Mudgett v. Paxson Mach. Co., 13-85-369-CV

• Decision Date: 24 April 1986
• Docket Number: No. 13-85-369-CV,13-85-369-CV
• Parties: Prod.Liab.Rep. (CCH) P 11,018 Jeffrey MUDGETT, Appellant, v. PAXSON MACHINE COMPANY, Appellee.
• Court: Texas Court of Appeals

Page 755

709 S.W.2d 755

Prod.Liab.Rep. (CCH) P 11,018

Jeffrey MUDGETT, Appellant, v. PAXSON MACHINE COMPANY, Appellee.

No. 13-85-369-CV.

Court of Appeals of Texas,

Corpus Christi.

April 24, 1986.

Rehearing Denied May 29, 1986.

Mike Felber, Denbow, Wells, Williford & Felber, Fort Worth, for appellant.

Eugene W. Brees, II, John P. Polewski, Thompson & Knight, Dallas, for appellee.

Before UTTER, SEERDEN and BENAVIDES, JJ.

OPINION

UTTER, Justice.

Appellant Mudgett brought suit against Thopax Investment Corporation (the former Paxson Machine Company) (Paxson I) and Paxson Machine Company (Paxson II) as a result of personal injuries he sustained in an accident involving a metal-slitting machine. ¹ Prior to the accident, Paxson I sold its assets to Paxson II, and then changed its name to Thopax Investment Corporation. Paxson II filed a motion for summary judgment asserting that it had neither designed, manufactured, nor sold the machine in question. Paxson II further asserted that it did not assume tort liability by the purchase of Paxson I's assets. The trial court granted the summary judgment and severed the claims asserted against Paxson I from those asserted against Paxson II. Appellant Mudgett appeals the granting of the summary judgment.

The summary judgment evidence shows that on December 23, 1963, Paxson I and R.P.B. Corporation entered into an agreement whereby R.P.B. Corp. was to purchase substantially all of the assets of Paxson I. The agreement states that December 30, 1963, was to be the closing date of the transaction. After the sale, Paxson I changed its name to Thopax Investment Company and R.P.B. Corp. changed its name to Paxson Machine Company (Paxson II).

By purchase orders dated October 1, 1963, Metal Goods Corporation (Metal Goods), a division of Alcoa Corporation, ordered a slitting line from Paxson I. A delivery date of November 1, 1963, was requested.

On February 8, 1983, Mudgett injured his left hand while operating the slitting machine for his employer, Metal Goods. Mudgett then sued Paxson I and Paxson II under the theory of products liability.

By his first three points of error, appellant asserts that fact issues remain concerning whether Paxson I or Paxson II manufactured, designed, assembled, sold or delivered the slitting machine. Appellee's summary judgment evidence, a three page document which we consider to be an invoice, lists the specifications incorporated into each of the three basic components of the slitting line manufactured for Metal Goods. At the bottom of the first page is the handwritten notation, "Shipped 12/13/63 via Metal Goods Truck." Appellee further has shown, by summary judgment evidence, that the sale of the assets of Paxson I was closed on December 30, 1963. This evidence established that the slitting machine in question was manufactured, designed, assembled, sold and delivered prior to December 30, 1963, the date Paxson II purchased the assets of Paxson I. Since Paxson II (the movant) established these facts, the burden shifted to appellant (the non-movant) to set forth sufficient summary judgment evidence to give rise to a genuine issue of material fact. First Federal Savings & Loan Ass'n v. Ritenour, 704 S.W.2d 895 (Tex.App.--Corpus Christi, 1986, writ ref n.r.e.).

Appellant contends that:

the notation only indicates that the uncoiler machine of the slitting line [the component described on the first page] was shipped that date. On the invoice for the slitting component, there is no indication of a date of shipment.

This argument is unfounded because the document was obviously intended to be a three page invoice as evidenced by the notations on the top of the invoices "page two of three" and "page three of three." Except for the above stated argument, appellant has not brought forth any summary judgment evidence which would show that a genuine issue of material fact exists as to the truthfulness or accuracy of these notations as to the date these articles were shipped. Points of error one, two and three are overruled.

By points of error four and five, appellant contends that a fact issue exists as to whether Paxson II assumed tort liability over the slitter in question as a result of the assets purchase. Appellant points out that the sales agreement provides that it shall be "construed and enforced by the laws of Ohio."

Appellant contends that Ohio law "recognizes that a successor [corporation] can expressly or impliedly assume the tort liability of its predecessor," citing Travis v. Harris Corp., 565 F.2d 443 (7th Cir.1977) and Chadwick v. Air Reduction Co., 239 F.Supp. 247 (N.D.Ohio 1965). Appellant first urges us to find that Paxson II expressly assumed "all liabilities, including tort liability," or secondly, to find "at least an implied agreement to assume liability including tort liability."

The laws of Texas and Ohio are in accord regarding the interpretation of written contracts. The entire agreement must be considered in order to ascertain the true intent of the parties and no single provision is to be given controlling effect. Compare Coker v. Coker, 650 S.W.2d 391 (Tex.1983); Corriveau v. 3005 Investment Corp., 697 S.W.2d 766 (Tex.App.--Corpus Christi 1985, writ ref'd n.r.e.) with Inland Refuse Transfer Co. v. Browning-Ferris Industries of Ohio, Inc., 474 N.E.2d 271 (Ohio 1984). If the written agreement is worded so that it can be given a definite legal meaning or interpretation, then it is not ambiguous and the court will construe it as a matter of law. Coker v. Coker, 650 S.W.2d at 393; Corriveau v. 3005 Investment Corp., 697 S.W.2d at 767; Inland Refuse Transfer Co. v. Browning-Ferris Industries of Ohio, Inc., 474 N.E.2d at 272.

The sales agreement provides, ² in pertinent parts, as follows:

The said assets and business shall be sold free and clear of all liabilities, obligations ... of any description, except only those liabilities and obligations which the Buyer shall assume.

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... the Buyer expressly assumes and guarantees ... all debts and liabilities of the Seller set forth in the November 30th Balance Sheet and all liabilities and obligations under normal contracts, orders and commitments incurred in the regular course of business to the closing date and specifically assumes Seller's liabilities for 1963 Federal Income tax ...

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Except to the extent reflected or reserved against in the November 30th Balance Sheet, the Seller as of such date had no liabilities or obligations of any nature, whether accrued, absolute, contingent or otherwise, including without limitation, those liabilities due or to become due, except for Federal Income taxes for the year 1963.

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A separate document, executed on the closing date (December 30, 1963) and entitled "Assumption of Liabilities," provides for assumption of:

a) All liabilities and obligations of Paxson Machine Company in respect of the contracts and commitments entered into in the ordinary course of business as disclosed by the balance sheet of Paxson Machine Company as of November 30, 1963, and such further liabilities and obligations of Paxson Machine Company only as have been incurred in the ordinary course of business from November 30, 1963 to December 30, 1963, all of which liabilities and obligations are set forth on Exhibit A which is attached hereto and expressly made a part hereof.

b) All liabilities for Federal Income taxes for the year 1963 and thereafter. [emphasis ours]

The November 30th Balance Sheet lists liabilities as "[n]otes and accounts payable", "[a]ccrued liabilities", "[a]dvances on contracts", "[d]ividends payable" and, "[r]eserve for Federal taxes on income."

Notwithstanding the presumption discussed in footnote 2, the agreement of the parties regarding the assumption of liabilities is unambiguous. Clearly the parties intended that Paxson II was only to assume those debts, liabilities or obligations as disclosed in the November 30th Balance Sheet, and those "liabilities and obligations under normal contracts, orders and commitments incurred in the regular course of business" between November 30th and December 30th which are not and could not have been reflected in the November 30th Balance Sheet. Appellant argues that the assumption of liabilities "incurred in the ordinary course of business" is evidence of an assumption of tort liability. We disagree. The phrase "incurred in the ordinary course of business," and similar phrases, are modified by phrases such as "as disclosed by the balance sheet." This indicates that such liabilities and obligations are only of the type listed in the balance sheet. When a matter is specifically addressed by the written terms of a contract no terms will be implied concerning the matter. City of Cincinnati v....