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Knapp v. North American Rockwell Corporation

United States Court of Appeals for the Third Circuit
506 F.2d 361 (3d Cir. 1974), cert. denied, 421 U.S. 965, 95 S.Ct. 1955, 44 L.Ed.2d 452 (1975)


Stanley Knapp Jr. (plaintiff) injured his hand in a machine that had been designed and manufactured by Textile Machine Works (TMW) and sold to his employer, Mrs. Smith’s Pie Company (Mrs. Smith’s) (defendant). Knapp’s injury occurred 13 months after TMW had entered into an agreement with North American Rockwell Corporation (Rockwell) (defendant) to sell all of TMW’s assets in exchange for Rockwell stock. TMW retained only its corporate seal, articles of incorporation, corporate documents, and cash connected to the asset transfer, and performed no operations or transactions. TMW also agreed to dissolve the corporation as soon as practicable. The agreement stipulated that Rockwell would assume certain liabilities of TMW, except those for which TMW was insured or indemnified. Prior to the exchange with Rockwell, TMW had procured insurance that would have indemnified TMW against liability to Knapp. TMW was fully dissolved nearly six months after Knapp’s injury. Knapp filed suit in federal district court against Rockwell for damages related to the injury, alleging negligence. Mrs. Smith’s was joined as a third-party defendant. Rockwell moved for summary judgment, arguing that Rockwell was neither a merger or consolidation with, nor a continuation of, TMW. The district court agreed and granted Rockwell’s motion. Knapp appealed.

Rule of Law


Holding and Reasoning (Adams, J.)

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