Kinney Shoe Corp. v. Polan
United States Court of Appeals for the Fourth Circuit
939 F.2d 209 (4th Cir. 1991)
Lincoln M. Polan (defendant) incorporated Industrial Realty Company (Industrial) and Polan Industries, Inc. (PI) without making any capital investment, holding initial meetings, electing directors, or issuing stock in either entity. Kinney Shoe Corporation (Kinney) (plaintiff), which held a long-term lease on a building, subleased it to Industrial, which in turn subleased part of it to PI (with Polan signing the relevant documents); Polan made a single rental payment from his personal account before Industrial defaulted, and Kinney obtained a $166,400 judgment against Industrial before suing Polan personally. The district court found Kinney had "assumed the risk of Industrial's undercapitalization" and declined to pierce the corporate veil, and Kinney appealed.
Whether a shareholder in a corporation may ever be held personally liable for corporate obligations.