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MERCK & CO. v. KNOX GLASS

UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA


May 28, 1971

MERCK & COMPANY, Inc., Plaintiff,
v.
KNOX GLASS, INC., and KL&D Company, Defendants

Van Artsdalen, District Judge.

The opinion of the court was delivered by: VAN ARTSDALEN

OPINION AND ORDER

VAN ARTSDALEN, District Judge.

 This indemnity action is submitted for final determination on a stipulation of facts. The legal issue for determination: -- Is a manufacturer liable to indemnify an intermediate seller for the costs of defense, including counsel fees, of a products liability case tried under the "strict liability" doctrine of Section 402(a), Restatement of Torts, 2nd. (as adopted in Pennsylvania in Webb v. Zern, 422 Pa. 424, 220 A. 2d 853), where the jury renders a verdict in favor of defendant?

 The stipulated facts are as follows:

 1. Merck is a corporation incorporated under the laws of the State of New Jersey with its principal place of business at Rahway, New Jersey.

 2. KL&D Company ["KL&D"] is a corporation incorporated under the laws of the Commonwealth of Pennsylvania with its principal place of business in Pennsylvania.

 3. Knox Glass, Inc. ["Knox"] is a corporation incorporated under the laws of the State of Delaware with its principal place of business in Pennsylvania.

 4. On or about September 30, 1965, Knox acquired the business and assumed the liabilities of KL&D, including any liability assessed in this action.

 5. On or about May 12, 1966, one Herbert Schindler instituted an action in the Eastern District of Pennsylvania, Civil Action No. 40291, against Plaintiff herein.

 6. The entire record in Civil Action No. 40291 shall be deemed to be a part of the record in this action.

 7. In December, 1969, Civil Action No. 40291 was tried before the Honorable Ralph C. Body and a jury and resulted in a verdict for Merck, defendant therein, plaintiff herein.

 8. In connection with the trial of the Schindler action [Civil Action No. 40291] Merck, Knox and KL&D determined that their interests were best served by deferring to this action resolution of the issues presented herein, and agreed before Judge Body that Merck's right to present the claims asserted in this action would not be prejudiced by its adherence to that joint decision.

 9. The Schindler action was tried upon evidence to which the principles of strict liability as enunciated in Restatement, Torts 2d., ยง 402 A applied and the Trial Judge charged the jury exclusively on these principles.

 10. The evidence offered by the Plaintiff in the Schindler action was to the effect that:

 

(a) A bottle sold by Merck containing hydrochloric acid, broke in his hands and injured him;

 

(b) The bottle reached him in substantially the same condition as it was at the time it was in the possession of Merck;

 

(c) The bottle contained a manufacturing defect which caused it to break.

 11. In this action, it is admitted that the pieces of bottle, identified by Schindler as being those which came from the bottle which injured him, were manufactured by KL&D [which prior to the acquisition described in paragraph 4 was known as Knox Glass] and were of the type and kind it sold exclusively to Merck, for use as containers for hydrochloric acid.

 12. At the outset of discovery in 1966, Herbert Schindler maintained that the bottle which he claimed to be defective carried the Knox emblem or trade mark. KL&D has admitted that the bottle fragments, identified by Herbert Schindler as being the pieces of the bottle, are of its manufacture and of the type and kind sold by it exclusively to Merck, for use as containers for hydrochloric acid.

 13. Merck gave Knox and KL&D timely notice of the claims against it and demanded that they assume the defense of the actions and pay any judgments or settlements as a result thereof. Knox and KL&D rejected Merck's demand. 14. In defense of the Herbert Schindler action, Merck incurred the following legal costs, all of which are reasonable and necessary: (i) Preparation of defense against Herbert Schindler $ 13,000. (ii) Preparation of claim against Knox Glass, and KL&D 2,000. (iii) Unreimbursed expenses -- re: (i) 2,480. Total: $ 17,480.

19710528

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