Real Persons, Corporate Persons and Vicarious Liability
![handle is hein.journals/cwrlrv38 and id is 489 raw text is: REAL PERSONS, CORPORATE PERSONS
AND VICARIOUS LIABILITY*
Courts have consistently held that a corporate officer cannot be vicariously liable
for the torts of a subordinate employee. However, a recent Ohio Court of Appeals
decision, which purports to follow this tradition, adopts a standard allowing an officer
of a corporation to be held liable for the negligent tort of another corporate employee
if he personally knew or personally should know of a risk of harm. This Note ar-
gues that the failure of the Ohio court to describe the behavior necessary to find that
an officer personally should know, permits the officer to be held vicariously liable.
The author analyzes whether the theories which support vicarious liability of corpora-
tions apply equally well to individual officers, and, concluding that in most cases they
do not, suggests an alternative to the recently adopted standard
WHEN AN injury results from the negligence of a corporate em-
ployee, the doctrine of respondeat superior permits the injured
party to seek compensation from the negligent employee's corporate
employer.' Consequently, suits against individual corporate officers
usually arise only when the injured party anticipates that a suit
against a corporation will result in either no relief or incomplete
relief. The injured third party may anticipate this result in several
distinct situations: 1) the corporation is insolvent or thinly capital-
ized;2 2) the corporation was liquidated between the time of the
accident and the time of the claim;3 3) the injured party is a corpo-
rate employee in a state where the worker's compensation statute
* I am grateful for the useful comments and editorial assistance of Richard A. Booth,
Professor Mollie A. Murphy and the editors and staff of the Case Western Reserve University
Law Review.
1. See W. KEETON, D. DOBBS, R. KEETON & D. OWEN, PROSSER AND KEETON ON
THE LAW OF TORTS § 69 (5th ed. 1984) [hereinafter PROSSER AND KEETON]. It is not neces-
sary for a business enterprise to be organized as a corporation in order to be subject to vicari-
ous liability. Similarly, it is not necessary that the tortfeasor be a corporate employee.
Vicarious liability extends to all forms of business enterprise and to the negligent acts of any
of their employees or agents. The question addressed in this Note is whether it should also be
extended to confer liability on individual supervisors of these negligent employees or agents.
2. Insolvent and thinly capitalized are used here merely in the sense that the
plaintiff anticipates that the corporation's net assets will be insufficient to satisfy the judgment
sought. See, eg., Schaefer v. D & J Produce, 62 Ohio App. 2d 53, 403 N.E.2d 1015 (1978);
Minton v. Cavaney, 56 Cal. 2d 576, 364 P.2d 473, 15 Cal. Rptr. 641 (1961).
3. Liquidation as used here means the complete cessation of the corporation's exist-
ence. See, eg., Schaefer v. DeChant, 11 Ohio App. 3d 281, 464 N.E.2d 583 (1983) (corporate
directors sued after they voted for a dissolution of the corporation without first satisfying the
corporation's known obligations; court held that under the Ohio statute directors could only
be liable to the corporation and that no direct cause of action existed in a creditor). Some
jurisdictions recognize a cause of action in a creditor. See generally 12 W. FLETCHER,
CYCLOPEDIA OF THE LAW OF PRIVATE CORPORATIONS §§ 5432, 5434 (perm. ed. 1986).](ViewImageLocal?handle=hein.journals/cwrlrv38&div=30&collection=&method=preview&ext=.png&size=3)
What Is HeinOnline?
Contact us for annual subscription options:
Already a HeinOnline Subscriber?
profiles profiles most
Real Persons, Corporate Persons and Vicarious Liability
Contact us for annual subscription options:
Already a HeinOnline Subscriber?
profiles profiles most