Solo Services, Inc. was a

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$.$ A business of this type

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considered a separate legal entity from its owners. When Toby Solo set up an account for Solo Services, Inc. with Lakes Express,

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would be liable for any charges on that account.

Assessment question

Toby Solo

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a shareholder in Solo Services, Inc. One of the advantages of being a shareholder in a corporation is the

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liability of shareholders. The principle of limited shareholder liability means that shareholders are not personally liable for the debts of the corporation beyond

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$.$ If Solo Services, Inc., was dissolved, and assets were distributed, then Toby Solo likely

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the value of his investment. Toby Solo

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have had assets outside of the company that he would have been allowed to keep when the company was dissolved.

Assessment question

If Lakes Express is attempting to receive payment from the extra assets of a shareholder, it would be asking the court to

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$.$ Courts will ignore the corporate structure and make the shareholder$-$owners personally liable when the corporate structure is

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for personal benefit or when the corporate form is

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from the controlling shareholder.

Assessment question

In this situation, it

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that Lakes Express was tricked into dealing with the corporation instead of the individual. Given the life of the corporation, it

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that the corporation was set up to always be insolvent, or was undercapitalized. It also

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that the corporation was formed to evade a legal obligation. There

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evidence that the corporate formalities were not followed and there

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evidence that Toby Solo commingled funds. Given these facts, a court

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pierce the veil of Solo Services, Inc., and hold Toby Solo personally responsible for the debt.

Assessment question

What If the Facts Were Different?

Assume that in addition to the facts given, that evidence was presented to the court that Solo, his wife, and their kids regularly used the account at Lakes Express to fill up their personal vehicles. Does this change the outcome?

Given this new evidence, a court likely

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find that Lakes Express was tricked or misled into dealing with the corporation rather than the individual. The court likely

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find that the corporation was undercapitalized, created to evade an existing legal obligation, or failed to comply with the required corporate formalities and meetings. The court likely

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find that the personal and corporate interests were commingled to such an extent that the corporation had no separate identity with regard to the relationship with Lakes Express. Because of these findings, the court likely

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pierce the corporate veil and hold Toby Solo personally responsible for the debt to Lakes Express.