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Bartle v. Home Owners Co-op

Court of Appeals of New York
127 N.E.2d 832 (1955)


Facts

Home Owners Co-op (defendant) was organized to provide low-cost housing to its members, mostly veterans. Westerlea Builders, Inc. was organized as a wholly owned subsidiary of Home Owners, to construct housing. When Westerlea began to have financial difficulties, its creditors took over construction responsibilities pursuant to an extension agreement. Westerlea was later adjudicated bankrupt. Bartle (plaintiff), Westerlea’s trustee in bankruptcy, brought suit against Home Owners, claiming it is liable for Westerlea’s contract debts. The trial court found that during the period when creditors extended credit, Home Owners and Westerlea maintained outward indications of being two separate corporations. The trial court also found that the creditors were not misled, that there was no fraud, and that Home Owners’ actions had not injured Westerlea’s creditors by depleting assets or otherwise. Finally, the trial court held that the creditors could not dispute the existence of separate corporate entities because of the extension agreement. The Appellate Division affirmed. Bartle appealed, arguing that the lower courts erred in refusing to pierce the corporate veil of Westerlea.

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Holding and Reasoning (Froessel, J.)

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Dissent (Van Voorhis, J.)

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