Court Opinion

ID: 9722489
Source: CourtListenerOpinion
Date Created: 2023-08-26 09:36:20.142678+00
Date Added: 2024-06-11T18:24:36.249914
License: Public Domain

FLEMING, J.
I dissent.
The majority opinion saddles liability on Meyer, an intermediary which had nothing to do with the defective design or manufacture of the machinery that injured Ortiz. The opinion accomplishes this by granting the operator of the Johnson business complete immunity from liability.
Concededly, the operation of the Johnson machinery business passed through the hands of several different operators in a series of complicated transactions. There was, however, continuity of business operation throughout. Each operator succeeded its predecessor in the business of manufacturing and marketing Johnson machinery, and the latest one, Amsted, acquired the Johnson name, premises, plant, equipment, inventory, customer lists, catalogues, and goodwill from its predecessor and continued to operate the Johnson machinery business to the time of the accident. The purchase agreement by which Amsted took over the business specified it was acquiring “all of the assets of every kind and character owned by Seller and used for the conduct of the businesses of Seller and of Johnson Shear and Brake Corporation, an Indiana corporation, as heretofore conducted(Italics added.)
Amsted, having undertaken to operate the business, thereby assumed the risks growing out of the continuity of business operation. One of these risks was product liability for defective machinery put in circulation at an earlier time and never corrected. While users of an orphaned product no longer actively manufactured or marketed cannot look to an existing manufacturer for parts, repairs, service, information, and the like, users of a product that continues to be manufactured, marketed, and serviced under its original trade name can reasonably expect a degree of protection from the entity currently carrying on the business, even though that entity may not be the one that originally manufactured and marketed the particular item involved. This expectation is particularly justifiable when the product consists of heavy machinery of a type that carries a high risk of personal injury. A manufacturer of heavy machinery who undertakes to carry on an existing business must take the good with the bad, and the bad includes defective product liability. (Cf. *851Malone v. Red Top Cab Co., 16 Cal.App.2d 268, 273 [60 P.2d 543]; Gordon v. Aztec Brewing Co., 33 Cal.2d 514, 521-523 [203 P.2d 522]; Blank v. Olcovich Shoe Corp., 20 Cal.App.2d 456, 461-462 [67 P.2d 376]; Stanford Hotel Co. v. M. Schwind Co., 180 Cal. 348, 354 [181 P. 780]; Corp. Code, § 4116.) Product liability today has become an integral part of a manufacturing business, and the liability attaches to the business like fleas to a dog, where it remains imbedded regardless of changes in ownership of the business. So long as the business retains its distinctive identity and character and continues to be operated as it has in the past, defective product liability adheres to the business and remains there until discharged by bankruptcy or comparable judicial act.
I find Schwartz v. McGraw-Edison Co., 14 Cal.App.3d 767 [92 Cal.Rptr. 776], distinguishable on the ground that the transfer of ownership took place there almost three years after the accident, thereby giving plaintiff ample opportunity to bring suit against the original owner prior to the transfer. At bench, the change in ownership occurred years before the accident, and Ortiz cannot be charged in 1967 with notice that a change in ownership of the business had occurred in 1962.
If, as Amsted argues, the entity in control of the business between the regimes of Johnson and Amsted should bear ultimate liability, i.e., Bontrager, it is Amsted’s responsibility and not a third party’s to track down Bontrager and secure indemnity for the loss. Amsted’s position is comparable to that of an agent whose ostensible authority includes an implied assumption of tort liability. The agent remains liable to third parties even though it may have a right to recoup from its undisclosed principal.
I would affirm the judgment.
The petition of the defendant and respondent for a hearing by the Supreme Court was denied May 28, 1975. Mosk, J., was of the opinion that the petition should be granted.