Shareholders Forced to Pay Debts of Insolvent Mill
A judge rules that the owners of the failed Fremont Manufacturing Company are personally liable for the firm's unpaid debts.
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Thomas and Alonzo Jose were yesterday granted judgment by Judge Lichtenberg in the sum of $540 against the Fremont Manufacturing Company and P. P. Carroll, George J. Kilgen and Michael Phillips, the officers of the company. From the pleadings and testimony in the case, it appears that the company was organized by Carroll, Kilgen and Phillips, who held all of the stock and paid in 35 percent of it. When the company made an assignment, it was announced that all assets had been used to pay the salaries of the officers. The Joses, who had a claim against the company, brought suit to secure the amount of their claim out of the unpaid stock. Judge Lichtenberg held that the stockholders were responsible for the company debt to the amount of stock not paid up, and awarded the plaintiffs judgment for the amount claimed.
“Judge Lichtenberg held that the stockholders were responsible for the company debt to the amount of stock not paid up.”
This ruling highlights a century-old precedent for 'piercing the corporate veil' to protect creditors. It remains a foundational concept in Washington business law, echoing today's legal battles over holding parent corporations or directors accountable for the debts or failings of their subsidiaries.
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