Tift v. Forage King Industries, Inc.

In 1968 Vernon Nedland (defendant) joined a partnership with Woodrow Wiberg (defendant) that later became a corporation, Forage King Industries, Inc. (Forage) (defendant). Later in 1968, Wiberg purchased all of Nedland’s shares and became Forage’s sole shareholder. During this time, Forage continued to operate as it previously had done. In 1975 Calvin Tiff sued Forage, Nedland, and Wiberg for an injury that occurred with a malfunctioning chopper box manufactured in 1962 by Wiberg. Prior to this incident, Wiberg had sold all his Forage stock. The trial court granted Forage’s motion for summary judgment, holding that under the intercorporate rule of nonliability, a corporation that purchased another corporation did not inherit the liabilities of the purchased corporation. The trial court recognized the intercorporate rule of nonliability with four exceptions. The four exceptions were: (1) if the purchasing corporation expressly or impliedly agreed to assume the selling corporation’s liabilities; (2) if the sale was a merger; (3) if the sale was just a continuation of the selling corporation; or (4) if the purchase was completed as a way to avoid liability. Ultimately, the trial court found that none of the exceptions applied, and Forage was dismissed as a defendant. On appeal, the appellate court affirmed the trial court’s ruling and added that because the chopper box was manufactured during a time that Wiberg ran the business as a sole proprietorship, he was the sole appropriate defendant. Tift appealed.