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Shabbat Parashat Shemot 5778

P'ninat Mishpat: A Worker Cleaning Up a Demised Companys Mess

(based on ruling 75116 of the Eretz Hemdah-Gazit Rabbinical Courts

Case: The plaintiff (=pl) contacted the defendant (=def), a manager for an “internal travel” company, to organize the lodgings and events for their son’s bar mitzva at a guest house. They decided on a package at a certain hotel, and def gave a quote of 40,500 shekels. Def informed pl that he had to deposit 30,000 shekels in her company’s bank account to enable her to order rooms from the hotel. Pl did so and received a receipt. A few weeks later, def informed pl that her company’s owner fled abroad after emptying the failed business’ accounts. It turns out that the rooms were never ordered, and the rooms that were supposed to be ordered were taken by a different family. Pl ended up spending more than 50,000 shekels on other rooms at the same guest house. Pl is suing def for the following: 30,000 shekels for the money he wasted due to def’s useless instructions; 10,300 shekels for spending extra money on the new rooms because pl had not ordered when she said she would; 5,000 shekels for the fact that pl ended up having to make time-consuming arrangements (including having to take off from work) that def was supposed to have done. Def argues that she was only a salaried worker for the company, which is the entity that should be sued. Regarding the fact that the rooms in question were not obtained, this was based on a mistake that the guest house made.


Ruling: While pl was the subject of a great injustice, one that might have even been purposeful on the company’s part, a major question is the status of a corporation and its shareholders and workers’ liability. While there is a machloket how to view a corporation regarding “religious” applications (e.g., ribbit, chametz), regarding monetary obligations, we follow the accepted practice to treat a corporation as a separate entity (see Minchat Yitzchak X:143). Even the owners of the corporation do not have liability. This is also a principle that those who sign our arbitration agreement accept upon themselves. Exceptions to this rule, both in secular law and in our beit din, are when someone used the corporation as a “front” to perpetrate a fraud or when a worker caused damage through gross negligence.   

In this case, our research into the corporation shows that def was not a shareholder of the company but a salaried worker. There is also no evidence that she was aware that the company was not solvent. Although she did not get paid for her last two months of work, at the time the money was paid, her salary was not that late. The reason such a large down payment was demanded could be as def claimed, that the boss needed funds for a major project at a Dead Sea resort. Therefore, def is not to be blamed for taking the high down payment without warning pl.

[While skipping significant detail,] it is not clear that the added expense that resulted from the order not being placed earlier was def’s fault or that it represented an actual loss (as opposed to a lack of gain) for pl. Therefore, this is not grounds for any payment either.
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