Opinion ID: 1104454
Heading Depth: 1
Heading Rank: 2

Heading: The Potential Liability of New Cyril Bath

Text: In its second order, which found Matrix-Churchill responsible for any liability to plaintiff under our products liability doctrine by virtue of piercing the corporate veil, the trial court rejected the allegations of Matrix-Churchill by which the principle of estoppel was argued against new Cyril Bath: Matrix-Churchill offers, in support of its motion, evidence of a listing by new Cyril Bath Company, Inc., in the Thomas Register for 1983 as a manufacturer of `press brakes.' This evidence, along with the letter from new Cyril Bath offered by Matrix-Churchill as Exhibit 10 at trial, would likely have been sufficient for the Court to have applied the estoppel theory as set out in the John Smith's Sons case as to new Cyril Bath, if it had been properly before the Court at the time of trial. As has been shown, neither the de facto merger theory nor the [same] instrumentality doctrine theory sustains the trial court's imposition of potential liability upon Matrix-Churchill. That portion of the trial court's second order discloses that the issue of estoppel was rejected by the trial court, because, in its opinion, evidence in support of an estoppel against new Cyril Bath was presented too late, i.e., on motion for a new trial. We disagree with that conclusion. Matrix-Churchill's Exhibit 10 was introduced during trial. That exhibit is a letter written on letterhead stationery of The Cyril Bath Company, dated August 26, 1976, after the purchase of old Cyril Bath by Fairfield, and sent to Clerkin Machinery Company of Indianapolis, Indiana. The letter contains a solicitation for business: Gentlemen: The Cyril Bath Company was recently acquired by Fairfield Machine Company, Inc., of Columbiana, Ohio. Fairfield is a designer and builder of machinery for the steel industry with excellent engineering and fabrication experience. This new association has enabled us to make substantial cost improvements in our line of mechanical press brakes. Therefore, we are in a position to pass these savings along to our prospective customers. We are pleased to submit our new prices which we are certain will give you added impetus to promote and sell our line. Formerly you sold `Quality.' Now we have added the competitive price factor. We are certain that your sales efforts will result in many orders for Cyril Bath Press Brakes. (Emphasis added.) The portions of the purchase agreement described earlier support the inference that new Cyril Bath not only contemplated using the Cyril Bath name, but had the seller agree to terms which prevented the seller from using that name and from competing in the manufacture and sale of press brakes. It was also shown by the evidence that new Cyril Bath acquired from old Cyril Bath the right to manufacture press brakes. Matrix-Churchill and old Cyril Bath were obliged by the agreement to preserve the trade secrets and know-how; and the president of old Cyril Bath, James Kiggen, was by the terms of the agreement to be made available to the purchasing company for no more than ten (10) working days within the first thirty (30) days following the closing. Accordingly, there was evidence before the trial court, even without the listing referred to in the motion for a new trial, which made an issue of estoppel against new Cyril Bath. This is so because the evidence raises an inference that new Cyril Bath was intended by the purchaser to be a continuation of old Cyril Bath for the purpose of sales. As stated in Turner, supra, and adopted by this Court in Andrews, supra : Where the successor corporation represents itself either affirmatively or, by omitting to do otherwise, as in effect a continuation of the original manufacturing enterprise, a strong indication of continuity is established. Justice would be offended if a corporation which holds itself out as a particular company for the purpose of sales, would not be estopped from denying that it is that company for the purpose of determining products liability.... 244 N.W.2d at 882. Accordingly, we have concluded that the trial court was incorrect when it did not consider the issue of estoppel under the evidence shown by the record. For that reason, the judgment must be reversed and the cause remanded for a new trial. It is so ordered. REVERSED AND REMANDED. TORBERT, C.J., and MADDOX, JONES and SHORES, JJ., concur.