Opinion ID: 1281617
Heading Depth: 1
Heading Rank: 4

Heading: dunmar inn account

Text: The trial court entered judgment in favor of the Dunmar Inn and against Leslie Bergh, Milton Bergh, Raymond Bergh, Khybur Investments, and Douglas P. Petersen for the amount owing to the Dunmar Inn on its account with Billys, Inc. on the theory that fraud rendered this entire deal void from the beginning. Appellants argue that the court erred in finding fraud liability in connection with this claim. We agree. When John and Dianne Mills were defrauded, they were not acting as agents of the Dunmar Inn. When they later convinced the Dunmar Inn to allow Billys, Inc. to run up an open account, they had already become aware of the true financial status of Billys, Inc. The Dunmar Inn's business relationship with Billys, Inc. did not come about through misrepresentation. Instead, it came about through the desire of its partners to try to help out John and Dianne Mills after the fraud had been committed. In the alternative, the Dunmar Inn pursued a contract claim on the open account. While this theory could clearly succeed against Billys, Inc., the shareholders of that corporation cannot be held individually liable unless the corporate identity is disregarded. In our view, the evidence in this case justifies disregard of the corporate entity. In AmFac Mechanical Supply Company v. Federer, Wyo., 645 P.2d 73 (1982), we stated that where a showing of actual fraud is made, that ground alone may be sufficient for piercing the corporate veil. Id. at 79. In the present case, appellees demonstrated actual fraud in the capitalization of the corporation. Even though the Dunmar Inn was not defrauded, the evidence supports the trial court's conclusion that it would not have entered and continued its contract with Billys, Inc. in the absence of appellants' fraudulent acts. We will not reward appellants' fraud by allowing them to enjoy the benefits of corporate status. We therefore affirm the trial court's finding of liability against Billys, Inc. and its individual shareholders, Leslie Bergh and Douglas Petersen, on the claim concerning the Dunmar Inn account. We must reverse the court's finding of individual liability against Khybur Investments, Raymond Bergh and Milton Bergh on that claim, however, as those parties were not shareholders in Billys, Inc. AFFIRMED IN PART AND REVERSED IN PART.