O'Flaherty Heim Birnbaum Kirchner & Curtis Ltd.

O'Flaherty Heim Birnbaum Kirchner & Curtis Ltd. > Business & Real Estate Law > Corporate Agents Can Be Personally Liable Even If Acting Within Corporate Authority

Corporate Agents Can Be Personally Liable Even If Acting Within Corporate Authority

In Ferris v. Location 3 Corp, 2010AP2203 the Court of Appeals recently held that corporate agents are personally liable for their tortious conduct on behalf of a corporation even if it is not shown that they acted outside of the scope of their authority as corporate agents.

Ferris concerned Ferris’ purchase of real property in Muskego from Location 3 Corporation.  After closing, Ferris discovered that the landfill next to his property was a Superfund site.  Ferris filed a complaint against Location 3 as well as three agents of Location 3 individually, alleging that they knew about the Superfund site but failed to disclose it on the real estate condition report.  The defendants moved for partial summary judgment alleging (in addition to other arguments) that the three named individuals should be dismissed because there were no facts pled to support piercing the corporate veil.  The trial court granted summary judgment against the three individuals on the grounds that there was nothing in the record indicating that they acted outside the scope of their authority as agents of Location 3. 

The Court of Appeals reversed the trial courts’ dismissal of the three individuals, noting that “Wisconsin case law has firmly established that individuals are liable for their own tortious conduct” and that the individual defendants could not hide behind the corporate veil.  In so ruling, the Court of Appeals relied on three Wisconsin Supreme Court cases which addressed the issue:  Oxmans’ Erwin Meat Co. v. Blacketer, 86 Wis. 2d 683, 273 N.W.2d 285 (1979), Hanmer v. DILHR, 92 Wis. 2d 90, 284 N.W.2d 587 (1979), and Stuart v. Weisflog’s Showroom Gallery, Inc., 2008 WI 22, 308 Wis. 2d 103, 746 N.W.2d 762.  The Court of Appeals quoted from Hanmer:

The general rule is that the agent, as well as the principal for whom he is acting is responsible for the tortious acts of the agent.  In such situations the corporate shield protects only those who would otherwise be vicariously liable, not those whose own conduct is called into question.

Based on the above cases, the Court of Appeals concluded that it was not necessary for Ferris to show that the Location 3 agents acted outside of the scope of their authority in order to hold them personally liable.  The Court ruled that they may held personally liable if a fact finder finds that the engaged in tortious conduct, regardless of whether or they acted on behalf of Location 3 when they did so.  Accordingly, the Court of Appeals reversed the trial court’s ruling to the contrary.

Comments are closed.