He had rented a crane from Tidewater to conduct business in Alexandria, Virginia in September 1998. Hildreth had made it apparent that he was acting for HCE, Inc., but was never asked or mentioned where he was incorporated. HCE-NJ failed to pay for four months rental on the crane and Tidewater repossessed the equipment and sued HCE, Inc. for $47,246. The plaintiff's theory:Tidewater believed Hildreth was personally liable to the debt of $47,246 incurred by HCE-NJ. The defendant's theory:Hildreth failure to register as a foreign corporation did not affect the validity of any contract to which the corporation is a party. There is nothing in the registration statues that permits a court to invade the corporate entity simply because of a failure to register. The legal issue:Did HCE-NJ conduct business to cause the courts to break the corporate veil?The holding of the court:Initially I would have concurred that Hildreth, a shareholder; caused the corporation to act to the personal benefit of the shareholder, domination-the first requirement for piercing the corporate veil-is proved. (Mallor, pg. 1042) In the end there was no evidence that conduct in any way influenced Tidewater to enter into the contractual arrangement from which the debt arose. Evading an Existing Obligation seems to be appropriate in this case. Hildreth completely understood what he was doing when he entered into the contract with Tidewater. Hildreth should have been held liable for the debt owed to Tidewater.Mallor, J., Barnes, A. J., Bowers, L. T., & Langvardt, A. (2013). Business Law, the Ethical, Global, and e-Commerce Environment. McGraw-Hill/Irwin.
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Corporation, Foreign corporation, Hildreth, John Hildreth