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Business Associations Keyed to Hwang, 3rd Ed.
Sea-Land Services, Inc. v. Pepper Source
Citation:
941 F.2d 519 (1991)Facts
Sea-Land Services shipped Jamaican sweet peppers for The Pepper Source but was never paid the freight bill of $86,767.70. The Pepper Source was dissolved in 1987 for failure to pay franchise taxes and had no assets. Gerald Marchese was the sole shareholder of The Pepper Source and several other corporations, all operated from the same office with shared phone lines and expense accounts. Marchese failed to maintain corporate formalities, never held corporate meetings (except occasionally for Tie-Net), kept no minutes, and had no personal bank account. He freely borrowed money interest-free from the corporations, commingled funds between entities, and used corporate accounts to pay personal expenses including alimony, child support, car maintenance, and even pet healthcare. The corporations borrowed from each other, leaving The Pepper Source undercapitalized when Sea-Land’s bills came due.
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