Case Citator › Castleberry v. Branscum

Castleberry v. Branscum

Is it still good law? What later courts have actually done to this case.

Superseded by statute
Court
Supreme Court of Texas
Citation
721 S.W.2d 270
Decided
Confirmed treatments
8
Flagged citations read
49 of 49
Citing cases (total)
49
Treatment dates
1994–2010
Superseded by statute
A reviewed court treats this case as superseded by later legislation. Castleberry v. Branscum was partly superseded by Texas legislation for contract based veil piercing claims. All 49 flagged citations have been read.
More on how this was screened

The eight confirmed treatments listed below explain how the later statute replaced Castleberry’s constructive fraud route and removed failure to observe corporate formalities as an alter ego factor. Its other veil piercing rules remain available. Source note: CourtListener labels citing opinion 2884653 as Chambers v. Equity Bank, but serves the text of Seidler v. Morgan. The Seidler treatment below is anchored to the matching opinion at 2884648. Other mismatched or appended texts (2909071, 2927143, 2899406) were checked against their assigned opinions and supplied no Castleberry treatment.

Every treatment on this page is written from the citing opinion itself, with a verbatim quote, never copied from a commercial citator. A citation flagged by our screen but not shown here was read and found not to weaken this case.

49 later cases cite Castleberry v. Branscum; 49 of those citations sat close to treatment language and were flagged for reading, and all of them have been read. Citations that did not sit near treatment language were not flagged and were not read one by one, so a court that weakened this case without using any of that language would not appear here.

Relying on Castleberry v. Branscum?

This page shows what later courts did to it. Ask about your specific facts and see whether it still carries your argument, with citations you can check.

Treatments

Superseded by statute

  • The court held that the statute displaced Castleberry for domestic corporations’ contract obligations while leaving its tort and statutory veil piercing rules available.

    In re Guyana Development Corp. · U.S. Bankruptcy Court for the Southern District of Texas · filed

    The seminal case on alter ego in Texas is Castleberry v. Branscum ... Although the case was partially overruled by Tex.Bus.Corp.Act Ann. art. 2.21 (Vernon Supp. 1993) as to contractual obligations of a domestic corporation, it has continuing validity regarding piercing the corporate veil for tort and statutory obligations of a corporation. Further, the statute has no applicability to corporations which were not incorporated under its provisions, such as GDC, MREV IV, or AMI.
    Read the full opinion on CourtListener →

  • The court rejected reliance on Castleberry for a contract creditor’s alter ego claim because Texas legislation had displaced that rule.

    Capital Parks, Inc. v. Southeastern Advertising & Sales System, Inc. · Fifth Circuit · filed

    In making its alter ego argument, Capital relies on Castleberry v. Branscum, 721 S.W.2d 270, 271 (Tex.1986), which was legislatively overruled five years ago. See TEX.BUS.CORP.ACT ANN. art. 2.21 (West 1994); Villar v. Crowley Maritime Corp., 990 F.2d 1489, 1496 n. 8 (5th Cir.1993), cert. denied, --- U.S. - ---, 114 S.Ct. 690, 126 L.Ed.2d 658 (1994).
    Read the full opinion on CourtListener →

  • The court held that article 2.21 removed failure to observe corporate formalities as a Castleberry alter ego factor.

    Hall v. Timmons · Court of Appeals of Texas, Ninth District · filed

    Castleberry was overruled by Tex. Bus. Corp. Act Ann. art. 2.21(A)(3) (Vernon Supp.1999) to the extent that failure to observe corporate formalities is no longer a factor in proving alter ego.
    Read the full opinion on CourtListener →

  • The court held that Texas’s 1989 amendment displaced Castleberry’s constructive fraud standard for shareholder liability on corporate obligations.

    Randall & Blake, Inc. v. Evans (In re Canion) · Fifth Circuit · filed

    R&B repeatedly cites to us the Texas Supreme Court case of Castleberry v. Branscum, 721 S.W.2d 270 (Tex.1986) as standing for the proposition that constructive fraud, which does not require intent, was sufficient grounds for a court to disregard the corporate form thereby extending liability to the shareholders—in that case some of the defendants. Castleberry was statutorily overruled. In 1989, in response to Castleberry the Texas legislature amended the Texas Business Corporation Act. Now, a shareholder cannot be held liable for corporate obligations unless actual fraud is shown.
    Read the full opinion on CourtListener →

  • The court held that article 2.21 displaced Castleberry’s use of corporate formalities as an alter ego factor.

    Howell v. Hilton Hotels Corp. · Court of Appeals of Texas, Houston (First District) · filed

    As discussed below, Castleberry was overruled by Business Corporation Act article 2.21 § A(3) to the extent that failure to observe corporate formalities is no longer a factor in proving alter ego.
    Read the full opinion on CourtListener →

  • The court recognized that the statute partly superseded Castleberry while retaining its list of veil piercing theories for discussion.

    Seidler v. Morgan · Court of Appeals of Texas, Sixth District · filed

    Although Castleberry has been partially superseded by statute (see Tex. Bus. Orgs. Code Ann. § 21.223(a) (Vernon Supp. 2008), the checklist within it remains useful for discussion.
    Read the full opinion on CourtListener →

  • The court held that legislative amendments partially displaced Castleberry for contract based veil piercing claims.

    JNS Aviation, Inc. v. Nick Corp. · U.S. District Court for the Northern District of Texas · filed

    In truth, however, the legislative amendments only partially overruled Castleberry.
    Read the full opinion on CourtListener →

  • The court required actual fraud under the later statute, confining Castleberry’s constructive fraud route for contract creditors.

    Bale v. Ryan (In re Ryan) · U.S. Bankruptcy Court for the Northern District of Texas · filed

    In Castleberry v. Branscum, 721 S.W.2d 270, 271 (Tex.1986) (superseded in part by Tex. Bus. Orgs.Code Ann. § 21.223), the Texas Supreme Court stated there are six situations 10 in which a court may pierce the corporate veil when the corporate form has been used as part of a basically unfair device to achieve an inequitable result. ... The Texas Business Corporation Act has additional requirements for piercing the corporate veil such that invocation of “the various doctrines for disregarding the corporate entity, including alter ego and sham to perpetrate a fraud” must be supported by facts showing “actual fraud.” ... Thus, even if Plaintiffs’ evidence were more persuasive, Plaintiffs also would have to prove actual fraud in order to pierce the corporate veil and bring their claims against Debtor as president and sole shareholder of the Corporation.
    Read the full opinion on CourtListener →

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