In this civil case plaintiff Joseph Wilson is alleging he suffered injuries due to the defective design, manufacture, construction and maintenance of a certain machine by Fare Well Corp., formerly George S. Harwood & Sons, Inc., as succeeded by Davis and Furber Machine Company; The James Hunter Machine Company as succeeded by James Hunter Machine Company, Division of Crompton and Knowles Corp.; Hunter Investment Corp., formerly The James Hunter Machine Company Crompton and Knowles Corp. and the recently organized James Hunter Machine Company.
The action comes before this court by way of three motions for summary judgment -- one in favor of defendant Crompton and Knowles Corp., one in favor of defendant Davis and Furber Machine Company, and one in favor of defendant James Hunter Machine Company.
At the hearing the motion for summary judgment in favor of defendant James Hunter Machine Company was granted without objection due to the fact that this company did not even come into existence until approximately nine months after the alleged accident took place. Thus, as a matter of law and fact, it was found that this company could not be held liable for any of plaintiff's injuries.
The facts are not in dispute. Plaintiff sustained personal injuries while operating a machine consisting of five parts while in the course of his work at his place of employment, Supreme Felt. Four of the parts (the Garnett, lapper, floor apron and wind-up) were manufactured by The James Hunter Machine Co. and one part (the Bramwell Feeder) was manufactured by George S. Harwood and Sons, Inc. The machine in question was shipped to Supreme Felt in Elizabeth by George S. Harwood and Sons, Inc. and installed by the employees of The James Hunter Machine Co. in 1952. The Garnett parts and Feeder part were put together to form the complete machine.
The accident herein complained of occurred on April 28, 1972. Plaintiff alleges a cause of action against all defendants due to negligence, breach of warranty and strict liability. The liability of a manufacturer for the unreasonably unsafe products it places into the channels of trade has been clearly established in this state. Bexiga v. Havir Mfg. Corp. , 60 N.J. 402 (1972). The actual merits of the case are not in issue. The major area of dispute is the basis upon which each defendant may be sued, taking into consideration the changes in corporate identities, and the sales of assets which have taken place between the time of manufacture of the machine and the time of the accident.
It is most important to understand the corporate history of each company as well as the agreements between the companies.
In the late 1800s The James Hunter Machine Company (Hunter) was incorporated for the manufacture and distribution of machines for the textile industry. On December
27, 1961 Crompton and Knowles Corp. (C & K) entered into an agreement with Hunter for certain of Hunter's assets, property and business. The closing date of sale to these assets was held on January 2, 1962. Thereafter, Hunter operated under the new name of Hunter Investment Corp. and C & K continued the manufacturing operations of Hunter under the name of James Hunter Machine Company, a Division of Crompton and Knowles.
The agreement between Hunter and C & K is lengthy and quite complex. It basically provides for C & K to acquire all inventory of goods, all machinery, jigs, tools, patterns, equipment, furniture, fixtures, real estate, buildings, trademarks, patents and good will of Hunter. However, it made specific exceptions for life insurance proceeds, trade notes and accounts receivable, securities, one piece of property in South Carolina, and "all claims and causes of action of every nature relating to operations prior to the date of closing and to obligations and liabilities not assumed by C & K hereunder." As consideration C & K was to pay Hunter in the following way: transfer of 30,000 shares of common stock of C & K to Hunter at an agreed value of $30 a share, a promissory note for $1,000,000 and cash if book values exceeded $1,900,000., plus $150,000. C & K agreed to assume all obligations under contracts with customers entered into in the ordinary course of business by Hunter accruing after the closing date, all liabilities under Hunter's retirement plan, all liabilities for group insurance, all real and personal property taxes assessed as of January 1, 1962 and thereafter, all labor contracts, all other contracts, leases or other instruments arising from prior agreements with Hunter. The president of Hunter became vice-president and director of C & K, as well as president of The James Hunter Machine Company, Division of Crompton and Knowles. Hunter agreed not to use its old name anywhere, not to engage in the business of developing, manufacturing or selling textile machinery, and to completely revise its corporate purpose
so that C & K benefits solely from its previously acquired trademark and good will.
After the closing date C & K operated exactly as Hunter operated. All machinery previously designed, manufactured and sold by Hunter was now done by C & K. The same equipment, management, employees and servicing arrangements which were available at Hunter were available at C & K. There were no basic changes in the operations regarding manufacture of either the Garnett machine or any other machinery which had previously been manufactured by Hunter.
In 1973 most of these same assets were sold back to The James Hunter Machine Company, Inc. Section 13 of that agreement stated:
It is further understood and agreed that nothing contained in this agreement, nor the consummation of the transactions contemplated hereby, shall in any way prejudice the rights or obligations of Crompton or Hunter Investment Corporation with respect to any claims or litigation now pending or hereafter instituted relating to or arising out of products sold by The James Hunter Machine Company prior to the closing under the 1961 agreement, it being understood and agreed that such rights and obligations shall be determined without reference to this agreement. Crompton and the Purchaser each agrees that it will cooperate with the other party in the defense of any such claims or litigation brought by third parties and will each use its best efforts to cause its respective employees to cooperate and assist therein.
Davis and Furber Machine Company (D & F) was incorporated in the late 1800s. The business of George S. Harwood & Sons, Inc. (Harwood) was also organized in the 1800s. On September 5, 1967 Sydney Harwood, doing business under the name and style of George S. Harwood & Sons, Inc., sold by assignment to D & F all right, title and interest to the trade mark of "Bramwell," together with the good will of the business symbolized by that trademark for $200,000. In addition, the Fare Well Corporation, Sydney Harwood, president, sold to D & F all its right, title and interest in and to the name of George S. Harwood & Son,
together with the good will of the business. Fare Well Corporation dissolved in May 1968.
In the agreement between Harwood and D & F, all rights of action, claims for damages, profits and costs, and any other demands for money held by Harwood in law or equity by reason of infringement on the trademark, were sold, assigned and transferred to D & F.
On September 25, the same day of the agreement, two letters were sent out -- one by Harwood and one by D & F -- to customers of the respective companies. The pertinent parts of Harwood's letter, signed by President Sydney Harwood, stated:
NOTICE TO CUSTOMERS OF CHANGE IN OWNERSHIP:
This is to advise you that Geo. S. Harwood & Son, Inc. ceased its manufacturing operations on September 25, 1967 and has sold to Davis and Furber Machine Company all properties which they will require for taking over and carrying on in North Andover, Massachusetts the manufacture of Bramwell Feeders and repair items for all outstanding Harwood machines.
THEREFORE, ALL FUTURE ORDERS AND INQUIRIES FOR WHAT HAVE HITHERTO BEEN HARWOOD PRODUCTS SHOULD BE DIRECTED TO:
DAVIS AND FURBER MACHINE COMPANY NORTH ANDOVER, ...