Hart v. Bruno Machinery Corp.
Decision Date | 05 November 1998 |
Citation | 250 A.D.2d 58,679 N.Y.S.2d 740 |
Parties | , 1998 N.Y. Slip Op. 9487 James HART, Respondent, v. BRUNO MACHINERY CORPORATION, Individually and as Successor in Interest to Bruno-Sherman Corporation, Defendant and Fourth-Party Plaintiff-Appellant-Respondent; Harris Corporation et al., Fourth-Party Defendants-Appellants. (And a Third-Party Action). |
Court | New York Supreme Court — Appellate Division |
Pemberton & Briggs (Paul Briggs, of counsel), Schenectady, for defendant and fourth-party plaintiff-appellant-respondent.
Costello, Shea & Gaffney (Steven E. Garry, of counsel), New York City, for fourth-party defendants-appellants.
Gordon, Siegel, Mastro, Mullaney, Gordon & Galvin (John R. Seebold, of counsel), Schenectady, for respondent.
Before MIKOLL, J.P., and CREW, WHITE, YESAWICH and SPAIN, JJ.
Appeal from an order of the Supreme Court (Kramer, J.), entered December 23, 1997 in Schenectady County, which denied motions by fourth-party defendant Harris Corporation and defendant for summary judgment dismissing the complaint and fourth-party complaint.
On April 18, 1988, plaintiff, an employee of Carville-National Leather Corporation (hereinafter Carville) sustained severe injuries to his left hand when it was crushed by an allegedly malfunctioning leather embossing press manufactured in 1946 by T.W. & C.B. Sheridan Company (hereinafter Old Sheridan) and purportedly sold to Carville by defendant. Thereafter, plaintiff commenced this negligence and strict products liability action against defendant alleging, inter alia, that defendant failed to warn of the dangers of the press and "negligently failed to properly rebuild, recondition, repair, modify, maintain and/or service the said press". Defendant, in turn, commenced a fourth-party action seeking indemnification and/or contribution from, among others, Harris Corporation (hereinafter Harris). 1 Following discovery, Harris and defendant moved for summary judgment dismissing plaintiff's complaint on the ground that successor corporation liability could not be imposed upon them or, alternatively, that they were shielded from liability since the press had been substantially modified after having been placed in the stream of commerce. Supreme Court denied the motions, prompting this appeal.
Before discussing the doctrine of successor corporation liability, it is necessary to trace the corporate history of the defendants. On April 13, 1964, Old Sheridan sold its entire manufacturing business, good will, trade name and substantially all other assets to Harris-Intertype Corporation which formed a new wholly owned subsidiary, T.W. & C.B. Sheridan Company (hereinafter New Sheridan), to receive these assets and to continue the manufacturing operation of Old Sheridan. On May 5, 1964, Old Sheridan was dissolved and its corporate officers became officers of New Sheridan, which remained a wholly owned subsidiary of Harris-Intertype until 1968 when it was merged into that entity. In 1972, Harris-Intertype sold to defendant all assets used in the manufacture of the Sheridan press along with the good will related to the Sheridan press. In 1974, Harris-Intertype changed its name to Harris Corporation and continued to manufacture different products.
We agree that, on these facts, the four generally recognized exceptions to the traditional rule that a corporation that acquires the assets of another is not liable for the torts of its predecessor are not applicable (see, Schumacher v. Richards Shear Co., 59 N.Y.2d 239, 244-245, 464 N.Y.S.2d 437, 451 N.E.2d 195). This does not end our discussion since, upon the advent of the strict products liability cause of action, some courts, believing that the four exceptions formulated in the context of corporate law were too narrow, crafted a new exception known as the product line exception (see, Ray v. Alad Corp., 19 Cal.3d 22, 136 Cal.Rptr. 574, 560 P.2d 3; Ramirez v. Amsted Indus., 86 N.J. 332, 431 A.2d 811; Garcia v. Coe Mfg. Co., 123 N.M. 34, 933 P.2d 243; Dawejko v. Jorgensen Steel Co., 290 Pa.Super. 15, 434 A.2d 106). To invoke this exception, it must be shown that (1) the injured party's remedy against the original manufacturer was virtually destroyed by the successor's acquisition of substantially all the predecessor's assets, (2) the successor continued to manufacture essentially the same line of products as its predecessor, (3) the successor had the ability to assume the original manufacturer's risk-spreading role, and (4) the successor benefited from the original manufacturer's good will (see, Ray v. Alad Corp., supra, at 31, 136 Cal.Rptr. 574, 560 P.2d 3; Ramirez v. Amsted Indus., supra, at 358, 431 A.2d 811; Rothstein v. Tennessee Gas Pipeline Co., 174 Misc.2d 437, 443-444, 664 N.Y.S.2d 213).
Applying these principles, a New Jersey court found the product line exception applicable to defendant, pointing out that it benefited from its use of the Sheridan trade name and good will in manufacturing the same line of products and from holding itself out to customers and the public as substantially the same manufacturing enterprise (Nieves v. Bruno Sherman Corp., 86 N.J. 361, 368, 431 A.2d 826). Likewise, the court found that successor corporation liability could be imposed upon Harris even though it was not the current manufacturer of the Old Sheridan press product line since its acquisition of Old Sheridan contributed to the destruction of plaintiff's remedies against Old Sheridan and it was an integral part of the overall producing and marketing enterprise that should bear...
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