In Langley, the employer was named as a principal party-defendant in an action brought by an employee for injuries suffered when a press manufactured and designed by Harris Corporation's predecessor corporation malfunctioned and injured the plaintiff-employee.Summary of this case from McPike v. Die Casters Equipment
Docket No. 45977.
Decided September 19, 1980.
Butzel, Long, Gust, Klein Van Zile (by X. Orhan), for Harris Corporation.
Harvey, Kruse Westen, P.C. (by Kirt B. DeVries), for King-Seeley Thermos Co.
Third-party plaintiff; Harris Corporation (Harris), appeals as of right the trial court's grant of summary judgment in favor of third-party defendant, King-Seeley Thermos Co. (King-Seeley), denying indemnification to Harris.
This action arises from the third-party aspects of an industrial accident on January 7, 1977, in which William L. Langley, an employee of King-Seeley, was severely injured when a press manufactured and designed by the predecessor corporation of Harris (T.W. C.B. Sheridan Company) malfunctioned. Langley brought suit for damages against both Harris for negligent design and manufacture, through Sheridan, and against King-Seeley for negligence in knowingly allowing Langley to operate the defective press. King-Seeley moved for and was granted summary judgment under the exclusive remedy provisions of the Worker's Disability Compensation Act. This Court affirmed that decision on appeal. After King-Seeley had been dismissed as a direct defendant, Harris filed a third-party complaint against King-Seeley for indemnity. King-Seeley sought and was granted summary judgment on the grounds that Harris failed to state a claim upon which relief can be granted. GCR 1963, 117.2(1).
Appellant, Harris, contends that any potential liability to Langley is liability without personal fault, and that if it is held liable it will be only by operation of law and not by any actual wrongdoing. Accordingly, it argues it is entitled to indemnity from the employer on the basis of Dale v Whiteman, 388 Mich. 698; 202 N.W.2d 797 (1972).
In Dale, the plaintiff employee was injured when a fellow employee ran into him with defendant Whiteman's car while it was being operated through their employer's car wash. Plaintiff brought suit against the car owner, who then sought indemnity from the employer. The Supreme Court ruled that defendant car owner was without personal fault and liability should fall upon the party best situated to adopt preventive measures (i.e., the employer) and thereby reduce the likelihood of injury.
This, however, is not the type of situation present in the case at bar. Harris is not subject to liability that flows from the employer, King-Seeley, but rather is subject to potential liability flowing from its predecessor corporation, Sheridan, under the theory of "continuity of enterprise" as set out in Turner v Bituminous Casualty Co, 397 Mich. 406; 244 N.W.2d 873 (1976). Turner held that products liability may attach to a corporation which acquires the assets of a manufacturer of a product for cash where the totality of the acquisition transaction demonstrates a basic continuity of the enterprise between the seller and the buyer. The successor corporation is made to stand in the shoes of its predecessor. In effect it is estopped from denying that it is not that company for the purpose of determining products liability. Id., 426.
Since Harris stands in the place of the manufacturer (Sheridan), the only way that Harris could be held liable is to show that the manufacturer was actively negligent. Minster Machine Co v Diamond Stamping Co, 72 Mich. App. 58; 248 N.W.2d 676 (1976). If active negligence is shown, one of the essential prerequisities of indemnity, i.e., being without personal fault, is not legally present. Id., 64. If active negligence is not shown, Harris would have a complete defense to any liability rather than a basis for a third-party complaint for indemnification against King-Seeley. Diekevers v SCM Corp, 73 Mich. App. 78, 81; 250 N.W.2d 548 (1976).
Appellant cites Gulick v Kentucky Fried Chicken Manufacturing Corp, 73 Mich. App. 746; 252 N.W.2d 540 (1977), as authority for the proposition that indemnity may be appropriate even without a showing of a special relationship between the indemnitor and indemnitee. In Gulick, an action for indemnity was held proper where it was foreseeable that a doctor might negligently treat the plaintiff's original injury causing further damage. Indemnity was thus allowed when the appellants could be chargeable for negligence through the doctor.
Gulick can readily be distinguished from the case at bar on two grounds. First, in Gulick, there were two separate injuries that resulted and the law has developed a special relationship between an initial tortfeasor and a subsequent health professional who commits malpractice. See 2 Restatement Torts, 2d, § 457, p 496. Secondly, in Gulick, the defendant was alleged to have been vicariously liable for the negligence of the doctor. Accordingly, there was a sufficient relationship between the parties to warrant indemnification. In the case at bar, Langley's complaint does not allege that Harris is vicariously liable for the negligence of King-Seeley. Rather, it alleges that Harris is liable because of the negligence of its predecessor corporation, Sheridan, based upon negligent design and manufacture of the press. Turner, supra.
While we recognize that Harris has committed no wrong, the Supreme Court has held as a matter of policy that a successor corporation should bear the burden of product liability cases even though the corporation is without fault. In short, because the original plaintiff's complaint does not allege that the liability of Harris is in some manner derived from King-Seeley, it is inappropriate to consider indemnification an available avenue of relief.