Case ID: ny-2d_51/html/0152-01.html
Source: Caselaw Access Project
Author: {"author": "Gabrielli, J. Meyer, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Mildred A. Billy, as Executrix of Joseph M. Billy, Jr., Deceased, Appellant, v Consolidated Machine Tool Corporation et al., Respondents.
    Argued September 3, 1980;
    decided October 21, 1980
    
      POINTS OF COUNSEL
    
      Robert J. Michael and Jay M. Friedman for appellant.
    I. The claims against Consolidated and Parrel are nothing more than ordinary third-party products liability claims against manufacturers of defective machinery. II. Defendant USM is the successor of Consolidated and Parrel and as such is liable for their tortious conduct. (Cyr v Offen & Co., 501 F2d 1145; Shannon v Langston Co., 379 F Supp 797.) III. The Workers’ Compensation Law does not bar the claim against USM as the corporate successor of Consolidated and Parrel. IV. In its memorandum decision, the court below specifically deferred to the Court of Appeals as to whether the State of New York should adopt the dual capacity doctrine which allows claims against an employer under certain circumstances by employees. (Costanzo v Mackler, 34 Misc 2d 188, 17 AD2d 948; Williams v Hartshorn, 296 NY 49; Minsky v Baitelman, 281 App Div 910; Reed v The Yaka, 373 US 410.) V. The possibility that under Delaware law Consolidated may be liable even though it is a dissolved corporation does not appear to have been addressed by the courts below. VI. The action against defendant Emhart Corporation which may be liable through its relationship with defendant, USM, should not be barred. VII. Section 11 of the Workers’ Compensation Law, as applied by the courts below, violates plaintiffs rights under the due process and equal protection clauses of the New York and United States Constitutions. VIII. This court has jurisdiction of this appeal by reason of its having granted leave to appeal, pursuant to CPLR 5602 (subd a).
    
      Thomas C. Burke for respondents.
    I. The Workers’ Compensation Law, as applied, is constitutional. (Shanahan v Monarch Eng. Co., 219 NY 469; Matter of Jensen v Southern Pacific Co., 215 NY 514; Matter of White v New York Cent. & Hudson Riv. R. R. Co., 216 NY 653, sub nom. New York Cent. R. R. Co. v White, 243 US 188.) II. Plaintiffs complaint was properly dismissed as to defendant Emhart. III. Plaintiffs complaint was properly dismissed as to defendants Consolidated Machine Tool Corporation, Farrel-Birmingham Co., Inc., and Farrel Corporation. (Matter of Riley v Aircraft Prods. Mfg. Corp., 40 NY2d 366.) IV. Plaintiffs complaint was properly dismissed as to the decedent’s employer USM Corporation. (Costanzo v Mackler, 34 Misc 2d 188, 17 AD2d 948; D’Agostino v Wagenaar, 183 Misc 184, 268 App Div 912; Winter v Doelger Brewing Co., 95 Misc 150, 175 App Div 796, 226 NY 581; De Giuseppe v City of New York, 188 Misc 897, 273 App Div 1010; Minsky v Baitelman, 281 App Div 910; Williams v Hartshorn, 296 NY 49; O’Rourke v Long, 41 NY2d 219; Garcia v Iserson, 33 NY2d 421; Doyle v Jennings, 26 NY2d 957; Velasquez v Pine Grove Resort Ranch, 61 AD2d 1102.) V. Any adoption of the so-called dual capacity doctrine in New York should be legislative. (Lawrence Constr. Corp. v State of New York, 293 NY 634; People v Kupprat, 6 NY2d 88; Matter of White v New York Cent. & Hudson Riv. R. R. Co., 216 NY 653, sub nom. New York Cent. R. R. Co. v White, 243 US 188; Williams v Hartshorn, 296 NY 49; Naso v Lafata, 4 NY2d 585; Rauch v Jones, 4 NY2d 592; Ryder Truck Lines v Maiorano, 44 NY2d 364; Matter of Granger v Urda, 44 NY2d 91.)
    
      Robert Abrams, Attorney-General (Stanley Fishman and Shirley Adelson Siegel of counsel), in his statutory capacity under section 71 of the Executive Law.
    The holding of the
    courts below — that section 11 of the Workers’ Compensation Law makes workers’ compensation the exclusive remedy available to an employee injured during the course of his employment (as against his employer), - thus barring common-law remedies which might otherwise have been available to the employee — does not violate the due process or equal protection clauses of the New York State or United States Constitutions 
      (Barrencotto v Cocker Saw Co., 266 NY 139; Koutrakos v Long Is. Coll. Hosp., 47 AD2d 500, 39 NY2d 1026; Montgomery v Daniels, 38 NY2d 41; New York Cent. R. R. Co. v White, 243 US 188; Matter of Jensen v Southern Pacific Co., 215 NY 514; Duke Power Co. v Carolina Environmental Study Group, 438 US 59; Cifolo v General Elec. Co., 305 NY 209; Ryder Truck Lines v Maiorano, 44 NY2d 364.)
   OPINION OF THE COURT

Gabrielli, J.

As a general rule, when an employee is injured in the course of his employment, his sole remedy against his employer lies in his entitlement to a recovery under the Workers’ Compensation Law (Workers’ Compensation Law, § 11). In our previous decisions, we have adhered strictly to this basic rule and have declined to recognize exceptions, even when the liability is purportedly premised upon conduct of the employer acting in a capacity other than that of employer (e.g., Williams v Hartshorn, 296 NY 49; Winter v Doelger Brewing Co., 175 App Div 796, affd without opn 226 NY 581). We have not previously been called upon to consider, however, a situation in which the employer’s liability, if any, is alleged to have arisen solely fyom its independent assumption, by contract or operation of law, of the obligations and liabilities of a third-party tort-feasor. Having examined all of the relevant precedent as well as the firmly rooted policies underlying the Workers’ Compensation Law, we conclude that, in such situations, the exclusivity provisions of that statute do not bar a common-law action against the employer for injuries sustained by an employee in the course of his employment.

Plaintiff’s decedent, an employee of defendant USM Corporation, was killed when a 4,600-pound "ram” from a vertical boring mill broke loose and struck him. There was no doubt that the October 21, 1976 accident occurred "in the course of’ the decedent’s employment within the meaning of section 10 of the Workers’ Compensation Law. Although the decedent’s widow applied for and received workers’ compensation benefits, she subsequently commenced a common-law tort action against USM Corporation, seeking recompense for the decedent’s personal injuries and wrongful death. Also named as party defendants were Emhart Corporation, the parent of USM, and Consolidated Machine Tool Corporation, Farrel-Birmingham Company and Parrel Corporation, all of which had been absorbed by USM through corporate mergers prior to the accident. In her complaint, plaintiff alleged that the accident had been caused by certain defects in the manufacture and design of the vertical boring mill and in the two moving parts that had been directly involved in the accident, a metal "lifting bar” and a 4,600-pound "ram”.

After preliminary discovery had taken place, each of the five corporate defendants moved for summary judgment. USM Corporation, the decedent’s employer, based its summary judgment motion primarily upon section 11 of the Workers’ Compensation Law. That section provides that the employer’s obligation to furnish workers’ compensation benefits is "exclusive and in place of any other liability whatsoever” to employees or their dependents for injuries sustained in the course of employment.

Both Special Term and the Appellate Division concluded that section 11 constituted an absolute bar to the assertion of any common-law claim that plaintiff might have against USM Corporation, regardless of the theory of liability advanced. Accordingly, the causes of action asserted against USM were dismissed. We granted plaintiffs motion for leave to appeal on November 20, 1979 (48 NY2d 608). Because we find the principle of exclusivity embodied in section 11 to be inapplicable to the unique set of facts presented in this case, we now reverse this aspect of the lower courts’ rulings and hold that the causes of action asserted against USM should be reinstated.

It is undisputed that the vertical boring mill which allegedly caused decedent’s injuries was designed several decades ago and manufactured during the early 1950’s by Consolidated Machine Tool Corporation and Farrel-Birmingham Company. It was also established through discovery that Consolidated Machine Tool Corporation had played a significant role in the design of the 4,600-pound "ram” that eventually broke loose from the machine and killed the decedent. Farrel-Birmingham Company was apparently responsible for the 1955 installation of the vertical boring mill in the plant now operated by USM.

Through a series of consolidations and mergers that took place during the 1950’s and 1960’s, Consolidated Machine Tool Corporation and Farrel-Birmingham Company were ultimately absorbed into USM Corporation. In 1954, Farrel-Birmingham, which had acquired a controlling interest in Consolidated three years earlier, dissolved that corporation and, concededly, assumed its assets and liabilities. In 1963, the name of the resulting corporate entity was changed from Farrel-Birmingham Company to Farrel Corporation. Farrel Corporation was finally merged into USM Corporation, the decedent’s employer, in 1968, eight years before the accident in question occurred. It is not seriously disputed that this merger resulted in the assumption by USM, a New Jersey corporation, of the liabilities and obligations of Farrel, a Connecticut corporation, including those liabilities that Farrel had inherited from Consolidated (see Conn Gen Stats Ann, § 33-371, subd [d]; NJ Stats Ann, § 14A:10 — 7, subd [3]; see, also, Business Corporation Law, § 906, subd [b], par [3]).

At the outset, we note our rejection of plaintiffs contention that, notwithstanding section 11 of the Workers’ Compensation Law, she is entitled to maintain a common-law action against USM either in its capacity as a participant in the manufacture and design of the metal "lifting bar” which was involved in the accident or in its capacity as the owner of the premises on which the accident occurred. The theory advanced by plaintiff, commonly known as the "dual capacity” doctrine, has been described by one noted commentator as follows: "[A]n employer normally shielded from tort liability by the exclusive remedy principle [embodied in section 11 of the Workers’ Compensation Law] may become liable in tort to his own employee if he occupies, in addition to his capacity as an employer, a second capacity that confers on him obligations independent of those imposed on him as employer” (2A Larson, Workmen’s Compensation Law, § 72.80, at p 14-112; see, e.g., Reed v The Yaka, 373 US 410; Duprey v Shane, 39 Cal 2d 781; Smith v Metropolitan Sanitary Dist., 77 Ill 2d 313; see, generally, Kelly, Workmen’s Compensation and Employer Suability: The Dual-Capacity Doctrine, 5 St Mary’s LJ 818). The doctrine is most frequently invoked when, as here, an employee or his dependents are seeking to hold the employer liable at common law as the owner of the property upon which a job-related injury has occurred (2A Larson, Workmen’s Compensation Law, at p 14-113). Although several jurisdictions have permitted maintenance of a common-law action under this theory (e.g., State ex rel. Auchter Co. v Luckie, 145 So 2d 239 [Fla]; Marcus v Green, 13 Ill App 3d 699; Duplechin v Pittsburgh Plate Glass Co., 265 So 2d 787 [La]; but see McCarty v City of Marshall, 51 Ill App 3d 842), we have squarely rejected its use in our State (William v Hartshorn, 296 NY 49, supra; Winter v Doelger Brewing Co., 175 App Div 796, affd without opn 226 NY 581, supra; see Minsky v Baitelman, 281 App Div 910; see, also, Murray v City of New York, 43 NY2d 400; cf. Volk v City of New York, 284 NY 279), as have several other jurisdictions (Kottis v United States Steel Corp., 543 F2d 22; Vaughn v Jernigan, 144 Ga App 745; Jansen v Harmon, 164 NW2d 323 [Iowa]; Frith v Harrah South Shore Corp., 92 Nev 447; Billings v Dugger, 50 Tenn App 403). In a similar vein, there has been a spate of cases in recent years in which employees have attempted to avoid the effects of the exclusivity rule by suing their employers in their capacities as manufacturers or designers of hazardous equipment causing injury on the job. While some courts have recognized and adopted this approach (Douglas v E. & J. Gallo Winery, 69 Cal App 3d 103; Mercer v Uniroyal, Inc., 49 Ohio App 2d 279), most have specifically refused to do so (Mapson v Montgomery White Trucks, 357 So 2d 971 [Ala]; Profilet v Falconite, 56 Ill App 3d 168; Winkler v Hyster Co., 54 Ill App 3d 282; Needham v Fred’s Frozen Foods, 359 NE2d 544 [Ind]; Atchison v Archer-Daniels-Midland Co., 360 So 2d 599 [La]; Schlenk v Aerial Contractors, 268 NW2d 466 [ND]; Kottis v United States Steel Corp., 543 F2d 22, supra).

Having examined all of the pertinent precedent, we conclude that the "dual capacity” doctrine as it has been applied to permit common-law suits against employers in their capacities as property owners or manufacturers of plant equipment is fundamentally unsound. The Workers’ Compensation Law was designed to spread the risk of industrial accidents through the vehicle of insurance coverage and, more specifically, to "provide a swift and sure source of benefits to the injured employee or to the dependents of [a] deceased employee” (O’Rourke v Long, 41 NY2d 219, 222), without regard to fault in most instances. In exchange for the security of knowing that fixed benefits will be paid without the need to resort to expensive and sometimes risky litigation, however, the employee has been asked to pay a price in the form of the loss of his common-law right to sue his employer in tort and perhaps to enjoy a more substantial recovery through a jury award. The legislative implementation of this "trade-off” is embodied in section 11 of the Workers’ Compensation Law, which precludes suits against the employer and limits the employees to the recompense afforded under the statute when he is injured in the course of his employment.

We cannot sanction the circumvention of this clear legislative plan by approving a theory which would permit the employer to be sued in his capacity as property owner or manufacturer of equipment used on the job site. As we have previously observed, "an employer remains an employer in his relations with his employees as to all matters arising from and connected with their employment. He may not be treated as a dual legal personality, 'a sort of Dr. Jekyl and Mr. Hyde’ ” (Williams v Hartshorn, 296 NY 49, 50-51, supra, quoting Winter v Doelger Brewing Co., 95 Misc 150, 153). Employers are expected to provide their employees with a safe workplace that is reasonably free of hazards. This obligation to provide a safe workplace simply cannot be separated in a logical and orderly fashion from the duties owed by the employer to his employees by reason of his ownership of the premises or his manufacture of the equipment with which the employees must work. Indeed, these duties are merely subcategories within the complex of obligations that arise in connection with the employment relation. We would be seriously undermining the salutary social purposes underlying the existing workers’ compensation scheme if we were to permit common-law recovery outside of that scheme on the basis of such illusory distinctions. This we decline to do.

Plaintiff’s claim against USM as the successor to the liabilities of Consolidated Machine Tool Corporation and FarrelBirmingham Company, however, stands on a somewhat different footing. It is well settled that the policies underlying the Workers’ Compensation Law do not preclude the maintenance of a common-law action against third-party tort-feasors who may be responsible, in whole or in part, for an. employee’s injuries. "[I]n compensation law, social policy has dispensed with fault concepts to the extent necessary to ensure an automatic recovery by the injured workman; but the disregard of fault goes no further than to accomplish that object, and, with payment of the workman assured, the quest of the law for the actual wrongdoer may proceed in the usual way” (2A Larson, Workmen’s Compensation Law, § 71.10, at p 14-2). In the present case, had the corporate identities of Consolidated Machine Tool Corporation and Farrel-Birmingham Company been preserved, plaintiff would have had a right to maintain an action against those corporations on the theory that they exposed her deceased husband to the risk of injury by designing and manufacturing a defective vertical boring mill and "ram”. It is only because these corporations were consolidated and then merged with USM Corporation that plaintiff is now without the means to hold them directly accountable as third-party tort-feasors.

As previously noted, USM has not seriously disputed that it had succeeded to the liabilities ánd obligations of Consolidated and Farrel-Birmingham as a result of the 1968 merger (see Business Corporation Law, § 906, subd [b], par [3]). In effect, USM stands in the shoes of these two defunct corporations and, in the ordinary course of events, would be fully answerable to plaintiff for their tortious conduct. Under the circumstances of this case, we cannot accept USM’s contention that the obligations it inherited through corporate merger may be avoided simply because of the fortuity that the injured party was an employee covered by the provisions of the Workers’ Compensation Law. In short, we conclude that the exclusivity rule of section 11 is not available as a defense to a common-law tort action under these facts.

Conceptually, the deceased employee’s executrix is suing not the decedent’s former employer, but rather the successor to the liabilities of the two alleged tort-feasors. That USM also happens to have been the injured party’s employer is not of controlling significance, since the obligation upon which it is being sued arose not out of the employment relation, but rather out of an independent business transaction between USM and Farrel. What distinguishes this case from the "dual-capacity” cases discussed above is that here the tort in question was not committed by the employer or any of its agents; instead, the tort, if any, was committed by third parties, which, as it appears on the present record, never had an employer-employee relationship with the injured party. Since these third parties would have had no basis for invoking section 11 of the Workers’ Compensation Law as a defense in a common-law action brought against them by the employee or his dependents, USM, which stands in their shoes with respect to the question of liability, should similarly not be permitted to do so.

Through its merger with Consolidated and Parrel, USM voluntarily assumed any obligations that those corporations may have had to individuals who might suffer injury as a result of a defect in their product. It would be grossly inequitable to permit USM to avoid its assumed obligations solely because the injured party was coincidentally an employee and the injuries in question arose in the course of his employment. As we have already seen, the policies underlying the Workers’ Compensation Law do not extend so far as to preclude actions by an injured worker against a third-party manufacturer whose defective product has caused the injury. Inasmuch as plaintiff’s action represents essentially an attempt to recover from third-party manufacturers through a suit against their corporate successor, plaintiff should be permitted to maintain the action, notwithstanding that the successor corporation is also an employer which would otherwise be immune from suit under section 11. Accordingly, we hold that it was error for the courts below to dismiss plaintiff’s causes of action against USM on the basis of its status as employer.

We note that plaintiff had also named Emhart Corporation, USM’s parent, as a party defendant in the action. It was plaintiff’s position that Emhart should be answerable for the obligations of USM because its involvement in its subsidiary’s management was so extensive as to render the subsidiary a mere "alter ego” of the parent (see, generally, Berkey v Third Ave. Ry. Co., 244 NY 84; Lowendahl v Baltimore & Ohio R. R. Co., 247 App Div 144, affd 272 NY 360). Upon Emhart’s motion for summary judgment, the courts below dismissed the complaint against that corporation, but only because they had concluded that USM, upon which Emhart’s alleged liability was based, could not itself be held liable to plaintiff. Inasmuch as we have reached a contrary conclusion as to USM’s potential liability, we must now consider whether, assuming USM to be liable, there are sufficient facts on the record to permit plaintiff to continue the action against Emhart.

As a general rule, the law treats corporations as having an existence separate and distinct from that of their shareholders and, consequently, will not impose liability upon shareholders for the acts of the corporation (Port Chester Elec. Constr. Corp. v Atlas, 40 NY2d 652, 656). Indeed, the avoidance of personal liability for obligations incurred by a business enterprise is one of the fundamental purposes of doing business in the corporate form (see Rapid Tr. Subway Constr. Co. v City of New York, 259 NY 472, 487-488). It is true that, on occasion, the courts will disregard the separate legal personality of the corporation and assign liability to its owners where necessary "to prevent fraud or to achieve equity” (International Aircraft Trading Co. v Manufacturers Trust Co., 297 NY 285, 292). But, such liability can never be predicated solely upon the fact of a parent corporation’s ownership of a controlling interest in the shares of its subsidiary. At the very least, there must be direct intervention by the parent in the management of the subsidiary to such an extent that "the subsidiary’s paraphernalia of incorporation, directors and officers” are completely ignored (Lowendahl v Baltimore & Ohio R. R. Co., 247 App Div 144, 155, affd 272 NY 360, supra).

Here, there has been no showing whatsoever that Emhart disregarded the separate identity of USM and involved itself directly in the affairs of that corporation. In response to Emhart’s moving papers, which assert that Emhart is merely a holding company with no employees involved in the management of USM, plaintiff has stated only that her claim against Emhart is "based on the fact that the defendant USM Corporation is [a] wholly-owned subsidiary [of Emhart]”. Of course, this fact alone would not be sufficient to support the imposition of liability upon Emhart for the acts of its subsidiary.

Nevertheless, plaintiff argues that a grant of summary judgment in favor of Emhart would be premature because it is still unclear whether "there is the necessary control exerted by the parent corporation to make it liable for the acts of its subsidiary”. Plaintiff further contends that additional discovery is "essential in this connection”. While it is true that CPLR 3212 (subd [f]) authorizes the court to deny summary judgment or grant a continuance pending discovery when "facts essential to justify opposition [to the motion] may exist but cannot be stated”, we cannot conclude that such action would be warranted here, since plaintiff has given no indication as to what "essential” facts she believes exist that would justify a denial of Emhart’s motion to dismiss her complaint. Consequently, l^mhart is entitled to summary judgment on its motion.

Finally, we hold that the dismissal of the complaint as it pertained to defendants Consolidated Machine Tool Corporation, Farrel-Birmingham Company and Farrel Corporation was entirely proper. Those corporations had long since ceased to exist at the time the instant action was commenced, and there is no indication that there remain any assets or insurance coverage which would provide a source of recovery. Inasmuch as these corporations have been completely absorbed by USM, plaintiff’s sole remedy for any injuries resulting from their tortious conduct lies in an action against that corporate entity.

Accordingly, the order of the Appellate Division should be modified, with costs to plaintiff against USM Corporation, by reinstating plaintiff’s causes of action against USM Corporation in accordance with the opinion herein and, as so modified, affirmed, with costs to the remaining defendants against plaintiff.

Meyer, J.

(dissenting). I would affirm. I agree that the dual capacity doctrine is inapplicable, though on different grounds than the majority, but I disagree with their conclusion that the Business Corporation Law, when all its pertinent provisions are considered, authorizes the action.

As the majority notes, the dual capacity doctrine holds a manufacturer-employer liable at common law for injury to an employee which results from a defect in the product. The theory underlying liability is that the duty of the manufacturer to make a product free of defect is unrelated to the employment relationship by reason of which the employer’s compensation liability and resultant immunity from tort liability comes into being. But even under the most liberal application of that doctrine a manufacturer-employer is held protected by compensation immunity when the product was manufactured solely for his own use and not for distribution to the general public (see Douglas v E. & J. Gallo Winery, 69 Cal App 3d 103, Mercer v Uniroyal, Inc., 49 Ohio App 2d 279).

Here Farrel-Birmingham ("Farrel”) acquired Consolidated in 1951 and Consolidated was formally dissolved on December 31, 1954. The record indicates that Consolidated designed the vertical boring mill, that it was manufactured by Consolidated and Farrel during the latter part of 1954 and part of 1955 and installed in the Farrel plant in August, 1955. Since no cause of action for the claimed design defect could exist before completion of installation (Sears, Roebuck & Co. v Enco Assoc., 43 NY2d 389; Sosnow v Paul, 36 NY2d 780), Consolidated, which had been dissolved before that time, had no liability as an entity separate from Farrel. Moreover, since Farrel caused the mill to be installed for use in its own plant, the dual capacity doctrine would not apply to it, to impose common-law liability to an employee, in any event.

My disagreement with the majority is that it has applied only a part of the provisions of the Business Corporation Law. Relying on the provision in section 906 (subd [b], par [3]) of that law, which makes the surviving corporation "liable for all the liabilities, obligations and penalties of each of the constituent corporations,” it ignores paragraph (1) of subdivision (b) of the same section which endows the surviving corporation with "all the rights, privileges, immunities, powers and purposes of each of the constituent corporations.”

Accepting for purposes of argument that the dual capacity doctrine will not be applied in New York, we then have a situation in which Farrel, USM’s predecessor corporation, incurred an inchoate liability at the time the defectively designed boring mill was installed in its plant, to anyone injured by the defect other than an employee, as to whom the compensation law immunized it from common-law liability. Since both immunities and liabilities of the predecessor corporation, Farrel, are available to or imposed upon the survivor or consolidated corporation, USM, it necessarily follows that the latter corporation is immune from liability if the person injured by the defect when the previously inchoate liability becomes choate is one of USM’s employees. The reason, quite simply, is that the predecessor corporation would have been immune had there been no merger or consolidation and section 906 explicitly says that merger or consolidation does not affect immunity. That there might have been liability had the injury occurred before merger or consolidation is immaterial, for the coalescence of defect and injury which makes liability choate is accompanied by employment of the injured person, which under the Business Corporation Law immunizes the surviving corporation from tort liability. The facts that Billy was never employed by Parrel and that Barrel is not the surviving corporation are immaterial for USM as the surviving corporation was entitled as to its employees to the immunity to which Barrel, one of the constituent corporations, would have been entitled had there been no merger.

The majority’s argument that Barrel would be subject to suit by Mr. Billy’s survivors had it not merged with USM and that USM, therefore, should not escape liability through the "fortuity” of its merger with USM is inconsistent not only with the Business Corporation Law but with the facts and with decisional law. Had Billy been injured while working for Barrel, Barrel would have been immunized by section 11 of the compensation law and USM as the successor to Barrel would have been immune to suit by Billy because Barrel was. There could be liability on USM’s part for an injury to Billy only if Barrel sold the mill to USM and did not merge with it. There was, however, no sale, and there was, indeed, a merger.

All that has occurred is that USM acquired the corporations that built the allegedly defective mill and used it in their work. The mill has never been removed from the employment operation and neither corporation ever surrendered the immunity from suit which was conferred upon it by reason of compliance with the Workers’ Compensation Law. When USM acquired Barrel, it acquired as well the immunity of which Barrel was possessed, an immunity USM would not have acquired if it had merely purchaséd the mill from Barrel. That immunity protected Barrel from liability resulting from defective design for injury to an employee in the course of his employment by equipment manufactured by Barrel for its own use. Both the immunity and the liability remained inchoate until the occurrence of an injury brought both into play. If the person injured was a nonemployee of USM, USM would be liable for the design defect because Barrel would have been and USM was the successor corporation. If the injured person was an employee of USM, USM would be immune from liability because Barrel was and USM was the successor corporation. It is immaterial that Billy never worked for Farrel (cf. majority opn, footnote, p 161). USM was immune from liability to Billy as its employee not because Billy was a Farrel employee but because Farrel was immune from liability to an employee and USM inherited that immunity. This is made clear by McElwain v Primavera (180 App Div 288, 289) which teaches that the effect of section 906 is that "nothing is lost by a merger; that the company formed by the merger stands in the place of those merged, and any right which belonged to them can be asserted by it”.

Nor are the assets of a merged corporation to be considered as having been transferred to the surviving corporation. As is illustrated by Torrey Delivery v Chautauqua Truck Sales & Serv. (47 AD2d 279), there is a substantial difference between a transfer of stock and a transfer of property. In that case plaintiff tenant had been granted a right of first refusal by its corporate landlord. On the death of the landlord’s sole stockholder, his stock was acquired by another corporation. Claiming that the stock sale violated its right of first refusal, the tenant sued to enforce it. The Appellate Division held that there had been no change of ownership of the landlord-corporation’s property, that "the corporate merger cannot be viewed as divesting or separating control of the subject property from the corporate entity” (47 AD2d, at p 283). Similarly, USM, Billy’s employer, stands in the place of Farrel and benefits from the compensation law’s grant of immunity.

The fallacy of the majority’s reasoning becomes apparent if we consider the consequences. Assume that a person works for a company which has manufactured its own equipment, that the corporation is acquired by another corporation and that the employee remains in his job. Under the majority’s reasoning, although the former employer had protection against suit, the Workers’ Compensation Law does not protect the acquiring corporation against suit if an injury to the employee is caused by any of the acquired equipment built by its predecessor. To make common-law liability of an employer otherwise entitled to section 11 immunity turn on whether the injury causing equipment was built by it or its predecessor is unrealistic. An acquiring corporation should not be required to take inventory of the equipment acquired through merger and obtain general liability insurance on so much of it as was manufactured by the acquired corporation, and nothing in either section 906 of the Business Corporation Law or section 11 of the Workers’ Compensation Law suggests that the Legislature so intended.

The majority’s conclusion is, in my view, theoretically deficient and impractical. Since the courts below properly granted summary judgment to defendant, the order of the Appellate Division should be affirmed.

Chief Judge Cooke and Judges Jones, Wachtler and Fuchsberg concur with Judge Gabrielli; Judge Meyer dissents and votes to affirm in a separate opinion in which Judge Jasen concurs.

Order modified, with costs to plaintiff against defendant USM Corporation, in accordance with the opinion herein and, as so modified, affirmed, with costs to the remaining defendants against plaintiff. 
      
       There is no record evidence that the decedent was ever employed by the predecessor corporations, Farrel-Birmingham and Consolidated. Moreover, inasmuch as Farrel was not the surviving corporation (Business Corporation Law, § 901, subd [b], par [4]), decedent’s subsequent employment by USM cannot be attributed to Parrel. It is therefore unnecessary for us to consider or, indeed, to speculate whether USM Corporation would have inherited the immunity from suit which these corporations would have enjoyed had decedent been in their employ at some time prior to the merger (see Business Corporation Law, § 906, subd [b], par [1]). The dissenter’s reasoning to the contrary is unavailing. Inasmuch as Parrel never employed decedent Billy and, therefore, never invested in workers’ compensation insurance to cover injuries decedent might sustain during the course of his employment, it cannot be said, logically or legally, that section 11 of the Workers’ Compensation Law would have afforded Parrel any immunity from a lawsuit instituted on behalf of Billy; it follows that since Parrel possessed no "immunity” from such a suit, there was no immunity for USM to "inherit” in consequence of its ultimate merger with Parrel.
     
      
       Since the majority posits liability under section 906 of the Business Corporation Law, there is no occasion to discuss the merits of the dual capacity doctrine and developments subsequent to Williams v Hartshorn (296 NY 49), not briefed by the parties or discussed by the majority, such as our decision in Dole v Dow Chem. Co. (30 NY2d 143), which materially affected the employer’s workers’ compensation protection, the predicate for Hartshorn’s conclusion.