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2 Santa Clara Lawyer 90 (1962)
Attorney's Exposure to Personal Liability for Active Participation in the Formation of a Corporation

handle is hein.journals/saclr2 and id is 96 raw text is: SANTA CLARA LAWYER upon the findings of a trial judge, they will be reversed only if they are not based on substantial evidence. Of all the factors which the trial court considers to determine whether there has been a substantial change, the test which has evolved is whether, in spite of all the changes, the property is still suitable for the purpose for which the original restrictions were imposed. Robert Rishwain* CORPORATIONS: ATTORNEY'S EXPOSURE TO PERSONAL LIABILITY FOR ACTIVE PARTICIPATION IN THE FORMATION OF A CORPORATION. In Minton v. Caveney, a recent decision rendered by the Supreme Court of California,1 a wide extension of the alter ego doctrine exposed an attorney to personal liability in a tort action which had originally been filed against a corporation The Seminole Hot Springs Corporation was incorporated in March, 1954 for the purpose of conducting a public swimming pool business. ThF corporation leased a swimming pool and opened for business. In June, 1954 the plaintiff's daughter drowned in the pool. In a wrongful death action against the corporation, the plaintiff was awarded a $10,000 judgment. The judgment went unsatisfied however, so plaintiff originated the present action to have the court declare the defendant, Caveney, an attorney who was a director and the secretary-treasurer of the corporation, personally responsible for the judgment obtained against the corporation. Caveney died during the proceedings and his estate was substituted as the party defendant. After the drowning, the corporation applied to the Commissioner of Corporations for permission to issue three shares of stock, but permission was refused until additional requested information was furnished. This information was never supplied. Consequently a permit was never issued. It was brought out at the trial that Caveney was to have received one of these initial shares of stock, the remainder going to the other two incorporators and directors. Before his death Caveney related that the corporation did not have any assets: that the corporation was organized but never functioned as a corporation; that he had served in his official capacities as officer and director more as an accomodation to his client (the corporation's presi- dent) than for any other reason; and that he was serving in these capacities with the understanding that he would not be an active director. The trial court found the defendant liable for the sum of $10,000. * Third year student, University of Santa Clara School of Law. 1 56 Adv. Cal. 597, 15 Cal.Rptr. 641 (1961). [Vol. 2'

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