Angelo Tomasso, Inc. v. Armor Construction & Paving, Inc.

447 A.2d 406, 187 Conn. 544, 1982 Conn. LEXIS 554

• Court: Supreme Court of Connecticut
• Decided: July 13, 1982
• Status: Published

Opinions

Arthur H. Healey, J.

These two companion cases were referred to the state referee for hearing and judgment by the Superior Court. In April, 1974, the defendant, Armor Construction & Paving, Inc. (Armor), applied for and was granted by the plaintiffs, Angelo Tomasso, Inc. (Tomasso) and Ashland Oil Company, Inc. (Ashland), a line of credit for the purchase of materials to be used in its business as a paving contractor. The plaintiffs required the defendants Mario Leo and John Went-worth, the president and secretary-treasurer of Armor, respectively, to guarantee personally payment of the accounts plus all costs of collection, including reasonable attorney’s fees and interest on any delinquent balance.

In 1975, Armor ordered and received amounts of bituminous concrete and crushed stone from Tomasso and Ashland at prices of $7490.78 and $5054.23, respectively. Armor experienced financial difficulties and ceased operations in February, 1976 without making any payments on these accounts. The plaintiffs instituted suit against Armor and the individual defendants, Leo and Wentworth, as guarantors. The Superior Court rendered summary judgment in favor of the plaintiffs as to liability only and a hearing was subsequently held on the issue of damages. As a result of this hearing, Leo and Wentworth were held liable for the principal sum of these accounts plus interest, attorney’s fees, and costs.

While these cases were pending, the defendants Wentworth and Leo, as third party plaintiffs, with the permission of the court, in each case impleaded a third party defendant, Pierre C. Lemieux, alleging that Armor was in reality a sole proprietorship owned, controlled and operated by the third party defendant, Lemieux, and was the alter ego of said third party defendant and that he “is or may be liable to the third party Plaintiffs” for the amount of the claims alleged in the principal action in each case. To this third party complaint, the third party defendant pleaded by way of a denial, special defense and a counterclaim.

Pursuant to Practice Book § 302, the third party defendant moved for a judgment of dismissal of the third party complaint for failure to make out a prima facie case. The referee granted the motion and stated: “[i]t is found and concluded, in each case, that the cause of action alleged by the third party plaintifs [sic], Wentworth and Leo, against the third party defendant, Lemieux was not prima facie established and the evidence did not justify a judgment in their favor either on legal or equitable grounds in each case.” From this judgment, the third party plaintiffs have appealed.

The third party plaintiffs claim error in the trial referee’s dismissal of their complaint because they allege that there was sufficient evidence presented at the hearing to establish that the third party defendant, Lemieux, owned and operated Armor and that when they guaranteed payment of the plaintiffs’ accounts, they were actually acting as mere agents of their principal, Lemieux. The third party plaintiffs claim that the court should have disregarded the corporate entity and imposed liability on Lemieux to the extent of the third party plaintiffs’ liability to the plaintiffs on the guarantee.

“A motion for judgment of dismissal has replaced the former motion for nonsuit for failure to make out a prima facie case. Compare Practice Book § 302 with Practice Book, 1963, § 278; see Lukas v. New Haven, 184 Conn. 205, 210 n.3, 439 A.2d 949 (1981). When such a motion has been granted, the question is whether sufficient facts were proved to make ont a prima facie case. Pignatario v. Meyers, 100 Conn. 234, 239-40, 123 A. 263 (1924). To state it another way, a judgment of dismissal is proper ‘when the evidence produced by the plaintiff, if fully believed, would not permit the trier in reason to find the essential issues on the complaint in favor of the plaintiff.’ Minicozzi v. Atlantic Refining Co., 143 Conn. 226, 230, 120 A.2d 924 (1956). The evidence offered by the plaintiff is to be taken as true and interpreted in the light most favorable to him, and every reasonable inference is to be drawn in his favor. Ace-High Dresses, Inc. v. J. G. Trucking Co., 122 Conn. 578, 579, 191 A. 536 (1937). A party has the same right to submit a weak case as he has to submit a strong one. Fritz v. Gaudet, 101 Conn. 52, 53, 124 A. 841 (1924). See Lukas v. New Haven, supra, 210-11; Crowell v. Palmer, 134 Conn. 502, 505, 58 A.2d 729 (1948); Maltbie, Conn. App. Proc. §§ 215 and 217; Stephenson, Conn. Civ. Proc. (2d Ed.) § 192f.” Hinchliffe v. American Motors Corporation, 184 Conn. 607, 609-10, 440 A.2d 810 (1981).

Viewed in the light most favorable to their case, the third party plaintiffs could be found to have established the following facts at the hearing: Prior to April, 1974, one Rick Soucy and the third party plaintiffs, Mario Leo and John Wentworth, were employed by Gem Paving Company.¹ Lemieux was the president and owner of Gem Paving Company, a union contracting company, and controlled or was the principal of CFL, Inc., a construction equipment leasing company. In September, 1973, Lemieux told Leo, Wentworth and Soucy that he wanted to form another paving company (Armor) which would be non-union. Lemieux explained what the structure of the new company would be, who the officers, directors and stockholders would be and how Leo and Wentworth would be officers (president and secretary-treasurer, respectively) in name only because they would still be working for him. Apparently, Leo and Went-worth agreed to this arrangement because they feared losing their jobs if they did not consent.² However, Leo and Wentworth indicated to their office secretary that they felt that Lemieux had no right to exercise authority over Armor’s affairs in the manner that he did.

In September, 1973, Lemieux contacted his attorney and instructed him to form the new corporation, Armor. About two months later, Lemieux took Leo, Wentworth and Soucy to his attorney’s office where only those three signed the necessary corporate documents. The minutes of the organization meeting and first meeting of directors and the by-laws had been fully prepared prior to this meeting. Leo and Wentworth did not consult with and were not represented by legal counsel, nor had they had any prior contact with Lemieux’s attorney as to the contents of the corporate documents. No election of directors or officers was ever held. The corporate documents indicated, however, that Leo, Wentworth and Soucy were directors and officers.

No officers’ or shareholders’ meetings were held subsequent to this initial meeting and the remaining corporate documents were mailed to Lemieux at the office of Gem Paving. Lemieux then took these documents to Armor’s office to obtain Leo’s and Wentworth’s signatures.

The corporation started out with initial capital of $15,000. Leo, Wentworth and Soucy were each loaned $5000 by Lemieux which they then used to purchase stock. Leo, Wentworth and Soucy were each issued 500 shares of common stock having a par value of $10 per share. Each was required to execute a personal promissory note in the principal sum of $5000 payable to Lemieux. These notes were never paid, nor did Lemieux ever demand payment until March, 1980, four years after Armor ceased operating.³ Lemieux did not own any stock in Armor, nor was he listed as an officer or director of the corporation.

On February 1,1974, Leo, Wentworth, Soucy and Lemieux entered into a written agreement wherein Lemieux was to receive twenty-five percent of Armor’s annual net profit before taxes until he should receive $300,000 and thereafter such net profits were to be allocated at the rate of fifty-five percent to Lemieux and fifteen percent to each of the others. Under this agreement Lemieux also had the option to purchase that number of shares necessary to give him fifty-five percent of Armor’s stock.⁴

Lemieux helped to arrange for the necessary bonding through the same bonding agent employed by Gem Paving. It does not appear that Armor could have bid on bonded jobs without the financial backing of Lemieux and all bids had to be approved by him. Armor was not in a financial position either to buy or rent the equipment necessary for the type of construction work contemplated without the assistance of Lemieux acting through CPL, Inc., his equipment leasing company. Lemieux insisted that all of the construction equipment used by Armor be leased from CFL, Inc. and he personally scheduled such equipment.

Between April, 1974 and October, 1975, Lemieux, who was no longer receiving a salary from Gem Paving Company, or a corporation in which he was a principal, began receiving $700 per week from Armor. In October, 1975, when Armor experienced financial difficulties, these payments were reduced to $350 per week. Some of the payments were made by check payable to Lemieux and were labelled “consultant’s fees” while other checks were made payable to CFL, Inc. and were labelled “equipment rental.” Lemieux visited Armor’s office at least once or twice a week. He had access to Armor’s checkbook and all of its financial records and required its officers to report to him periodically. Leo, as president, however, signed all the corporate checks, contracts with customers and bid estimates on jobs.⁵

In October, 1975, when Armor started to experience financial difficulties, Lemieux went to the company’s office and took possession of the checkbook. Thereafter, all checks issued by Armor had to be approved by him. In some instances, Armor’s checks would be made up by Lemieux’s bookkeeper, while in other cases, Lemieux would indicate his approval by making a mark in the comer of such checks. Lemieux never disapproved any check, however.

Armor ceased operating in February, 1976, at the order of Lemieux. Lemieux then took possession of all of the company’s equipment and records. The corporate records were thereafter inaccessible to Armor’s officers and directors. When Armor ceased operating, it had outstanding debts totalling approximately $200,000, the largest creditors being CFL, Inc. for equipment rentals and the federal government for payroll taxes. Leo and Wentworth received no dividends or other payments from Armor except for their weekly salaries and when the company ceased doing business, they acquired none of its assets. Throughout the time he was president of Armor, however, Leo was never told by Lemieux that there were certain decisions he could or could not make.⁶

“Courts will . . . disregard the fiction of a separate legal entity to pierce the shield of immunity afforded by the corporate structure in a situation in which the corporate entity has been so controlled and dominated that justice requires liability to be imposed on the real actor. 1 Fletcher, Corporations (Perm. Ed. 1963 Eev.) §43; Ballantine, Corporations (Eev. Ed.) § 136; 18 Am. Jur. 2d, Corporations § 14; see Vogel v. New Milford, 161 Conn. , 290 A.2d 231 (1971); Tishman Equipment Leasing, Inc. v. Levin, 152 Conn. 23, 28, 202 A.2d 504 (1964); Humphrey v. Argraves, 145 Conn. 350, 354, 143 A.2d 432 (1958); Hoffman Wallpaper Co. v. Hartford, 114 Conn. 531, 535, 159 A. 346 (1932). We have affirmed judgments disregarding the corporate entity and imposing individual stockholder liability when a corporation is a mere instrumentality or agent of another corporation or individual owning all or most of its stock. See Zaist v. Olson, 154 Conn. 563, 573, 227 A.2d 552 (1967).

“In Zaist, we found the controlling stockholder and a related corporation liable under an ‘alter ego’ theory, concluding that the corporate structure of the defendant in that ease could properly have been disregarded under either the ‘instrumentality’ rule or the ‘identity’ rule. Zaist v. Olson, supra, 578.” (Emphasis in original.) Saphir v. Neustadt, 177 Conn. 191, 209-10, 413 A.2d 843 (1979).

“The instrumentality rule requires, in any ease but an express agency, proof of three elements: (1) Control, not mere majority or complete stock control, but complete domination, not only of finances but of policy and business practice in respect to the transaction attached so that the corporate entity as to this transaction had at the time no separate mind, will or existence of its own; (2) that such control must have been used by the defendant to commit fraud or wrong, to perpetrate the violation of a statutory or other positive legal duty, or a dishonest or unjust act in contravention of plaintiff’s legal rights; and (3) that the aforesaid control and breach of duty must proximately cause the injury or unjust loss complained of. Lowendahl v. Baltimore & O.R. Co., 247 App. Div. 144, , 287 N.Y.S. 62 [1936]; Fisser v. International Bank, 282 F.2d 231, 238 (2d Cir. [1960]); Powell, [Parent and Subsidiary Corporations] §§ 2, 3; see Steven v. Roscoe Turner Aeronautical Corporation, 324 F.2d 157, 160 (7th Cir. [1963]).” (Emphasis added.) Zaist v. Olson, 154 Conn. 563, 575, 227 A.2d 552 (1967); see also Omaha Pollution Control Corporation v. Carver-Greenfield Corporation, 413 F. Sup. 1069, 1091 (D. Neb. 1976).

The identity rule has been stated as follows: “ ‘If plaintiff can show that there was such a unity of interest and ownership that the independence of the corporations had in effect ceased or had never begun, an adherence to the fiction of separate identity would serve only to defeat justice and equity by permitting the economic entity to escape liability arising out of an operation conducted by one corporation for the benefit of the whole enterprise.’ Mull v. Colt Co., 31 F.R.D. 154, 163 (S.D.N.Y. [1962]); Walkovsky v. Carlton, 24 App. Div. 2d 582, 583, 262 N.Y.S.2d 334 [1965].” Zaist v. Olson, supra, 576.

The third party plaintiffs claim, relying on such cases as Zaist and Saphir, that the circumstances outlined above demonstrate sufficient manipulation and control over the affairs of Armor by Lemieux so as to justify piercing the corporate veil and treating Armor as a sole proprietorship, holding Lemieux personally liable for the accounts which the third party plaintiffs guaranteed. We do not agree.

We must first determine whether the fact that Lemieux was neither a director, officer or shareholder of Armor effectively insulates bim from liability under the instrumentality or identity rules or other theory designed to disregard the legal fiction of the separate corporate entity. The present case is not the ordinary situation in which a corporate veil is pierced by a creditor suing an individual who has used a corporation as an instrument of fraud. See Saphir v. Neustadt, supra; Zaist v. Olson, supra. Nor is this a “reverse pierce” situation where an “insider” is attempting to pierce the corporate veil from within the corporation. See, e.g., Crum v. Krol, 99 Ill. App. 3d 651, 425 N.E.2d 1081 (1981); Roepke v. Western National Mutual Ins. Co., 302 N.W.2d 350 (Minn. 1981) (piercing corporate veil of one man company to allow stacking of survivor’s benefits under no-fault insurance coverage). Instead, this unique situation presents us with an attempt by an insider to pierce the corporate veil to reach an “outsider” who, personally and not through another corporate entity, exercises a great deal of control over corporate affairs.

The concept of piercing the corporate veil is equitable in nature. See Aetna Casualty & Surety Co. v. Stover, 327 F.2d 288, 291 (8th Cir. 1964); Shearson Hayden Stone, Inc. v. Lumber Merchants, Inc., 500 F. Sup. 491, 501 (S.D. Fla. 1980); Roepke v. Western National Mutual Ins. Co., supra; Southern Union Exploration Co. v. Wynn Exploration Co., 95 N.M. 594, 600, 624 P.2d 536 (1981); 1 Fletcher, Cyc. Corp. (Perm. Ed. 1974 Rev.) § 41.2, p. 179; see also comment, “Alternative Methods of Piercing the Corporate Veil in Contract and Tort Cases,” 48 B.U.L. Rev. 123 (1968). “No hard and fast rule, however, as to the conditions under which the entity may be disregarded can be stated as they vary according to the circumstances of each case.” (Footnote omitted.) 1 Fletcher, op. cit., § 41.3, p. 191.⁷

In Zaist v. Olson, supra, 574, we stated: “The circumstance that control is exercised merely through dominating stock ownership, of course, is not enough. Hoffman Wall Paper Co. v. Hartford, [114 Conn. 531, 535, 159 A. 346 (1932)]; see Kulukundis v. Dean Stores Holding Co., 132 Conn. 685, 689, 47 A.2d 183 [1946]. There must be ‘such domination of finances, policies and practices that the controlled corporation has, so to speak, no separate mind, will or existence of its own and is but a business conduit for its principal.’ 1 Fletcher, op. cit., p. 205.”

This is a clear indication that stock ownership, while important, is not a prerequisite to piercing the corporate veil but is merely one factor to be considered in evaluating the entire situation. Similarly, we have never required that an individual be an officer or director of the pierced corporation in order to hold him liable for the debts of the corporation. It is clear that the key factor in any decision to disregard the separate corporate entity is the element of control or influence exercised by the individual sought to be held liable over eorporate affairs. See Saphir v. Neustadt, supra, 210; Zaist v. Olson, supra, 574-75; Hoffman Wall Paper Co. v. Hartford, 114 Conn. 531, 534-35, 159 A. 346 (1932). Thus, while the usual case does involve a director, officer or shareholder of a corporation, the lack thereof, in an unusual case such as this, would not prevent us from imposing liability upon an individual by piercing the corporate veil if the evidence demonstrated the requisite level of control and otherwise satisfied the instrumentality or other applicable test. See In re Flanzbaum, 10 B.R. 420 (S.D. Fla. 1981) (finding that corporation was alter ego of debtor even after debtor resigned as an officer and sold all his stock to another person); see also Krivo Industrial Supply Co. v. National Distillers & Chemical Corporation, 483 F.2d 1098, 1105 (5th Cir. 1973) (“If a lender becomes so involved with its debtor that it is in fact actively managing the debtor’s affairs, then the quantum of control necessary to support liability under the ‘instrumentality’ theory may be achieved.”); Werner v. United States, 374 F. Sup. 558 (D. Conn. 1974), aff’d, 512 F.2d 1381 (1975) (holding defendant liable for withholding taxes even though defendant was not an officer, shareholder or director).

“Ordinarily the corporate veil is pierced only under exceptional circumstances, for example, where the corporation is a mere shell, serving no legitimate purpose, and used primarily as an intermediary to perpetuate fraud or promote injustice.” Newberry v. Barth, Inc., 252 N.W.2d 711, 714 (Iowa 1977); see Saphir v. Neustadt, supra, 209; Hoffman Wall Paper Co. v. Hartford, supra, 535. Even though the evidence, when mewed in the light most favorable to the third party plaintiffs, demonstrates that Lemieux did indeed exercise a considerable amount of control (although he was not a director, officer or shareholder) over the business affairs of Armor, with respect to the specific transaction attacked; see Saphir v. Neustadt, supra, 210; there is insufficient evidence of Lemieux’s dominance or influence such as is required to disregard the separate legal entity of the corporation.

The specific transaction out of which the third party plaintiffs’ liability arises is the signing of the plaintiffs’ guarantee. There was simply no evidence presented⁸ which could show that, with respect to the signing of the guarantee, Lemieux’s control was “used ... to commit fraud or wrong, to perpetrate the violation of a statutory or other positive legal duty, or a dishonest or unjust act in contravention of [the third party plaintiffs’] legal rights; and . . . that the aforesaid control and breach of duty . . . proximately cause [d] the injury or unjust loss complained of.” Zaist v. Olson, supra, 575. The third party plaintiffs were aware of the guarantee and the evidence reveals that they procured it on their own and signed it voluntarily.⁹ There has been no showing that Lemieux, through Armor or individually, coerced or even requested the third party plaintiffs to sign the guarantee. In fact, it does not even appear that Lemieux was involved in or had knowledge of this transaction. Whatever Lemieux’s role might otherwise have been with regard to other corporate actions, it cannot be said that Armor was a mere instrumentality or agent of Lemieux in connection with the signing of the guarantee. The fact that the corporate veil could be disregarded for some purposes does not mean that it must be disregarded for all purposes. Cooperman v. Unemployment Ins. Appeals Board, 49 Cal. App. 3d 1, 8, 122 Cal. Rptr. 127 (1975); see United States v. Goldberg, 206 F. Sup. 394, 405 (E.D. Pa. 1962), aff’d, 330 F.2d 30, cert. denied, 377 U.S. 953, 84 S. Ct. 1630, 12 L. Ed. 2d 497 (1964); Norman v. Murray First Thrift & Loan Co., 596 P.2d 1028, 1032 (Utah 1979). “It is true that courts will disregard legal fictions, including that of a separate corporate entity, when they are used for fraudulent or illegal purposes. Unless something of the kind is proven, however, to do so is to act in opposition to the public policy of the state as expressed in legislation concerning the formation and regulation of corporations.” Humphrey v. Argraves, 145 Conn. 350, 354, 143 A.2d 432 (1958), quoting Kulukundis v. Dean Stores Holding Co., 132 Conn. 685, 689, 47 A.2d 183 (1946). The third party plaintiffs cannot successfully hold Lemieux liable under the instrumentality rule.

The identity rule similarly offers the third party plaintiffs no relief. The evidence presented does not “ ‘show that there was such a unity of interest and ownership that the independence of the corporation had in effect ceased or had never begun, [such that] an adherence to the fiction of separate identity would serve only to defeat justice and equity by permitting the economic entity to escape liability arising out of an operation conducted by one corporation for the benefit of the whole enterprise.’ ” Saphir v. Neustadt, supra, 210. The identity rule primarily applies to prevent injustice in the situation where two corporate entities are, in reality, controlled as one enterprise because of the existence of common owners, officers, directors or shareholders and because of the lack of observance of corporate formalities between the two entities.¹⁰ See Zaist v. Olson, supra, 575-76, 578 (and cases cited therein). The third party plaintiffs have neither claimed nor presented evidence that Armor and Gem, the company of which Lemieux was president, were actually one enterprise. Therefore, the identity rule cannot avail the third party plaintiffs of the relief they seek.¹¹

While the result we reach in this case may seem harsh, this court does not and cannot rescue a party from its own unfavorable or unwise business dealings. “ ‘A hard bargain is not enough to energize the equitable power to disregard the corporate form.’ ” Chengelis v. Cenco Instruments Corporation, 386 F. Sup. 862, 865 (W.D. Pa.), aff’d, 523 F.2d 1050 (1975). The evidence, viewed in the light most favorable to the third party plaintiffs; see Hinchliffe v. American Motors Corporation, supra, 610; simply does not establish a prima facie case for piercing the corporate veil in the fashion pressed as to the specific transaction complained of. The issue of whether the corporate veil is pierced presents a question of fact. Stark v. Coker, 20 Cal. 2d 839, 129 P.2d 390 (1942); see 1 Fletcher, op. cit., § 41.3, p. 191. Whether the third party plaintiffs made out a prima facie case presented a question of law. “On appeal, it is the function of this court to determine whether the decision of the trial court is clearly erroneous. See Practice Book, 1978, § 3060D.” Pandolphe’s Auto Parts, Inc. v. Manchester, 181 Conn. 217, 221, 435 A.2d 24 (1980). We cannot say that the referee’s decision was clearly erroneous based on the evidence before him.

There is no error.

In this opinion Parskey, Armentano and Shea, Js., concurred.

1 Leo was employed as an estimator and Wentworth was employed as an office manager. Both earned approximately $300 per week. Souey was a superintendent or a foreman.

2 Specifically, they feared that if they did not agree to Lemieux’s demands, he would “pull the rug out from under the whole corporation at any time” by recalling his loans, removing his construction equipment and by failing to obtain bonding work for Armor.

3 Lemieux filed two counterclaims on January 25, 1980 in Ms answer to the third party action filed by Leo and Wentworth against him; in the counterclaims, he sought to recover the amount of each note together with interest against Leo and Wentworth.

4 Leo, Wentworth and Soucy had no control over the amount of their own salaries. In fact, when they attempted to raise their salaries in June, 1974 by $50 per week, Lemieux reduced them back to their initial level upon learning of the raises from an audit performed on Armor’s books by the same accountant who worked for Lemieux.

5 Leo had been in the construction business for about twenty-five years. He testified that, based on his experience as an estimator, he had a “pretty good handle” on equipment costs and that the prices charged by CFL, Ine. to Armor were “reasonable.”

6 Wentworth testified that he was responsible for going out and obtaining credit for Armor.

7 “The circumstances which have been considered significant in an action to disregard the corporate entity have rarely been articulated with any clarity. Perhaps this is true because the circumstances necessarily vary according to the facts of the particular ease. Therefore, each case in which the issue is raised should be regarded as sui generis, to be decided in accordance with its own underlying facts. Since the issue is thus one of faet, its resolution is particularly within the province of the trial court and such resolution will be regarded as presumptively correct and will be left undisturbed on appeal unless it is clearly erroneous.” (Footnotes omitted.) 1 Fletcher, Cyc. Corp. (Perm. Ed. 1981 Sup.) § 41.3, p. 38.

8 The dissent attempts by way of “permissible inference” to demonstrate that Lemieux used his control of Armor to avoid his liability. We do not agree that any such inference would be permissible under the evidence offered in this case. It is within the province of the trier of fact, in civil as well as criminal cases, to draw reasonable and logical inferences from the facts proven. See State v. Gonski, 155 Conn. 463, 467, 232 A.2d 483 (1967), and cases cited therein. Moreover, “[m]ere possibilities or suppositions will not sustain a legitimate inference of the existence of a faet nor can it be drawn by conjecture only.” General Petroleum Products, Inc. v. Merchants Trust Co., 115 Conn. 50, 58, 160 A. 296 (1932).

9 Wentworth testified that, to his knowledge, the materials purchased from Ashland and Tomasso were actually used for the benefit of Armor.

10 Other cases illustrate the application of our “identity rule,” as we have described it, though under the heading of the “instrumentality” or “alter ego” rule. See Houston Oil Field Material Co. v. Stuard, 406 F.2d 1052 (5th Cir. 1969) ; Northern Illinois Gas Co. v. Total Energy Leasing Corporation, 502 F. Sup. 412 (N.D. Ill. 1980); Brown v. Margrande Compania Naviera, S.A., 281 F. Sup. 1004 (E.D. Va. 1968); Elliott v. Occidental Life Ins. Co. of California, 272 Cal. App. 2d 373, 77 Cal. Rptr. 453 (1969) ; My Bread Baking Co. v. Cumberland Farms, Inc., 353 Mass. 614, 233 N.E.2d 748 (1968); Westcott Construction Corporation v. Cumberland Construction Co., 3 Mass. App. 294, 328 N.E.2d 522 (1975).

11 We note that the dissent attempts to apply the “identity rule” to this fact situation. However, this would ignore the plain language of that rule which operates to pierce the corporate veil where “ 'adherence to the fiction of separate identity would serve only to defeat justice and equity by permitting the economic entity to escape liability arising out of an operation conducted by one corporation for the benefit of the whole enterprise.’ ” (Emphasis added.) Zaist v. Olson, 154 Conn. 563, 576, 227 A.2d 552 (1967). In this case, there is no “economic entity” which would “escape liability” as set out in the rule. The dissent’s characterization of Lemieux and Armor as the “economic entity” and Armor as the “one corporation” which conducted the operation for the benefit of the “whole enterprise” is quite unique. Not only was there no trace of evidence whatsoever, and therefore no basis for any inference, that Armor “conducted” any “operation” for the benefit of the “whole enterprise,” but, in fact, this claim was not even alleged by the third party plaintiffs.

In Saphir v. Neustadt, 177 Conn. 191, 413 A.2d 843 (1979), as the dissent points out, there were but two defendants, the corporation, CLESCO, and the individual. It was proper, in that case, to prevent the “economic entity,” i.e., the defendant CLESCO, from escaping liability. In the present matter, however, as the dissent fails to realize, Armor was never joined as a third party defendant, nor did the third party plaintiffs ever allege that Armor was “escaping liability.” It is for such reasons that the identity theory, as it is defined in our eases, cannot apply to this case to make Lemieux liable in this guaranty transaction.