Opinion
May 22, 1939.
William A. Shea [ Samuel Boksenbom and John B. Warner of counsel], for the Superintendent of Insurance, as liquidator of the National Mortgage Company.
Maurice Finkelstein [ Solomon J. Heifetz of counsel], for the Mortgage Commission of the State of New York.
Sherman S. Rogers [ Sherman S. Rogers, Amos S. Basel and Herbert Burton Brill of counsel], for the Trustees of Series C-2, New York Title and Mortgage Company.
However close the relationship between the New York Title and Mortgage Company and the National Mortgage Corporation may have been, the latter was held out to the public as a separate and distinct corporation having an independent legal existence and its own assets. The National Mortgage Corporation is now in liquidation on the ground of insolvency. Its creditors must be deemed to have dealt with it in the belief that it was a separate and distinct corporate entity and that they would be entitled to resort to its assets for the purpose of satisfying their claims against it.
The court accordingly holds that this is not a proper case for piercing the corporate veil and treating certificates owned by the National Mortgage Corporation as if they were owned by the New York Title and Mortgage Company. To do so would work an injustice to the creditors of National Mortgage Corporation, who in dealing with said company, had the right to assume that its assets, to the extent necessary to satisfy their claims, were separate and distinct from the assets and liabilities of the title company. The corporate veil may at times be pierced to do equity and justice, but never to accomplish the reverse.
The motion to confirm the report of the official referee and for incidental relief is granted. Settle order.