B-167
ALTERNATE CASE PROBLEM ANSWERS
CHAPTER 39
CORPORATE FORMATION
AND FINANCING
39-1A. Professional corporations
(Chapter 39—Page 759)
Yes. The court held that the shareholders, as members of a professional corporation, could not be held
39-2A. Corporate status
(Chapter 39—Pages 759–760 & 763–764)
The court held that because the parties intended to create a lease agreement with the corporation as
lessee, the corporate promoters who signed the lease were not liable. The court stressed that whether
B-168 APPENDIX B: ALTERNATE CASE PROBLEM ANSWERS—CHAPTER 39
39-3A. Liability of shareholders
(Chapter 39—Page 766)
The court refused to disregard the corporate form and pierce the corporate veil. The court listed the
39-4A. Liability for preincorporation contracts
(Chapter 39—Pages 759–760)
The appellate court agreed with the trial court—Alexander and Looney had not acted on behalf of the
39-5A. Disregarding the corporate entity
(Chapter 39—Page 766)
The court found Ameri-Pak International responsible for the damage and held Zuberi personally liable.
39-6A. Liability of shareholders
(Chapter 39—Page 766)
B-170 APPENDIX B: ALTERNATE CASE PROBLEM ANSWERS—CHAPTER 39
transaction had at the time no separate mind, will or existence of its own; and (2) Such control must
have been used by the defendant to commit fraud or wrong * * * ; and (3) The aforesaid control and
39-7A. Corporate powers
(Chapter 39—Pages 765–766)
What the president of Soda Dispensing signed was a confession of judgment—that is, he agreed to the
39-8A. Corporate status
(Chapter 39—Page 766)
39-9A. S Corporations
(Chapter 39—Page 759)
The state tax commissioner refused the request of Agley and the others for refunds, and they appealed
to the Ohio Board of Tax Appeals, which in each case affirmed the order denying a refund. They
appealed to the Ohio Supreme Court, which affirmed the decision of the state board. The state supreme
39-10A. A QUESTION OF ETHICS
1. The court in this case defined “situations in which one corporation shows such domination and
control over another that the latter corporation becomes an adjunct or alter ego of the first. In such a
situation, when the formal corporate separateness and the arrangements between the two corporations
is devised or used to accomplish a fraud, injustice, or some unlawful purpose, then the separate formal
corporate structures will be ignored. To ‘pierce the corporate veil’ and hold one corporation liable for
2. ADG made this argument. The court held that “[t]his principle has questionable validity” in a
context involving the factors noted above “and has no viability in the context of this case. In the first
B-172 APPENDIX B: ALTERNATE CASE PROBLEM ANSWERS—CHAPTER 39