Law School Resources

American Trading and Production Corp. v. Fishbach & Moore, (1970)

1. American Trading and Production Corp. v. Fishbach & Moore, (1970); pg. 356, briefed 2/24/97

2. Facts: An exposition hall was destroyed by fire.  The plaintiffs are exhibitors who lost property.  Defendants are the corporate parent of a wholly owned subsidiary electrical contractor corporation which allegedly installed faulty wiring in the exposition hall.

3. Procedural Posture:  American Trading sued to pierce the corporate veil of the subsidiary electrical contracting corporation to get at the assets of the parent corporation.  Defendants move for summary judgment on the grounds that they are not liable under any theory.

4. Issue: Whether the wholly owned subsidiary corporation is a mere instrumentality of the parent corporation, thus entitling the plaintiffs to pierce the corporate veil.

5. Holding: No.

6. Reasoning:  While stock control and common directors and officers are generally prerequisites for application of the instrumentality rule, they are not themselves sufficient to bring the rule into operation.  There must also be some “direct intervention” by the parent, and the actual exercise of control.  Here, that control is lacking.  The undisputed facts clearly show that the subsidiary is a separate corporational entity, and all formalities as to its operation have been observed.  The separation of the parent and the subsidiary is scrupulously maintained.  Furthermore, there are no equitable considerations that would justify piercing the corporate veil here, even if the subsidiary were the mere instrumentality of the parent.