Dawson v. Withycombe

1 This appeal requires us to clarify when corporate directors may be personally liable to corporate creditors and potential creditors for misrepresentations made by other corporate officers and for constructive fraud. We must also address the scope of the duty of directors to corporate creditors when the corporation enters a zone of insolvency, as well as issues of personal liability for negligent supervision of corporate employees, punitive damages and pre-judgment interest. For the reasons stated below, we vacate the judgment against the appellants and remand for a new trial on the issue of personal liability for fraud committed by an agent.