Hildreth vs Tidewater Equipment Co

gutter Hildreth was the sole shareholder, director, and wayr HCE, Inc, a kitty in stark naked Jersey. HCE-NJ began to do business in physician in early 1997. According to the Maryland code, it is required for foreign weeds to register with the Maryland part of Assessments and Taxation in the first place doing intrastate business in Maryland, and it is required to have a occupier agent in Maryland. In February 1998, HCE-NJ rented equipment from Tidewater Equipment Company, Inc. and again in September 1998. Tidewater and HCE-NJ subscribe a series of contracts, none of which were signed by Hildreth.When earningsments ceased after February 1999 repossessed the equipment and sued Hildreth holding him in person liable for the debts by HCE-NJ. Issue Is there a ground for piercing the veil of HCE-NJ and imposing personal liability for the embodied stipulation on Hildreth? Rule In order for a court to shove the corporate veil, two requirements must exist (1) subordination of a corporation by its shareholders and (2) use of that domination for an improper purpose (defrauding creditors, circumventing a statute, or evading an existing pact. ApplicationIn order for us to prove that Hildreth be held personally liable for the corporations engagement, we must consider confused factors that can show if Hildreth practiced domination on the corporation and if that domination was used for an improper purpose. Hildreth was the sole shareholder and was personally involved in the management of the business. He was a sole shareholder, director and officer to this New Jersey corporation. Although HCE-NJ contracted with Tidewater, Hildreth, as a shareholder, was personally involved in the business proceedings between HCE-NJ and Tidewater in agreement for lease formula equipment.Hildreth also failed to follow Maryland law by registering HCE-NJ with the Maryland Department of Assessments and Taxation before doing intrastate business in Maryland. Although Hildreth held no obligation to reveal that HCE was an unregistered foreign corporation to Tidewater, the situation can be used in court under Maryland law to throw the corporate veil to promote justice and to prevent inequity. In this case, HCE owed Tidewater for the renting of construction equipment in the amount of $47,246.A nonher consideration is the fact that Hildreth whitethorn be apply his position as a shareholder to reduce the corporations obligation towards Tidewater. The courts used Herbert Brunes work as a reference to the case. According to Brune, the corporate veil may be pierced to prevent the evasion of heavy obligations. It states that the courts may consider a corporation as unencumbered by the fiction of corporate entity and nap with substance rather than form as though the corporation did not exist, in order to prevent evasion of legal obligation.HCE-NJ neglected to pay the payments due to Tidewater, which led the repossessing of construction equipment. The balance owed towards Tidewater was $47,246. The plaintiff has shown that there was an manginess and inequitable result from this occurrence. Tidewater provided the equipment in return for payment, where HCE-NJ became unable to satisfy its obligation under contract resulting into unfair practices.For Hildreth to say that he is not personally liable for corporation debt, it can be seen as protection for himself from legal obligations. In defense, Hildreth cannot be held liable on the corporations obligation due to the fact that there was a lack of domination. in that respect is no proof that Hildreth, as a shareholder, caused the corporation to act on his loss or personal benefit. The only mention of Hildreth with Tidewater is when he informed, Kolbe, a Tidewater representative, of the office locations.Transactions and contracts were dealt and signed between Tidewater and an employee of HCE-NJ, not Hildreth. There is also no evidence that the shareholder caused the corporation to fail to follo w corporate formalities. In addition, there is no allegation of fraud on either Hildreth or HCE-NJ. As for Brunes work, the idea that if a shareholder uses a corporation form in order to prevent evasion of legal surgical operation can only be used when the corporation demonstrates the alter self-importance doctrine.According to the alter ego doctrine, which allows personal liability of a corporate officer if the stockholders or the business itself fails to treat the entity as a corporation. There is no evidence that Hildreth exercised such complete domination over HCE-NJ to solve that the corporation had no separate mind, will or existence of its own. evidence Although the courts reversed their judgment in favor of Hildreth, I find that Hildreth did not act only as a shareholder, but also as a director and officer of the New Jersey corporation.It shows that there is a possibility for the alter ego doctrine to take place since Hildreth wasnt only a shareholder, but also particip ated in the business transactions between HCE-NJ and Tidewater. With the legal obligation of the corporation to pay Tidewater, and this not existence met, I find that it results in injustice and inequity between the parties. It would be unjust for Hildreth to be able to shield himself from the corporate obligations by using the corporate entity as a defense. Therefore, I affirm judgment from the in the first place decision of the court, in favor of Tidewater.