The issue before the Court was whether Carlton could be personally liable for the injury to a pedestrian on account of attempting to "defraud the members of the general public".

The order of the Appellate Division should be reversed, with costs in this court and in the Appellate Division, the certified question answered in the negative and the order of the Supreme Court, Richmond County, reinstated, with leave to serve an amended complaint.

The interests of the state in protection of victims of negligence is a sufficient basis to pierce the corporate veil.

This "insufficient capitalization" rationale has not been widely persuasive with courts, perhaps due to a fear that it would chill entrepreneurial activity.

Not long after the decision, the state increased the minimum amount of liability insurance required by a corporation.