This section is from the book "Business Finance", by William Henry Lough. Also available from Amazon: Business Finance, A Practical Study of Financial Management in Private Business Concerns.
Both the Continental courts and the English courts have tended always to regard the corporation or company as if it were a group of individuals, while in this country the tendency has been to follow strictly Chief Justice Marshall's famous definition in the Dartmouth College case in 1819, wherein he spoke of the corporation as "an artificial being, invisible, intangible, and existing only in contemplation of the law." The logical simplicity of this view appeals strongly to the legal mind, and many beautiful bits of fine-spun reasoning based upon it are to be found in the records of our courts. But unfortunately, it happens to be far removed from the facts of every-day business life. We all know that in practice the corporation has no existence and no interests apart from the existence and interests of its shareholders, creditors, and officers. In an ideal world, possibly, men would devote themselves to building up a business corporation for its own sake, just as many men have devoted themselves to building up religious and governmental corporations, and in that case there would be some solid basis for the lawyer's line of reasoning. However, in our work-a-day world, the reverse is more often true; the corporation may easily prove a convenient shield for the men back of it who are intent upon actions and policies for which they would not care to accept, as individuals, the full responsibility.
The fiction of corporate entity favors this species of misuse. It erects an obstacle - an "invisible, intangible," but effective obstacle - between the wrongdoer and his victim.
Recognizing this abuse, the courts of this country have become more and more inclined in recent years to tear aside the corporate mask and look for the men and the motives behind corporate actions. This is true at least of courts of equity. Nevertheless, we are still tangled and blocked at every step by the thousands of precedents consisting of decisions based upon the fundamental idea of the corporation as a thing distinct from the men who compose it.