Court Opinion

ID: 9763702
Source: CourtListenerOpinion
Date Created: 2023-08-29 02:52:46.250027+00
Date Added: 2024-06-11T07:29:48.646070
License: Public Domain

BASKIN, Justice,
concurring.
I concur in the result.
Plaintiff was injured on February 19, 1977, while cleaning a rotary kiln at Barrett Industries in Bexar County. The kiln had *801been manufactured by Custom between August, 1966, and April, 1967, and sold by Custom in April, 1967. In November, 1968, Custom sold virtually all of its assets to Trinity. In the purchase and sale agreement between Trinity and Custom, Trinity agreed to assume certain specified liabilities of Custom but did not agree to assume any tort liabilities.
Plaintiff has sued both Custom and Trinity for damages, claiming faulty design of the rotary kiln. Plaintiff maintains that Trinity is successor corporation to Custom by virtue of its purchase of Custom’s assets. Both Trinity and Custom filed Pleas of Privilege. Custom’s plea was denied and plaintiff’s case against it will be tried in Bexar County. Trinity’s plea was sustained and the cause will be transferred to Dallas County. Appellant conceded at oral argument that it was urging only exception 23 to Trinity’s right to be sued in its home county under the venue statute, Tex.Rev. Civ.Stat.Ann. art. 1995 (Vernon 1964). To defeat Trinity’s plea of privilege, plaintiff had the burden to plead and to prove its cause of action against Trinity, all or part of which had to arise in Bexar County. Pesek v. Murrel’s Welding Works, Inc., 558 S.W.2d 39, 44 (Tex.Civ.App.—San Antonio 1977, writ dism’d w. o. j.); Santleben v. Taylor-Evans Seed Co., 585 S.W.2d 784, 786 (Tex.Civ.App.—San Antonio 1979, no writ).
The trial court having denied Custom’s plea of privilege and there being no appeal of that action before us, we must, and do, assume that appellant pleaded and proved a prima facie cause of action against Custom. Appellant failed to plead and prove a prima facie cause of action against Trinity insofar as any act or omission of Trinity is concerned.
The only way in which appellant could defeat Trinity’s plea of privilege was to show that Trinity stood in the shoes of Custom, either by contract or operation of law. We must assume that the trial court found as a fact that Trinity did not contractually agree to assume all product liability caused by instrumentalities placed in commerce by Custom prior to the sale of its assets to Trinity, and we agree with that finding.
We also agree with the implied findings by the trial court that the plaintiff had not sustained his burden of proving a de facto merger. The only case discussing de facto merger in Texas is Western Resources Life Ins. Co. v. Gerhardt, 553 S.W.2d 783 (Tex.Civ.App.—Austin 1977, writ ref’d n. r. e.). [I question the adoption of the de facto merger doctrine as enunciated in Gerhardt, but it is not necessary to reach a determination as to whether to follow that pronouncement.] In Gerhardt, the Court of Civil Appeals looked at a large number of facts and concluded from such survey that there had occurred a de facto merger between the corporation selling its assets and the purchasing corporation, agreeing with the trial court’s determination. A number of facts existed in the Gerhardt case which are absent in the case at bar. For example, in that case, the board of directors of the purchasing corporation was enlarged in order to accommodate the directors of the selling corporation; and that is not true in the current case. No officers or directors of Custom became officers or directors of Trinity, and there was no continuation of the product line in question. We have examined the facts surrounding the purchase and sale of the assets of Custom by Trinity, and we agree with the trial court that there is no evidence to sustain a finding that the two corporations merged.
The appellant, however, does not cite nor rely upon Gerhardt. Appellant’s contention is that social policy requires that a purchasing corporation be held liable to an injured person for damages produced by a defective product manufactured by the selling corporation, even though the purchasing corporation had nothing to do with the manufacture, sale, or design of the defective product, on the basis that the purchasing corporation is better able to spread the loss of the injury than is the injured party. Appellant recognized that there is no case in Texas so holding and cites for persuasive authority Knapp v. North American Rockwell Corp., 506 F.2d 361 (3d Cir. 1974); *802Shannon v. Samuel Langston Company, 379 F.Supp. 797 (W.D.Mich.1974). A study of those cases, however, reveals that in each of them the court had found either that there was a de facto merger or that the purchasing corporation was simply a continuation of the selling corporation. It was only in that context that the court held the purchasing corporations to be liable to the injured plaintiffs because they were better able to spread the burden of loss. That is not the case here, where the facts have been impliedly found against de facto merger or continuation of the selling corporation by the trial court.
I am not prepared to expand the rule of strict liability for injuries from defective products to a party which neither designed, manufactured, nor sold the offending instrumentality nor had the power to prevent its entry into the stream of commerce, particularly in the face of the enactment by the legislature of Art. 510B, Tex.Bus. Corp.Act Ann. (Vernon 1980), at its first session after the Austin Court of Civil Appeals had introduced in Gerhardt the concept of de facto merger. While the statute was not in effect at the time of the purchase of Custom’s assets by Trinity, it seems apparent that the legislature, in acting so promptly after the Gerhardt decision to prevent assumption of all liabilities by a purchasing corporation unless it expressly assumes them, declared the public policy of this State in a manner contrary to that sought by appellant.
Before ESQUIVEL, BUTTS and BAS-KIN, JJ.