Court Opinion

ID: 6762722
Source: CourtListenerOpinion
Date Created: 2022-07-21 00:33:11.328398+00
Date Added: 2024-06-11T16:02:38.484707
License: Public Domain

H. Brown, J.,
concurring in judg-
ment only. I cannot agree that “the individualities of Kline and his corporation [Republic Escrow] are nonexistent.” It is hornbook law that a corporation is a separate legal entity from its shareholders, even when there is only one shareholder. E.g., First Natl. Bank of Chicago v. Trebein Co. (1898), 59 Ohio St. 316, 52 N.E. 834, paragraph one of the syllabus (“In contemplation of law a corporation is a legal entity, an ideal person, separate from the real persons which compose it. * * *”); BeWigged by Suzzi, Inc. v. Atlantic Dept. Stores (1976), 49 Ohio App. 2d 65, 68-69, 3 O.O. 3d 125, 127, 359 N.E. 2d 721, 725, fn. 1 (single, human shareholder); General Motors Corp. v. Moffett (1927), 27 Ohio App. 219, 160 N.E. 878 (wholly owned subsidiary).
In certain situations, of course, courts can “pierce the corporate veil” and treat both the shareholder and his corporation as a single entity. However, this is an extraordinary step which is only taken in those situations where the corporate entity is being used as a cloak for fraud or illegality, e.g., First Natl. Bank of Chicago, supra, paragraph two of the syllabus (fraudulent conveyance to corporation), or where the sole shareholder has disregarded the separate corporate entity in business dealings with third parties, see, generally, Annotation, Stockholder’s Personal Conduct of Operations or Management of Assets as Factor Justifying Disregard of Corporate Entity (1972 & Supp. 1990), 46 A.L.R. 3d 428, and cases therein cited. In the instant case, neither of these conditions is present, yet the majority disregards Republic Escrow’s existence as a separate legal *53entity. In so doing, the majority renders the fidelity bond a nullity, and creates a precedent which imperils the limited liability enjoyed by the thousands of Ohioans who legitimately conduct their business in the form of a “one-man” corporation.
However, I concur in the judgment. Section 8 of the fidelity bond requires that the insured “file [a] detailed proof of loss, duly sworn to, with the * * * [insurer] within four months after the discovery of loss” as a prerequisite to recovery.
No proof of loss was filed until Kline sent one from jail in May 1985. This was over a year after the embezzlement, and seven months after Home Savings served Fidelity with its third-party complaint. Viewing the facts most favorably to Home Savings, it is clear that the proof of loss was not timely filed. Even if the service of process on Fidelity is taken as the date on which Republic Escrow “discovered” the loss, the proof of loss was three months late. Accordingly, Republic Escrow and, by extension, Home Savings, had no right to collect from Fidelity.
Wright, J., concurs in the foregoing concurring opinion.