Ray v. Alad Corporation

Facts

P fell from a defective ladder in the laundry room of the University of California while working for the contracting company by which he was employed. P sued D in strict tort liability. But the problem was that D neither manufactured nor sold the ladder. Prior to P's injury D succeeded to the business of that ladder's manufacturer. The Alad Corporation (Alad I), was sold to D for an adequate cash consideration. Alad I was in 'the specialty ladder business' and was known among commercial and industrial users of ladders as a 'top quality manufacturer' of that product. D acquired Alad I's plant, equipment, inventory, trade name, and goodwill, D 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. Alad I agreed 'to dissolve its corporate existence as soon as practical. The only provisions in the sale agreement for any assumption of Alad I's liabilities were that D would (1) accept and pay for materials previously ordered by Alad I in the regular course of its business and (2) fill uncompleted orders taken by Alad I in the regular course of its business and hold Alad I harmless from any damages or liability resulting from failure to do so. The liability for defects in products manufactured or sold by Alad I was not specifically discussed nor was any provision expressly made therefor. Aside from a redesign of the logo, or corporate emblem, on the letterheads and labels, there was no indication on any of the printed materials to indicate that a new company was manufacturing Alad ladders, and the manufacturer's representatives were not instructed to notify customers of the change. The court entered summary judgment for D. P appealed.

Issues

Rule of Law

Holding and Decision

Legal Analysis

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