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Nieves v. Bruno Sherman Corp.

Decided: June 18, 1981.

LUIS A. NIEVES, JR., PLAINTIFF-APPELLANT-RESPONDENT,
v.
BRUNO SHERMAN CORPORATION (FORMERLY KNOWN AS BRUNO SHERIDAN CORP.), DEFENDANT-RESPONDENT, AND HARRIS CORPORATION (FORMERLY KNOWN AS HARRIS-INTERTYPE CORP.), DEFENDANT-APPELLANT, AND T.W. & C.B. SHERIDAN COMPANY AND JOHN DOE OR JOHN DOE, INC., THE SAID NAME BEING FICTITIOUS, THE TRUE IDENTITY OF THE DEFENDANT BEING UNKNOWN, AND EMPIRE MUTUAL INSURANCE COMPANY, DEFENDANTS



On certification to the Superior Court, Law Division.

For affirmance -- Justices Sullivan, Pashman, Clifford, Schreiber, Handler and Pollock. For reversal -- None. The opinion of the Court was delivered by Clifford, J.

Clifford

This case implicates an extension of Ramirez v. Amsted Industries, Inc., 86 N.J. 332 (1981), decided this day. We there held that where one corporation acquires all or substantially all the manufacturing assets of another corporation, even if exclusively for cash, and undertakes essentially the same manufacturing operation as the selling corporation, the purchasing corporation is strictly liable for injuries caused by defects in units of the same product line, even if previously manufactured and distributed by the selling corporation or its predecessor. In Ramirez the successor corporation was the only viable corporate entity plaintiff could sue for his injuries; his remedies against the original manufacturer and an intermediate corporation had been destroyed by the successor's acquisition of all the business assets of its predecessors, which subsequently dissolved. The question now before us is whether the Ramirez standard may be extended to impose liability on an intermediate successor corporation -- one that acquired all the business assets from the original manufacturer and thereafter transferred those assets to its successor and discontinued the offending product line, all several years before plaintiff's accident occurred.

The intermediate successor corporation in this case is Harris Corporation (Harris). It is still in business, although no longer manufacturing the type of machinery that caused plaintiff's injuries. Harris's successor, defendant Bruno-Sherman Corporation (Bruno-Sherman), is likewise a viable corporation. It manufactures the product line of the original manufacturer of the machine in question. Harris argues that under these circumstances it should not be subject to liability inasmuch as its intermediate acquisition has not resulted in any interference with plaintiff's remedies against the still-extant manufacturing corporation, Bruno-Sherman. The argument, in short, is that as long as its successor is still susceptible to suit, Harris is entitled to judgment as a matter of law.

We hold that the Ramirez rationale is not necessarily so limited as to visit liability upon only the current, viable manufacturer of the product line. In certain situations both the current successor corporation and the intermediate manufacturer may be responsible under Ramirez.

I

On July 26, 1976 plaintiff, Luis A. Nieves, Jr., suffered severe injury when his right arm was crushed in die-cutting power press machine at his place of work, Fiber-Flex Company in Jersey City, New Jersey. The arm was subsequently amputated. The machine that caused plaintiff's injury was known as a Sheridan Model 34, Number 93 power press, manufactured in 1941 by T.W. & C.B. Sheridan Company (Old Sheridan), a New York manufacturing corporation established in 1903. The press apparently came into the possession of plaintiff's employer by second-hand purchase in or about 1966. Plaintiff alleges that the press was defective when sold to the original purchaser in 1941.

By agreement dated April 13, 1964, Old Sheridan sold its entire manufacturing business, good will, trade name and substantially all other assets to Harris-Intertype Corporation. The latter in turn formed a new, wholly-owned subsidiary, T.W. & C.B. Sheridan Company (New Sheridan), to receive those assets and continue the manufacturing operation of Old Sheridan. In May 1964 representatives of Harris-Intertype and Old Sheridan executed a separate agreement whereby New Sheridan assumed certain debts, obligations and liabilities necessary for the uninterrupted continuation of the normal business operations of Old Sheridan. The agreement stated that New Sheridan

hereby assumes and agrees to pay, perform and discharge all debts, obligations, contracts, and liabilities of [Old Sheridan] of any kind, character or description, whether accrued, absolute, contingent or otherwise, as reflected on the balance sheets, books of account and other records of [Old Sheridan] on the date hereof * * *. [Emphasis added.]

Shortly thereafter Old Sheridan, which had changed its name almost immediately following the purchase of the manufacturing assets by Harris, distributed the cash proceeds of the sale to its shareholders and underwent dissolution. Its corporate officers became officers of New Sheridan, which remained a wholly-owned subsidiary of Harris-Intertype until July 1968, when it merged with Harris and became the Sheridan Division of Harris-Intertype.

Pursuant to an agreement dated September 6, 1972 Harris-Intertype sold to Bruno-Sherman all the assets used in the manufacture of the Sheridan die-cutting press and related spare parts. As determined by the trial court, the sale of business assets to Bruno-Sherman included the good will related to the Sheridan press line as well as historical data, business records, customer correspondence, trade secrets, patents, trademarks, designs, patterns, jigs, fixtures and equipment involved in the manufacturing operation. Bruno-Sherman removed the purchased assets to its own plant, where it manufactured and from which it distributed and serviced the Sheridan line of presses. In May 1974 Harris-Intertype Corporation changed its name to Harris Corporation and continued the manufacturing operation of a different product line.

II

Plaintiff seeks recovery from both Harris and Bruno-Sherman as successor corporations to Old Sheridan, the original manufacturer of the machine that caused plaintiff's injury, on theories of strict products liability, negligent failure to upgrade the machine, and breach of a duty to warn plaintiff's employer of the negligent design of the machine. In separate motions for summary judgment heard and decided by two different trial judges both Harris and Bruno-Sherman argued that they were not successor corporations to ...


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