Denolf v. Frank L. Jursik Co.

• Decision Date: 12 August 1974
• Docket Number: 14521,No. 1,Docket Nos. 14520,1
• Citation: 54 Mich.App. 584,221 N.W.2d 458
• Parties: Adhemar DENOLF, Plaintiff-Appellee, and Insurance Co. of North America, Intervening Plaintiff, v. FRANK L. JURSIK COMPANY, a Michigan Corporation, Defendant and Third-Party Plaintiff-Appellant, and TODCO DIVISION OF the OVERHEAD DOOR CORPORATION, Defendant and Third-Party Defendant-Appellee. Adhemar DENOLF, Plaintiff-Appellee, and Insurance Co. of North America, Intervening Plaintiff, v. FRANK L. JURSIK COMPANY, a Michigan corporation, Defendant and Third-Party Plaintiff-Appellee, and TODCO DIVISION OF the OVERHEAD DOOR CORPORATION, Defendant and Third-Party Defendant-Appellant
• Court: Court of Appeal of Michigan — District of US

Page 458

221 N.W.2d 458

54 Mich.App. 584

Adhemar DENOLF, Plaintiff-Appellee, and Insurance Co. of North America, Intervening Plaintiff, v. FRANK L. JURSIK COMPANY, a Michigan Corporation, Defendant and Third-Party Plaintiff-Appellant, and TODCO DIVISION OF the OVERHEAD DOOR CORPORATION, Defendant

and Third-Party Defendant-Appellee.

Adhemar DENOLF, Plaintiff-Appellee, and Insurance Co. of North America, Intervening Plaintiff, v. FRANK L. JURSIK COMPANY, a Michigan corporation, Defendant and Third-Party Plaintiff-Appellee, and TODCO DIVISION OF the OVERHEAD DOOR CORPORATION, Defendant

and Third-Party Defendant-Appellant.

Docket Nos. 14520, 14521.

Court of Appeals of Michigan, Division No. 1.

Aug. 12, 1974.

Released for Publication Sept. 13, 1974.

John D. Dougherty, Plunkett, Cooney, Rutt & Peacock, Detroit, for jursik.

Richard J. Tonkin, Vandeveer, Garzia, Tonkin, Kerr & Heaphy, P.C., Detroit, for Todco.

L. S. Charfoos, Detroit (Hayim I. Gross, Southfield, of counsel), for Denolf.

Wayne Ogne, Detroit, for North America Ins.

Before V. J. BRENNAN, P.J., and QUINN and CARLAND,* JJ.

CARLAND, Judge.

This is a consolidated appeal from a jury verdict in favor of plaintiff Adhemar Denolf in the sum of $42,500 against Frank L. Jursik Company, a Michigan corporation, and Todco Division of the Overhead Door Corporation. Plaintiff's injuries were sustained in the course of his employment as a milkman for the Borden Company while operating a side-lift elevator mounted to the chassis of a truck owned by his employer. The lift was used to load and unload cargo while making delivery of Borden products.

On November 14, 1969, the plaintiff, a long-time employee of Borden, was making deliveries and in so doing was for the first time using the truck in question. The lift about which this controversy revolves was also being used and operated by plaintiff for the first time. After making his last delivery at the 'Sweden House Restaurant' in St. Clair Shores, the plaintiff began to put the lift into the travelling position. This operation, however, was never completed. Because plaintiff had a new truck equipped with a new lift, he wanted to demonstrate the same to an employee of 'Sweden House'. He lowered the lift, dropped the pan and plaintiff and said employee stood on the pan and inspected the interior of the truck body. The lift was so designed that it could be activated or stopped through the use of one or two control levers located on either side of the mechanism.

After inspecting the interior of the truck, the two men stepped off the pan and plaintiff, using both hands, then picked up the pan from its horizontal position and rotated it in an are to its vertical position. Plaintiff removed his right hand from the pan edge and with his left hand attempted to push the pan into its cradle. In some manner, although plaintiff testified that he touched neither control lever, the lift was activated and plaintiff's left hand was caught between the pan and the bottom of the truck resulting in injuries for which recovery is sought.

The lift in question was manufactured by H. S. Watson Company and sold by it to defendant and third-party plaintiff F. L. Jursik Company, hereinafter called Jursik, on or before February 20, 1967. It was installed by Jursik on Borden's truck shortly before September 25, 1969 when the truck was first put into operation. The installation was done pursuant to blueprints 'drawn by H. S. Watson Company of Emeryville, California and Toledo, Ohio', in June of 1968. Todco Division of Overhead Door Corporation (hereinafter called Todco) acquired the Watson-Atlas Division of H. S. Watson Company. This was well over a year after the sale to Jursik. It should also be noted that H. S. Watson Company still maintains its corporate identity.

In March of 1970, plaintiff filed this action against Jursik alleging unsafe installation and design of the lift as the proximate cause of his injuries. These allegations are denied by Jursik.

During pretrial discovery, a witness testified that the name 'Todco' appeared on some portion of the equipment, whereupon and without further investigation, Jursik filed a third-party complaint against Todco alleging faulty design and manufacture of the equipment by Todco and seeking indemnification and contribution in the event plaintiff obtained a judgment against it. Thereafter, plaintiff adopted Jursik's third-party complaint.

Some three days prior to trial, it was established for the first time that the lift had in fact been manufactured by H. S. Watson Company and not Todco. Jursik thereupon filed a motion for adjournment and permission to add Watson as a third-party defendant. This motion was denied and the case proceeded to trial.

At the conclusion of plaintiff's proofs, Todco moved for a directed verdict of no cause for action on the ground that it had neither designed, manufactured, sold, nor installed the lift gate. This motion was renewed at the close of Jursik's proofs and again renewed at the conclusion of all proofs. Following verdict, Todco's motion for judgment notwithstanding the verdict or in the alternative for a new trial was also denied, as had been the previous motions.

The question of whether the trial court's denial of the motions made by Todco as set forth above resulted in reversible error should first be answered, because if answered in the affirmative, it will be dispositive so far as Todco's liability is concerned.

The undisputed proofs establish that the lift was manufactured by H. S. Watson Company and sold to Jursik some two and one-half years prior to the accident. There are no proofs that Todco participated in the installation of the lift on the Borden truck. Neither is it disputed that in June of 1968, Todco acquired Watson-Atlas Company, a division of H. S. Watson Company. No proofs were offered as to the relationship between H. S. Watson and Watson-Atlas other than that the latter was described as a division of the former. Whether Watson-Atlas had a separate corporate existence or was only an operational division is left only to conjecture. We can therefore only conclude that certain assets of H. S. Watson were acquired by Todco. We are further left completely in the dark as to whether the acquisition was through merger, consolidation or purchase. The burden was upon those asserting Todco's liability to prove either manufacture or installation by Todco. This they failed to do. Upon such failure, Todco's liability can only be imposed because of this acquisition either by operation of law or by the terms of its contract with Watson or by both. Here again, the burden of proof is upon the plaintiffs.

Since there are no proofs as to the terms of the contract, we must conclude that no Todco liability is thereby fixed.

The general rule is that an acquiring corporation which purchases the assets of another is not liable for the seller's liability absent some exception or consolidation or merger, 19 Am.Jur.2d, Corporations, § 1546 et seq., p. 922 et seq. In Chase v. Michigan Telephone Co., 121 Mich. 631, 80 N.W. 717 (1899), the plaintiff was an employee of a construction company which was consolidated with defendant company. Plaintiff sought to hold defendant company liable in a tort action for injuries received by plaintiff while in the employ of defendant's predecessor. The plaintiff recovered below and the Supreme Court in granting a reversal said on page 634, 80 N.W. on page 718 as follows:

'The law is well settled in regard to liability of the consolidated or purchasing corporation for the debts and liabilities of the consolidating or selling corporation. Such obligations are assumed when (1) two or more corporations consolidate and form a new corporation, making no provision for the payment of the obligations of the old; (2) when, by agreement, express or implied, a purchasing corporation promises to pay the debts of the selling corporation; (3) when the new corporation is a mere continuance of the old; (4) when the sale is fraudulent, and the property of the old corporation, liable for its debts, can be followed into the hands of the purchaser. Austin v. Bank, 49 Neb. 412, 68 N.W. 628 (1896). Plaintiff produced no evidence tending to bring the defendant within any of these cases.'

Further, on page 636, 80 N.W. on page 719, the Court said:

'The record is barren of evidence to show a consolidation. It shows only a sale. The Onus probandi was on plaintiff to show that the purchase was made subject to the obligations of the construction company. Upon this point the record is also barren of evidence. The court should have directed a verdict for defendant.'

No claim is here asserted by plaintiff as to any statutory liability of Todco. The portions of the applicable Michigan statutes in force at the time of the acquisition here in question as they pertain to this case were M.C.L.A. § 450.53; M.S.A. § 21.53 and M.C.L.A. § 450.55; M.S.A. § 21.55 (these sections of the act were repealed January 1, 1973 by the new Michigan corporation code and these sections have been consolidated in M.C.L.A. § 450.1722; M.S.A. § 21.200(722)).

Whether liability is to be imposed by statute depends upon the form of acquisition and not merely that acquisition occurred. There appear to be three basic forms either by merger, consolidation or purchase. The statutes above referred to when read with M.C.L.A. § 450.52; M.S.A. § 21.52 use the terms 'consolidation and merger'. Nowhere does the word 'purchase' appear. Since the record is barren as to the form of acquisition, no statutory liability may be...