540 F.2d 681 (4th Cir. 1976)
DeWitt Truck Brokers v. W.
Under South Carolina law, may a court pierce the corporate veil to hold a dominant shareholder personally liable for a corporation's debts where the shareholder has so dominated and misused the corporation—through undercapitalization, disregard of formalities, and siphoning of funds—that recognizing the corporate entity would work an injustice?
Courts may pierce the corporate veil when the corporate form is used to defeat public convenience, justify wrong, protect fraud, or achieve inequitable results. The inquiry is fact intensive and considers whether the corporation is the mere instrumentality or alter ego of its dominant shareholder and whether adherence to the corporate fiction would promote injustice or fundamental unfairness. Relevant nonexclusive factors include: (1) gross undercapitalization for the corporation's undertaking; (2) failure to observe corporate formalities; (3) nonfunctioning of officers and directors other than the dominant shareholder; (4) absence or inadequacy of corporate records; (5) insolvency at the time of the challenged transaction; (6) siphoning or diversion of corporate funds by the dominant shareholder; (7) nonpayment of dividends; (8) use of the corporation as a façade for the operations of the dominant shareholder; and (9) whether recognition of the corporate entity would result in inequity or injustice.
Yes. The court pierced the corporate veil and held W. Ray Flemming personally liable for the corporation's debt to DeWitt.
DeWitt is a cornerstone case for veil piercing. It supplies a widely adopted multifactor test and clarifies that no single factor is dispositive; instead, courts look to the totality and to whether recognizing the entity would promote injustice. For students, the case illustrates how undercapitalization, disregard of formalities, and self-dealing combine to justify personal liability, and it underscores that veil piercing is an equitable remedy grounded in fairness rather than a rigid formula.