Mark complied with all formation requirements for incorporating his taxicab business. He is the sole shareholder in the corporation. The corporation owns two automobiles that Mark frequently uses for his own personal use. In addition, he sometimes deposits the money he takes in during the day into his personal checking account. One day, an employee of the company, while driving one of the company vehicles, accidentally hits a pedestrian in a crosswalk. The pedestrian sues both Mark and the taxi company for $100,000. The corporate assets are only $32,000. Is the corporation liable for the acts of its employee? Will Mark be personally liable under the facts? Explain.

Question

Abhishek Kalarikkal Sukumar · Accepted Answer

Final Answer : Since the formalities of creating a corporation have been strictly complied with, there is no question that this is a de jure corporation. However, the corporate veil may be pierced and limited liability disregarded where the business has not been conducted in a corporate manner. Here, Mark is acting as though the cars and income are for his own personal use, and the courts are likely to require that he personally pay the injured party. Also, the corporation bears liability under respondeat superior for Mark's tort because it was committed in the course of his employment.

Definitions

Learning Objectives

Learning Objectives

Related questions