Kinney Shoe Corp v Polan

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Kinney Shoe Corp v Polan
Citation(s) 939 F2d 209 (4th Cir 1991)
Case opinions
Chapman J

Kinney Shoe Corp v Polan, 939 F2d 209 (4th Cir 1991) is a US corporate law case, concerning piercing the corporate veil.

Facts[edit]

Kinney Shoe Corp sued Mr Lincoln M Polan to pay money outstanding on a sub-lease by the "Industrial Realty Company". Polan wholly owned "Industrial", but had never held any corporate meetings or elected officers.

The question is whether Kinney could pursue Mr Polan for the debt.

Judgment[edit]

Chapman J quoted from Sanders v Roselawn Memorial Gardens, Inc.[1] that the "fiction" of separate legal personality,

It emphasized that each case should be decided on its facts, and pointed to a number of relevant factors.

  • that Industrial was not adequately capitalized (no capital had been paid in)[2]
  • no corporate formalities, such as taking minutes or electing officers, had been observed[3]
  • it appeared that the company was deliberately used to carry out transactions to benefit another of Mr Polan's companies, which had assets but would be shielded from liability

He concluded by saying,

See also[edit]

Notes[edit]

  1. ^ 152, W. Va 91, 159 S.E.2d 784, 786 (1968)
  2. ^ quoting, Laya v Erin Homes, Inc., 352 SE2d 93, 101-2 (W Va 1986) "grossly inadequate capitalization combined with disregard of corporate formalities, causing basic unfairness, are sufficient to pierce the corporate veil in order to hold the shareholder(s) actively participating in the operation of the business personally liable for a breach of contract to the party who entered into the contract with the corporation."
  3. ^ quoting, Labadie Coal Co v Black 672 F2d 92, 96-8 (DD Cir 1982) "Individuals who wish to enjoy limited personal liability for business activities under a corporate umbrella should be expected to adhere to the relatively simple formalities of creating and maintaining a corporate entity"

References[edit]

External links[edit]