Pursuant to the provisions of 52-105 of theGeneral Statutes, the plaintiffs brought a classaction seeking damages and equitable relief, claimingthat the defendants, Egon Neustadt and Candlewood
[177 Conn. 193]
Lake Estates Service Corporation, failed toconstruct and maintain roads in a developmentowned by the defendant Neustadt, in accordancewith the terms contained in deeds from Neustadt tothe plaintiffs. The matter was referred to a statereferee, who, acting as a judge of the SuperiorCourt, found that the defendants had substantiallycomplied with the obligations imposed by the deedsand denied equitable relief, but rendered judgmentawarding damages to the plaintiffs for the defendants'misapplication of certain funds paid by theplaintiffs.1
The trial court found2 the followingpertinent facts: In 1945, the defendant EgonNeustadt, hereinafter the defendant, acquiredtitle to the area known as Candlewood Lake Estates
[177 Conn. 194]
located in the town of Sherman. Prior to the dateof acquisition, his predecessor in title had commenceda rustic development with a few houses and narrow dirtroads. The general topography of the area isheavily wooded and mountainous with large rock ledgesand steep slopes with no paved road. Thedevelopment of the land continued until about1969, during which time lots were sold, new roadswere constructed and other roads were improved.The defendant designed the development forresidential use as a resort area, for seasonal andrecreational use. In so doing, he attempted toretain the character of the development and tomake the narrowest roads consistent with zoningregulations thereby making as little change inthe environment as possible.
Throughout the development of the area, thedefendant used a fairly standard form of contractand deed, changing only slightly from time totime. A covenant, typical of the covenantscontained in the deeds of all of the plaintiffs inthis action, provided that the "[g]rantees [theplaintiffs] shall have the right to the use ofroad and beach at their own risk and withoutliability of grantors. Grantees covenant to pay tothe grantors, their heirs and assigns, the sum of$25.00 on May 1st of each year in advance, whichsum shall be set aside in a road fund to beapplied to the maintenance and construction of theroads; and likewise the sum of $10.00 for beachmaintenance; said payments to continue until suchtime as the roads and beach will have been takenover by a property owners association." (Emphasisadded.) The court found that none of the fundscollected by the defendant under the provisions ofthe deeds was ever used by him for the constructionof new roads.
[177 Conn. 195]
In 1966, the defendant conveyed all roads,beaches and open areas in the development to acorporation known as Candlewood Lake EstatesService Corporation, hereinafter CLESCO, andturned over all funds to the corporation. CLESCO'ssole source of income was the receipts from thecharges made by the development's residents.During the period from 1966 to 1973, inclusive,CLESCO received $96,466.24 from Candlewoodproperty owners, and substantially all fundscollected were expended during each year. Thefinancial records indicate that expenditures werebroken down into three categories: roads, beaches,and general. Under roads and beaches, allexpenditures listed were expended each year formechanical work and repairs on roads and beaches,such as patching and oiling. In 1974, thedefendant, by letter to all the landowners, abandonedhis responsibilities for road and beachmaintenance.
As we have initially indicated, the trial court,although finding that the road conditions inCandlewood Lake Estates were not completelysatisfactory, concluded that the defendants hadsubstantially performed the obligations assumed bythem pursuant to the covenant before mentioned inregard to the maintenance of the roads. The court,however, concluded that the defendant Neustadt hadwrongfully used and misapplied the sum of $19,835.89paid to him for road maintenance, and renderedjudgment for the plaintiffs. The court instructed counselfor the plaintiffs to file an amendment totheir complaint, after trial, to conform tothe proof at trial. Thereafter, the defendantswere given leave to plead to the plaintiffs'amended complaint, and on January 15, 1976,the defendants were given an opportunity tooffer evidence limited to the amount of damages
[177 Conn. 196]
awarded to the plaintiffs in the court's originaljudgment. In a supplemental judgment, filed March10, 1976, the court opened and vacated itsoriginal judgment, and reduced the amount of theaward to the plaintiffs for the defendants'misapplication of funds to $13,412. The courtconcluded further that the defendant Neustadt andthe defendant CLESCO were alter egos, and,accordingly, rendered judgment against bothdefendants in favor of the plaintiffs. It is fromthis final judgment that the plaintiffs haveappealed and the defendants have cross appealed.
II THE PLAINTIFFS' APPEAL A
In their initial assignments of error, theplaintiffs seek to correct the court's finding toinclude numerous material facts which they claimwere admitted or undisputed, and they also claimthat certain conclusions reached by the court werenot supported by the facts found. They contendthat of the 129 draft findings which theysubmitted and which addressed the failure of thedefendants to maintain the Candlewood roads, thetrial court included in its finding only eighteenreferences to road conditions, the majority ofwhich made no reference to their unsafe orhazardous conditions. The plaintiffs, argue thatconsiderable evidence was presented by photographs,expert witnesses and residents to the effectthat the roads were in poor condition, dangerousto travel and in need of repairs. The defendantNeustadt admitted on cross-examination thatthe roads were generally in bad repair. The plaintiffscontend that without the addition of these factsto the finding, this court is prevented from fully
[177 Conn. 197]
considering the merits of their argument concerningthe alleged breach by the defendant Neustadt ofthe covenant to maintain the Candlewood roads.
We have examined the court's finding, and haveconcluded that the finding as made warrants nocorrections. The plaintiffs submitted, via the 129paragraphs of their draft finding, an extremelydetailed description of sixteen roads inCandlewood Lake Estates, the structural deficienciesof the roads, the generally broken-down conditionsof the roads and the cost of restoring the"roads to an acceptable level of comfort andsafety. The trial court found that an overflow ofgrass and shrubs had encroached on some of theroads causing visual disturbances to motor vehicleoperators, that the end of Candlelight Roadshould be widened, that some of the roads wereunpaved gravel, that a hazardous U-turn existedon Sunset Drive, that no guardrail existedon Skyline Drive, and that a steep grade existedthereon. In view of those findings, the courtconcluded that the road conditions in CandlewoodEstates were not completely satisfactory, thatnumerous road surfaces were broken and rutted, andthat storm water lay on the roads in variousplaces.
This court may correct a finding which fails toinclude admitted or undisputed facts. Morrone v.Jose, 153 Conn. 275, 277, 216 A.2d 196 (1965). Thetrial court, however, is not required to state itsfinding in the identical language of anappellant's draft finding. Walsh v. Turlick,164 Conn. 75, 77, 316 A.2d 759 (1972); Blatt v. StarPaper Co., 160 Conn. 193, 201, 276 A.2d 786(1970). We are satisfied that in the twenty-oneparagraphs of the court's finding and its fourparagraphs of conclusions, all dealing with theallegedly defective conditions of the roads,
[177 Conn. 198]
the court sufficiently found the facts posited inthe 129 paragraphs of the plaintiffs' draftfinding. As those paragraphs of the draft findingare thus implicit in the finding as made, nouseful purpose would be served by their additionto the finding. Salvatore v. Milicki, 163 Conn. 275,277, 303 A.2d 734 (1972).
The plaintiffs also attack the court'sconclusion that the defendants had substantiallycomplied with their obligation under the covenantto keep and maintain the Candlewood roads in areasonably safe condition. That conclusion istested by the finding and must stand unless it islegally or logically inconsistent with the factsfound or unless it involves the application ofsome erroneous rule of law material to the case.Belford v. New Haven, 170 Conn. 46, 55,364 A.2d 194 (1975). Only in the clearest circumstanceswhere the conclusion found could not reasonably bereached will the trier's determination bedisturbed. McLaughlin v. Chicken Delight, Inc.,164 Conn. 317, 323-24, 321 A.2d 456 (1973).
At the outset, we note that a covenant, bydefinition, obligate's the parties to observerights and duties in relation to the physicalcharacteristics of the land to which the covenantattaches; the defendants' obligation to maintainthe roads must thus be considered in relation tothe physical topographical conditions inCandlewood Lake Estates. See 7 Thompson, RealProperty, 3150; 5 Powell, Real Property, 673 ofparticular importance in the court's reaching ofthe above conclusion is the fact that the statereferee made, with the consent of counsel, apersonal on site examination of all of the roadsin the Candlewood Lake Estates. In view of themountainous, steeply sloped and wooded topography
[177 Conn. 199]
of the area, the court was in a position,following inspection, reasonably to conclude thatthe defendants had substantially complied with theduties to maintain the roads in the development inaccordance with their commitment imposed by thecovenant. Moreover, the court could reasonablyconclude, having found that the area was recreationaland seasonal in nature, that the defendantswere obliged to maintain roads carrying seasonaltraffic, and had met this obligation byconstructing and maintaining the roads in thedevelopment.
Evidence obtained by the court upon aninspection of the premises was properly taken intoaccount by the court in making the findings andconclusions we have previously referred toconcerning the conditions of the roads, and inreaching its conclusion that the defendants hadsubstantially performed their obligations.Canepari v. Townshend, 142 Conn. 477, 479,115 A.2d 432 (1955); Albright v. MacDonald,121 Conn. 88, 91, 183 A. 389 (1936); Greenberg v.Waterbury, 117 Conn. 67, 74, 167 A. 83 (1933);Maltbie, Conn. App. Proc. (2d Ed.) 149; seePractice Book, 1978, 3029. This inspectionfurnished evidence as truly as though similarinformation had been presented by the lips ofwitnesses; Heublein, Inc. v. Street Commissioners,109 Conn. 212, 218, 146 A. 20 (1929); Maltbie, op.cit., 74; and from that inspection, the trialcourt could reasonably base findings and, fromthose findings, recall conclusions as to theconditions of the roads. Cf. Shaughnessy v.Morrison, 116 Conn. 661, 664, 165 A. 553 (1933);Ruerat v. Stevens, 113 Conn. 333, 338, 155 A. 219(1931). We cannot say that the court's conclusion,which is entitled to great weight on appeal, isnot supported by the facts found when the factthat the referee visited the premises is also
[177 Conn. 200]
taken into consideration, as it must be. West HillConstruction Corporation v. Horwath, 149 Conn. 608,612, 182 A.2d 919 (1962); Tide Water OilSales Corporation v. Shimelman, 114 Conn. 182,184, 158 A. 229 (1932); annot., 97 A.L.R. 335,337-38; 76 Am.Jur.2d, Trials 1247. We find no errorin that conclusion.3
The plaintiffs next assign error in the court'srefusal, on the grounds of relevancy and hearsay,to admit into evidence the certified minutes ofthe town of Sherman planning and zoning commissionrelating to the commission's denial of thedefendant Neustadt's prior applications forbuilding permits for certain lots in theCandlewood development due to substandard andhazardous conditions of the roads. The plaintiffscontend that the records in question constituted arunning commentary on the unsatisfactoryconditions of the roads from 1963 to the time oftrial, and argue that they were prejudiced intheir efforts to show a breach of the defendant'sduties to maintain the Candlewood roads. We do notagree. On the matter of admissibility, it
[177 Conn. 201]
rests in the discretion of the court to determinewhether the evidence offered conduces in anyreasonable degree to the establishment of theprobability or improbability of the fact in issue.Pitt v. Kent, 149 Conn. 351, 357, 179 A.2d 626(1962); see Console v. Nickou, 156 Conn. 268, 275,240 A.2d 895 (1968); Plumb v. Curtis, 66 Conn. 154,166, 33 A. 998 (1895). The fact in issue herewas whether the defendant had reasonably performedhis contractual obligation to construct andmaintain the roads in Candlewood Estates to thetime of trial. An examination of the dates of theminutes printed in the appendix to the plaintiffs'brief discloses that the minutes primarily relatedto action taken by the commission from 1963 to1965. Some of the proffered documents related toparking problems not relevant to the factsconcerning the defendants' obligation under thecovenant. Although one of the documents indicatesthat the commission believed that the conditionsin the development were unacceptable, thatdocument is dated August 15, 1964. There is noindication in the record that at the time of thefiling of this suit in January, 1971, or at thetime of the filing of the amended complaint inJanuary, 1975, the zoning commission was of thesame opinion as it was in 1964.
The plaintiffs have the burden of showing thatthe court's ruling excluding the evidence on theground of irrelevancy was both wrong and harmful.DeCarufel v. Colonial Trust Co., 143 Conn. 18,21, 118 A.2d 798 (1955); Senderoff v. Senderoff,133 Conn. 300, 303, 50 A.2d 422 (1946);Maltbie, Conn. App. Proc. 13. If the ruling could nothave affected the court's judgment, it is not harmful.Anonymous v. Norton, 168 Conn. 421, 430,362 A.2d 532, cert. denied, 423 U.S. 935, 96 S.Ct. 294, 46
[177 Conn. 202]
L.Ed.2d 268 (1975); Guerrieri v. Merrick,145 Conn. 432, 435, 143 A.2d 644 (1958). Thedetermination of that question lies in the record.Murray v. Gagliardi, 105 Conn. 392, 394,135 A. 293 (1926). In light of those principles, theruling was harmless. Our review of the recordindicates that the referee could reasonably haveconcluded that the proffered evidence, primarilyrelating to conditions in the development in 1963-1965,was not relevant to the conditions thereinat the time of trial. Moreover, in view of thereferee's on site inspection of the conditions inCandlewood Estates, as of the time of trial, theadmission of the proffered evidence almostcertainly would not have affected his judgment onthe defendants' substantial compliance with theirobligations under the covenant. See Norwich RomanCatholic Diocesan Corporation v. Southern NewEngland Contracting Co., 164 Conn. 472, 478,325 A.2d 274 (1973). There was no error in the court'sruling, and, in sum, we find no error on theplaintiffs' appeal.
III THE DEFENDANTS' CROSS-APPEAL A
On their cross appeal, the defendants firstargue that expenditures made by the defendantsCLESCO and Neustadt and disallowed as improper bythe trial court were in fact authorized expenditures.The trial court found that under general expendituresCLESCO spent $19,846.40. of this amount $13,412was found to have been wrongfully misapplied tocover expenditures in the amount of $11,260.82to the defendant Neustadt as reimbursement foroffice expenses he incurred on behalf of
[177 Conn. 203]
CLESCO, the balance having been paid formiscellaneous items including real estate taxes,legal fees, state fees, insurance, fire departmentcontributions, signs, a mailbox and a guardhouse.The court rendered judgment for the plaintiffsagainst both CLESCO and Neustadt.4 The issuepresented is whether the covenant, stating thatfunds received from the plaintiff-property owners"shall be applied to the maintenance . . . of theroads" authorized the defendants to expend part ofthose funds for purposes not strictly related tothe maintenance of the roads. We find that thetrial court did not err in concluding that thecovenant did not authorize such expenditures.
The defendants argue that all of the aboveexpenses fall into the general categoryof overhead expenses and are a part of the"maintenance" of the roads, urging that weconstrue the word "maintenance" broadly toencompass all of the above expenditures. Theword "maintenance," however, has no precise legalsignificance; its meaning varies with the purposeto be accomplished. Compare Davis Holding Corporationv. Wilcox, 112 Conn. 543, 547, 153 A. 169 (1931),with Faraday v. Dube, 175 Conn. 438, 399 A.2d 1262(1978). We agree with the plaintiffs that the termmust be construed in light of the intention ofthe parties, which is to be determined from thelanguage used, the circumstances, the motivesof the parties and the purposes they sought toaccomplish. Klein v. Chatfield, 166 Conn. 76,80, 347 A.2d 58 (1974); Henriques v. Rockefeller,148 Conn. 654, 658, 173 A.2d 596 (1961); seeSwayze v. Swayze, 176 Conn. 323, 408 A.2d 1
[177 Conn. 204]
(1978). We add, however, that a covenant containinglanguage of doubtful or uncertain meaningis to be construed in the sense in which it ismost probably understood by the person to whom itis addressed; or, expressed differently, the termsare to be construed most strongly against theparty using them, in this case the defendantNeustadt. Collins v. Sears, Roebuck & Co.,164 Conn. 369, 376, 321 A.2d 444 (1973); 20 Am.Jur.2d,Covenants, Conditions and Restrictions 6. Moreover,the meaning of language in restrictive covenantsis to be narrowly construed and is not to beextended by implication. Rossini v. Freeman,136 Conn. 321, 323, 71 A.2d 98 (1949); Hooker v.Alexander, 129 Conn. 433, 436, 29 A.2d 308 (1942).
The court found that neither the deeds, contractsof purchase nor the defendants' offering statementsmentioned the fact that part of the funds collectedwould be used for CLESCO's office expenses, andthat at no time were the plaintiffs ever informedthat some of the funds collected for road andbeach maintenance would be used to defray officeand administrative expenses. The court found furtherthat most of the funds found to have been misappliedby the defendants were paid to Neustadt as reimbursementfor amounts he paid for expenses in connectionwith collection work on delinquent accounts owedto CLESCO by the plaintiffs.
Implicit in the court's findings and conclusionsis a restrictive definition of the word "maintenance"in the covenant contained in the plaintiffs' deeds,one that would limit permissible use of the "roadfund" to the physical upkeep of the road, excludinguse of the funds for administrative or managerialexpenses. This construction of "maintenance" is
[177 Conn. 205]
both consistent with meanings given to similarcovenants relating to road maintenance, and withthe parties' intentions concerning the paymentsmade by the plaintiffs. "Maintenance" in relationto property has been defined as "the upkeep orpreservation of the condition of property";Black's Law Dictionary; and "making repairs andotherwise keeping premises . . . in goodcondition." Ballentine's Law Dictionary. Itconnotes a state of physical repair, upkeep, andpreservation. Frye v. Angst, 28 Wis.2d 575, 582,137 N.W.2d 430 (1965); 54 C.J.S., Maintenance, p.905. It does not, in common parlance, encompassthe expenditure of funds for the administrative ormanagerial purposes of a corporation. If thecovenant here in question had been intended toauthorize expenditures other than those related tothe physical upkeep and repair of the roads, itcould easily have so stated. See Neptune ParkAssn. v. Steinberg, 138 Conn. 357, 361,84 A.2d 687 (1951). The court found that approximately$11,000 of the $13,412 wrongfully misapplied hadbeen used by Neustadt to underwrite the cost ofcollection work by CLESCO and Neustadt. Thisexpenditure, of course, had nothing to do with thephysical upkeep or repair of the roads. The courtcould have concluded that the plaintiffs neverenvisioned such a use of the "road fund," andnever intended that it be used in this manner. Inview of the evidence before the court, indicatingthat the roads were in constant need of repair andthat the plaintiffs paid the defendants moniessolely to alleviate that problem, we cannot saythat the court erred in concluding that Neustadtimpliedly covenanted with the plaintiffs to usethe road fund solely for the physical upkeep of theroads, and not for general administrative expenses.
[177 Conn. 206]
The defendants next claim that the trial courterred in allowing the plaintiffs, after the trialand initial judgment, to amend their complaint toconform to the proof at trial on the ground thatthis amended complaint alleged a new cause ofaction. In this connection, they argue furtherthat the judgment, covering amounts wrongfullyspent during the years 1966 to 1973, was improperin that the court erroneously allowed the amendedcomplaint to relate back to the date of the filingof the plaintiffs' original complaint in 1971.Without such relation back, the defendants arguethat the statute of limitations, General Statutes52-576, would bar any claim based on actions ofthe defendants prior to six years before August,1975, the date of the postjudgment amendedcomplaint. These claims are without merit.
As to the defendants' argument that the amendmentwas improper, we note that a trial court mayallow, in its discretion, an amendment to pleadingsbefore, during, or, as here, after trial toconform to the proof. Wright v. Coe & Anderson,Inc., 156 Conn. 145, 155, 239 A.2d 493 (1968);Thibault v. Frechette, 135 Conn. 170, 173,62 A.2d 863 (1948); cf. Winsor v. Hawkins, 130 Conn. 669,670, 37 A.2d 222 (1944); General Statutes 52-130;Practice Book, 1963, 132, 134; Maltbie, Conn. App. Proc.33, 62-64. Such a ruling can be reversedonly on a clear showing of abuse of discretion.Practice Book, 1963, 132; Antonofsky v. Goldberg,144 Conn. 594, 597, 136 A.2d 338 (1957). We findno abuse of discretion in the court's action, and,thus, the court did not err in allowing the amendment.
[177 Conn. 207]
As to the defendants' argument concerning therelation back of the amendment and the statute oflimitations, it is well settled that amendments toa complaint, unless they allege a new cause ofaction, relate back to the date of the complaint.Keenan v. Yale New Haven Hospital, 167 Conn. 284,285, 355 A.2d 253 (1974); Baker v. Baker, 166 Conn. 476,486, 352 A.2d 277 (1974); Kelsall v. Kelsall,139 Conn. 163, 165, 90 A.2d 878 (1952). The issue,therefore, is whether the amended complaint, filedafter trial, alleged a new "cause of action." Wehold that it did not. "A cause of action is thatsingle group of facts which is claimed to havebrought about an unlawful injury to the plaintiffand which entitles the plaintiff to relief. [Citationsomitted.] `A right of action at law arises fromthe existence of a primary right in the plaintiff,and in invasion of that right by some delict on thepart of the defendant. The facts which establishthe existence of that right and that delict constitutethe cause of action.' Pavelka v. St. Albert Society,82 Conn. 146, 147, 72 A. 725." Gallo v. G. Fox &Co., 148 Conn. 327, 330, 170 A.2d 724 (1961); seeKeenan v. Yale New Haven Hospital, supra; Veits v.Hartford, 134 Conn. 428, 434, 58 A.2d 389 (1948).Here, the "single group of facts" contained in theplaintiffs' complaint alleged a complete delict bythe defendants of the duties imposed by the covenant,and the complaint sought an accounting of the moniespaid pursuant to that covenant. By allowing theamendment, the trial court properly permitted theplaintiffs to expand or amplify what had alreadybeen alleged in support of their cause of action.See Gallo v. G. Fox & Co., supra. The damages awardedby the court were of such a nature that they werein general within the allegations of the complaint,
[177 Conn. 208]
and the allowance of damages for misappropriationof funds by the defendants did not constitute adeparture from those allegations in a "matteressential to the charge or claim" which wouldrender the judgment awarding them invalid. Froschv. Sears, Roebuck & Co., 124 Conn. 300, 303,199 A. 646 (1938).
Moreover, where, as here, there is a variancebetween allegations in the complaint and the proofat trial, which is corrected by amendment to thecomplaint, a judgment based on the amended complaintwill not be set aside unless the variance misledor prejudiced the defendants on the merits ofthe case. Antonofsky v. Goldberg, supra, 599;Reciprocal Exchange v. Altherm, Inc., 142 Conn. 545,552, 115 A.2d 460 (1955); Practice Book,1963, 134. The facts on which the plaintiffsrelied in proving the defendants' misappropriationof funds had been received through the testimonyof the defendant Neustadt. Moreover, the courtopened the original judgment and gave thedefendants the opportunity to plead to theamended complaint and to offer evidence onthe amount of damages. The new evidence resultedin a reduction of the damages originally awardedto the plaintiffs. In view of that, we cannotsay that the defendants were prejudiced inmaintaining their defense on the merits, orthat they were surprised by the plaintiffs'proof, or that they were misled by the allegationsin the amended complaint. For these reasons,the variance was not material, and the court'sjudgment was correct. Strimiska v. Yates,158 Conn. 179, 184, 257 A.2d 814 (1969); Schallerv. Roadside Inn, Inc., 154 Conn. 61, 64,221 A.2d 263 (1966).
In sum, we hold that the amended complaint, arisingfrom the same single group of facts as the initialcomplaint, properly related back to it, that
[177 Conn. 209]
the claims therein were thus not barred by thestatute of limitations, and that the court'sjudgment was proper.
We turn finally to the defendants' claim thatthe court erred in concluding that CLESCO andNeustadt were alter egos and that, therefore,both defendants were liable in damages to theplaintiffs. Generally, a corporation is a distinctlegal entity and the stockholders are notpersonally liable for the acts and obligations ofthe corporation. 18 Am.Jur.2d, Corporations 13;19 Am.Jur.2d, op. cit. 713. Courts> will, however,disregard the fiction of a separate legal entity topierce the shield of immunity afforded by thecorporate structure in a situation in which thecorporate entity has been so controlled anddominated that justice requires liability to beimposed on the real actor. 1 Fletcher, Corporations(Perm. Ed. 1963 Rev.) 43; Ballantine, Corporations(Rev. Ed.) 136; 18 Am.Jur.2d, Corporations 14; seeVogel v. New Milford, 161 Conn. 490, 494,290 A.2d 231 (1971); Tishman Equipment Leasing, Inc. v.Levin, 152 Conn. 23, 28, 202 A.2d 504 (1964);Humphrey v. Argraves, 145 Conn. 350, 3, 54,143 A.2d 432 (1958); Hoffman Wallpaper Co. v. Hartford,114 Conn. 531, 535, 159 A. 346 (1932). We haveaffirmed judgments disregarding the corporateentity and imposing individual stockholder liabilitywhen a corporation is a mere instrumentalityor agent of another corporation or individual owningall or most of its stock. See Zaist v. Olson,154 Conn. 563, 573, 227 A.2d 552 (1967).
In Zaist, we found the controlling stockholder anda related corporation liable under an "alter ego"theory, concluding that the corporate structure of
[177 Conn. 210]
the defendant in that case could properly havebeen disregarded under either the "instrumentality"rule or the "identity" rule. Zaist v. Olson, supra,578. Similarly, we have concluded that the defendantNeustadt could properly have been held liable,and the corporate structure of CLESCO disregarded,under either theory.
"The instrumentality rule requires, in any casebut an express agency, proof of three elements:(1) Control, not mere majority or complete stockcontrol, but complete domination, not only offinances but of policy and business practice inrespect to the transaction attacked so that thecorporate entity as to this transaction had at thetime no separate mind, will or existence of itsown; (2) that such control must have been used bythe defendant to commit fraud or wrong, toperpetrate the violation of a statutory or otherpositive legal duty, or a dishonest or unjust actin contravention of plaintiff's legal rights; and(3) that the aforesaid control and breach of dutymust proximately cause the injury or unjust losscomplained of." (Emphasis added.) Zaist v. Olson,supra, 575. The identity rule, on the other hand,has been expressed as follows: "If plaintiff canshow that there was such a unity of interest andownership that the independence of the corporationhad in effect ceased or had never begun, anadherence to the fiction of separate identitywould serve only to defeat justice and equity bypermitting the economic entity to escape liabilityarising out of an operation conducted by one corporationfor the benefit of the whole enterprise." Id, 576.
The record before us reasonably supports aconclusion that CLESCO was a corporation in nameonly and that it was operated as the instrumentality
[177 Conn. 211]
or alter ego of Neustadt, subject to the solecontrol of Neustadt; as such, CLESCO's activitywas not indicative of corporate activity, but wassymptomatic of the business operations of anindividual. See, generally, 46 A.L.R.3d 428, 431.The court found that Neustadt was the soleshareholder of CLESCO, that he was the presidentof CLESCO, that Neustadt held the onlyproprietary interest in CLESCO, that no minuteswere kept of the meetings of CLESCO's directors,that no records of annual elections of CLESCOexisted, that other officers of CLESCO existedsolely to accommodate Neustadt, that Neustadtsolely directed CLESCO's affairs, that onlyNeustadt could deal with corporate funds, and thatCLESCO had never filed a corporate business taxreturn. In view of those facts the court couldreasonably conclude that Neustadt completelydominated the corporation to the point whereCLESCO had no separate existence, and that suchcontrol was used for the purpose of divertingNeustadt's "positive legal duty"; Zaist v. Olson,supra; imposed by deeds signed solely by Neustadt,to construct and maintain the roads in the development.Moreover, the court could conclude that there existeda unity of interest and ownership between CLESCOand Neustadt such that the purposes of justice wouldbe served by disregarding the shield of CLESCO'scorporate structure. In sum, we find no errorin the court's conclusions imposing liabilityon CLESCO and Neustadt individually. See Houseof Koskot Development Corporation v. AmericanLine Cosmetics, Inc., 468 F.2d 64, 66-67 (5thCir. 1972); Segan Construction Corporation v.Nor-West Builders, Inc., 274 F. Sup. 691, 698-99(D.Conn. 1967); Plank v. Arban, 241 So.2d 198,200 (Fla. App. 1970).
[177 Conn. 212]
We add one caveat. We do not wish to beunderstood to countenance, by anything we havesaid here, the imposition of the legitimateindebtedness of a corporation upon a majoritystockholder in derogation of his legal immunitymerely because of the corporate control inherentin his stock ownership. To do so would be to actin opposition to the public policy of this stateas expressed in legislation concerning the formulationand regulation of corporations. See Zaist v. Olson,supra, 581 (Cotter, J., dissenting). The presentcase, however, presents a set of circumstances fardifferent from mere majority control of a corporationby a sole stockholder. We decide cases on the recordbefore us; and, on that record, we have no difficultysustaining the conclusions of the trial court asto the personal liability of the defendant Neustadt.
There is no error on the defendants' cross-appeal.
There is no error.
In this opinion the other judges concurred.
1. The plaintiffs have appealed from thisjudgment and the defendants have filed a crossappeal. In their appeal, the plaintiffs havelimited their attack on the court's finding tothe court's failure to find as admitted orundisputed a number of paragraphs contained inthe plaintiffs' draft finding. We consider thisissue in the text of this opinion, section IIA, infra. The defendants, on the other hand, in theircross appeal, have assigned error in relation toevery paragraph of their draft finding; such abroadside attack has been unfailingly descountenancedby this court. Arcari v. Dellaripa, 164 Conn. 532,534, 325 A.2d 280 (1973). Some of the paragraphsalleged not to be found by the court are implicitin the finding as made. Those portions of thedraft finding which the defendants argue wereimproperly excluded are not "admitted or undisputed"facts, or are not material in that the result willnot be affected by their inclusion; their additionto the finding would avail the defendants nothing.See Practice Book, 1978, 3039; Schomer v. Shilepsky,169 Cons. 186, 158 n. 1, 363 A.2d 128 (1975); Lewisv. Lewis, 162 Cons. 476, 481, 294 A.2d 637 (1972).Those conclusions and rulings of the court whichare necessary to the disposition of the defendants'appeal will be discussed in this opinion.
2. The trial court rendered two separatefindings, one in relation to the plaintiffs' appealand one in relation to the defendants' cross-appeal.
3. In their brief, the plaintiffs makethe argument that, as part of the defendants'obligation to maintain the roads, the defendantswere required to assume the sole obligationfor the road upkeep, and that if the fundsacquired from the plaintiffs were insufficientto maintain the roads, the defendants were requiredto expand additional funds for road maintenance.As the trial court made conclusions accepting thosearguments of the plaintiffs, we find it odd thatthe plaintiffs have briefed those arguments onappeal. In any event, our holding that the trial courtdid not err in concluding that the defendants hadsubstantially complied with their obligationsunder the covenant, while disposing of the issueof the defendants' obligations, leaves intact thetrial court's conclusion that the defendants wererequired to spend sums of their own if the sumscollected from the plaintiffs by way of assessmentswere insufficient to maintain the roads.
4. The defendants also assign error in the