Hanewald v. Bryan’s Inc.

Keith and Joan Bryan incorporated Bryan's, Inc., authorized to issue 100 shares at $1,000 par value, and issued themselves 50 shares each without paying anything for the stock. The corporation bought a store from Hanewald (plaintiff) for $55,000 cash (from a bank loan personally guaranteed by the Bryans) plus a $5,000 promissory note, and leased the building from Hanewald for five years at $600/month. After operating just four months, the corporation dissolved, repaying the bank loan and a $10,000 personal loan from the Bryans, but never paying Hanewald's $5,000 note or the remaining lease payments. Hanewald sued the corporation and the Bryans (defendants), seeking to pierce the corporate veil. The trial court entered judgment against the corporation but declined to hold the Bryans personally liable, finding the $10,000 loan was sufficient capital and no bad faith. Hanewald appealed.