Seminole Hot Springs Corporation (Seminole), a corporation in California, leased and maintained a public swimming pool. In June 1954, the plaintiff’s daughter drowned in the pool and the plaintiffs got a judgment for $10,000 against Seminole for her wrongful death. The judgment was never paid by the corporation and in January 1957, the plaintiffs filed action to hold Cavaney personally responsible for settling the judgment. Cavaney died in May 1958 and the plaintiffs replaced Cavaney’s wife as the defendant. The trial court awarded the judgment for the plaintiffs. Cavaney’s wife, appealed the decision.
The equitable owners of a corporation are liable for the debts of the corporation when they treat the assets of the corporation as their own, when they hold themselves as being personally liable for the debts of the corporation, or when they provide inadequate capitalization and actively participate in the affairs of the corporation.
In this case, there was no doubt that Cavaney had some ownership of the corporation. He along with two others applied for permission to issue themselves a share each of the corporation, but were turned down. The defendants showed evidence that Cavaney was the attorney of Seminole and based on Cavaney’s answers to several interrogatories that he also at times served as Seminole’s director, treasurer and secretary on a temporary basis. There was evidence that Cavaney’s office was used by Seminole to receive mail and to maintain records and that Cavaney himself actively participated in Seminole’s business.
Although the plaintiffs were able to show Cavaney’s