Summary
holding shareholder liable on the contract at issue when, among other factors, he “gave his personal guarantee that the project would be completed, even if he had to pay for it out of his own pocket”
Summary of this case from Edmunds v. Delta Partners, L.L.C.Opinion
64455.
DECIDED OCTOBER 28, 1982.
Action for damages. Hall State Court. Before Judge Smith.
Douglas E. Smith, for appellants.
James M. Walters, for appellee.
Appellee Walter M. Luke brought this action against appellants James Saxton and Byron M. Forrester, d/b/a Forrester and Saxton, and Forrester Saxton, Inc., seeking damages for breach of contract. This action was tried before a jury which returned a verdict in the amount of $5,000.00 in favor of appellee against all appellants. The sole error enumerated on appeal is the trial court's denial of a motion for directed verdict in favor of the individual appellants, Saxton and Forrester.
Forrester Saxton, Inc. was incorporated on October 22, 1979. Two days later, on October 24, appellee accepted a proposal for a paving project submitted by the corporation by Charles Hooper, an employee thereof. The paving project was not completed before the corporation ceased operations in early 1980. The issue presented for resolution by this appeal is whether there was any evidence to support the verdict against the individual appellants, Saxton and Forrester. The thrust of appellants' arguments here is that the subject contract was solely between appellee and the corporation, Forrester Saxton, Inc. Thus, they contend that they, as principals of the corporation, can not be held personally liable for a debt of the corporation.
The evidence of record was conflicting and will be construed in a light most favorable to upholding the verdict. Smith v. Hornbuckle, 140 Ga. App. 871 (2) ( 232 S.E.2d 149) (1977). While documentary evidence showed its incorporation, testimony revealed Forrester Saxton, Inc. to be merely a paper corporation whose existence was largely ignored by the individual appellants. Although Forrester paid Saxton for an interest in paving equipment owned by Saxton, such equipment was never transferred to the corporation. No stock was issued by the corporation, and no evidence of any corporate meetings was produced. Although appellant Saxton worked on appellee's project, there was no evidence which showed him to be doing so as an employee of the corporation. Although checks were made out to the corporation, appellant Forrester endorsed them individually without any designation as president of the corporation. Finally, Forrester gave his personal guarantee that the project would be completed, even if he had to pay for it out of his own pocket.
"A corporation is a fictional legal entity, completely separate and distinct from its officers, stockholders, and shareholders. [Cit.] The advantageous legal concept [is] that it limits the liabilities of its members. [Cit.] However, `(u)sing such expressions as "piercing the corporate veil," or "looking at the substance rather than at the forms," or "disregarding the corporate fiction," the courts are constantly demonstrating a willingness to disregard the separateness of the entity of a corporation where such corporation has overextended its privileges in the use of the corporate entity to defeat justice, to perpetrate fraud, or to evade statutory, contractual or tort responsibility.'" Bone Const. Co. v. Lewis, 148 Ga. App. 61, 62-3 ( 250 S.E.2d 851) (1978); Casey v. Carrollton Ford Co., 152 Ga. App. 105 (1) ( 262 S.E.2d 255) (1979). The evidence in this case did not demand a verdict in favor of either individual appellant. DeJong v. Stern, 162 Ga. App. 529 (3) ( 292 S.E.2d 115) (1982).
Judgment affirmed. Deen, P. J., and Sognier, J., concur.