Dewitt Truck Brokers v. W. Ray Flemming Fruit Co.

4th Cir. Ct. of App., 540 F.2d 681 (1976)

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Nature of the Case

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Facts

Fleming (D) and his wife incorporated W. Ray Fleming to sell fruit for local growers in the South Carolina area in 1962 with a capitalization of 5,000 shares at $1 each. Even rudimentary corporate formalities were not followed. No stockholder or officer of the corporation other than D ever received any salary, dividend, or fee from the corporation and D had the sole voice in operations and decisions. D owned approximately 90% of the corporation's outstanding stock though this was not verified by any stock records. D was obscure on who the other stockholders were and how much stock these other stockholders owned. The corporation did have one other director, Ed Bernstein. There were no corporate records of a real directors' meeting in all the years of the corporation's existence. The corporation never had a stockholders' meeting. D was receiving from $15,000 to $25,000 each year from a corporation, which, during most of the time, was showing no profit and apparently had no working capital. Payments to D were authorized under no resolution of the board of directors of the corporation, as recorded in any minutes of a board meeting. The District Court found, that there was here a complete disregard of 'corporate formalities' in the operation of the corporation, which functioned, not for the benefit of all stockholders, but only for the financial advantage of D, who was the sole stockholder to receive one penny of profit from the corporation in the decade or more that it operated, and who made during that period all the corporate decisions and dominated the corporation's operations. DeWitt Truck Brokers (P) incurred expenses in transporting produce in relation to the sales of the corporation. D was withdrawing funds from the corporation at the rate of at least $15,000 per year by withholding payment of the transportation charges due P.