COOLAHAN, Senior District Judge.
This case comes before the Court on motion for summary judgment by defendants Adamson United Company, United Engineering & Foundry Co., and Wean United, Inc., pursuant to Fed.R.Civ.P. 56. Movants claim they cannot be held liable as a matter of law for the injuries sustained by plaintiff while cleaning a machine manufactured by movants' predecessor. Plaintiff and defendant Zurn Industries, Inc. -- Div. of EEMCO
contend that movants are either a continuation of, or a corporation created by merger with, the corporation that manufactured the machine which caused plaintiff's injuries, and can therefore be held liable under the doctrine of successor corporations enunciated in McKee v. Harris-Seybold Co., 109 N.J.Super. 555, 264 A.2d 98 (L.Div. 1972), aff'd per curiam, 118 N.J.Super. 480, 288 A.2d 585 (App.Div.1972), and reinterpreted in Wilson v. Fare Well Corp., 140 N.J.Super. 476, 356 A.2d 458 (L.Div.1976), leave to appeal denied (unpublished order, Docket No. AM-599-75, July 1, 1976). This motion requires the Court to determine the effect of the recent Wilson opinion on prevailing New Jersey law.
The present action is one brought in this Court's diversity jurisdiction. 28 U.S.C. § 1332(a).
In diversity jurisdiction, a federal court is bound to apply the conflict of laws rule of the State in which it sits. Klaxon Co. v. Stentor Electrical Mfg. Co., 313 U.S. 487, 61 S. Ct. 1020, 85 L. Ed. 1477 (1941). Therefore, the Court must apply New Jersey's conflict of laws rule. The New Jersey conflict rule is to apply a weighing of governmental interests test patterned after Restatement 2d, Conflict of Laws. See, Heavner v. Uniroyal, Inc., 63 N.J. 130, 305 A.2d 412 (1973); Rose v. Port of N.Y. Authority, 61 N.J. 129, 293 A.2d 371 (1972); Henry v. Richardson-Merrell, Inc., 508 F.2d 28 (3rd Cir. 1975). However, movants argue that New Jersey substantive law and Ohio substantive law are identical on the question before the Court so that new Jersey law may be applied. See, McKee v. Harris-Seybold Co., supra (where the very same States were involved in exactly the same question as now confronts the Court; there the New Jersey court applied its own substantive law).
The Court agrees with the parties that the substantive law of the two States is similar on this point and, therefore, will do what the New Jersey court did in the same situation and apply New Jersey substantive law.
On January 3, 1973, Victor Menacho, the plaintiff, was employed as a machine operator by Continental Plastics and Chemical Co. in Avenel, New Jersey. While cleaning a plastic null machine, his hand became lodged between two rollers. When the machine was finally stopped, plaintiff had sustained severe injuries to his right hand, which resulted in the amputation of three fingers. Plaintiff claims the machine was defective and lacked adequate safeguards.
The plastic null machine was originally manufactured in May, 1920, by the Adamson Machine Co. of Ohio. (Westin affidavit, Sept. 10, 1975; Leyhane affidavit, Sept. 22, 1975.) It was purchased by plaintiff's employer in 1966 after it had been rebuilt by Erie Engine Co., a subsidiary of Zurn Industries.
Plaintiff contends that the rebuilding of the machine did not change it, neither correcting nor worsening the alleged defect. Movants claim that the rebuilder changed the machine substantially so that it could perform functions for which the machine was not originally designed. These facts are in dispute and can only be resolved by a jury. However, the fact that the machine was rebuilt does have a bearing on the present motion.
On December 31, 1944, Adamson Machine Co. agreed to sell all its assets to United Engineering & Foundry Co., a Pennsylvania corporation, or to United Engineering & Foundry Company's wholly owned subsidiary, Adamson United Co., an Ohio corporation.
The sale was actually consummated in January, 1946, at which time Adamson Machine Co. was liquidated. Adamson United continued in the same business as Adamson Machine Co. On April 21, 1970, Adamson United merged with its parent corporation, United Engineering & Foundry Co.
Almost two years later, on December 15, 1971, United Engineering & Foundry Co. merged with Wean Industries, Inc., to become Wean United, Inc.
(See affidavit of Henry C. Westin, counsel for Wean United, Inc., Sept. 10, 1975.)
Plaintiff contends that because Adamson Machine Co., the manufacturer of the machine which caused plaintiff's injury, is no longer in existence, the corporation which purchased its assets or those which were subsequently merged with the purchaser of Adamson Machine Company's assets, should be held to have assumed Adamson Machine Company's tort liability.
The issue before the Court is whether tort liability should be imposed upon the movant corporations if it is found that Adamson Machine Co. had manufactured a defective machine, or one without adequate safeguards. The leading case in New Jersey on this subject before Wilson was McKee v. Harris-Seybold Co., supra.
The court in McKee succinctly stated the position accepted by a majority of jurisdictions on this question. The court said (109 N.J.Super. at 561, 264 A.2d at 101):
"It is the general rule that where one company sells or otherwise transfers all its assets to another company the latter is not liable for the debts and liabilities of the transferor, including those arising out of the latter's tortious conduct, except where: (1) the purchaser expressly or impliedly agrees to assume such debts; (2) the transaction amounts to a consolidation or merger of the seller and purchaser; (3) the purchasing corporation is merely a continuation of the selling corporation, or (4) the transaction is entered into fraudulently in order to escape liability for such debts."