## Facts

- Contractors performed clearing, grading, and related work and supplied materials and equipment for shopping-center projects on parcels owned or leased by Martin Olson and/or Martin Olson, Inc.
- Olson directed the contractors to deal with East Haven Homes, Inc. for payment; East Haven issued checks, often signed by Olson as president.
- Olson was an officer/director and the person generally in charge of East Haven and also controlled Martin Olson, Inc. and related project entities.
- The entities shared offices and staff, corporate formalities were minimal, and East Haven’s asserted project contracts with Olson-related entities were authorized but never executed.
- East Haven had few assets and relied on bank loans arranged by Olson and secured by project land to fund payments to contractors.
- The contractors remained unpaid for a substantial balance; judgment (including interest) totaled $31,596.95 against Olson and Martin Olson, Inc.
- The case was referred to a referee to find facts and report; the trial court adopted the report over defendants’ objections and entered judgment. On appeal, only Olson and Martin Olson, Inc. were treated as appellants because the judgment did not finally dispose of claims involving East Haven.

## Issues

1. Whether East Haven Homes, Inc. functioned as the instrumentality or alter ego of Martin Olson and Martin Olson, Inc. such that the court could disregard East Haven’s separate corporate existence and impose liability on Olson and Olson, Inc. for the contractors’ unpaid work.
2. Whether the trial court erred in refusing requested corrections to the referee’s report, overruling exceptions, and rendering judgment on the report.

## Decision

- The Supreme Court of Connecticut affirmed the judgment against Martin Olson and Martin Olson, Inc.
- The court held the findings supported imposing liability under the instrumentality rule because East Haven was used as a conduit to obtain the contractors’ services and improvements without payment, while the benefits accrued to Olson and Olson, Inc.
- The court rejected the procedural challenges to the referee’s report, concluding the findings were supported and the trial court acted properly in adopting the report.
- The appeal as to East Haven was not reached because there was no final judgment disposing of issues involving that defendant.

## Legal Principles

- Under the instrumentality rule, a court may disregard the corporate entity when: (1) the dominant party exercised such control that the subservient corporation had no separate will regarding the transaction; (2) the control was used to commit fraud or wrong, violate a legal duty, or accomplish a dishonest or unjust act against the plaintiff’s rights; and (3) the misuse of control proximately caused the plaintiff’s loss.
- Under the identity (alter-ego) rule, the corporate form may be disregarded when there is such unity of interest and ownership that separate corporate independence has ceased (or never began) and recognizing separateness would defeat justice and equity.
- Common control, shared operations, undercapitalization, and use of a corporation as a payment conduit in an integrated enterprise may support veil piercing when the structure is used to avoid paying for benefits received.
- A trial court may render judgment on a referee’s factual report when the findings are supported; refusal to make additional requested corrections is not error absent a showing that the corrections were required.

## Conclusion

The court affirmed contractor recovery against the developer and his related corporation by disregarding a thinly capitalized intermediary corporation used as a conduit, holding that the elements of the instrumentality rule were met and that adopting the referee’s supported findings was procedurally proper.


Zaist v. Olson, 154 Conn. 563, 227 A.2d 552 (1967)