Court Opinion

ID: 9580876
Source: CourtListenerOpinion
Date Created: 2023-08-21 22:09:50.684175+00
Date Added: 2024-06-11T13:36:34.758685
License: Public Domain

HENDERSON, Justice
(dissenting).
This corporation has no separate existence. It is the instrumentality of three shareholders, officers, and employees. Here, the corporate fiction should be dis*143regarded. The factors of Curtis v. Feurhelm, 335 N.W.2d 575 (S.D.1983) were disregarded by the trial court.
A corporate shield was here created to escape the holding of this Court relating to an individual’s liability in a dram shop action. Thus, our holdings in Baatz v. Arrow Bar, 426 N.W.2d 298 (S.D.1988), Selchert v. Lien, 371 N.W.2d 791 (S.D.1985) and Walz v. City of Hudson, 327 N.W.2d 120 (S.D.1982) have been totally circumvented.
As a result of this holding, the message is now clear: Incorporate, mortgage the assets of a liquor corporation to your friendly banker, and proceed with carefree entrepreneuring.
In both of these briefs, the parties argue, all in all, about the facts. One may reasonably conclude that there exists questions of fact. See, Deuchar v. Foland Ranch, Inc., 410 N.W.2d 177, 181 (S.D.1987) holding that: “Issues of negligence or related matters are ordinarily not susceptible of summary adjudication.”
Baatzes had their case thrown out of court when many facts were in dispute. I am reminded of the old lawyer, before a jury, who expressed his woe of corporations. He cried out to the jury: “A corporation haveth no soul and its hind end you can kicketh not.”
FACTS JUSTIFYING JURY TRIAL
Peggy Baatz, a young mother, lost her left leg; she wears an artificial limb; Kenny Baatz, a young father, has had most of his left foot amputated; he has been unable to work since this tragic accident. Peggy uses a cane. Kenny uses crutches. Years have gone by since they were injured and their lives have been torn asunder.
Uninsured motorist was drunk, and had a reputation of being a habitual drunkard; Arrow Bar had a reputation of serving intoxicated persons. (Supported by depositions on file). An eyewitness saw uninsured motorist in an extremely intoxicated condition, shortly before the accident, being served by Arrow Bar. Therefore, a question of fact exists as to liability being violated under SDCL 35-4-78(2). This evidence must be viewed most favorably to the nonmoving party. American Indian Agr. Credit Consortium, Inc. v. Ft. Pierre Livestock, Inc., 379 N.W.2d 318 (S.D.1985). A police officer testified, by deposition, that uninsured motorist was in a drunken stupor while at the Arrow Bar.
Are the Neuroths subject to personal liability? It is undisputed, by the record, that the dismissed defendants (Neuroths) are immediate family members and stockholders of Arrow Bar. By pleadings, at settled record 197, it is expressed that the dismissed defendants are employees of Arrow Bar. Seller of the Arrow Bar would not accept Arrow Bar, Inc., as buyer. Seller insisted that the individual incorporators, in their individual capacity be equally responsible for the selling price. Thus, the individuals are the real party in interest and the corporate entity, Arrow Bar, Inc., is being used to justify any wrongs perpetrated by the incorporators in their individual capacity. Conclusion: Fraud is perpetrated upon the public. At a deposition of Edmond Neuroth (filed in this record), this “President” of “the corporation” was asked why the Neuroth family incorporated. His answer: “Upon advice of counsel, as a shield against individual liability.” The corporation was undercapitalized (Neu-roths borrowed $5,000 in capital). For authorities establishing undercapitalization as an indication that a legitimate, separate corporate entity is not maintained, see, Vol. 1 W. Fletcher, Cyclopedia of Corporations, section 44.1, at 528 (rev. ed. 1983); Curtis v. Feurhelm, 335 N.W.2d 575 (S.D.1983); Anderson v. Abbott, 321 U.S. 349, 362, 64 S.Ct. 531, 538, 88 L.Ed. 793 (1944). In Loving Saviour Church, cited by the majority, the Eighth Circuit Court of Appeals reflected upon this Court’s stance in casting aside corporate veils, expressing that this Court decides each case sui generis with the outcome in accordance with the underlying facts of each case. In Loving Saviour Church, it was held that a chiropractor could not use a church to escape income taxes; here, a corporation conceived in undercapitalization as “a shield,” in the words of “the President,” should not be used as an artifice to avoid the intent of *144SDCL 35-4-78(2). In Curtis, cited by the majority opinion, we held that corporate entity should be disregarded if use of the corporation was employed to promote fraud, injustice, and illegality.
Clearly, it appears a question arises as to whether there is a fiction established to escape our previous holdings and the intent of our State Legislature. Truly, there are fact questions for a jury to determine: (1) negligence or no negligence of the defendants and (2) did the Neuroth family falsely establish a corporation to shield themselves from individual liability, i.e., do facts in this scenario exist to pierce the corporate veil?
CONCLUSION
Plaintiffs are entitled to a jury trial under the State Constitution to have a jury resolve these two issues. The South Dakota Constitution, art. VI, § 6, begins with these words: “The right of trial by jury shall remain inviolate and shall extend to all cases at law without regard to the amount in controversy,_” The majority writer, Justice Sabers, wrote in Klatt v. Continental Insurance Company, 409 N.W.2d 366, 368 (S.D.1987), for the majority and expressed: “Therefore, we affirm only if there are no genuine issues of material fact and the legal questions have been correctly decided.” Genuine issues of material fact on negligence should be resolved by the jury and there are questions concerning the legality of this corporation which have not been, in my opinion, correctly decided.
Therefore, I respectfully dissent.