In the case of Henderson Company v. Thompson et al., 1936, the U.S Supreme Court ruled in favor of Thompson and others who were shareholders in a dissolved corporation. The dispute arose when Henderson Company filed a suit against them to recover dividends that had been paid out by the defunct company from its capital stock, arguing this was illegal under Kentucky law. However, the court held that since these payments were made without any fraudulent intent or purpose on part of either directors or shareholders and there was no insolvency issue involved at time of payment, they cannot be deemed as unlawful. Furthermore, it stated that such transactions can only be challenged by state authorities responsible for enforcement of corporate laws rather than individual creditors or other private parties unless their rights have been directly infringed upon.

In the dissenting opinion for Henderson Company v. Thompson, Justice Cardozo disagreed with the majority's ruling that a corporation could not be held liable for damages caused by its subsidiary company. He argued that if a parent company exercises control over its subsidiary to such an extent that it essentially becomes one entity, then it should also bear responsibility for any harm caused by the subsidiary's actions. According to him, this principle is consistent with general corporate law principles and does not require piercing of the corporate veil or disregarding separate legal identities of corporations. He further contended that allowing parent companies to escape liability in such situations would encourage abuse of corporate form and undermine public faith in business institutions.