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The corporate structure is an artificial construct of the law, a substantial purpose of which is to create an incentive for investment by limiting exposure to personal liability. "The insulation of a stockholder from the debts and obligations of his corporation is the norm, not the exception." NLRB v. Deena Artware, Inc., 361 U.S. 398, 402-03, 80 S.Ct. 441, 443-44, 4 L.Ed.2d 400 (1960) (citations omitted). In extreme circumstances, however, the corporate form will be disregarded and the personal assets of a controlling shareholder or shareholders may be attached in order to satisfy the debts and liabilities of the corporation. However, the corporate veil should be pierced only reluctantly and cautiously. Cascade Energy and Metals Corp. v. Banks, 896 F.2d 1557, 1576 (10th Cir.), cert. denied, 498 U.S. 849, 111 S.Ct. 138, 112 L.Ed.2d 105 (1990). Piercing the corporate veil is an equitable action and as such is reserved for situations where some impropriety or injustice is evident.
If any general rule can be laid down, in the present state of authority, it is that a corporation will be looked upon as a legal entity as a general rule, and until sufficient reason to the contrary appears; but, when the notion of legal entity is used to defeat public convenience, justify wrong, protect fraud, or defend crime, the law will regard the corporation as an association of persons.... The corporate veil may not be pierced absent a showing of improper conduct. 1 Charles R.P. Keating & Gail O'Gradney, Fletcher Cyclopedia Corporations, Sec. 41 at 603 (1990 ed.) (footnote omitted); see 18 C.J.S. Corporations Sec. 10 at 277 (1990) ("Generally, a corporation is a legal entity, ... and such legal entity may not be disregarded except where equitable considerations require piercing the corporate veil."); 18 Am.Jur.2d Corporations, Sec. 44 at 843-44 (1985).
("[D]isregard of the corporate entity may be invoked if this is necessary to preserve, protect or enforce [substantial rights rather than mere matters of organization], in other words to prevent an injustice.") (footnote omitted). As the NLRB has set out: "the corporate veil will be pierced whenever it is employed to perpetrate fraud, evade existing obligations, or circumvent a statute." Riley Aeronautics Corp., 178 NLRB 495, 501 (1969) (citations omitted).
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