John Banton Radford v. State of Texas--Appeal from 104th District Court of Taylor County

SUPREME COURT CASES

Laws-info.com » Cases » Texas » 11th District Court of Appeals » 2001 » John Banton Radford v. State of Texas--Appeal from 104th District Court of Taylor County

State: Texas

Court: Texas Northern District Court

Docket No: 11-01-00077-CR

Case Date: 09/13/2001

Plaintiff: John Banton Radford

Defendant: State of Texas--Appeal from 104th District Court of Taylor County

Preview:Billy O. Carter & Mike Sternberg v. JEB Lease Service,
Inc.; Midway Oil Field Constructors, Inc. & C.P. Bailey
Construction Co., Inc. d/b/a Centex Supply--Appeal
from 12th District Court of Madison County
MAJORITY | MAJORITY
IN THE
TENTH COURT OF APPEALS
No. 10-02-034-CV
BILLY O. CARTER
AND MIKE STERNBERG,
Appellants
v.
JEB LEASE SERVICE, INC.,
MIDWAY OIL FIELD CONSTRUCTORS, INC.
AND C.P. BAILEY CONSTRUCTION CO., INC.,
D/B/A CENTEX SUPPLY,
Appellees
From the 12th District Court
Madison County, Texas
Trial Court # 96-8156-012-06
MEMORANDUM OPINION
In 1995, M.B. Properties, Inc. failed to pay debts owed to JEB Lease Service, Inc., Midway Oil Field Constructors,
Inc., and C.P. Bailey Construction Co., Inc., d/b/a Centex Supply. Centex asked Carter for help with its unpaid invoice.
JEB sent its unpaid invoice to Carter. Nothing was paid. In the meantime, M.B. took $50,000 from Tony Martin to
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construct a commercial saltwater disposal well. The money was spent, but no well was developed. Martin threatened to
sue Carter and Sternberg individually for fraud. They settled with Martin using all the assets of M.B. and some of their
personal assets. There was nothing left with which to pay the claims of the appellees.
The appellees sued M.B. and Carter and Sternberg, individually, for the unpaid debts for services rendered and goods
provided to M.B. They sued Carter and Sternberg individually under the theory of alter ego. After a bench trial, the
trial court found M.B. was the alter ego of Carter and Sternberg. The court also found Carter and Sternberg liable to
the appellees for the unpaid invoices. Carter and Sternberg appeal.
Alter Ego
Disregarding the legal fiction of corporate entity is an exception to the general rule which forbids disregarding
corporate existence. Lucas v. Texas Industries, Inc., 696 S.W.2d 372, 374 (Tex. 1984). Alter ego is but one basis for
disregarding the corporate fiction. Castleberry v. Branscum, 721 S.W.2d 270, 272 (Tex. 1986). And the burden is on
the plaintiff to prove alter ego. Lucas, 696 S.W.2d at 375.
Law-Disregarding the Corporate Entity
Under the alter ego theory, courts disregard the corporate entity when there exists such unity between corporation and
individual that the corporation ceases to be separate and when holding only the corporation liable would promote
injustice. Mancorp, Inc. v. Culpepper, 802 S.W.2d 226, 228 (Tex. 1990); Castleberry, 721 S.W.2d at 272. An alter ego
relationship may be shown from the total dealings of the corporation and the individual. Id. This showing may include
evidence of "the degree to which corporate formalities have been followed and corporate and individual property have
been kept separately, the amount of financial interest, ownership and control the individual maintains over the
corporation, and whether the corporation has been used for personal purposes." Id. (quoting Castleberry, 721 S.W.2d at
272).
Law-Legal Sufficiency
Carter and Sternberg only challenge the legal sufficiency of the court s implied findings that M.B. was the alter ego of
Carter and Sternberg. In conducting a legal sufficiency or no-evidence review, we must "view the evidence in a light
that tends to support the finding of the disputed fact and disregard all evidence and inferences to the contrary." Excel
Corp. v Apodaca, 81 S.W.3d 817, 820 (Tex. 2002); Bradford v. Vento, 48 S.W.3d 749, 754 (Tex. 2001). We will
uphold the finding if more than a scintilla of evidence supports it. Burroughs Wellcome Co. v. Crye, 907 S.W.2d 497,
499 (Tex. 1995); Burleson State Bank v. Plunkett, 27 S.W.3d 605, 612 (Tex. App. Waco 2000, pet. denied).
Evidence
Carter and Sternberg operated M.B. Properties. All corporate paperwork was kept up to date. In 1995, M.B. incurred
debts to the appellees. Those debts went unpaid. During the same time period, M.B. also owed Tony Martin a
commercial saltwater disposal well for which Martin had paid M.B. $50,000. // Martin threatened M.B., and Carter and
Sternberg, individually, with a lawsuit for fraud over the disposal well. According to Carter, Carter and Sternberg put
personal money into the corporation and then the corporation paid out that money for a settlement. However, Martin
testified they transferred personal assets in the form of cash and M.B. s interest in four wells for the settlement of
Martin s threatened claims against Carter and Sternberg and against M.B. After the settlement with Martin, there were
no more assets in M.B. to pay the debts to the appellees. There was no evidence regarding the allocation of payments
or transfer of assets made to settle the various claims against M.B. or individually against Carter and Sternberg.
Application
Although Carter and Sternberg may have kept themselves apart from M.B. initially, there is some evidence they
merged when Carter and Sternberg were threatened by, and settled with, Martin. It does not matter which description
of the transfer of money was accurate. Under either version, the bottom line is that there is some evidence in the record
that Carter and Sternberg disregarded the separation of the corporate entity by transferring all M.B. s assets to settle
claims that were, in part, against them personally. To then allow Carter and Sternberg to shield themselves from
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liability to the appellees and hold M.B. only liable would result in an injustice. There is more than a scintilla of
evidence that M.B. was the alter ego of Carter and Sternberg.
Conclusion
The trial court did not err in impliedly finding M.B. was the alter ego of Carter and Sternberg. The trial court s
judgment is affirmed.
TOM GRAY
Chief Justice
Before Chief Justice Gray,
Justice Vance, and
Justice Reyna //
(Justice Vance dissenting)
Affirmed
Opinion delivered and filed February 4, 2004
[CV06]
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