approximated $77,000,000 in each of these two years.
The Parent and all subsidiaries are participants in a group
liability insurance policy. The Subsidiary pays its own share of
the premium, and has $15,000,000 worth of coverage applicable to
liability arising out of the McCormick Place fire.
These facts, even when viewed in the light most favorable to
the plaintiffs, United States v. Diebold, Inc., 369 U.S. 654,
655, 82 S.Ct. 993, 8 L.Ed.2d 176 (1962), conclusively show that
the Subsidiary is not the mere instrumentality of the Parent, as
that concept has been defined in the case law. Neither ownership
of all of the stock of a subsidiary, nor identity of officers and
directors, nor both combined are sufficient to justify "piercing
the corporate veil." Superior Coal Company v. Department of
Finance, 377 Ill. 282, 289-290, 36 N.E.2d 354 (1941); McDermott
v. A.B.C. Oil Burner Corp., 266 Ill. App. 115, 120 (1932). "While
stock control and common directors and officers are generally
prerequisites for application of the instrumentality rule, yet,
they are not sufficient by themselves to bring the rule into
operation. * * * Such factors are common business practice and
exist in most parent and subsidiary relationships." Steven v.
Roscoe Turner Aeronautical Corp., supra, 324 F.2d at 161.
The additional factors which must be present have been
variously described as "direct intervention" in the subsidiary's
affairs, Kingston Dry Dock Co. v. Lake Champlain Transportation
Co., 31 F.2d 265, 267 (2d Cir. 1929), the "act of operation" of
the subsidiary's business, Berkey v. Third Avenue Ry. Co.,
244 N.Y. 84, 155 N.E. 58, at 61 (1926), or "the exercise of control,
not the opportunity to exercise control." Brown v. Margrande
Compania Naviera, supra, 281 F. Supp. at 1006.
The facts of record here show at most that the Parent exercises
supervision and guidance of the general performance of the
Subsidiary. Thus it requires various financial reports and is
consulted as to mark ups on large jobs. It is clear, however,
that the Parent does not "operate" the business. It does not
compute bids, negotiate contracts or purchase goods and services
for the Subsidiary. It does not supervise the manner in which the
Subsidiary's contracting jobs are performed, and it does not use
its own goods, equipment or employees in the Subsidiary's
Exercise of some degree of supervision by a 100% stockholder is
not sufficient to render the subsidiary its instrumentality or
alter ego. "That a stockholder should show concern about the
company's affairs, ask for reports, sometimes consult with its
officers, give advice, and even object to proposed action is but
the natural outcome of a relationship * * *." United States v.
Elgin, J. & E. Ry., 298 U.S. 492, 503-504, 56 S.Ct. 841, 844, 80
L.Ed. 1300 (1936). In Steven v. Roscoe Turner Aeronautical
Corporation, supra, 324 F.2d at 162, similar supervisory concern
was held to be "sound business practice" which did not raise "a
genuine factual issue under the instrumentality rule." Such
participation in a subsidiary's affairs does not amount to the
domination of day to day business decisions and disregard of the
corporate entity necessary to impose liability on a parent. Davis
v. John R. Thompson Co., 239 Ill. App. 469, 475 (1926); Dregne v.
Five Cent Cab Co., 381 Ill. 594, 602-603, 46 N.E.2d 386 (1943);
United States v. Reading Co., 253 U.S. 26, 62-63, 40 S.Ct. 425,
64 L.Ed. 760 (1920).
Another factor deemed significant in applying the
instrumentality test is the extent to which corporate formalities
are observed. Holland v. Joy Candy Manufacturing Corp.,
14 Ill. App.2d 531, 145 N.E.2d 101 (1957); Steven v. Roscoe Turner
Aeronautical Corporation, supra, 324 F.2d at 161. In the instant
case, separate corporate identities are scrupulously maintained.
The physical locations of the corporations are different; the
records of each
are separately maintained; there is no commingling of funds;
payrolls are separately administered; contracts are independently
negotiated and signed; assets are not transferred back and forth;
and purchasing, hiring and firing are independently conducted.
The fact that the Parent considers its subsidiaries to be members
of a "family" does not destroy the separate existence of each
member. New Orleans & N.E. Ry. Co. v. Hewett, 341 F.2d 406, 408
(5th Cir. 1965). Nor does the Parent's boastful advertising show
in any way that corporate identities were otherwise ignored by
the participants in the conduct of their enterprises.
Moreover, even if it could be said that the Subsidiary were the
mere instrumentality of the Parent, that circumstance by itself
would not justify imposition of liability. For it has long been
the law that the corporate entity is only ignored when the ends
of justice require it. Taylor v. Standard Gas & Electric Co.,
306 U.S. 307, 59 S.Ct. 543, 83 L.Ed. 669 (1939); Anderson v. Abbott,
321 U.S. 349, 362, 64 S.Ct. 531, 88 L.Ed. 793 (1944). Some
element of unfairness, something akin to fraud or deception, or
the existence of a compelling public interest must be present in
order to disregard the corporate fiction. Fisser v. Int'l Bank,
282 F.2d 231 (2d Cir. 1960); Shamrock Oil & Gas Co. v. Ethridge,
159 F. Supp. 693 (D.Colo. 1958).
None of the elements of injustice relied on in earlier cases
exist here. It has not been shown or even suggested that the
operators of McCormick Place, or the exhibitors, believed they
were dealing with the Parent rather than the Subsidiary, or were
misled as to the financial strength of the Subsidiary. See Zubik
v. Zubik, 384 F.2d 267, 272-273 (3d Cir. 1967), cert. den.
390 U.S. 988, 88 S.Ct. 1183, 19 L.Ed.2d 1291. On the contrary, it is
clear that the Parent played no part in the electrical
installation in McCormick Place and that the Subsidiary conducted
its affairs in its own name. The record is barren of any evidence
of misrepresentation, deception or mistake.
Nor has the Parent stripped the Subsidiary of its assets or
otherwise operated it as an undercapitalized "sham" or "dummy".
The Subsidiary is an independent and self sufficient operating
entity, with ample net worth and income to meet the needs of its
operations. Furthermore, it carries liability insurance in excess
of the extraordinary damages allegedly suffered by these
complainants. There is no evidence here "of such complete control
of the subsidiary by the parent as to render the former a mere
tool of the latter, and to compel the conclusion that the
corporate identity of the subsidiary is a mere fiction." National
Lead Co. v. Federal Trade Commission, 227 F.2d 825, 829 (7th Cir.
Thus no fraud, injustice or unfairness has been suggested or
disclosed which would justify ignoring the separate identities of
these two corporations. To impose liability in such circumstances
would be an unwarranted invasion of the established principle of
limited liability, which was properly and understandably relied
upon by these defendants in the conduct of their separate
Because defendant Fischbach and Moore, Incorporated neither
participated in the acts allegedly causing plaintiffs' damages,
nor treated its subsidiary codefendant as its mere
instrumentality, an order will enter granting its motion for
summary judgment and dismissing it from this consolidated cause.