New Sheridan Hotel & Bar, Ltd. v. Commercial Leasing Corp., Inc., 81CA0142

• Decision Date: 29 April 1982
• Docket Number: No. 81CA0142,81CA0142
• Parties: NEW SHERIDAN HOTEL & BAR, LTD., Plaintiff-Appellant, v. COMMERCIAL LEASING CORPORATION, INC., a Colorado corporation, Defendant-Appellee. . I
• Court: Colorado Court of Appeals

Page 868

645 P.2d 868

NEW SHERIDAN HOTEL & BAR, LTD., Plaintiff-Appellant, v. COMMERCIAL LEASING CORPORATION, INC., a Colorado

corporation, Defendant-Appellee.

No. 81CA0142.

Colorado Court of Appeals, Div. I.

April 29, 1982.

Hamilton, Hamilton, Shand & McLachlan, P.C., Michael E. McLachlan, Durango, for plaintiff-appellant.

Kent F. Williamson, Cortez, for defendant-appellee.

COYTE, Judge.

Plaintiff appeals from the entry of a judgment denying relief on its complaint and the entry of a judgment against plaintiff on defendant's counterclaim. We affirm.

Marketing Department, Inc., (Marketing) was in the business of selling telephone systems. It would contract and complete the installation of the equipment under a lease purchase agreement in the lessee's place of business, and then find a company to purchase the installed equipment under the lease agreement.

Defendant, Commercial Leasing Corporation, Inc., (Leasing) was organized for the purpose of acquiring and leasing already installed telephone equipment.

Plaintiff contracted with Marketing to install a telephone system in its new hotel. After the system had been installed, Marketing sold the equipment to Leasing who then entered into a new lease with plaintiff. Thereafter, plaintiff complained that the equipment did not operate properly as was represented, and that it was not properly installed. It then filed suit seeking rescission of the leasing agreement. Leasing answered denying that it was liable for any representations made by Marketing to plaintiff. It also filed a counterclaim alleging that plaintiff was in default under the leasing agreement and sought to accelerate the payments required under the lease and to recover attorney fees as provided in the lease agreement.

The trial court found that there was no working relationship between Marketing and Leasing, that Leasing was not responsible for the installation of the telephone equipment, and that plaintiff was in default under the lease. Consequently, it ordered acceleration of the lease payments and payment of attorney fees.

Plaintiff first contends that the evidence fails to support the findings of the trial court that there was not such a close relationship between Leasing and Marketing as would make Leasing liable to plaintiff for representations made by Marketing. We disagree.

Before one corporation may be held liable for the acts of another corporation, there must be such a close relationship between the two companies that one is, in essence, an instrumentality of the other. Fish v. East, 114 F.2d 177 (10th Cir. 1940). The factors which enter into this determination include, inter alia : stock ownership of one corporation by the other; management decisions by the one corporation for the other; and the amount of business which one company has apart from its business with the other. Fish v. East, supra.

Here, the trial court found that Lewis, the vice president and operating manager of Leasing, was not involved with Marketing and did not participate in any management decisions of Marketing and that neither company had any ownership interest in the other. The court thus found that Leasing was...