Loughran v. Reynolds

DRAPEAU, J. pro tem.

In this action for damages for breach of contract, judgment was rendered in favor of a defendant in his individual capacity, after the trial court sustained a demurrer to plaintiff’s first amended complaint without leave to amend. The effect of the judgment was to leave a corporate defendant in the case and to release an individual sued on the same cause of action.

There is no question but that the complaint states a cause of action as to damages. The only possible contention is whether or not the facts alleged in the complaint apply to the individual defendant and are sufficient as a pleading to establish that the cause of action as against him arose out of his operations through the agency of a corporation as his

alter ego.

The complaint alleges that all of the subscribed, issued, and outstanding capital stock of the corporate defendant was three shares and that the individual defendant was the owner of all of it; that the corporate board of directors consisted of three persons, the individual defendant, his wife, and his daughter; that the individual defendant was the sole and exclusive owner of all of the business and assets of the corporate defendant; that he alone controlled the corporation, its business, property and affairs; that the corporation “has been and is now a mere shell and naked corporate framework,” which the individual defendant used “for the conduct of his personal business, property, and affairs.” It is next alleged that the corporation was created and continued in existence pursuant to a plan on the part of the individual defendant whereby he diverted the income, revenue, and profits thereof to his own use, in order to avoid his individual obligations, and in particular his individual obligation as alleged in the complaint. For cause of action for damages against both defendants, the complaint alleges the hiring of the plaintiff at an agreed compensation, refusal on the part of the defendants to permit him to continue with the work for which he was hired, and damages

ex contractu

in the sum of $39,264.

The complaint states a cause of action as against both the corporate defendant and the individual defendant operat

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