Carlton owned a cab company in which he had established ten independent corporations. Each corporation held a liability insurance value of $ 10,000 recognized by the State law. Nevertheless, Carlton is the primary and sole owner and beneficiary stockholder of the business. Despite the fact that the companies were legally recognized as separate entities, they were run and managed by Carlton. When one of the cabs negligently injured Walkovszky, it was justifiable to sue one of the subsidiary companies which had the least asset value (Robert et al. , 2008).
Arguments for Carlton Arguments for Walkovszky The law should recognize that although Carlton owns the company, the corporations within the company are legal and independent. The law should overlook the fact that Carlton is the primary stockholder of the company and should therefore be held responsible for the negligently caused accident by one of his cabs. It is efficient that the corporation was run not for personal gains but for the benefit of the whole corporation.
Therefore a corporation with lowest asset value is valid and cannot be ignored as supported by law (Robert et al. , 2008). It is inefficient to assume that the corporation was run for the benefit of the whole company. Since Carlton is the sole earner of benefits and share holder, he personally derives satisfaction from the corporation. It is efficient to support the fact that the corporation was not intentionally undercapitalized to avoid liability and responsibility for careless acts that were bound to happen as a result of operating a cab company involved in public transport.
The minimum asset value was not an abuse of the corporate entity since it was legally recognized (Hamilton, 1994). It is inefficient for the law to undermine the fact that Carlton new the risk involved in cab industry. He undercapitalized the corporation to evade liabilities yet it part of his company and business. This indeed is a great abuse of the corporate entity since he was the sole owner of the company (Hamilton, 1994). The law of the state permits minimum liability to all desiring to join business enterprises.
Therefore it is sufficient that valuing of the corporation to take responsibility is not at any point an abuse of the corporate entity. It is unfair to consider the minimum liability cover as a ladder upon which acts of exploitation can be tolerated. The fact that taxi driver negligently ran down on Walkovszky was enough for Carlton to personally compensate the injured pedestrian. It is sufficient that the legislature was adopted by State to protect and promote business operations. The minimum liability value of $10,000 is therefore a way of keeping and respecting the law.
However, the law does not limit or detect business entrepreneurs on the amount of liability value or insurance cover to be considered in protecting business assets. It is important to note that the corporation to take care of the accident caused by negligence is an independent entity of the company recognized by law. This implies that Carlton is legally not bound to paying the cost of the accident even tho0ugh he is the primary stockholder of the company (Thomas, 1984). The entity in itself cannot be viewed as substantial since it only has two cars.
Carlton and his associates are doing in individual capacities. The law recognized $10,000 as the minimum liability value to enable small business enterprises to meet compensation claims of those injured as a result of management negligence. The law had no intentions of shielding big firms and business enterprises from taking a public responsibility and had allowance for able entities acquiring higher insurance cover. The legislature considered that owners of substantial assets would protect their assets by having an excess liability capitalization.
Therefore Carlton being the primary shareholder of the corporation is liable to cater for compensation of Walkovszky. He owns substantial assets with limited liability to evade responsibilities. Conclusion The ruling of the court in this case was a legal and valid upon which no favors were made. Although Carlton is in business that is viewed as lucrative and substantial, he has gone a head to identify his associates as individual entities of the company (Hamilton, 1994). These entities legally qualify to be considered for a minimum liability in case of risks.
He therefore evades public responsibility of his cars although he is the primary stockholder in the business. On the other hand, the defendant, Carlton has a mechanism of evading his responsibilities in the name of corporations. Before he entered then cab industry, he understood the risk factors involved in a public transport business (Hamilton, 1994). As a result, he decided to register his ten associates as individual entities so as to be considered as a small business owner and evade public responsibilities. How does he explain the ownership of the business when he is the primary shareholder?