Opinion ID: 2134995
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Heading: General Negligence Principles.

Text: As a general rule, corporate officers are individually liable to third parties for their torts, even when occurring while they act in their official corporate capacity. Grefe v. Ross, 231 N.W.2d 863, 868 (Iowa 1975); Luther v. National Inv. Co., 222 Iowa 305, 308-09, 268 N.W. 589, 590 (1936); Stambaugh v. Haffa, 217 Iowa 1161, 1163, 253 N.W. 137, 138 (1934). Our court has upheld the imposition of personal liability against corporate officers in cases involving instances of fraud, or actions for the wrongful conversion of personal property. See Briggs Transp. Co. v. Starr Sales Co., 262 N.W.2d 805, 808-09 (Iowa 1978); Grefe, 231 N.W.2d at 868; Luther, 222 Iowa at 308-09, 268 N.W. at 590; Stambaugh, 217 Iowa at 1163, 253 N.W. at 138. However, there exists a relative dearth of Iowa case law regarding the extent to which corporate officers are personally liable for their tortious acts. Haupt contends all of the defendants in this case are individually liable for the torts alleged in her petition regardless of whether they acted within or without the scope of their employment. Defendants contend they are not liable for negligent torts occurring within the scope of their employment. Absent fraud, defendants argue, corporate officers cannot be held individually liable in tort for actions occurring while acting on behalf of a corporate entity. The district court held that only where evidence of fraud exists may individual liability be imposed against corporate officers or directors. At the outset, it is important to define the precise issue before us. Haupt is not asking this court to pierce the corporate veil. That doctrine is primarily used to impose personal liability upon the owners, directors, or officers of the corporation attempting to use the corporate entity as an intermediary to perpetrate fraud or promote injustice. Briggs Transp., 262 N.W.2d at 810. Nor is our analysis in Unertl v. Bezanson applicable to our analysis of this case. Unertl v. Bezanson, 414 N.W.2d 321 (Iowa 1987). In Unertl we said: The rule generally followed by the authorities is that a creditor of a corporation may not maintain a personal action at law against its officers or directors who have, by their mismanagement or negligence, committed a wrong against the corporation to the consequent damage of the creditor. Unertl, 414 N.W.2d at 324. Taldine Thies was not a creditor of CSB. Moreover, Haupt is not alleging injury caused by the commission of a wrong by an officer against CSB. Rather, Haupt alleges the defendants committed a wrong against Taldine Thies, causing her direct loss. The rights of creditors to recover against corporate officers for torts committed by corporate officers against the corporation is a much different legal question than that presented by Haupt in her appeal. See 3A William M. Fletcher, Cyclopedia of the Law of Private Corporations § 1134, at 265 (1986) [hereinafter Fletcher]; see also Frances T. v. Village Green Owners Ass'n, 42 Cal.3d 490, 229 Cal. Rptr. 456, 723 P.2d 573, 581 (1986). Other jurisdictions have decided that corporate officers can be held personally liable for their negligent acts. See Fletcher § 1137, at 276, § 1161, at 370. Many courts, however, posit the existence of liability on a finding of misfeasance or malfeasance, but distinguish nonfeasance of duty. See e.g., Galie v. RAM Assocs. Management Servs., Inc., 757 P.2d 176, 177 (Colo.App.1988) (positing liability on finding of misfeasance); Mathis v. Yondata Corp., 125 Misc.2d 383, 480 N.Y.S.2d 173, 176 (N.Y.Sup.Ct.1984). See generally Fletcher § 1161, at 370. The trend among courts is to discard such distinctions, in favor of utilizing a general negligence standard as the test for imposing individual liability against corporate officers for negligent acts committed against third parties. See Cherry v. Ward, 204 Ga.App. 833, 420 S.E.2d 763, 765 (1992); Berry v. Aetna Casualty & Sur. Co., 240 So.2d 243, 247 (La.App.1970). See generally Fletcher § 1171, at 370-71; see also Pirtle's Adm'x v. Hargis Bank & Trust Co., 241 Ky. 455, 44 S.W.2d 541, 546 (1931); Hoeverman v. Feldman, 220 Wis. 557, 265 N.W. 580, 582 (1936). In 1921 our court noted that status as an agent does not insulate an agent from liability for wrongful acts. E.H. Emery & Co. v. American Refrigerator Transit Co., 193 Iowa 93, 97, 184 N.W. 750, 751 (1921). We said: The question of the liability of an agent to a third person for negligence has been frequently before the courts, and there is much confusion and lack of uniformity in the authorities. Cases have frequently arisen where the duty which the agent owed to the public, rather than to an individual, was involved, and liability determined because of such duty. In a general way, it may be said that an agent is liable to third parties for his own tortious acts, the same as any other person. The fact of the agency neither increases nor diminishes such liability. In determining the liability of an agent to third parties for tortious acts directly connected with and growing out of the agency, the courts have recognized a distinction between malfeasance, misfeasance, and nonfeasance; but the line of demarcation has frequently been lost sight of, and reconciliation of the authorities is utterly impossible. Id. at 97, 184 N.W. at 751-52 (citations omitted.) No less difficulty is present now in establishing a line of demarcation despite attempts by the courts since Emery was decided. In determining liability of a corporate officer for negligence, it is difficult to logically support a legal distinction that exonerates a corporate officer's act of nonfeasance while exacting retribution for acts of misfeasance or malfeasance. In practice, applying such labels may be more descriptive and thus conclusory than the facts would justify as a difference. Accordingly, we join the modern trend of jurisdictions applying the general negligence standard, rather than predicating individual corporate officer liability for negligence on a prerequisite finding of misfeasance or malfeasance.