Corporations and Limited Liability Companies
Both formal business entities acting as a legal – but artificial – person. Liability can only be directed at the entity and not the shareholders, officers or members, except in cases of personal guarantees, fraud or some other intentionally illegal act. Absent intentionally illegal acts, liability is for shareholders, officers and member’s is limited to the assets of the formal business entity and the capital investments of each. Personal liability to shareholders, officers and members can only be born from their intentionally illegal acts.
Fact Pattern
Limited Liability of Shareholders. Joseph M. Billy was an employee of the USM Corporation (USM) USM is a publicly held corporation. On October 21, 1976, Billy was at work when a 4600lb ram from a vertical boring mill broke loose and crushed him to death. Billy’s widow brought suit against USM, alleging that the accident was caused by certain defects in the manufacture and design of the vertical boring mill and the two moving parts directly involved in the accident, a metal lifting arm and the 4600lb ram. If Mrs. Billy’s suite is successful, can the shareholders of USM be held personally liable for any judgment against USM?
Use the data provided above on Corporations and Limited Liability Companies, and answer the question below.
Is there personal liability? Yes No Explain your Answer