Roman Catholic Archbishop of San Francisco v. Sheffield
93 Cal.Rptr. 338 (1971)
While at a monastery in Switzerland, Sheffield entered into an agreement with Father Cretton to purchase a St. Bernard. The $175 dog was payable in $20 installments, and was to be shipped from Geneva to Sheffield’s home in LA upon payment of the first installment. Sheffield also agreed to pay the $125 freight charge.
After returning to LA, Sheffield paid two additional installments, but did not receive the dog. When he asked either for shipment or for refund of his money, the monastery replied that the dog would not be sent until Sheffield paid the entire purchase price plus additional freight fees.
Sheffield then sued:
The Roman Catholic Church d.b.a.;
The Archbishop of San Francisco;
The Bishop of Rome (i.e., the pope);
The Holy See (i.e., the Vatican);
The Canons Regular of St. Augustine; and
Whether the Swiss organization (The Canons Regular of St. Augustine) is an “alter ego” of the Archbishop of San Francisco.
The alter ego theory (AKA “piercing the corporate veil”) makes a parent liable for the actions of a subsidiary which it controls.
(1) There must be such unity of interest and ownership that the separate personalities of the corporation and the individual [or other corporation] no longer exist; and
(2) circumstances must be such that adherence to the fiction of separate corporate existence would sanction a fraud or promote injustice.
However, this does not mean that where a parent controls several subsidiaries, each subsidiary then becomes liable for the actions of all other subsidiaries.
- Here, that was the case – there is no respondeat superior between the subagents!
- Now, had it been between the Canons and the Pope, it might have been a different story.
As for the second part of the test (promoting injustice):
- “It is not sufficient that the plaintiff will not be able to collect if the corporate veil is not pierced. The purpose of the doctrine is not to protect every unsatisfied creditor, but rather to afford him protection, where some conduct amounting to bad faith makes it inequitable for the equitable owner of a corporation to hide behind its corporate veil.”