Court Opinion

ID: 9678129
Source: CourtListenerOpinion
Date Created: 2023-08-24 06:12:15.575675+00
Date Added: 2024-06-11T18:17:02.060327
License: Public Domain

SHIRLEY S. ABRAHAMSON, J.
(dissenting). This case raises a question which this court has not previously addressed: Should a corporation which buys the assets of another corporation and continues manufacturing the product be liable for injury caused by a product that was manufactured and sold by the predecessor corporation?
On October 8, 1979, Emily Fish was injured while operating a “Johnson” power press for her employer Hamilton Industries. The press was manufactured in 1957 by Bontrager Construction Company, which sold its assets to Amsted Industries, Inc., in 1962, and was dissolved in 1964. In 1975 Amsted sold the “Bontrager” assets to South Bend Lathe, Inc., which continued to manufacture presses under the Johnson trade name. In 1978 and *3141982, South Bend Lathe sold parts to Hamilton Industries for the press involved in this case.
Applying a traditional rule of corporate law to this tort case, the majority concludes that South Bend Lathe, the successor corporation, is not liable for Emily Fish’s injuries.1 Because the majority’s decision contravenes the rationale underlying products liability law in this state,2 I dissent.
Under traditional corporate law a corporation purchasing the assets of another corporation is not liable for the debts and liabilities of the seller corporation. The genesis of this rule was, at least in part, to protect corporate transferees from unassumed liabilities and to protect commercial creditors and dissenting shareholders when corporate assets were transferred. The traditional *315rule developed outside the context of tort law and prior to the adoption of modern products liability law.
The question then arises whether the traditional rule should be applied to a products liability plaintiff. For the reasons set forth, I conclude that the corporate rule should not be applied in product liability cases.3
First, while possibly satisfying the needs of the commercial creditors whose claims arise before or soon after the transfer, the traditional corporate rule is unresponsive to the needs of the products liability plaintiff whose claim may arise years after the product is purchased and the corporate transfer has transpired. Furthermore, while the form of the corporate transfer may have some relevance to the contracting parties, the commercial creditor or the shareholder, it is irrelevant to the injured party.
Second, the traditional corporate rule of successor liability contravenes the fundamental principles of Wisconsin’s products liability law. The corporate rule runs counter to the products liability concept of placing the burden on the party most able to bear the loss by spreading the risk.
Underlying Wisconsin’s products liability law is a concern “about the just claims of the injured and hapless user or consumer of industrial products. The doctrines of laissez nous faire and caveat emptor have given way to more humane considerations.” Dippel v. Sciano, 37 Wis. 2d 443, 450, 155 N.W.2d 55 (1967). This court has recognized that manufacturers and distributors of a product, rather than by the injured person, should bear the risk of injury. The manufacturers and distributors *316are in the best position to spread the risk of injury in the overall cost of the product. Those who reap a benefit from the sale of the product that has caused the injury should bear responsibility for the injury.
Applying this principle to DES manufacturers, the court imposed liability on the manufacturers even though the plaintiff could not prove that the manufacturers produced or marketed the drug which allegedly caused the woman’s injury. We explained the imposition of liability as follows:
“[A]s between the injured plaintiff and the possibly responsible drug company, the drug company is in a better position to absorb the costs of the injury. The drug company can either insure itself against liability, absorb the damage award, or pass the cost along to the consuming public as a cost of doing business. We conclude that it is better to have the drug companies or consumers share the cost of the injury than to place the burden solely on the innocent plaintiff." Collins v. Eli Lilly Co., 116 Wis. 2d 166, 190-192, 342 N.W.2d 37 (1984).
A second underlying principle of our products liability law is that damage awards may act as an incentive for the development of safe products. In the DES case, we justified imposing liability on drug manufacturers because “the cost of damages awards will act as an incentive for drug companies to test adequately the drugs they place on the market for general medical use.” Collins v. Eli Lilly Co., supra 116 Wis. 2d at 192.
While South Bend Lathe had not manufactured or distributed the alleged defective product causing the injury in this case, the policy reasons discussed above for imposing strict products liability on manufacturers and distributors support imposing liability on South Bend Lathe in this case. South Bend Lathe apparently acquired substantially all the manufacturing assets of the predecessor corporation. South Bend Lathe apparently continued substantially the same manufacturing opera*317tion producing Bontrager’s “Johnson Mechanical Press.” South Bend Lathe appears to have benefited from Bon-trager’s accumulated good will, business reputation and established customers. If South Bend Lathe did in fact continue the established business of Bontrager by continuing the manufacture of the same press, South Bend became an integral part of the marketing and manufacturing enterprise that put the alleged defective product on the market and should bear the cost of injuries resulting from the defective product.
Furthermore, imposing liability on South Bend Lathe can also serve as an incentive to the corporation to improve the product. South Bend Lathe had the opportunity to assess the product, perceive any risks and take steps to avoid any risks.
The majority opinion favors letting the legislature decide whether to impose liability on a corporate successor which purchases the assets of a predecessor corporation. I disagree. Tort law has been developed through the common law. The common law is susceptible of growth and adaptation to new circumstances and situations; the common law is not immutable but flexible and adapts itself to varying conditions.4 In Bielski v. Schulze, 16 Wis. 2d 1, 11, 114 N.W.2d 105 (1962), we said that “inherent in the common law is a dynamic principle which allows it to grow and to tailor itself to meet changing needs within the doctrine of stare decisis, which, if correctly understood, was not static and did not forever prevent *318the courts from reversing themselves or from applying principles of common law to new situations as the need arose.”
This court first recognized a cause of action based on strict products liability in 1967 in the Dippel case. The evolution of the common law doctrine of strict products liability has been a matter of continuing concern to the courts. In “passing the buck” to the legislature in this case, the court abdicates its responsibility to develop the common law of this state.
I conclude that the policies underlying modern products liability law are not served by the majority’s applying the corporate rule to decide whether liability should be imposed on a successor corporation for a product manufactured and sold by a predecessor corporation. I believe the court should fashion a “product line” rule of successor corporate liability and should reverse the order of the circuit court and remand the case to determine the defendants’ liability under such a rule.5 For the reasons set forth, I dissent.
I am authorized to state that Chief Justice Nathan S. Heffernan joins this dissent.

 By successor corporation we refer in this case to South Bend Lathe which at the time the lawsuit was commenced was producing presses under the Johnson trade name. Amsted’s liability arises from its agreement to indemnify South Bend Lathe for any liability claims arising out of defects in the Johnson Mechanical Press.

 The Johnson-Bontrager-Amsted-South Bend Lathe transfers have been the subject of several cases raising the issue of successor corporate liability. In addition to the Ramirez case discussed by the majority, see Jones v. Johnson Machine & Press Co., Etc., 211 Neb. 724, 320 N.W.2d 481 (1982) (successor corporation not liable under traditional corporate rule); Korzetz v. Amsted Industries, Inc., 472 F. Supp. 136 (E.D. Mich., 1979) (successor corporation liable under Turner) ; Manh Hung Nguyen v. Johnson Mach. & Press, 104 Ill. App. 3d 1141, 433 N.E.2d 1104 (1982) (successor corporation not liable under traditional corporate rule); Ortiz v. South Bend Lathe, 46 C.A.3d 842, 120 Cal. Rptr. 566 (1975) (successor corporation not liable under traditional corporate rule; expressly overruled by the Ray case) ; Hernandez v. Johnson Press Co., 70 Ill. App. 3d 664, 388 N.E.2d 778 (1979) (successor corporation not liable under traditional corporate rule); Perez v. Amsted Industries, Inc. (Massachusetts Superior Court holding successor corporation liable under product line theory, cited in Swartz, Hazardous Products Litigation, sec. 6, p. 93, Supp. 12/84).

 For reference to the extensive law review commentary on successor corporate liability, generally critical of applying the traditional corporate rule, see Phillips, Product Line Continuity and Successor Corporation Liability, 58 N.Y.U. L. Rev. 906, 906, n. 1 (1983).

 See also Sorenson v. Jarvis, 119 Wis. 2d 627, 632-634, 350 N.W.2d 108 (1984) ; Prah v. Maretti, 108 Wis. 2d 223, 237-238, 321 N.W.2d 182 (1982); Moran v. Quality Aluminum, Casting Co., 34 Wis. 2d 542, 551, 150 N.W.2d 137 (1967) ; State v. Esser, 16 Wis. 2d 567, 581, 115 N.W.2d 505 (1962).
For support of the common law process for resolving legal dispute about products liability law, see ABA, Special Committee on the Tort Liability System, Towards a Jurisprudence of Injury: The Continuing Creation of a System of Substantive Justice in American Tort Law, pp. 11-39 — 11-48 (1984).

 The defendants contend that the imposition of liability on corporate successors would have a devastating effect on the transferability of assets. The majority opinion acknowledges the difficulty of devising a rule that would be equitable to the successor corporation and the injured party. Many of the concerns expressed by the majority might be met by making any rule of successor corporate liability substantially prospective in operation. This limitation on the application of the new rule would provide concerned parties the opportunity to adjust their future conduct and relationships to take into consideration their potential liability. See Ramirez v. Amsted Industries, Inc., 86 N.J. 332, 431 A.2d 811, 824-26, 826 (1981).