GUITTARD, Chief Justice.
In this garnishment proceeding the holder of a judgment against a corporation seeks to pierce the corporate veil and hold its sole stockholder, and also other corporations owned by him, personally liable for the judgment. Trial without a jury resulted in a judgment for the garnishees. On this appeal, plaintiff attacks the trial court’s findings that the judgment debtor and the other corporations were not alter egos of the sole stockholder, asserting that she had proved alter ego conclusively as a matter of law, and, alternatively, that the court’s findings are against the great weight and preponderance of the evidence. We hold that the alter ego theory was established as a matter of law and that the trial court’s findings to the contrary are not supported by the evidence. Consequently, we reverse and remand with instructions to render judgment for plaintiff.
Plaintiff Ruby Tigrett sued Heritage Building Company in April 1974. The company was then insolvent according to the testimony of its president and sole stockholder, Gerald M. Pointer. On May 1,1974, substantially all its assets were transferred to Pointer in consideration of a reduction of the company’s indebtedness to him. On the same day, he transferred the same assets to Heritage Corporation. No money changed hands. The consideration was shown on the books of the transferee, Heritage Corporation, as a loan to it by Pointer in the same amount as the reduction of Pointer’s loan to Heritage Building Company.
Plaintiff’s lawsuit resulted in a judgment against Heritage Building Company on August 10, 1976, for $49 per week for 401 weeks,1 but no assets remained on which execution could be levied. She brought the present suit in the form of an application for writ of garnishment, based on that judgment, against Gerald M. Pointer, Heritage Corporation, and other corporations owned and controlled by Pointer, alleging that the garnishees were indebted to Heritage Building Company as a result of the fraudulent transfer of its assets. She further alleged that Heritage Building Company, Heritage Corporation, and the other corporate garnishees were the alter egos of Pointer and that all of the garnishees were jointly and severally liable for the judgment.2
[379] After rendering judgment for the garnishees, the judge filed findings of fact to the effect that neither Heritage Building Company nor Heritage Corporation was the alter ego of Pointer, that all of the corporate garnishees transacted business as separate corporate entities, that the corporate minute books were adequate, well maintained, and reflected the conduct of substantial business by the board of directors of each corporation, and that the transfer of assets by Heritage Building Company to Pointer was a legitimate payment of a legitimate indebtedness and was not a return of capital investment or equity. All of these findings are attacked on the ground that the opposite of each finding is conclusively established as a matter of law and on the alternate ground that each is so against the great weight and preponderance of the evidence that it is clearly wrong and manifestly unjust.
1. Summary of Evidence
The relevant facts are not in dispute. The only testimony in the record is that of the appellee Pointer and his employees, and all the documentary evidence, other than plaintiff’s judgment, was produced from the appellees’ files.
Heritage Building Company was chartered in 1955 for the purpose of purchasing, subdividing and selling real estate, erecting and repairing buildings, and accumulating and lending money for these purposes. It was capitalized for $1,000 in cash, and 10,-000 shares of stock were issued, of which 9,800 were issued to Gerald M. Pointer in consideration of $980. Pointer has since become sole stockholder, and he has always served as president and as chairman of the board of directors. The company acquired land and buildings, mostly apartment complexes, and also acted as general contractor for buildings erected on lands owned by Pointer. The corporate offices were maintained in a building owned by Pointer. Approximately six regular employees were paid by the corporation, including a bookkeeper and office manager, who also supervised the keeping of Pointer’s personal books. Two of these employees acted as members of the board of directors, along with Pointer. Meetings were held routinely, loans and other corporate acts were authorized, and minutes were kept, but Pointer’s proposals were always adopted without question.
The corporation’s ledger contains a “loan account” showing its indebtedness to Pointer. On April 30, 1974, the ledger showed this indebtedness to be $484,218.00. No notes were signed, no security taken, and no interest paid. The only written evidence of the indebtedness in the present record is the notation in the corporate books. Pointer testified that he considered this a loan rather than a capital investment. The corporate financial statement, however, designates it as “capital.”
On April 30, 1974, at a special meeting of the board of directors of Heritage Building Company, six days after service of process in plaintiff’s suit, a resolution was adopted authorizing transfer of substantially all its assets to its president and sole stockholder, Gerald M. Pointer, in consideration of a reduction of the company’s debt to him. On the next day entries were made on the books of the company, showing the transfer and listing in detail both real and personal property. Corresponding entries were made in Pointer’s personal books showing his purchase of these assets. At the same time entries were made on the books of Heritage Corporation, also solely owned by Pointer, showing a transfer of the same assets from Pointer to it. No money changed hands. The books of Heritage Building Company showed a reduction of $389,967.00 in its debt to Pointer. This figure was determined by the book value of the assets, less the debts against them. The books of Heritage Corporation showed a loan of the same amount to it by Pointer. No deeds were signed until September 1975, [380] when Heritage Building Company conveyed the various tracts of land listed directly to Heritage Corporation. The transfer was not announced, even to the employees of Heritage Building Company, who first learned of it when they received their paychecks from the new corporation. Operation of the business continued without change. The same employees continued to perform the same duties in the same suite of offices. New stationery was printed, but “Heritage Building Company” remained on the office door and was still there at time of this trial.
The transfer of assets from Heritage Building Company to Pointer and from Pointer to Heritage Corporation on May 1, 1974, was explained by Pointer as a change of the corporate name and as an effort to improve the “credit reputation” of the business. He testified that the company had acquired a bad credit reputation and was unable to obtain loans because three of its apartment projects had been lost by foreclosure. In 1973, when the financial problems of Heritage Building Company became apparent, Heritage Corporation was organized with an initial capital of $1,000 and Pointer as the principal officer and sole stockholder. Its corporate purpose was somewhat broader than that of Heritage Building Company. The assets transferred consisted principally of real estate and equipment used in the construction business, all of which were listed in the books of Heritage Building Company as transferred to Pointer and in the books of Heritage Corporation as transferred to it by Pointer.
Pointer acknowledged that at the time of the transfer Heritage Building Company “owed a lot of other people,” and that no provision was made for payment of other creditors. The corporation had no independent directors that were concerned about claims of creditors. Tom Fuller and Joseph Thompson, the employees who served as the other two directors at that time, testified that they were not concerned about the other debts of the corporation. Neither raised any questions in that respect. Their duties as directors had never been explained to them. They simply followed Pointer’s instructions. They did not remember a meeting at which the resolution authorizing the transfer was approved, but they knew that Heritage Building Company was heavily indebted to Pointer, as were all of Pointer’s corporations, and that the transfer would reduce that debt. Fuller testified that he knew that the transfer would strip the corporation of its assets, but Thompson said that he did not know it would have that effect and that the resolution was not explained to him.
The trial court made no finding as to whether Heritage Building Company was insolvent on May 1, 1974, when it transferred its assets to Pointer. No implied finding on that issue can be presumed because Pointer’s testimony establishes as a matter of law that the company was insolvent and could not continue in business. He testified expressly that it was “insolvent,” even before the transfer. This conclusion is supported by his factual testimony. Thus, he said that the transfer did not make the company insolvent because it was already insolvent and had “a large negative net worth.” He said that the company “owed a lot of other people,” but that no provision was made for payment of other creditors because “it had become obvious to us as directors that Heritage Building Company could not continue to function, so we had to shut the business down in effect.” Pointer’s testimony leaves no doubt that “virtually all” of the company’s assets were transferred to him and then to the new corporation, and that after the transfer the new corporation carried on the business and the old company “did no business” and “had no assets.” Besides its remaining debt to Pointer of $94,251, it still “owed not only me but a lot of other people a lot of money.” Pointer testified further that in October, 1974 and several times in 1976 he put his individual assets and funds into the old corporation in order to pay some of its debts, including attorney’s fees and court costs in the suit brought by plaintiff Ruby Tigrett. If the indebtedness to Pointer was a “legitimate debt,” as the trial court found, then, unquestionably, even before [381] the transfer, the corporation was insolvent within the statutory definitions of insolvency as “inability of a corporation to pay its debts as they become due in the usual course of business.” Tex.Bus.Corp.Act Ann. art. 1.02 (Vernon 1956).
The trial court found that Heritage Building Company had not ceased doing business at the time of the transfer of assets to Pointer. This finding is apparently based on evidence that the corporation was not dissolved, then or later, but continued to maintain its existence and pay its franchise taxes, that funds were deposited in its bank account, against which checks were written, that the company realized a profit of $91,000 in October 1974, and that in November 1974 the board of directors authorized the corporation to borrow $200,000 from Republic National Bank to purchase and develop certain land in Lancaster. Although these transactions may have been technically the acts of the old company, Pointer did not regard them in that light. He testified positively that the old company was “shut down” in May 1974 and “did no business” after that time. The new corporation, he said, took over all the employees and virtually all the assets, occupied the offices, and carried on the operations as if no transfer had occurred. Thereafter, he said, the old company had “no assets” and was “nothing but a bank account” in which for a time rents from his personal properties were deposited and on which checks were drawn for expenses, but that these were shown on the books as his personal funds and any profit or loss was attributed to him individually. Pointer explained, “Frankly, we had a lot of debt in there. We were rolling the debt by depositing these Heritage Apartment receipts in there.”
He also explained that the “profit” of October 1974 came from two sources, an escrow fund of $25,000, which had been on the company’s books all along and was then released because of satisfaction of the conditions, and $66,000 which was a profit on the sale of an apartment that he owned individually and which he contributed to the old company to pay some of its debts. He testified also that the loan from Republic National Bank was actually a loan to the new corporation, but was closed in the name of the old company because that company had originally applied for it, although the new corporation received the money, acquired the property, and developed the land. Thus, although the evidence may be sufficient to support the court’s finding that the old company had not ceased doing business at the time of the transfer, this finding cannot properly be understood as a finding that its business continued in its usual way.
2. Heritage Building Company as Alter Ego of Pointer
With these facts in mind, we turn to the authorities bearing on the alter ego question. It has been said that each case involving disregard of the corporate entity must rest on its own special facts. Rosenthal v. Leaseway, 544 S.W.2d 180, 182 (Tex. Civ.App.—Tyler 1976, no writ). When all the material facts are undisputed, however, application of the alter ego doctrine is a question of law. American Petroleum Exchange, Inc. v. Lord, 399 S.W.2d 213, 217 (Tex.Civ.App.—Fort Worth 1966, writ ref’d n. r. e.); Pacific American Gasoline Co. v. Miller, 76 S.W.2d 833, 851 (Tex.Civ.App.—Amarillo 1934, writ ref’d); Continental Supply Co. v. Forrest E. Gilmore Co., 55 S.W.2d 622, 628 (Tex.Civ.App.—Amarillo 1932, writ dism’d); and see Buie v. Chicago, R. I. & P. Ry. Co., 95 Tex. 51, 65 S.W. 27, 30 (1901).
Of course, domination of corporate affairs by the sole stockholder does not in itself justify imposition of personal liability. Evans v. General Insurance Co., 390 S.W.2d 818, 822 (Tex.Civ.App.—Dallas 1965, no writ). Personal liability may be imposed on the sole stockholder only in extraordinary circumstances. Various statements of the circumstances justifying personal liability are found in judicial opinions, but common to all is the concept that the corporate form may be disregarded when it is used to perpetrate a fraud or is relied on to justify [382] wrong or injustice. See Gentry v. Credit Plan Corp., 528 S.W.2d 571, 575 (Tex.1975); Pace Corp. v. Jackson, 155 Tex. 179, 284 S.W.2d 340, 351 (1955); First Nat. Bank in Canyon v. Gamble, 134 Tex. 112, 132 S.W.2d 100, 103 (1939); State v. Swift & Co., 187 S.W.2d 127, 131-32 (Tex.Civ.App.—Austin 1945, writ ref’d); Pacific American Gasoline Co. v. Miller, 76 S.W.2d 833, 851 (Tex.Civ. App.—Amarillo 1934, writ ref’d); 1 I. Hildebrand, Texas Corporations § 5 (1942).
Accordingly, even though corporate formalities have been observed and separate accounts of corporate property kept, one who has dealt with the corporation may challenge the corporate entity by showing that he has been the victim of some basically unfair device by which the corporate form of business organization has been used to achieve an inequitable result. This principle is stated in Bell Oil & Gas Co. v. Allied Chemical Corp., 431 S.W.2d 336, 340 (Tex. 1968), as follows:
[T]he corporate arrangement must be one which is likely to be employed in achieving an inequitable result by bringing into operation a basically unfair device which in all probability will result in prejudice to those dealing with one or more of the units making up the corporate arrangement, or one which has actually resulted in the complaining party’s having been placed in a position of disadvantage by the exercise of inequitable means, of which the corporate arrangement is a part.
Among the unfair devices which have been considered in piercing the corporate veil is inadequate capitalization. One authority states that if a corporation carries on a business with so little capital that it is likely to have insufficient assets to pay its debts, it would be inequitable to allow the stockholders to set up such a flimsy organization to escape personal liability. W. Fletcher, Cyclopedia of the Law of Private Corporations, § 44.1 (rev. perm. ed. 1974). Another commentator has pointed out that the policy of the law supporting limited liability is to induce investors to risk their capital in the corporate enterprise, and that to extend limited liability without requiring adequate capital would give the privilege without receiving the benefit of the investment and would have the contrary effect of encouraging entrepreneurs to subject as little of their capital as possible to the risks of the business. Drye, Inadequate Capitalization as a Basis for Shareholder Liability, 45 So.Cal.L.Rev. 823, 845 (1972).
Inadequate capitalization by itself may not be a sufficient ground to pierce the corporate veil. Associates Development Corp. v. Air Control Products, Inc., 392 S.W.2d 542, 545 (Tex.Civ.App.—Austin 1965, writ ref’d n. r. e.). Thus, a party who has contracted with a financially weak corporation and is disappointed in obtaining satisfaction of his claim cannot look to the dominant stockholder or parent corporation in the absence of additional compelling facts. Bell Oil & Gas Co. v. Allied Chemical Corp., 431 S.W.2d 336, 340 (Tex.1968); Hanson Southwest Corp. v. Dal-Mac Construction Co., 554 S.W.2d 712, 717 (Tex.Civ.App.—Dallas 1977, writ ref’d n. r. e.). Grossly inadequate capitalization, however, as measured by the nature and magnitude of the corporate undertaking, is an important factor in determining whether personal liability should be imposed. Anderson v. Abbott, 321 U.S. 349, 362, 64 S.Ct. 531, 88 L.Ed. 793 (1944); De Witt Truck Brokers, Inc. v. W. Ray Flemming Fruit Co., 540 F.2d 681, 685 (4th Cir. 1976); National Marine Service, Inc. v. Thibodeaux, 501 F.2d 940, 942 (5th Cir. 1974); Holmes v. Clow, 533 S.W.2d 99, 102 (Tex.Civ.App.—Tyler 1976, no writ); Oriental Investment Co. v. Barclay, 25 Tex.Civ.App. 543, 64 S.W. 80, 88 (1901, writ ref’d); Automotriz del Golfo de California v. Resnick, 47 Cal.2d 792, 306 P.2d 1, 63 A.L.R.2d 1042 (1957).
Appellees argue that in this case the minimum capitalization of $1,000 was more than adequate for the type of business carried on by Heritage Building Company, since construction projects on real property are generally financed by loans without personal liability, with the realty standing as collateral. This argument is conclusively [383] rebutted by the company’s financial statement of April 30, 1974, which shows loans from Pointer to the company aggregating $484,218, designated as “capital.” Although Pointer might have been able to carry on the business without advancing the money other than the amount he paid for the stock, he chose not to do so. Instead, he advanced money to the corporation from time to time in the form of loans aggregating more than four hundred times the initial capitalization. These loans were in addition to borrowings secured by liens on real estate and other property held by the company. There is no evidence that the company had ever obtained a loan from a financial institution without full security. It is most unlikely that a commercial lender or any other person without a shareholder’s interest would have made such unsecured loans to a company with so little capital. Neither does it appear that Pointer’s loans were made at times of financial stress, but rather pursuant to a practice Pointer had followed for many years of advancing funds needed in the company’s operations. Pointer testified that he had loaned money to his corporations for years, and one of his employees, who served as a director of all the corporations, testified that all of Pointer’s corporations were indebted to him. Thus, the evidence conclusively shows that the initial capital stock was grossly inadequate as compared to the funds which Pointer actually invested in the enterprise.
Another ground for disregarding the corporate entity is a dominant stockholder’s preference of himself as a creditor, in violation of his fiduciary duty to an insolvent corporation. Appellees contend that a debt- or, even though insolvent, may prefer one of several creditors by conveying property in satisfaction of the debt, citing Hawes v. Central Texas Production Credit Association, 503 S.W.2d 234, 235 (Tex.1973), and they insist that the evidence establishes that at the time of the transfer, Heritage Building Company was indebted to Pointer in an amount greater than the value of the assets transferred.
The rule that a debtor may prefer one of several creditors does not apply to an insolvent corporation when it can no longer continue to do business in the usual way. Its assets then become a trust fund for the benefit of all its creditors; consequently, its stockholders have no right, directly or indirectly through the managing officers, to pay or secure some of the creditors at the expense of others. Lyons-Thomas Hardware Co. v. Perry Stove Mfg. Co., 86 Tex. 143, 24 S.W. 16, 23 (1893). In this situation, all the directors become trustees with the duty to see that the assets are devoted to the payment of corporate debts, without preferring one creditor over another. Waggoner v. Herring-Showers Lumber Co., 120 Tex. 605, 40 S.W.2d 1, 5 (1931); cf. Allied Chemical Corp. v. Randall, 321 F.2d 320, 323 (7th Cir. 1963) (transfer of assets of insolvent corporation to affiliated corporation). More especially, because of this fiduciary duty, they are not permitted to manipulate the affairs of the corporation by preferring themselves as creditors to the injury of general creditors. Continental Supply Co. v. Forrest E. Gilmore Co., 55 S.W.2d 622, 628 (Tex.Civ.App. — Amarillo 1932, writ dism’d). In equity, a large indebtedness in favor of a dominant stockholder may be treated as an advance of capital, and thus as subordinate to the claims of other creditors, if the corporation is capitalized for an inadequate amount. Pepper v. Litton, 308 U.S. 295, 309-312, 60 S.Ct. 238, 84 L.Ed. 281 (1939); Duberstein v. Werner, 256 F.Supp. 515, 521 (E.D.N.Y.1966).
In Pepper v. Litton, supra, Litton, the dominant stockholder, attempted to defeat Pepper’s claim as a corporate creditor by taking a judgment against the corporation, buying its assets at an execution sale, and then transferring them to a new corporation in exchange for stock. The Supreme Court held that regardless of whether or not Litton’s judgment was based on a valid claim, he could not use his inside position to gain an unfair advantage for himself at the expense of other creditors. The opinion is [384] so pertinent to the present case that we quote from it at length in the margin.3
Admittedly, most of the cases recognizing the fiduciary duty of the directors of an insolvent corporation are trust-fund cases, and, of course, the trust-fund doctrine and the alter ego doctrine have different consequences. The trust-fund doctrine allows a creditor to pursue corporate assets and hold the directors liable for that portion of the assets that would have been available to satisfy his debt if they had been distributed pro rata to all creditors, and it does not, in itself, justify piercing the corporate veil and imposition of unlimited liability on the stockholders. Fagan v. La Gloria Oil & Gas Co., 494 S.W.2d 624, 632 (Tex.Civ.App.—Houston [14th Dist.] 1973, no writ). On the other hand, we see no reason why the two doctrines should be mutually exclusive. The trust-fund doctrine, though urged by appellant, is not applicable here, and we do not rely on it as such, because it was not pleaded in the trial court and because appellant has not established her proportionate share of the assets. We cite the trust-fund cases only as establishing the existence of a fiduciary duty which Pointer breached at the time of the transfer. That breach may not in itself be sufficient to pierce the corporate veil and impose personal liability, as distinguished from the liability of a trustee. It adds weight, however, to the other circumstances shown and reveals those circumstances in a significant new light. When a corporation is completely dominated by a [385] single stockholder, who has advanced funds to the corporation from time to time in the form of unsecured loans amounting to almost five hundred times the amount of the original capital, and then, when other debts accumulate and the company can no longer continue its business in the usual way, he transfers all assets to himself in partial repayment of his advances so that he can continue the same business through another corporate vehicle without making provision for payment of other creditors, he may well incur the liability of a trustee, but the question arises also as to whether he is guilty of such unfair manipulation of the corporate enterprise in his individual interest that he can no longer be allowed to interpose the separate identity of the corporation to insulate himself from personal liability.
Appellees argue that plaintiff has no standing as a creditor to complain of the transfer of assets by Heritage Building Company because her claim was unliquidat-ed and had not been reduced to judgment when the transfer was made. We do not think that she must have reduced her claim to judgment at that time in order to assert Pointer’s personal liability. She was at that time a claimant, and the subsequent judgment establishes the legitimacy of her claim and her standing as a creditor. See Pierce v. United States, 255 U.S. 398, 403, 41 S.Ct. 365, 65 L.Ed. 697 (1920); World Broadcasting System, Inc. v. Bass, 160 Tex. 261, 328 S.W.2d 863, 864-65 (1959). She need not show that the transfer was made with specific intent to defeat her claim in view of Pointer’s unequivocal testimony that even before the transfer and without considering her claim, the company was insolvent, “owed a lot of other people,” and could not continue in business, and that the assets were transferred to him without any provision for paying creditors. Her standing as one of several creditors is no worse than if she were the only creditor whose claim Pointer intended to defeat by putting the company’s assets beyond her reach.
Appellees also contend that the alter ego doctrine cannot be applied in the absence of fraud or bad faith. They cite Holmes v. Clow, 533 S.W.2d 99 (Tex.Civ.App.—Tyler 1976, no writ), which recognizes inadequate capitalization as a ground for piercing the corporate veil (id. at 101-102), but holds that an initial capitalization of $1,000 did not establish that the corporation was underfinanced to the extent that it constituted a fraud on persons dealing with it, since it also had a commitment from a bank for a loan in an amount which the incorporators believed sufficient to cover its debts. The court observed that subsequent failure of the corporation could not afford the basis of finding fraud at the inception. That case does not control here because in this case the claim of alter ego does not rest on fraudulent intent at the time of incorporation. This claim rests rather on the transfer of all the assets of the corporation to the dominant stockholder when the corporation was insolvent in violation of his duty to preserve the assets for the benefit of creditors. Whether he misled them or subjectively intended to defraud them is immaterial. DeWitt Truck Brokers, Inc. v. W. Ray Flemming Fruit Co., 540 F.2d 681, 684 (4th Cir.1976); National Marine Service, Inc. v. Thibodeaux, 501 F.2d 940, 942 (5th Cir.1974); Platt v. Billingsley, 234 Cal.App.2d 577, 44 Cal.Rptr. 476, 479, 483 (1965); and cf. Gentry v. Credit Plan Corp., 528 S.W.2d 571, 573 (Tex.1975) (plaintiff in tort case does not have burden of showing fraud to pierce the corporate veil). In the circumstances shown here, this action was so grossly unfair as to amount to constructive fraud, even though the corporation may not have been organized originally for a fraudulent purpose and even though no specific fraudulent intent is shown.
The situation is comparable to that in International Bankers Life Ins. Co. v. Holloway, 368 S.W.2d 567, 584 (Tex.1963), in which the supreme court held that the breach of a fiduciary duty by directors in selling stock in competition with sales by the corporation was an act “which equity considers to be wilful and fraudulent, regardless of what may have been the actual motives . . . Cf. Givens v. Girard Life Ins. Co., 480 S.W.2d 421, 425 (Tex.Civ.[386] App.—Dallas 1972, writ ref’d n. r. e.) (husband’s excessive gift of community funds was constructive fraud without proof of specific intent to defraud). These decisions are in accordance with the principle stated by the supreme court in Archer v. Griffith, 390 S.W.2d 735, 740 (Tex.1964) as follows:
Actual fraud usually involves dishonesty of purpose of intent to deceive, whereas constructive fraud is the breach of some legal or equitable duty which, irrespective of moral guilt, the law declares fraudulent because of its tendency to deceive others, to violate confidence, or to injure public interests.
Here, the operation of the business on funds provided by unsecured loans from the sole stockholder, rather than on equity capital subscribed or contributed in the usual manner, created the false appearance of a corporation with substantial assets, although those assets were subject to withdrawal at will by the sole stockholder in satisfaction of the corporation’s indebtedness to him. Significantly, Pointer’s loan account is designated as “capital” in the company’s financial statement on April 30, 1974, and although this listing is under “liabilities” rather than the more specific designation of “capital,” which includes the capital stock, it emphasizes Pointer’s practice of financing the corporate enterprise by advances of his personal funds and indicates recognition that the capital stock itself is grossly inadequate for this purpose.
Under these circumstances the insolvency, or prospective insolvency, of the corporation at the time of withdrawal of the assets is crucial in determining his right to do so to the detriment of other creditors. Prom Pointer’s testimony as summarized above, we have no difficulty in determining as a matter of law that Heritage Building Company was insolvent and could not continue in business at the time of the transfer and thereafter. We recognize that a corporation may not be insolvent, though it has difficulty in paying its creditors and its balance sheet shows a temporary deficit. Nevertheless for the purpose of determining the existence of a fiduciary duty to preserve the assets for all the creditors, the test is whether the corporation’s assets are insufficient for the payment of its debts and that it has ceased to do business, or has taken, or is in the act of taking, a step which will practically incapacitate it for conducting the corporate enterprise with a reasonable prospect of success. Lyons-Thomas Hardware Co. v. Perry Stove Mfg. Co., 86 Tex. 143, 24 S.W. 16, 25 (1893); Fagan v. La Gloria Oil & Gas Co., 494 S.W.2d 624, 629 (Tex.Civ.App.—Houston [14th Dist.] 1973, no writ). This test is satisfied as a matter of law by the undisputed evidence in this case, whether or not the corporation was technically in a condition of “insolvency,” as that term is defined by statute. Tex.Bus.Corp.Act Ann. art. 1.02 (Vernon 1956). Consequently, Pointer had a fiduciary duty that was breached when he transferred the company’s assets to himself. Our question is whether that breach, in the light of the other circumstances shown here, requires imposition of personal liability without proof of the other requisites of the trust-fund doctrine.
We return, therefore, to the test set out in Bell Oil & Gas Co. v. Allied Chemical Corp., supra: a basically unfair device by which the fiction of separate corporate personality is likely to be or actually has been used to achieve an inequitable result. Such a device is clearly shown by the undisputed evidence in this case. Pointer organized Heritage Building Company with a minimum of capital stock and advanced the necessary working funds from time to time in the form of loans. When the corporation ran into financial difficulty, he used his dominant position as president, director, and sole stockholder to withdraw substantially all assets from the corporation without making any provision for payment of plaintiff and other creditors. Under the authorities above discussed, this maneuver was a violation of his fiduciary duty as officer and director of an insolvent corporation to preserve the assets for the benefit of all the creditors. It was particularly inequitable and unfair in that he preferred himself as a creditor, although in view of the [387] inadequate capitalization, his loan to the corporation must be treated as an advance of capital, or, at most, as a claim subordinate to those of other creditors. Although no one of these circumstances, standing alone, would justify piercing the corporate veil, when taken together, they demonstrate conclusively that while Pointer observed the form of the corporate enterprise, he ignored his substantive duties as a corporate officer and director and acted solely in his own interest. Consequently, we hold that the trial court erred in failing to hold him liable individually for the corporation’s debts.
3. Heritage Corporation as an Alter Ego of Pointer
Plaintiff also attacks the trial court’s finding that Heritage Corporation, the new entity to which the assets of Heritage Building Company were transferred, was not an alter ego of Gerald M. Pointer. We hold that this finding, likewise, is contrary to the undisputed evidence. The new company is equally Pointer’s tool and equally subject to his absolute will. Admittedly, it was organized for the purpose of carrying on the same business as that of the Heritage Building Company after that company had run into financial difficulties. Before the transfer, the new company had no assets except, presumably, the $1,000 Pointer had paid for its capital stock. After the transfer it had substantially all the assets of the old company, with a net book value of $389,677, for which it had paid nothing but an entry in its books evidencing a loan in that amount from its president and sole stockholder. In practical operation the new company does not differ from the old. The only material difference is in the position of the creditors of the old company.
Appellees would have us hold that resolutions in corporate minutes and entries in corporate books are effective, like a magic wand, to free the enterprise from the claims of its creditors. We are asked to believe that the old company has been laid to rest, with neither the absolution of bankruptcy nor the obsequies of formal dissolution, and that a new corporation in its image has sprung up like a Phoenix, full-grown and free of fiscal infirmity. This legal legerdemain should deceive no one. Behind the corporate veil we see no miraculous new birth, but only a vain attempt by an entrepreneur to revive the same moribund enterprise without the transfusion of capital necessary to restore it to financial health.
We regard the entire transaction as a basically unfair device in which the new corporation as well as the old is a part. This device has, by inequitable means, put plaintiff and other creditors at a disadvantage and, in all probability, will result in similar prejudice to persons dealing with the business in the future. Consequently, we hold that the trial court erred in failing to disregard the corporate existence of Heritage Corporation as well as that of Heritage Building Company.
4. Other Corporations as Alter Egos of Pointer
The other corporations solely owned by Pointer present little difficulty. Pointer testified that East Realty Company, South Management Corporation, and Heritage Apartment Company have no assets or business of their own, but merely hold title to property that he owns individually. South Management Corporation has the same status, except that it holds nominal title to a piece of property owned jointly by Pointer and his partner, John Taylor, against whom several liens were outstanding.4 All of these corporations have the [388] same officers, directors, and stockholders as Heritage Building Company and Heritage Corporation, and none pay any salaries or dividends. The only one with any semblance of business activity is East Realty Company which, Pointer said, has a bank account in which he deposits rentals from apartments owned by him individually and on which checks are drawn for maintenance and repairs of these apartments. He has made loans to East Realty from time to time, and he transfers money from its bank account to himself whenever he wants it. The law will not permit a stockholder to treat all the assets standing in the name of a corporation as his individual property, which he can withdraw whenever he pleases, and also claim the benefits of a separate corporate entity. Clearly, all three of these corporations are but tools or conduits used by Pointer for his individual purposes rather than separate business enterprises. Consequently, we hold that they are also alter egos of Pointer. Sundaco, Inc. v. State, 463 S.W.2d 528, 532 (Tex.Civ.App.—Eastland 1970, writ ref’d n. r. e.); McDonald & Co. v. Kemper, 386 S.W.2d 215, 217 (Tex.Civ.App.—Fort Worth 1965, no writ); Continental Supply Co. v. Forrest E. Gilmore Co., 55 S.W.2d 622 (Tex.Civ.App.—Amarillo 1932, writ dism’d). Actually, disregarding the separate existence of these corporations may have little practical significance because the assets standing in their names, or Pointer’s interest in such assets, are subject to his individual debts anyway in view of his testimony that these assets are his individual property.
First North Corporation, however, stands on a different footing. Although Pointer was originally its sole stockholder, he contributed the stock to a family trust. The terms of this trust are not in evidence, and we do not know whether it is revocable or irrevocable. First North has assets of its own consisting of a vacant lot, a day-care center, and certain furniture and equipment located in apartments owned by Pointer, individually. Although Pointer evidently controls First North, there is no evidence that it has been used as a part of any unfair device that would put his assets or the assets of any of his other corporations beyond the reach of creditors. Consequently, we overrule plaintiff’s points of error asserting that the trial court erred in failing to hold that it was another alter ego of Pointer.
Judgment
Except with respect to First North Corporation, we sustain all of appellant’s points attacking the findings of the trial court concerning the separate corporate existence of Heritage Building Company and the corporate appellees. We hold that these findings are contrary to the undisputed evidence and that plaintiff’s allegations of alter ego are established as a matter of law. To the extent that any fact questions may be raised, we hold that these findings are against the great weight and preponderance of the evidence.
Accordingly, the judgment of the trial court is affirmed insofar as it denies relief against First North Corporation. Otherwise, the judgment is reversed and the cause is remanded with instructions to render judgment in favor of Ruby Tigrett against Gerald M. Pointer, Heritage Corporation, East Realty Company, South Management Corporation, and Heritage Apartment Company, jointly and severally, for all amounts due on the judgment of plaintiff Tigrett against Heritage Building Company, including interest as provided by law. All costs are taxed against appellee Gerald M. Pointer.
AKIN, J., dissenting.