mation is used instead of consolidation; and an amalgamation is assumed to be where the existing companies agree to abandon their respective articles of association and regulations, and to register themselves under new articles as one body. This would be a new company formed by the coalition or amalgamation of the companies previously existing. Some difficulty which the English courts had with the name amalgamation was really an effort to make the substance of the thing itself comport with the ordinary principles of law applicable to the liability of the stockholders and the payment of creditors of the companies amalgamated. In one case the court said that on general principles two companies may be united either by fusion into a third, or by one absorbing the other; that the former process seems to correspond most nearly with the popular sense of the word amalgamation, but that nobody really knows what amalgamation means. Whatever be the process, however, no shareholder in the company which it destroys, or of which it suspends the life, can become a shareholder in the other company without his personal assent. In another case it was said that if amalgamation was to be considered as meaning the power of transferring the whole business of one company to another-in other words, the annihilation of the lesser company in which the shareholders in the one company were to be compelled to participate in the liabilities of that company, however different their objects, it might be contended that a member of an insurance company might be compelled against his will, to become a

1 In re Bank of Hindustan, 2 Hen. & M. 666; Clinch v. Financial Co., L. R. 4 Ch. App. 117: In re Empire Assur. Co., L. R. 4 Eq. 341.

2 Dougan's Case, (173) 28 L. T. N. S. 60. Nobody, said Lord Westbury, uses the word amalgamation with any definite meaning, and the word which his lordship has suggested to replace it, the word which will best express the peculiar process by which one joint stock company endeavors, usually with indifferent success, to put an end, as far as it can, to its own existence, is a "weld

ing," a word which necessarily implies the rule of law that one company can not so sink its existence in that of another, can not so vanish into thin air and leave its creditors going blankly into space, as under the guise of amalgamation it will endeavor to do; that its existence must necessarily continue until its liabilities have been discharged, until every creditor who is interested in the prolongation of its existence has received that satisfaction which he is entitled to demand. Blundell's Case, 17 Sol. J. & Rep. 87, 362.

2

member of a loan, guaranty, or other speculative company.1 It has been held in England that when two companies amalgamate, the shareholders of each become the shareholders and partners in another company. In this country it has been held that where several railroad companies were by virtue of the act of union, "merged in and constituted one body corporate" under the name of one of them, and all were continued in existence, it was to be a consolidation; but that where by the very terms of the statute and the deed, the first corporation was extinguished, and the second only continued to exist, the case was not one of mere consolidation or amalgamation. An unincorporated Masonic lodge in existence before the organization of its members into a corporation of the same name, is not merged into the latter. Even an absolute identity of membership would not of itself lead to any such result. The same persons may be members in the same or different proportionate interests, of as many distinct bodies, incorporated and unincorporated, as they choose to organize. The word consolidate in a constitutional prohibition applying to parallel and competing lines, is used in the sense of join or unite, and the law is not to be evaded by the substitution of

3

that the sale or amalgamation was invalid, being ultra vires, the business not being of the like nature, and therefore that they were shareholders in the former company only, which was still in real existence. The court so held and remarked that it was difficult to define exactly the meaning of the term " amalgamation," but that it was not sufficiently potent to compel a shareholder in one company to enter upon all the liabilities of another company totally different in its objects. It could not make a man a partner in a concern of the objects of which he was totally ignorant, and which he had never consented to join.

1 In re Empire Assur. Co., 16 L. T. N. S. 346. The case was this: The articles of association of an insurance company contained a clause empowering the directors, with the consent of an extraordinary general meeting, 66 to transfer and sell the business of the company, or purchase or amalgamate with the business of any other company of like nature." This company sold itself to a company whose business it was to purchase the business of other assurance companies; to carry on the business of fire and life assurance, and that of a loan company; to guaranty fidelity; to advance money on houses, and to purchase lands. Afterwards the purchasing company was wound up and some shareholders of the selling company were placed upon the list of contributaries of the amalgamated companies. They objected 282.

2 Drew's Case, 16 L. T. N. S. 657. 3 Powell v. North Missouri R. Co., 42 Mo. 63.

Mason v. Finch, (1873) 28 Mich.

a lease for a deed of conveyance.' Consolidation generally implies "a surrender of the old charters by the companies, the acceptance thereof by the legislature, and the new formation of a new corporation, out of such portions of the old as enter into the new.2

$327. What amounts to consolidation.-A lease may amount to a consolidation, and consolidations have frequently taken the form of purchases by one corporation of the shares of another. In Indiana, a railroad company, having power to consolidate with connecting or intersecting lines, may, under the statute, with a view thereto and to carrying out the object for which it was created, purchase the stock of such other road. There is moreover nothing fraudulent in railroad companies combining to purchase another road which must go to sale. Where the consolidation has taken the form of a sale and purchase, like any other sale, it can not be rescinded without restoring the consideration or purchase price. A mere voluntary union, without the authorization of the legislature, does not constitute an amalgamation; neither does a mere alliance with respect to traffic amount to an amalgamation.' Accordingly, traffic arrangements without legislative authority are nevertheless legal. A temporary co-operation under one management is not a consolidation." And a traffic agreement involving a joint management has been enforced.12 And,

1 State v. Atchison &c. R. Co., (1888) 24 Neb. 143; s. c. 4 Ry. & Corp. L. J. 86, 91.

2 State v. Bailey, 16 Ind. 46, 51; s. c. 79 Am. Dec. 405, citing Lauman v. Lebanon Valley R. Co., 30 Pa. St. 742; s. c. 72 Am. Dec. 685. Cf. McMahan v. Morrison, 16 Ind. 172; s. c. 79 Am. Dec. 418. See Clearwater v. Meredith, 1 Wall. 25, 40.

3 State v. Atchison &c. R. Co., (1888) 24 Neb. 143; s. c. 4 Ry. & Corp. L. J. 86, 91.

Central &c. R. Co. v. Georgia, (1875) 92 U. S. 665; Hill v. Nisbet, 100 Ind. 341; Eaton &c. R. Co. v. Hunt, 20 Ind. 457, 462.

5 Hill v. Nisbet, 100 Ind. 341.

256; Williamson v. New Jersey Southern R. Co., 26 N. J. Eq. 398

7 Buford v. Keokuk &c. Co., 69 Mo. 611, affirming s. c. 3 Mo. App. 159.

8 Shrewsbury &c. R. Co. v. Stour Valley Co., 2 De Gex, M. & G. 866; s. c. 21 Eng. Law & Eq. 628.

9 Shrewsbury &c. Ry. Co. v. Stour Valley Ry. Co., 2 De Gex, M. & G. 866; Midland Great Western Ry. Co. v. Leech, 3 H. L. Cas. 872.

10 Hart v. Renselaer &c. R. Co., 8 N. Y. 37; Straton v. New York &c. R. Co., 2 E. D. Smith, 184.

11 Archer v. Terre Haute &c. R. Co., 102 Ill. 503; s. c. 7 Am. & Eng. R. R. Cas. 249.

12 In a recent case the plaintiff, a

St. Louis &c. R. Co., 69 Mo. 224, New Hampshire corporation operat

generally, a railway company allying itself with another does not thereby become equitably amalgamated with it. An agreement to amalgamate, as from time past, may possibly, in equity, amount to amalgamation; but an agreement to do so at a future period will not, until that time arrives.1

§ 328. Manner of effecting. The steps necessary to effect a consolidation must of course be prescribed by statute; and the statutes generally prescribe: 1. An agreement between the corporations intending to consolidate. 2. Ratification by a certain majority, generally two-thirds, of the stockholders of the corporation, at a duly notified meeting for that purpose. 3. The articles of consolidation thus ratified, properly authenticated, are filed with the Secretary of State, which are thereafter evidence of the consolidation in all courts.2 The essential steps prescribed by the statute to effect the consolidation are conditions precedent, and must be performed, or the new company does not exist.

ing a railroad from N. to L., and the defendant, a Massachusetts corporation operating a road from L. to B., in the latter State, entered into a joint traffic agreement providing that the two roads were to be operated as a single road, under a joint management; that the property of each party should be kept in the same relative condition as at the time of the making of the agreement, at their joint expense; that plaintiff should erect, at his own expense, a freight depot at L., and defendant, at its own expense, a passenger depot at B.; that buildings destroyed by fire should be restored by the owner at his own cost; and that the interest upon the debts contracted by either party should be paid out of his own share of the net income; and it was decided that a passenger depot at B., in addition to the one provided for in the agreement, having become necessary to retain the increased business of the joint management, the directors of

The New York statute,

plaintiff had power to agree that the interest on expenditures made by defendant in the erection of the additional depot should be charged as a part of the operating expenses of the joint management. But defendant, without authority from the stockholders or directors of plaintiff, could not charge, as a part of such operating expenses, interest on expenditures made by defendant in purchasing a controlling interest in the stock of the branch roads which it had leased, and which were being operated by the joint management. Nashua &c. R. Co. v. Boston R. Co., (1890) 10 Sup. Ct. Rep. 1004, reversing s. c. 8 Fed. Rep. 458.

1 Shrewsbury &c. Ry. Co. v. Stour Valley Ry. Co., 2 De G. M. & G 866. 2 S. D. Thompson in 31 Cent. L. J. 5.

3 Com. v. Atlantic &c. R. Co., 53 Pa. St. 9; Peninsular R. Co. v. Tharp, 28 Mich. 506; Mansfield v. Drinker, 30 Mich. 124; Tuttle v. Michigan &c. R. Co., 35 Mich. 247; Mansfield

which is a codification of the law applying to business corporations, is probably the general law upon the subject. Any two or more corporations organized for the purpose of carrying on any kind of business of the same or of a peculiar nature, may consolidate such corporations into a single corporation, as follows: The respective boards of directors of such corporations may enter into and make an agreement, under their respective corporate seals, for the consolidation of such corporations, prescribing the terms and conditions thereof, the mode of carrying the same into effect, the name of the new corporation, the number of directors who shall manage its affairs, not less than five nor more than thirteen, the names and post office address of the directors for the first year, the term of its existence, not exceeding fifty years, the name of the town or towns, county or counties, in which its operations are to be carried on, the name of the town or city and county in this State in which its principal place of business is to be situated, the amount of its capital stock which shall not be larger in amount than the fair aggregate value of the property, franchises and rights of such corporations, and the number of shares into which the same is to be divided, the manner of distributing such capital stock among the holders thereof, and if such corporations or either of them shall have been organized for the purpose of carrying on any part of its business in any place out of this State, and such new corporations shall propose to carry on any part of its business out of this State, the agreement shall so state, with such other particulars as they may deem necessary. Although every consolidation must take place in consequence of two things, legislative authorization, or a contract between the corporations duly ratified by their shareholders, yet when it comes to the contract itself, a distinction must be carefully made between a consolidation and an agreement looking to a consolidation in the future. The agreement to consolidate required by the statute shall be submitted to the stockholders of each of such corporations at a meeting thereof to be called upon

&c. R. Co. v. Brown, 26 Ohio St. 223.

IN. Y. Laws 1890, c. 567, § 13.

S. D. Thompson in 31 Cent. L. J.

4: Shrewsbury &c. R. Co. v. Stour Valley R. Co., 2 De Gex, M. & G. 866; s. c. 21 Eng. Law & Eq. 628.