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Freeman v. White Way Sign & Maintenance

OPINION FILED FEBRUARY 22, 1980.

ROBERT FREEMAN, PLAINTIFF-APPELLEE,

v.

WHITE WAY SIGN AND MAINTENANCE COMPANY, DEFENDANT AND THIRD-PARTY PLAINTIFF-APPELLANT. — (THE BUNKER RAMO COMPANY, THIRD-PARTY DEFENDANT-APPELLEE.)



APPEAL from the Circuit Court of Cook County; the Hon. RUSSELL R. DeBOW and the Hon. JAMES A. GEROULIS, Judges, presiding.

MR. JUSTICE MEJDA DELIVERED THE OPINION OF THE COURT:

Rehearing denied April 11, 1980.

Plaintiff brought this action to recover for personal injuries he suffered when he fell from a theater marquee ladder. A directed verdict was entered in favor of the third-party defendant. A jury rendered a verdict for plaintiff against defendant, White Way Sign and Maintenance Company (White Way), in the amount of $125,000, and judgment was entered on that verdict. On appeal, White Way contends that: (1) the trial court erroneously permitted plaintiff to reinstate a count previously dismissed; (2) it is not liable as a matter of law, or if liable, it should be indemnified by the third-party defendant; and (3) certain errors committed at trial entitle it to a new trial. Because of the disposition of this appeal, it is necessary to address only the first two of White Way's contentions.

This case involves the issue of a successor corporation's tort liability for injuries resulting from a predecessor's product. A review of the pleadings and evidence presented at trial reveals the following facts. In 1916, Thomas Flannery, Sr., started a sign business called White Way Service Company. The name was later changed to White Way Electric Sign and Maintenance Company, and was owned and operated by the Flannery family. In 1966, Amphenol Corporation bought the stock of White Way Electric Sign and Maintenance Company from the Flannerys. James Flannery, the president of White Way Electric Sign and Maintenance Company, testified at trial that the corporation was dissolved but was unsure of the date. Other evidence indicated that the corporation was still registered with the Secretary of State in 1969. Testimony of the secretary-treasurer of the corporation indicated that the previous corporation continued merely as a name-holding corporation to prevent an outside party from using the name and that it held no assets. Amphenol operated the sign business as one of its divisions under the name "White Way Sign, a division of Amphenol Corporation" (White Way-Amphenol). In 1968 Amphenol Corporation merged with the Bunker Ramo Company and the sign company became "White Way Sign Division of Bunker Ramo Company."

From 1966 to 1970, James Flannery was vice-president of the White Way Sign division of Amphenol and then Bunker Ramo, but was not a corporate officer, director or shareholder in either parent corporation. In 1968 White Way Sign was a small part of Bunker Ramo, providing only about 2% of its total revenues.

In 1970 the instant defendant, White Way Sign and Maintenance Division, came into legal existence. On April 20 of that year a certificate of incorporation was issued for J.E. Enterprises, Inc., which was owned by the Flannerys. Pursuant to an agreement dated June 1, 1970, J.F. Enterprises, Inc., purchased certain assets of White Way Sign division of Bunker Ramo for $678,000. Included in the assets were the stock of the name-holding corporation, inventories, plant equipment and certain maintenance contracts. Bunker Ramo retained all the land, buildings, certain lease contracts and other items amounting to about 90% of the division's assets. The agreement expressly provided: "* * * Seller shall be responsible for all liabilities of the Division arising out of activities of the Division prior to the effective date [January 1, 1970]; but all liabilities (except liabilities related to the properties, interests and rights retained by Seller) of the Division arising out of activities of the Division after the Effective Date shall be the obligation of the Buyer." J.F. Enterprises' articles of incorporation were amended on June 2, 1970, to change the corporate name to White Way Sign and Maintenance Corporation. The name-holding corporation was liquidated on the same day.

After this agreement Bunker Ramo continued to receive income from its interest in the division. In 1975 White Way Sign and Maintenance Company purchased the remaining assets of the division from Bunker Ramo. Bunker Ramo continued its existence after this sale.

The theater marquee in question was installed by White Way-Amphenol in 1967. When installed, the marquee had no access ladder and a portable extension ladder was used to change the letters on the marquee. Because of the difficulties experienced with this arrangement, White Way-Amphenol proposed to install a permanent steel ladder that would extend from ground level to the catwalk surrounding the marquee. However, because of a change of plans, a standard aluminum ladder was purchased from an unknown source and ultimately affixed to the marquee by White Way-Amphenol in 1967 by means of steel bolts.

Plaintiff's accident occurred on September 9, 1971. At that time he was a 17-year-old high school senior who had worked for the theater for a period of 7 or 8 months. He performed odd jobs for the theater, and on the day of the accident he was asked to change the letters on the marquee, a task he had never done previously. Plaintiff ascended the ladder carrying a box containing the letters. As he climbed upward there were times when his hands were not in contact with the ladder. When he was a couple of feet from the top, he remembered missing a rung with his hand. He fell and sustained the injuries for which he brought this action.

Plaintiff originally filed a complaint against White Way Electric Sign and Maintenance Company and White Way Sign and Maintenance Company based upon alleged violations of the Structural Work Act. (Ill. Rev. Stat. 1977, ch. 48, pars. 60 through 69.) The complaint was amended to include a strict liability count and a negligence count. White Way filed a second amended third-party complaint based on products liability against Bunker Ramo seeking indemnity for any possible liability of White Way. White Way alleged that Bunker Ramo was the actual manufacturer of the ladder and that White Way was its corporate successor. Bunker Ramo sought to have the third-party complaint for indemnity on products liability dismissed, contending that the sale of the marquee was an isolated event and that since it was permanently attached to real estate it could not be the subject of a products liability suit.

On September 14, 1977, Bunker Ramo renewed its motions to dismiss White Way's claim and White Way moved to dismiss plaintiff's products liability count from his amended complaint. Judge DeBow, the trial judge assigned to the case, granted both motions on that day, and the orders included findings that there was "no just cause to delay enforcement or appeal" of the orders.

The case proceeded to trial, and during trial plaintiff filed his second amended complaint based solely on the Structural Work Act and negligence counts. The jury could not reach a verdict and a mistrial was declared. On September 23, 1977, Judge DeBow ordered that the case be returned to the presiding judge for reassignment.

White Way filed a timely post-trial motion concerning the Structural Work Act and negligence aspects of the case, but it did not relate to the dismissed products liability counts. During the course of argument on the motion, White Way's attorney referred to evidence discovered at trial which showed that the ladder was not permanently affixed to the marquee as all parties had earlier believed and stated his belief that this misconception was the basis for Judge DeBow's dismissal of the products liability counts. Judge DeBow concluded his ruling on the motion by saying, "Take you all back where you started." A written order on the post-trial motion was entered on October 13, 1977, and pertained only to matters raised in the motion and did not vacate the orders of September 14 which dismissed the products liability counts.

On April 13, 1978, the case was assigned to Judge Geroulis for trial. The case proceeded to a second trial on April 14, 1978. On that date plaintiff sought to file a third amended complaint which would reinstate the products liability count but omit the negligence count. White Way objected contending that because the final and appealable order of September 14 which dismissed the products liability claim had not been appealed, the count could not be reinstated. Judge Geroulis granted plaintiff leave to file the complaint and allowed White Way to file a fourth amended third-party complaint which included an indemnity count for products liability against Bunker Ramo. The court also granted summary ...


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