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By taking over and continuing the established business of producing and distributing products, a purchasing corporation becomes an integral part of the overall producing and marketing enterprise that should bear the cost of injuries resulting from defective products.
Claiming damages for injury from a defective ladder, Herbert Ray asserted strict tort liability against defendant Alad Corporation (Alad II) which neither manufactured nor sold the ladder but prior to Ray’s injury succeeded to the business of the ladder's manufacturer, the now dissolved "Alad Corporation" (Alad I), through a purchase of Alad I's assets for an adequate cash consideration. Upon acquiring Alad I's plant, equipment, inventory, trade name, and good will, Alad II continued to manufacture the same line of ladders under the "Alad" name, using the same equipment, designs, and personnel, and soliciting Alad I's customers through the same sales representatives with no outward indication of any change in the ownership of the business. The trial court entered summary judgment for Alad II and Ray appealed.
Was Alad II liable for injuries from Alad I’s defective products?
The court held that although the general rule governing succession to liabilities did not require Alad II to respond to the claim, special departure was required in this instance. Imposition upon Alad II of liability for injuries from Alad I’s defective products was fair and equitable in view of Alad II’s acquisition of the trade name, good will, and customer lists, its continuing to produce the same line of ladders, and its holding itself out to potential customers as the same enterprise.