d DCA 1987)…hat absent a showing of fraud or reliance upon the credit of an individual, a corporate officer is not liable for the corporate debts. In support of his argument Anderson cites Spector v. Hart, 139 So. 2d 923 (Fla. 2d DCA 1962), and Russell v. Gans, 275 So. 2d 270 (Fla. 3d DCA 1973). Both cases, however, were decided prior to the enactment of Florida’s General Corporation Act in 1975. The act provides that “All persons who assume to act as a corporation without authority to do so shall be jointly and severall…
-
Zeph Futch v. S. Stores, Inc., 380 So. 2d 444 (Fla. 1st DCA 1979)…editors or to work a fraud upon them. Delta AirLines, Inc. v. Wilson, 210 So. 2d 761 (Fla. 3d DCA 1968); Riley v. Fatt, 47 So. 2d 769 (Fla.1950). There is no showing of fraud in the record here. Furthermore, the case is analogous to Russell v. Gans, 275 So. 2d 270 (Fla. 2d DCA 1973) in which the court held that where the plaintiffs attempting to collect a debt there considered at all times that they were dealing with a corporate entity, they could not question the corporate existence in the absence of pleadin…
Authorities Cited
- Advertects, Inc. v. Sawyer Indus., Inc., 84 So. 2d 21 (Fla. 1955)
- Riley v. Fatt, 47 So. 2d 769 (Fla. 1950)
- DELTA AIR Lines, Inc. v. Wilson, 210 So. 2d 761 (Fla. 3d DCA 1968)
- Sapiro v. Levenstein, 266 So. 2d 40 (Fla. 3d DCA 1972)