Thе widower and co-administrators of the estate of Amala Thomas brought suit for wrongful death and medical malpractice against parent corporation Humana, Inc.; Humana’s wholly-owned subsidiary which does business as Humana Hospital-Newnan; and an individual physician. Humana moved for summary judgment as to all claims against it and appealed the denial of its motion to the Court of Appeals. That court reversed, finding that there was no evidence with which to pierсe the corporate veil between Humana and its subsidiary,
Humana, Inc. v. Kissun,
Three separate legal theories are in issue here: alter ego; apparеnt or ostensible agency; and joint venture. Under the alter ego doctrine, equitable principles are used to disregard the separate and dis
*420
tinct legal existence possessed by a corporation where it is established that the corporation served as a mere alter ego or business conduit of another. See, e.g.,
Farmers Warehouse v. Collins,
These three theoriеs are closely intertwined with one another. In discussing the alter ego doctrine, the courts frequently invoke the term “agency” in the context of the subsidiary corporation having been “ ‘so organized and controlled and its business conducted in such a manner as to make it merely an
agency,
instrumentality, adjunct, or alter ego of another corporation.’ ” (Emphasis supplied.)
Triple “C” Recreation Assn. v. Cash,
However, while there may be instances where evidence to pierce the corporate veil also serves to еstablish an agency relationship between the corporate parties, it cannot be held as a matter of law that evidence insufficient to рierce the corporate veil automatically serves to negate the existence of an agency relationship between the corporations. The Court of Appeals has recognized that even where a parent and wholly-owned subsidiary have remained separate corporate entities so that the acts of one are not chargeable to the other under the alter ego doctrine, both corporatiоns may nonetheless be subject to liability where one corporation acted as the agent for the other.
Midland Properties Co. v. Farmer,
Courts most often “pierce the corporate veil” where fraud would result if the corporate structure were allowed to shield shareholders from liability. . . . [indeрendent corporate status may be disregarded when such factors as gross undercapitalization, fraud, failure to observe corporate fоrmalities, non-functioning of officers and directors, or similar circumstances indicate that the subsidiary is merely the shadow of the parent. If, as in this case, the shаreholder happens to be another corporation, piercing the corporate veil results in disregard for the separate existenсe of parent and subsidiary.
There is a second theory under which a parent may be held liable for the activities of its subsidiary: an application of gеneral agency principles. One corporation whose shares are owned by a second corporation does not, by that fact alone, become the agent of the second company. However, one corporation — completely independent of a second corporation — may assume the role of the second corporation’s agent in the course of one or more specific transactions. This restricted agency relationship may develop whether the two separate corporations are parent and subsidiary or are сompletely unrelated outside the limited agency setting. See Restatement (Second) of Agency § 14M, comment (a) (1958). Under this second theory, total domination or general alter ego criteria need not be proven.
Id. at 1476-1477.
There is no question that under appropriate circumstances a parent corрoration can set up a subsidiary to promote the parent’s purposes yet maintain a separate identity from the subsidiary and avoid liability for the subsidiаry’s actions. A parent/subsidiary relationship does not in and of itself establish the subsidiary as either the alter ego of the parent, see, e.g.,
Trans-American Communications v. Nolle,
Therefore, the Court of Appeals erred when it concluded that the absence of evidence sufficient to crеate a fact question on piercing the corporate veil between Humana and its subsidiary ended all inquiry, as a matter of law, into whether a fact quеstion remains regarding the existence of an apparent agency relationship or a joint venturer relationship under the facts of this case. The holding in Division 2 of the Court of Appeals’ opinion is accordingly reversed and the case is remanded to that court for action consistent with this opinion.
Judgment reversed and case remanded.