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Sea-Land Services, Inc. v. Pepper Source

United States Court of Appeals for the Seventh Circuit
941 F.2d 519 (1991)


Facts

Gerald Marchese (defendant) owned six separate business entities (defendants). Marchese ran all of the companies out of a single office. The companies shared expense accounts in common and lent funds to each other, as well as regularly lending money to Marchese for his personal expenses. None of these companies had internal governing documents such as bylaws. One of those businesses, Pepper Source, contracted with a shipping company, Sea-Land Services, Inc. (plaintiff) for the delivery of some peppers. Pepper Source failed to pay for these services, and Sea-Land filed a collection suit against Pepper Source. Pepper Source never appeared, and had in fact been dissolved for failure to pay business taxes. Sea-Land then brought suit against Marchese and all of his companies, seeking to pierce Pepper Source’s veil and collect from Marchese, and then to “reverse pierce” Marchese’s other companies and collect from them. The lower court held that Sea-Land could collect Pepper Source’s debt from Marchese and the companies he owned. The defendants appealed.

Rule of Law

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Issue

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Holding and Reasoning (Bauer, C.J)

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  • A "yes" or "no" answer to the question framed in the issue section;
  • A summary of the majority or plurality opinion, using the CREAC method; and
  • The procedural disposition (e.g. reversed and remanded, affirmed, etc.).

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