Plaintiffs' daughter drowned in a pool operated by Seminole Hot Springs Corporation. Plaintiffs recovered a $10,000 judgment against Seminole, but this went unsatisfied. Plaintiffs then sued defendant Cavaney to hold him personally liable for the judgment. He died, and his widow, the executrix of his estate was substituted as defendant.
Cavaney was the attorney for Seminole and had been a director, secretary, and treasurer of Seminole to accommodate his client. He also kept its records in his office. Seminole had never issued any shares of stock, owned any assets, or functioned as a corporation.
Trial court entered judgment for plaintiffs for $10,000.
The owners of Seminole no doubt did not try to provide adequate capitalization. Cavaney was the director of Seminole and was to receive one-third of the shares of stock to be issued. This shows that he was an equitable owner of the company. The fact that he kept its records in his office shows that he actively participated in the conduct of its business.
The trial court does not have to believe that he was director just to accommodate his client, but either way, a person cannot divorce the responsibilities of a director from the statutory duties and powers of the office, even if it is only a temporary position.
However, the judgment against Seminole cannot be binding against Cavaney without an opportunity to relitigate the issues as he was not a party to the action against it.