In an early action against an individual for injuries caused by a negligent wagon driver, it was held that evidence of mal- or non-function sufficient to deprive a corporation of the right to continued existence was irrelevant, even though the key issue was whether defendant or that corporation was the employer of the driver. Werner v. Hearst, 177 N.Y. 63, 69 N.E. 221 (1903). In a somewhat different context, it was assumed that a corporation is viewed as an entity separate from its stockholders if "no rule of common sense or common justice is thereby violated" and "no wrong or fraud is shielded by the corporate charter."

"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." See, also, Salomon v. A. Salomon Co. ( 1897), A.C. 22;Button v. Hoffman, 61 Wis. 20; 20 N.W. Rep. 667 ( 1884); Baldwin v. Canfield, 26 Minn. 43; 1 N.W. Rep. 261, 276 ( 1879); Smith v. Hurd, 53 Mass. 371 ( 1847); Old DominionCopper Mining and Smelting Co. v. Bigelow, 203 Mass. 159;89 N.E. Rep. 193 ( 1909); Home Fire Insurance Co. v. Barber,67 Neb. 644; 93 N.W. Rep. 1024 ( 1903); Werner v. Hearst,177 N.Y. 63; 69 N.E. Rep. 22 ( 1903); Linn and Lane Timber Co. v. United States, 236 U.S. 574 ( 1915); Terhune v. HackensackSavings Bank, 45 N.J. Eq. 344; Stockton v. Central RailroadCo., 50 N.J. Eq. 52; Barrett v. Bloomfield Savings Institution,64 N.J. Eq. 425. There is another phase of this matter which should be borne in mind — that is the intent of the testator.

The corporation exists for the legitimate convenience of the stockholders, not as a mere mask for their personal acts and responsibilities. It absorbs and takes the place of the individuals who own its stock. ( Werner v. Hearst, 177 N.Y. 63; Brock v. Poor, 216 N.Y. 387; Berkey v. Third Ave. Ry. Co., 244 N.Y. 84; Jenkins v. Moyse, 254 N.Y. 319.) The leased premises have been transferred to a third party ( Matter of Gates, 243 N.Y. 193, 197; Marr v. Tumulty, 256 N.Y. 15, 24), but the words "sale" and "transfer" are not synonymous. "Sale" is a technical term which has been defined ( Matter of Grand Union Co., 219 Fed. Rep. 353, 356.

The attempt has often been made in civil actions to disregard or go behind the corporate organization for the purpose of reaching the individuals who owned, controlled or operated it. But such attempts, unless under exceptional circumstances, have been consistently defeated on the ground that the corporate organization was a single and complete creation which absorbed and took the place of the individuals who formed it. ( Werner v. Hearst, 177 N.Y. 63; Brock v. Poor, 216 N.Y. 387; Elenkrieg v. Siebrecht, 238 N.Y. 254.) We do not overlook it, that in this case it is argued that the provisions to which we have referred must apply to an ordinary corporation because section 327 enacts that "This article shall not apply to any person, association or corporation engaged in the publication or distribution of any newspaper or other publication issued at regular intervals in respect to the ordinary conduct of such business."

( Chicago, M. St. P. Ry. Co. v. Minneapolis Civic Commerce Association, 247 U.S. 490), but this is not one of those cases. In Werner v. Hearst ( 177 N.Y. 63) the existence of a corporation and its employment of a servant whose act was claimed to have been negligent was brought in question by evidence tending to show that it did not exist as a corporation but that its articles were mere forms under which the defendant, as individual, had and exercised control. It was said by this court: "They were corporations, in fact; however open to inquiry as to their right to continue as such, at the instance of the proper authorities. It was not the province of the jury to determine whether they were incorporated in good faith, or whether incorporation was a mere form and an evasive device on the defendant's part to escape an individual responsibility for the conduct of the business."

Had he made such statement otherwise to accord with the theory of the plaintiff's counsel, namely, that the properties held by the company in its name really belonged to the bank, he would very likely have committed perjury in that respect in verifying the report. The position here taken by the respondents' counsel is something like that taken by the plaintiff's counsel in the case of Werner v. Hearst ( 177 N.Y. 63), wherein he convinced the justice presiding at the Westchester Trial Term that the plaintiff, who had been run over by a wagon delivering certain newspapers, could recover against the defendant personally upon a finding that the corporations, in whose names the papers were published and distributed and the wagon operated, were not conducted in good faith, and that their articles of association were mere forms under which defendant had and exercised control; and the plaintiff had a verdict upon that theory. The Court of Appeals, however, reversed, holding that "It was not the province of the jury to determine whether they [the corporations] were incorporated in good faith, or whether incorporation was a mere form and an evasive device on the defendant's part to escape an individual responsibility for the conduct of the business."

As this court had occasion to remark in Matter of Richman ( 142 Misc. 103, at p. 107): "A corporation, validly organized, is a legal entity separate from its stockholders, and, as such, is capable of incurring and acquiring valid obligations and rights distinct from those of its stockholders. ( Werner v. Hearst, 177 N.Y. 63.) While courts have on rare occasions disregarded this legal conception, such action has occurred only where it was made to appear that the incorporation was effected solely `for the purpose of evading the law, or for the perpetration of fraud.' ( Erickson v. Revere Elevator Co., 110 Minn. 443.)

A corporation, validly organized, is a legal entity separate from its stockholders, and, as such, is capable of incurring and acquiring valid obligations and rights distinct from those of its stockholders. ( Werner v. Hearst, 177 N.Y. 63.) While courts have on rare occasions disregarded this legal conception, such action has occurred only where it was made to appear that the incorporation was effected solely "for the purpose of evading the law, or for the perpetration of fraud." ( Erickson v. Revere Elevator Co., 110 Minn. 443.)

On sound legal principle, since title to the home is in the corporate entity and not in the testator, it might be held the devise would be invalid. ( Button v. Hoffman, 61 Wis. 20; Palmer v. Ring, 113 A.D. 643; Werner v. Hearst, 177 N.Y. 63.) The cases are fully collated and written upon in the very valuable book on "The Disregard of the Corporate Fiction," by Professor I. Maurice Wormser of the New York bar, at pages 17-20.

Recently, in Matter of Vannier v. Anti-Saloon League ( 238 N.Y. 457, 463, 464) HISCOCK, Ch. J., speaking of corporations, reiterates his earlier views: "Individuals combine to organize it but when it is once organized it becomes a single and complete entity which supplants or absorbs the individuals and thenceforth it stands, operates and is judged as a single body and not as a congregation of individuals." (Citing Werner v. Hearst, 177 N.Y. 63; Brock v. Poor, supra; Elenkrieg v. Siebrecht, 238 N.Y. 254. ) Boag v. Thompson ( 208 A.D. 132, 135) treats of this subject by MANNING, J. "His ownership of ninety-eight per cent of its stock, however, gave him no direct or derivative right to sue."