Ostrowski v. Hydra-Tool Corp.
| Decision Date | 06 April 1984 |
| Docket Number | No. 82-453,HYDRA-TOOL,82-453 |
| Citation | 479 A.2d 126,144 Vt. 305 |
| Parties | Janusz T. OSTROWSKI v.CORPORATION. |
| Court | Vermont Supreme Court |
Allan R. Keyes of Ryan Smith & Carbine, Ltd., Rutland, and Kissell & Massucco, Bellows Falls, for plaintiff-appellant.
J. Fred Carbine, Jr., Rutland, and Leonard J. Gluck, Rutland, (on the brief), for defendant-appellee.
Before BILLINGS, C.J., and HILL, UNDERWOOD, PECK and GIBSON, JJ.
Plaintiff appeals from an order by the Windham Superior Court dismissing his suit for failure to state a cause of action. V.R.C.P. 12(b)(6). We affirm.
The facts discussed herein are as alleged in plaintiff's complaint and are taken as true for purposes of deciding the merits of the appeal. Bennett Estate v. Travelers Insurance Co., 138 Vt. 189, 190-91, 413 A.2d 1208, 1209 (1980).
On November 12, 1980, plaintiff suffered an amputation of three fingers and other injuries to his hands while operating a press-brake machine in the course of his employment. The original corporate manufacturer of the machine had long since been dissolved at the time of plaintiff's injuries. Defendant Hydra-Tool Corporation is the second of two succeeding purchasers of the manufacturer's assets, and continues to manufacture similar press-brake machines.
Plaintiff sought to recover damages for his injuries under the doctrines of strict products liability, breach of warranty, and negligence based on a failure to warn. As to the first two counts, plaintiff urged that they be applied under the "product-line" theory or, as an alternative, the "continuity of enterprise" approach to successor liability. Plaintiff's negligence count alleged a duty to warn of the machine's defects on the part of Hydra-Tool, independent of its status as a successor corporation. The superior court dismissed all three counts.
The general and traditional rules of corporate successor liability are grounded in corporate law and turn on the form of the change in the corporate entity. The essence of the rules is that the liabilities of a predecessor corporation will pass to the successor only when the change is occasioned by statutory merger or consolidation. 1 L. Frumer & M. Friedman, Products Liability § 5.06 (1983). If the change is accomplished by a sale of assets only, the purchasing corporation assumes no liabilities of the seller unless one of the following exceptions applies: (1) the buyer expressly or impliedly agrees to assume such liabilities; (2) the transaction amounts to a de facto merger or consolidation; (3) the purchasing corporation is merely a continuation of the selling corporation; (4) the sale is a fraudulent transaction intended to avoid debts and liabilities; (5) inadequate consideration was given for the sale. Id.
Under the product-line theory urged by plaintiff here and in the court below, a successor corporation which continues to manufacture a product of the business it acquires, regardless of the method of acquisition or any possible attribution of fault, assumes strict liability for products manufactured and sold before the change of corporate ownerships. See, e.g., Ramirez v. Amsted Industries, Inc., 86 N.J. 332, 347-48, 431 A.2d 811, 819 (1981).
Broadly stated, the rationale of these decisions, as well as the continuity of enterprise theory, appears to turn on a balancing of economic considerations: perceived benefits to the successor resulting from acquisition, and the assumption that the successor is better able to bear the cost of harm regardless of fault, than the injured person. The postulate seems to be that these costs can always be passed on to consumers in the form of price increases.
We agree with the position taken by the lower court that these theories do not speak the law of this state, and we decline to adopt them. In our view, the arguments in support of the general rule are more persuasive: the successor...
To continue reading
Request your trial
-
National Gypsum Co. v. Continental Brands Corp., Civ. A. No. 93-12027-NG
...Corp., 835 F.2d 145 (6th Cir. 1987); Wallace v. Dorsey Trailers Southeast, Inc., 849 F.2d 341 (8th Cir.1988); Ostrowski v. Hydra-Tool Corp., 144 Vt. 305, 479 A.2d 126 (1984); Simoneau v. South Bend Lathe, Inc., 130 N.H. 466, 543 A.2d 407 (1988); Downtowner, Inc. v. Acrometal Products, Inc.,......
-
TRACEY BY TRACEY v. Winchester Repeating Arms Co.
...953, 954 (Okla.Ct.App. 1984); Downtowner, Inc. v. Acrometal Products, Inc., 347 N.W.2d 118, 123 (N.D.1984); Ostrowski v. Hydra-Tool Corp., 144 Vt. 305, 479 A.2d 126, 127 (1984); Gonzalez v. Rock Wool Engineering & Equipment Co., Inc., 117 Ill.App.3d 435, 72 Ill.Dec. 917, 921, 453 N.E.2d 792......
-
Winsor v. Glasswerks Phx, LLC
...Inc., 690 S.W.2d 287 (Tex.Ct.App. 1985); Mudgett v. Paxson Mach. Co., 709 S.W.2d 755 (Tex.Ct.App.1986); Vermont, Ostrowski v. Hydra-Tool Corp., 144 Vt. 305, 479 A.2d 126 (1984); Virginia, Harris v. T.I., Inc., 243 Va. 63, 413 S.E.2d 605 (1992); West Virginia, Davis v. Celotex Corp., 187 W.V......
-
Mettinger v. Globe Slicing Mach. Co., Inc.
...v. Capitol Machine Works, Inc., 690 S.W.2d 287, 294 (Tex.Ct.App.), writ denied, 701 S.W.2d 238 (Tex.1985); Ostrowski v. Hydra-Tool Corp., 144 Vt. 305, 479 A.2d 126, 127 (1984); Harris v. T.I., Inc., 243 Va. 63, 413 S.E.2d 605, 609 (1992); Fish v. Amsted Indus., Inc., 126 Wis.2d 293, 376 N.W......
-
Successor Corporate Liability in Product Liability Actions in Connecticut: the Convergence of Tort and Corporate Law
...515 (S.D. 1986); Texas: Griggs v. Capitol Machine Work Inc., 690 S.W.2d 287 (Tex. Ct. App. 1985); Vermont: Ostrowski v. Hydra-Tool Corp., 144 Vt. 305, 479 A.2d 126 (1984); Virginia: Harris v. Inc., 243 Va. 63, 413 S.E.2d 605 (1992); and Wisconsin: Fish v. Airnsted Industrial Inc., 376 NW.2d......
-
Successor Liability in Vermont
...at 511. 36. Id. Justice Brickley, in dissent, disagreed with the majority as to the underlying rationale of Turner. 37. Id. at 513. 38. 479 A.2d 126 (Vt. 1984). 39. Gladstone, 878 A.2d at 220 (citing Ostrowski, 479 A.2d at 127). 40. 560 P.2d 3 (Cal. 1977). 41. Id. at 9. 42. 62 P.3d 69, 73 (......