## Facts

- African Bio-Botanica, Inc. sold botanical merchandise beginning in December 1987 to “Sally Leiner” and later to “Ecco Bella,” a name used by Leiner in business communications.
- The first several orders were cash on delivery; some early shipments were delivered to Leiner’s home, where she repackaged goods for resale.
- Later transactions were shipped on 15-day credit terms to “Ecco Bella” at Leiner’s address.
- African did not conduct a credit investigation and did not inquire whether the customer was an individual or a corporation.
- African’s records initially listed “Sally Leiner” as the customer; later, “Ecco Bella” was substituted without any corporate designation.
- Prior payments were made by checks labeled “Ecco Bella,” and business letterhead also stated only “Ecco Bella,” without “Inc.” or other indication of corporate status.
- Leiner was the sole shareholder, director, and president of Ecco Bella Incorporated, a New Jersey corporation formed in October 1987.
- An order invoiced to “Ecco Bella” in the amount of $1,530 was not paid.
- African sued Leiner “individually and t/a Ecco Bella” to recover the unpaid purchase price.

## Issues

1. Whether Leiner could be held personally liable for the unpaid debt where she conducted business under “Ecco Bella” without clearly disclosing that the contracting party was a corporation.
2. Whether the trial court abused its discretion by denying African prejudgment interest on the unpaid amount.

## Decision

- The Appellate Division affirmed the judgment holding Leiner personally liable for $1,530.
- The court upheld the trial judge’s finding that African reasonably believed it was dealing with Leiner personally or a sole proprietorship because corporate status was not disclosed in checks, letterhead, or dealings.
- The court rejected the argument that African’s failure to inquire into corporate status barred personal liability.
- The Appellate Division affirmed the denial of prejudgment interest, finding no abuse of discretion.

## Legal Principles

- A person who contracts under a trade name that does not indicate corporate status, and who fails to disclose the existence of a corporation, may be treated as the contracting party and held personally liable when the creditor reasonably believes it is dealing with an individual or non-corporate business.
- The risk of non-disclosure of corporate form is allocated to the party best positioned to disclose it; a creditor generally is not required to assume a corporate principal absent clear notice.
- Personal liability in this setting may rest on holding-out and non-disclosure principles rather than traditional corporate veil piercing.
- Prejudgment interest in contract or debt actions is generally compensatory but remains equitable and discretionary with the trial court; denial will be upheld absent an abuse of discretion.

## Conclusion

The court held Leiner personally liable because she conducted transactions under a trade name that did not reveal the corporation’s existence, leading the seller to reasonably believe it was dealing with her individually, and it further affirmed the trial court’s discretionary denial of prejudgment interest.


African Bio-Botanica, Inc. v. Leiner, 264 N.J. Super. 359, 624 A.2d 1003 (N.J. Super. Ct. App. Div. 1993)