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Simmons v. Mark Lift Industries10/24/2005
r or consolidation. See Beckroge v. S.C. Power Co., 197 S.C. 184, 194-95, 15 S.E.2d 124, 128 (1941) (transfer of assets from one corporation to another may amount to a merger in fact even when predecessor corporation continues to exist, particularly when amount paid by successor does not reflect true value of predecessor; in such cases, equity looks past form and at the real effect of the transaction and, by application of the trust fund doctrine, successor may be held liable to prior creditors to extent of assets received); Huggins v. Commercial & Sav. Bank, 141 S.C. 480, 140 S.E. 177 (1927) (successor bank which by transfer obtained all assets of predecessor bank held liable to depositor of predecessor bank); Ex parte Sav. Bank of Rock Hill, 73 S.C. 393, 53 S.E. 614 (1906) (equity regards the property of a corporation as held in trust for the payment of debts, and recognizes the right of creditors to pursue the property wherever it may be transferred unless it has passed into the hands of a bona fide purchaser).
Our appellate courts rarely have addressed successor liability in the context of a tort action and have never done so in a product liability action. In Long v. Carolina Baking Co., 190 S.C. 367, 3 S.E.2d 46 (1939), plaintiff was injured when her vehicle collided with a baking company truck. Carolina Baking, a North Carolina corporation, had operated a plant and done business in South Carolina since 1924. In 1935, two years before the wreck, all assets of the predecessor corporation (Carolina Baking) were transferred to a successor corporation (Columbia Baking), a newly chartered Delaware corporation with its principal offices in Atlanta. The predecessor was dissolved as a corporate entity, although no notice of dissolution was filed in South Carolina.
After the asset transfer, the successor continued to use the trade name of predecessor Carolina Baking, licensing the subject truck and its business in that name and using the name on its vehicles and buildings. Carolina Baking entered a general appearance and defended the action. The Court rejected the successor's attempt to avoid liability on the ground that Carolina Baking no longer existed and the plaintiff had failed to sue the proper corporate entity. " he verdict and judgment against Carolina Baking Company binding upon the existent corporate entity and its assets, by whatsoever name it may be known or called. The corporate fiction and the rules surrounding it have been of inestimable service in the affairs of business, but they must be applied in such a manner as to promote justice, not to hinder or defeat it." Long, 190 S.C. at 377, 3 S.E.2d at 50.
In Bryant v. Waste Management, Inc., 342 S.C. 159, 536 S.E.2d 380 (Ct. App. 2000), the employee of a waste treatment plant sued the waste hauler for negligence after a waste container dropped on his foot, partially amputating it. The Court of Appeals concluded Waste Management was the proper defendant because Chambers Waste Systems, the original defendant, had been subsumed by USA Waste Services, which in turn had merged with Waste Management while the lawsuit was pending. The Court of Appeals rejected Waste Management's argument it had been improperly substituted as a defendant pursuant to Rule 25(c), SCRCP. Id. at 163-66, 536 S.E.2d at 382-84.
The above authority derived from contract and tort precedent reveals that our appellate courts have not looked favorably upon efforts by a successor corporation to employ corporate law principles to avoid liability to a wronged creditor or plaintiff. In addition, I have considered the numerous foreign decisions, treatises, and law review articles offered by the parties and amici curiae, as well as authority reveale
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