Berkey v. Third Avenue Railway

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Berkey v. Third Avenue Railway 44 N.Y. 602, 155 N.E. 914 (1927) is a classic veil piercing case by Judge Benjamin N. Cardozo in corporation law. In normal circumstances, if the shareholders and management of a state law corporation follows the letter of the law then the law will respect the separate fictional legal status of the corporation. However, when the corporation is merely used as an alter ego by its sole shareholder or when it is so thinly capitalized as to perpetrate a fraud on its creditors (especially involuntary creditors who are tort accident victims), the court may disregard the separate legal status of the corporation.