CORPORATIONS - DISREGARDING CORPORATE ENTITY - FRAUD

A and B purchased from plaintiffs all of the stock of defendant corporation. Prior to the transaction, and as a basis for negotiations, plaintiffs had an accountant prepare a statement of corporate assets and liabilities, which showed that the corporation was in financial difficulties. A and B acknowledged the corporate indebtedness and took over the corporation. Later, plaintiffs brought suit against the corporation on claims for salaries and advancements allegedly due them from it, which claims had not appeared on the statement of corporate liabilities.

Held, the corporate entity would be disregarded, and plaintiffs estopped from setting up their claims against the corporation. Paul v. University Motor Sales Co., 283 Mich. 587, 278 N. W. 714 (1938).