(concurring).
The majority holds that, under certain circumstances, a corporation which acquires substantially all the assets of another corporation may be held liable for injuries caused by defective products manufactured by the other corporation before the date of acquisition. In the present case, they conclude that, even though the transaction was structured as a sale of assets, it should be “treated as a merger” for the purpose of imposing tort liability. Although I concur in the result reached by the majority, I wish to clarify the basis upon which I would impose such liability.
Our examination should begin with the Pennsylvania Business Corporation Law which provides for merger of two or more corporations. 15 P.S. § 801 et seq. One of the purposes of the statutory merger provisions is to protect dissenting shareholders by according them the right to have their shares redeemed by the corporation at full market value. See 15 P.S. § 805. Another purpose is to protect persons having claims against a nonsurviving corporation. See 15 P.S. § 803.
Section 803 provides in part that, after merger,
all debts not of record, duties, and liabilities of each of said constituent corporations shall thenceforth attach to the said surviving . . . corporation
Thus, had Rockwell’s acquisition of TMW been accomplished by merger rather than by purchase of assets, section 803 would have subjected Rockwell to liability for tort claims against TMW.
In the present day of complex corporate reorganizations and acquisitions, the intrinsic nature of a transaction cannot be ascertained merely from the form in which it is structured. Courts therefore must examine the substance of the transaction to ascertain its purpose and true intent.
[I]t is no longer helpful to consider an individual transaction in the abstract and solely by reference to the various elements therein determine whether it is a “merger” or a “sale”. Instead, to determine properly the nature of a corporate transaction, we must refer not only to all the provisions of the *371agreement, but also to the consequences of the transaction and to the purposes of the provisions of the corporation law said to be applicable.
Farris v. Glen Alden Corp., 393 Pa. 427, 432, 143 A.2d 25, 28 (1958).
The Pennsylvania Supreme Court has had occasion to examine the rights of dissenting shareholders when a transfer of the business operations of one corporation to another is effectuated by sale rather than by utilization of the statutory procedures provided for merger. In Farris v. Glen Alden Corp., supra, Glen Alden entered into an agreement to purchase all of the assets of List Industries Corporation (List) in exchange for capital stock of Glen Alden. List was to be dissolved and the operations of both corporations were to be carried on by Glen Alden, whose name was to be changed to List Alden. The directors of both corporations were to become directors of List Alden. In enforcing the appraisal rights of an objecting stockholder of Glen Alden, the court stated that, even though the combination of corporations was effectuated by a sale of assets to which the merger statute does not literally apply, “we will not blind our eyes to the realities of the transaction.” 393 Pa. at 438, 143 A.2d at 31. It concluded that the combination proposed, “although consummated by contract rather than in accordance with the statutory procedure, is a merger within the protective purview of the corporation law.” Id. It reached this conclusion on the following basis:
The rationale ... of the present section of the Business Corporation Law ... is that when a corporation combines with another so as to lose its essential nature and alter the original fundamental relationships of the shareholders among themselves and to the corporation, a shareholder who does not wish to continue his membership therein may treat his membership in the original corporation as terminated and have the value of his shares paid to him.
Farris v. Glen Alden Corp., supra, 393 Pa. at 433, 143 A.2d at 29. Thus, whether or not the formal merger procedures are followed, the appraisal rights embodied in section 805 should be enforced if a transaction alters the “fundamental relationships” among a corporation and its investors. This altering of “fundamental relationships” is the attribute of merger which triggers the applicability of section 805 appraisal rights.
If, in protecting dissenting shareholders', a court should scrutinize a corporate transaction to ascertain the presence of certain attributes of merger relevant to the enforcement of appraisal rights, it should do no less in protecting tort claimants. Both dissenting shareholders under section 805 and tort claimants under section 803 are the intended beneficiaries of protective legislation. Although a transaction should be scrutinized to protect both shareholders and tort claimants, a court should search for somewhat different attributes of merger for purposes of imposing tort liability. This difference in relevant attributes stems from the distinct relationships to the corporation of the persons whom the legislature has sought to protect. While dissenting shareholders need protection against alteration of their investment rights, tort claimants need protection against attempts by ongoing businesses to avoid liability through transfer of their operations to another legal entity.
I believe that, where a corporation purchases substantially all the assets of a second corporation, the legislature intended to impose the second corporation’s tort liabilities on the acquiring corporation at least if the following attributes of merger are present:
(1) an ongoing business, including its name and good will, is transferred to the acquiring corporation; and
(2) the corporation whose assets are acquired is dissolved after distribution to its shareholders of the consideration received from the acquiring corporation.
In the present case, TMW transferred to Rockwell almost all its assets, retain*372ing only its corporate records and a limited amount of cash to effectuate the transaction.1 The “Agreement and Plan of Reorganization” specifically provided for the transfer of TMW’s business “as a going concern,” including good will, the exclusive right to use the name “Textile Machine Works,” and the “permits or licenses to conduct [TMW’s] business as now carried on.” TMW also agreed to change its name and dissolve. In this regard, the “Agreement and Plan of Reorganization” provided that,
[o]n the Closing Date, TMW shall take all action required to change its name to “T.W. Company” (“TW”) .... As soon as practicable after the last [liquidating distributions to its shareholders of Rockwell stock], TW shall wind up its affairs and dissolve. From and after the Closing Date, TW shall not engage in any business or other activity except as required to carry out the terms of this Agreement and to complete its liquidation and dissolution as provided herein.
In addition, this transaction has another characteristic of a statutory merger. The consideration given for TMW’s assets was Rockwell stock, which in turn was to be distributed to TMW’s shareholders on TMW’s liquidation and dissolution. Thus, TMW shareholders became shareholders in Rockwell just as if they had exchanged their shares directly with Rockwell under the statutory merger procedure. See 15 P.S. § 801.
On the basis of the foregoing, I am persuaded that the Pennsylvania courts would consider this transaction a merger within the intendment of section 803. This I believe they would do even though the transaction was structured as a sale and even though TMW had not fully wound up its affairs and dissolved until 18 months after the combination. TMW actually had ceased to function as a going concern when the sale was consummated. Only a corporate shell remained, engaged solely in the process of winding up and dissolution.
While I recognize the rightful prerogative of a corporation to rearrange its business or go out of business entirely, there is also a practical and reasonable basis for construing this transaction as a merger. Were we in the circumstances of this case to absolve of liability a corporation which acquires a functioning business by purchasing substantially all the assets of another corporation, many injured parties would be unable to maintain products liability actions 2 after the *373former corporate owner of the business has been dissolved. Although by statute Pennsylvania corporations are amenable to suit for two years after dissolution, a defect in a product manufactured by a dissolved corporation may not come to light until long after the two-year period. See 15 P.S. § 2111. Because the statute of limitations generally does not begin to run until the defect is discovered, such an action probably would not be time-barred.
In imposing liability for the torts of the acquired corporation, I realize that the acquiring corporation was not a party to any tortious act and had no connection with the acquired corporation at the time the allegedly defective product was manufactured. The acquiring corporation, however, is in a position both before and after the acquisition to take necessary measures for its protection against potential products liability claims.
I do not express, nor does the majority, any opinion concerning the merits of the tort claim which we today permit plaintiff to bring against Rockwell.
I would reverse the judgment of the district court and remand for further proceedings.
. The “Agreement and Plan of Reorganization” provided that,
TMW shall convey, transfer, assign and deliver to [Rockwell] ... all the property and assets, tangible and intangible, of every kind, nature and description and wherever situated, owned, possessed or held by TMW on the Closing Date (hereinafter referred to in Paragraph 5) including, but not limited to, TMW’s land and leaseholds as described in Exhibit A-l attached hereto, improvements, buildings, machinery, equipment and other fixed assets, real and personal, and rights appurtenant thereto, furniture, fixtures, business machines, vehicles, inventories, supplies, work in process, semi-finished products, patents, trademarks, licenses, trade names, copyrights, securities, investments, leasehold interests, options to purchase real or personal property, rights under contracts, insurance policies, cash on hand and in banks, accounts and notes receivable, claims, rights, choses in action, permits or licenses to conduct its business as now carried on, business as a going concern, shares of stock in other corporations, good will and all rights to use to the exclusion of TMW the name “Textile Machine Works” or a name or names similar thereto, except, however, the following, which shall be retained by TMW:
(a) TMW’s corporate seal, articles of incorporation, minute books, stock books and other corporate records; and
(b) $500,000 in cash to cover the costs and expenses of TMW (in such amounts as shall be agreed upon in writing by NR and TMW at or before the Closing) in connection with the transactions constituting the Plan of Reorganization under this Agreement, any payments to TMW preferred shareholders who demand cash for their shares, and all taxes on the transfer of any of the assets or properties to NR hereunder. Any balance of such sum remaining upon the dissolution of TMW shall be paid to NR at such time.
. In 1970 the President’s Commission on Product Safety [reported that] [s]ome 20 *373million Americans are injured each year as a result of incidents connected with consumer products. [Final Report of the National Commission on Product Safety (June, 1970), Lib.Cong. No. 76-600753.] Incidents connected with industrial products account for an additional 7 million injuries each year. [The President’s Report on Occupational Safety and Health (May, 1972).] Personal injuries are the primary source of the burgeoning number of product liability cases entering our courts.
Weinstein, Twerski, Piehler, & Donaher, Product Liability: An Interaction of Law and Technology, 12 Duquesne L.Rev. 425 (1974).