Roman Catholic Archbishop v. Superior Court
93 Cal. Rptr. 338, 15 Cal. App. 3d 405, 1971 Cal. App. LEXIS 906 (1971)
Premium Feature
Subscribe to Lexplug to listen to the Case Podcast.
Rule of Law:
One corporate entity cannot be held liable for the debts of another under the alter ego doctrine merely because both are subsidiaries of a common parent organization. There must be a showing that the specific entity being sued exerted control over the other and that an inequitable result would follow if the corporate veil were not pierced.
Facts:
- In 1968, William Sheffield visited the Hospice du Great St. Bernard in Switzerland, a monastery operated by the Canons Regular of St. Augustine.
- Sheffield entered into an agreement with a monk, Fr. Bernard Cretton, to purchase a St. Bernard dog for $175.
- The agreement stipulated that the dog would be shipped to Sheffield's home in Los Angeles after he paid the first installment.
- Sheffield paid a total of $60 in installments but never received the dog.
- The monastery informed Sheffield that the dog would not be shipped until the entire purchase price was paid, along with additional fees.
- The monastery refused to refund Sheffield's $60, claiming it was the cost of maintaining his account.
Procedural Posture:
- William Sheffield first sued The Roman Catholic Archbishop of San Francisco and others in San Francisco Municipal Court.
- The municipal court sustained the Archbishop's demurrer and dismissed the action.
- Sheffield appealed to the appellate department of the superior court, which affirmed the dismissal.
- Sheffield then filed an identical complaint in the Alameda County Superior Court (a trial court).
- The Archbishop's motion for summary judgment was denied by the superior court.
- The Archbishop petitioned the Court of Appeal for a writ of mandate to compel the superior court to grant summary judgment in its favor.
Premium Content
Subscribe to Lexplug to view the complete brief
You're viewing a preview with Rule of Law, Facts, and Procedural Posture
Issue:
Does the alter ego doctrine permit holding the Roman Catholic Archbishop of San Francisco, a corporation sole, liable for an alleged breach of contract by a monastery in Switzerland, a separate religious order, simply because both are part of the worldwide Roman Catholic Church?
Opinions:
Majority - David, J.
No, the alter ego doctrine does not permit holding the Archbishop liable for the contract of the Swiss monastery. For the alter ego doctrine to apply, there must be both a unity of interest and ownership that negates the separate personalities of the entities, and a failure to pierce the corporate veil must sanction a fraud or promote injustice. Here, Sheffield failed to meet both requirements. The Archbishop provided an uncontroverted affidavit stating it had no business relationship, dealings, or control over the Canons Regular of St. Augustine. Sheffield's counter-affidavit only suggested that the Pope controls both entities, but control by a common 'parent' does not make one 'subsidiary' liable for the actions of another. Furthermore, Sheffield did not demonstrate that an inequitable result would occur, as the doctrine's purpose is not merely to ensure a creditor is paid, but to prevent bad faith conduct, which was not shown here.
Analysis:
This case reinforces the stringent requirements for piercing the corporate veil under the alter ego doctrine. It clarifies that in large, hierarchical organizations, common control by a central authority does not automatically establish the 'unity of interest' required to hold one subsidiary entity liable for the actions of another. The ruling emphasizes that liability is not horizontal between 'sister' entities; a plaintiff must prove direct control by the specific entity being sued. This precedent makes it more difficult for plaintiffs to sue a local branch of a national or international organization for the conduct of a separate, distant branch, thereby protecting entities from liability for actions over which they have no direct control.
