Opinion ID: 2042465
Heading Depth: 1
Heading Rank: 6

Heading: Personal Liability of Chase.

Text: In a rather summary fashion, defendants assert that corporate officers are immune from individual liability for corporate acts, and that because Chase was acting on behalf of MAC, the trial court could not hold Chase liable in this case. They contend that as president of MAC, Chase's conduct was simply a matter of selling on behalf of MAC and making the arrangements incidental to that sale. Defendants argue that the only instances in which Chase could be held liable for his acts as a corporate president are circumstances where the notion of a legal entity is used to justify wrong, protect fraud, or defend crimethe basic 'piercing the corporate veil' doctrine. In response, Luedeke contends that liability was properly imposed on Chase because, in acting as an agent, he is personally liable to a third person for his own negligence or his own misrepresentation. The trial court stated its basis for holding Chase personally liable in its findings of fact and conclusions of law. The court's second finding states: 2. The plaintiffs purchased from Robert Patzer, Monroe Chase, and Midwest Air Center, Inc., a used Callair spray plane which had been represented to the plaintiffs by Monroe Chase, as an agent of Robert Patzer and as the agent of Midwest Air Center, Inc., as being ready to go. The corresponding conclusion is as follows: 1. There were express warranties made by Monroe Chase, personally and as agents (sic) for Robert Patzer and Midwest Air Center, Inc. The trial court's decision indicates that the liability of Chase was based on an agency theory. However, the court awarded damages based on the breach of warranties arising out of the contract claims. The liability of an agent to a third party is limited. Generally, an agent can be held liable to a third party only for his or her own separate tortious acts, and that obligation is founded on the common law principle that every person must act in a manner so as not to injure another. 3 Am.Jur.2d Agency § 309 (1986); Harding v. Ohio Casualty Ins. Co., 230 Minn. 327, 41 N.W.2d 818 (1950); Herzog v. Mittleman, 155 Or. 624, 65 P.2d 384 (1937). An agent cannot, however, be held liable as a contracting party for breach of the contract between the principal and the third party unless the contract itself contains language charging the agent personally. 3 Am.Jur.2d Agency § 304. Here, the only liability imposed by the trial court was contractual in nature, and the trial court concluded that [n]o fraud was established and denied recovery to Luedeke based on his tort claims. Furthermore, North Dakota law on this point is well settled. A corporation is distinct from its directors and officers, and they are generally not personally liable for their actions when acting for and on behalf of the corporation. Dangerud v. Dobesh, 353 N.W.2d 328, 331 n. 2 (N.D.1984); Hilzendager v. Skwarok, 335 N.W.2d 768, 774 (N.D.1983); Danks v. Holland, 246 N.W.2d 86, 90 (N.D.1976). The corporate entity can be disregarded to impose personal liability on officers and directors only when the notion of legal entity is used to defeat public convenience, justify wrong, protect fraud, or defend crime[.] Hilzendager, 335 N.W.2d at 774 (citation omitted). Here, the trial court made no findings indicating the existence of any of the factors necessary to disregard the corporate entity and hold an officer personally liable. See Id. There is no basis in the record for holding Chase personally liable, and the judgment of the trial court against Monroe Chase personally is reversed.