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04/11/96 STEVEN DANIEL JACOBSON v. BUFFALO ROCK

April 11, 1996

STEVEN DANIEL JACOBSON, AND CHRISTOPHER MICHAEL BOYLE, MINOR CHILDREN OF PAMELA ELLSWORTH, DECEASED, BY WILLIAM BOYLE, GUARDIAN AND NEXT FRIEND, PETITIONERS, AND RAYMOND BRUCE SCAMEN, ADMINISTRATOR OF THE ESTATE OF RONEA SCAMEN, PETITIONER-APPELLANT,
v.
BUFFALO ROCK SHOOTERS SUPPLY, INC., ELLSBETH S. FULLMER, INDIVIDUALLY, ELLSBETH S. FULLMER, AS ADMINISTRATOR FOR THE ESTATE OF ROGER W. FULLMER, DECEASED, AND EVELYN MUFFLER, AS ADMINISTRATOR OF THE ESTATE OF PATRICIA ANN SMITH, DECEASED, RESPONDENTS-APPELLEES.



Appeal from the Circuit Court of the 13th Judicial Circuit, La Salle County, Illinois. Nos. 92-L-282, 92-L-283. Honorable Cynthia M. Raccuglia, Judge Presiding.

Rehearing Denied May 9, 1996. Released for Publication May 9, 1996.

Present - Honorable Tom M. Lytton, Justice, Honorable Michael P. Mccuskey, Justice, Honorable Kent Slater, Justice. Justice McCUSKEY delivered the opinion of the court: Slater and Lytton, JJ., concur.

The opinion of the court was delivered by: Mccuskey

The Honorable Justice McCUSKEY delivered the opinion of the court:

Pamela Ellsworth and Ronea Scamen were both killed in an explosion while employed by Buffalo Rock Shooters Supply, Inc. (Buffalo Rock). The plaintiffs, Steven Daniel Jacobson and Christopher Michael Boyle, the minor children of Pamela Ellsworth, deceased, by their guardian and next friend, William Boyle, filed a complaint seeking to pierce Buffalo Rock's corporate veil and collect a judgment of $251,750 from the corporation's shareholders. The plaintiff, Raymond Bruce Scamen, administrator of the estate of Ronea Scamen, filed an almost identical complaint, also seeking to collect a $251,750 judgment.

Buffalo Rock's shareholders were Elsbeth S. Fullmer, Roger W. Fullmer and Patricia Ann Smith. Roger and Patricia Ann were killed in the same explosion. As a consequence, in both actions, the plaintiffs sought recovery from Elsbeth, individually and as administrator of Roger's estate and Evelyn Muffler, as administrator of Patricia Ann's estate. The trial court consolidated the complaints. Subsequently, the trial court entered an order which granted a motion to dismiss Roger's and Patricia Ann's estates as defendants and granted judgment in favor of Elsbeth.

On appeal, the plaintiffs argue: (1) the trial court erred when it granted the estates' motion to dismiss; and (2) the trial court should have pierced the corporate veil and enforced the judgments against the shareholders of Buffalo Rock.

Following our careful review of the record, we find the evidence does not support piercing the corporate veil and imposing liability on Buffalo Rock's shareholders. As a result, we affirm because we conclude the trial court's ruling was not against the manifest weight of the evidence.

FACTS

Buffalo Rock was incorporated on August 11, 1987. Roger and Elsbeth, husband and wife, each received 40 shares in the corporation. Elsbeth's daughter, Patricia Ann, received 20 shares. The shareholders paid a total of $1,000 for these shares. Buffalo Rock was in the business of operating a shooting range. It also sold guns and related equipment and manufactured and sold ammunition. Prior to incorporation, Elsbeth ran the business for 17 years as a sole proprietorship. The assets of the business were sold by Elsbeth to the corporation. A transferee statement showed that Elsbeth transferred $242,155 in assets to Buffalo Rock. Buffalo Rock assumed liabilities of $143,312 for a net transfer of $98,943 in assets. Elsbeth was to receive $1,500 per month for these assets, and she retained title to the real estate on which the business was located.

On October 19, 1987, the shareholders of Buffalo Rock executed a written consent in lieu of a meeting. They ratified the actions taken in incorporating Buffalo Rock and appointed themselves directors. On the same date, the newly appointed directors executed a written consent in lieu of a director's meeting in which they adopted the bylaws of the corporation and elected officers.

After incorporation, Elsbeth was not involved in the operation of the business and never attended a corporate meeting. She stated in her deposition that she did not know what it meant to be an officer of the corporation. Roger and Patricia Ann ran the business. They were employees of the corporation and received salaries. Roger was paid $4,552 for the period from August 11, 1987, to December 31, 1987. Patricia Ann was paid $4,308 during the same period.

The mortgage on the real estate, held in Elsbeth's name, was paid out of Buffalo Rock's account. The building on the property was used by Buffalo Rock and also by two companies Roger owned, Class III Enterprises and Chevron Case Master. No dividends were ever paid by Buffalo Rock. The bylaws required an annual meeting in August. We note that no meeting was held in August 1988.

Financial statements prepared on behalf of Buffalo Rock showed that, as of December 31, 1987, the assets of Buffalo Rock included $157,010 in inventory and $19,214 in equipment and vehicles, after depreciation. A statement of earnings showed sales in the amount of $248,401 for the five-month period ending December 31, 1987. Net earnings after expenses were ...


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