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Ds formed the Construction Corp. as a no-asset New York corporation to act as signatory and obligor on a series of conditional sales agreements for the purchase of bowling equipment to be operated in five new bowling alleys. The five alleys and the Brunswick equipment were operated by Ds through five separate partnerships, which owned the non-Brunswick equipment and fixtures in the alleys. Ds owned or leased the real property on which the bowling alleys were located, but charged the Construction Corp. no rent for the use of the premises. Nor did Ds pay rent to the Construction Corp. for the use of the bowling equipment. Ds owned in their individual or partnership capacities all the licenses and permits necessary to operate the alleys. Ds owned in their individual or partnership capacities all the licenses and permits necessary to operate the alleys. Proceeds from all the daily operation of the businesses were deposited in individual bowling alley accounts and later transferred into Ds' enterprise’s bank account from which funds were withdrawn to meet the necessary operating expenses of the alleys. The central bank account paid the amounts due on the sales contracts to the Construction Corp. account wherein P was paid. The Construction Corp. held no stockholders' or directors' meetings, adopted no bylaws, and issued no stock. It filed federal and New York State income tax returns, but none of these returns showed any income, nor did any report P’s equipment as corporate assets. Construction Corp.'s sole corporate activity was the transfer of funds into and out of its bank account for the purpose of meeting the installment payments under the P contracts. The bowling industry began to suffer from a long-term decline. The Construction Corp. was unable to meet its payment obligations to P. Pursuant to an extension agreement, title to the P equipment was transferred from Construction Corp. to five new corporations, which were also to receive an additional $375,000 in non-Brunswick assets. Ds never transferred the additional assets to the five corporations. The newly formed corporations simply took the place of Construction Corp. and acted merely as conduits for payments to P. In 1966, P eventually repossessed its equipment held by two of the five corporations and sold them at a substantial deficiency. P personally sued Ds to recover the deficiencies. The court entered judgment for Ds and P appealed.

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