Can Negligence Action Be Brought Against An Individual Who Is the President Sole Shareholder and Manager of a Company ?
In McDonald v. Frontier Lanes, Inc., 1 Ill. App. 3d 345, 272 N.E.2d 369 (1971), the plaintiff brought a negligence action against Frontier Lanes (Frontier) and Ceresa, who was Frontier's president, sole shareholder, and manager.
The plaint iff was injured when she fell into a hole in the grassy parkway that separated the sidewalk from the parking lot owned by Frontier.
The evidence showed that Frontier had had a gas line installed in the parkway and that the fill placed over the gas line was expected to settle 9 to 18 inches.
Of the parkway, Ceresa admitted that "he had known of a defect at that place for some time but not its extent." McDonald, 1 Ill. App. 3d at 350.
The appellate court held that, on the evidence at trial, Ceresa was personally liable for the injury.
The court first cited that rule that "an officer of a corporation is insulated from personal liability for negligence of the corporation unless he participated in the wrongful act or had such knowledge thereof as to give rise to liability." McDonald, 1 Ill. App. 3d at 357-58.
The court went on:
"In this case, Ceresa was the president, sole shareholder, and manager of Frontier.
He owned and operated the business and its corporate acts or omissions could only be those participated in by him.
The acts and omissions of Frontier giving rise to the negligence charged in the case were not isolated incidents brought about by conduct of an employee, for example, but were a part of the general mode of operation of the corporate business under Ceresa's sole power of direction and control." McDonald, 1 Ill. App. 3d at 358.