bama case, a railroad company was incorporated, and its existence was limited to fifty years. A person conveyed a strip of land of the usual width to the company, on which the tracks were afterwards laid; the habendum clause limiting the term to fifty years, or so long as the charter of said company might continue. The act of incorporation was afterward amended so as to permit the State to purchase the company's property at the end of the fifty years, and if no such election was then made the charter was to be continued for ten years, with a like option at each recurrence of that period. Still later, the same grantor conveyed the land, including said strip, together with the reversion therein, to plaintiff's ancestor. All the rights of the railroad company became vested in the defendant corporation by judicial sale. The original act incorporating the railroad company authorized condemnation of land in case the company and the owner could not agree on the price thereof. The identical company ceased to own or use the land in controversy, but it had been continually used for railroad purposes by the successors in title of the first company. That company was never judicially dissolved, though it ceased to do business. Upon this state of facts it was decided that the estate was not termi

ways and means and subject to the same conditions as the same would or might have been recoverable from or by the dissolved company if the amalgamating act had not been passed, (26 & 27 Vic. ch. 92, § 40); that all deeds, conveyances, grants, assignments, leases, purchases, sales, mortgages, bonds, covenants, and securities which before the amalgamation have been executed, made or entered into by, with, to, or in relation to the dissolved company or the directors thereof, and which are in force at the time of amalgamation, and all obligations and liabilities which before the amalgamation have been incurred by or to, or which but for the amalgamation might or would have arisen in relation to, the dissolved company, or the directors thereof, shall be as

valid and of as full effect in favor of, against, or in relation to the amalgamated company, as if the same had been executed, made, or entered into by, with, or to, or in relation to, or had been incurred by or to or had arisen in relation to, the amalgamated company by name, (26 & 27 Vic. ch. 92, § 41); that all causes and rights of action or suit accrued before the time of amalgamation, and then in any manner enforceable by, for, or against the dissolved company shall be and remain as good, valid, and effectual for or against the amalgamated company as they would or might have been for or against the dissolved company affected thereby, if the amalgamating act had not been passed," (26 & 27 Vic. ch. 92, § 42).

8

nated by the lapse of the fifty years, or by the fact that the company had ceased to do business, as the continuance of the charter referred to in the deed meant the continuance of the chartered rights or privileges, which still existed, though exercised by another body corporate. Where two or more companies are consolidated the new one may enforce the rights of the old ones. All the choses in action of the old companies are transferred to the newly created company and may be enforced by it in its own name, and only in its own name. Thus the new corporation may lawfully use a patented axle box which both the old corporations had been licensed to use. The stockholders of a defendant company voted to consolidate its business with a tannery owned by the plaintiffs in another State. That vote was carried out to the extent of transferring the personal property of the foreign tannery to the defendant corporation, but not the realty. Upon cession of business and an accounting, it was held that whether the purchase of real property in another State was within the powers of the company or not, it should account for the actual value of the personalty it received."

The extent of the

For the

§ 343. Liability of the new company. liability of the new company is at least equal to the property derived by it from each of its constituent parts. property of the constituent companies passes into the hands of the new company, as a taker with notice, charged with the payment of the debts of the old company. And equity will scrutinize with jealousy any arrangement among corporations 7 Harrison v. Arkansas &c. R. Co., 4 McCrary, 264; Brum v. Mer

1 Davis v. Memphis &c. R. Co., (1889) 87 Ala. 633.

2 University of Vermont v. Baxter, chants' &c. Ins. Co., 16 Fed. Rep. 42 Vt. 99.

3 Cumberland College v. Ish, 22 Cal. 641; Miller v. Lancaster, 5 Coldw. 514; University of Vermont v. Baxter, 42 Vt. 99.

Indianola R. Co. v. Fryer, 56 Tex. 609; University of Vermont &c. v. Baxter, 42 Vt. 99.

Lightner v. Boston &c. R. Co., 1 Low. 338.

140; Hibernia Ins. Co. v. St. Louis &c. Transportation Co., 13 Fed. .tep. 516; Prouty v. Lake Shore &c. Ry. Co., 52 N. Y. 363; Booth v. Bunce, 33 N. Y. 139; s. c. 88 Am. Dec. 372; Barclay v. Quicksilver Mining Co., 9 Abb. Pr. N. S. 283. Cf. Kelly v. Mariposa &c. Co., 4 Hun, 632.

8 Brum v. Merchants' Mutual Ins. Co., 16 Fed. Rep. 140; Hibernia InMoore v. Swanton Tanning Co., surance Co. v. St. Louis &c. Transp. (1888) 60 Vt. 459. Co., 3 McCrary, 398. Cf. Bent v.

whereby the assets of an insolvent corporation, which are a trust fund for its creditors, are turned over to another corporation, frittered away or otherwise diverted from the creditors who have the equitable charge upon it.' Conversely, however, where it is not otherwise provided, by the enabling act or the contract of consolidation, the new company is not liable upon the debts of the original corporations except so far as the property derived from each may suffice to satisfy their respective creditors. The assets of the old companies may be followed in equity, as trust funds, into the hands of the new, and the new company takes with notice of the trust. But as a mortgage foreclosure cuts off the antecedent general indebtedness of the mortgagor, such debts will not follow the property where the consolidation takes place subsequently to such a foreclosure. And so it has been held that a mortgage given. by the consolidated company upon all the property under its control, is superior to the claims of the unsecured creditors of the company from which that property was derived. The consolidated company may be expressly required, however, to assume all the debts of its constituent parts; without regard to the sufficiency of the property derived from them to satisfy the claims. The New York "Business Corporation Law" of 1890 enacts that the rights of creditors of any corporation that shall be so consolidated shall not in any manner be impaired, nor any liability or obligation for the payment of any money due or to become due to any person or persons, or any claim or demand for any cause existing against any such corporation or against any stockholder thereof be released or impaired by any such consolidation; but such new corporation shall suc

Hart, 73 Mo. 641, affirming s. c. 10 Finney, 14 Gratt. 338; Montgomery Mo. App. 143. &c. R. Co. v. Branch, 59 Ala. 139;

1 Patton v. Tribilcock, 91 U. S. 47; The Key City, 14 Wall. 653; Powell Alexander v. Relfe, 74 Mo. 495. v. North Missouri R. Co., 42 Mo. 63. 4 Houston &c. R. Co. v. Shirley, 54 Tex. 125.

2 Prouty v. Lake Shore &c. R. Co., 52 N. Y. 363; Shackleford v. Mississippi Central R. Co., 52 Miss. 159. Cf. Indianola R. Co. v. Fryer, 56 Tex. 609; Houston &c. R. Co. v. Shirley, 54 Tex. 125.

3 Harrison v. Arkansas Valley R. Co., 4 McCrary, 264; Barksdale v.

5 Tysen v. Wabash R. Co., 15 Fed. Rep. 763.

6 Warren v. Mobile &c. R. Co., 49 Ala. 582; Western Union R. Co. v. Smith, 75 Ill. 496.

ceed to and be held liable to pay and discharge all such debts and liabilities of each of the corporations consolidated in the same manner as if such new corporation had itself incurred the obligation or liability to pay such debt or damages; and the stockholders or the respective corporations consolidated shall continue, subject to all the liabilities, claims and demands existing against them as such, at or before the consolidation; and no action or proceeding then pending before any court or tribunal in which any corporation that may be so consolidated is a party, or in which any such stockholder is a party, shall abate or be discontinued by reason of such consolidation, but may be prosecuted to final judgment, as though no consolidation had been entered into; or such new corporation may be substituted as a party in place of any corporation so consolidated, by order of the court in which such action or proceeding may be pending. Without a statute, however, and unless otherwise provided in the statute authorizing a consolidation or by the terms of agreement between the companies, the consolidated corporation assumes all the liabilities of the companies composing it, and they may be enforced by proceedings against the new company."

IN. Y. Laws 1890, c. 567, § 17. 2 Harrison v. Union Pacific R. Co., 13 Fed. Rep. 522; s. c. 15 Fed. Rep. 563; Tysen v. Wabash R. Co., 11 Biss. 510; Western R. Co. v. Davis, 66 Ala. 578; Sappington v. Little Rock &c. Ry. Co. 37 Ark. 23; Slattery v. St. Louis &c. Transp. Co., 91 Mo. 217; s. c. 60 Am. Rep. 245; Thompson v. Abbott, 61 Mo. 176; Miller v. Lancaster, 5 Coldw. 514, 520; Columbus &c. Ry. Co. v. Powell, 40 Ind. 37; Indianapolis &c. R. Co. v. Jones, 29 Ind. 465; Columbus &c. R. Co. v. Skidmore, 69 Ill. 566; s. c. 95 Am. Dec. 654; Caley v. Coburg &c. R. Co., 14 Grant. (U. C.) 531. See Houston &c. R. Co. v. Shirley, 54 Tex. 125; Warren v. Mobile &c. R. Co., 49 Ala. 582. But see Shaw v. Norfolk County R. Co., 16 Gray, 407. Cf. Chase v. Vanderbilt, 5 Jones & Sp. 334. But it is held in the case of

railroads that a statute providing that in case of the consolidation of two or more companies, the new corporation shall be liable for all the debts of each company entering into the arrangement, applies only to companies which may thereafter consolidate. Wood's Ry. Law, 1682; Hatcher v. Toledo &c. R. Co., 62 Ill. 477. And it is held also that where two railroads are consolidated, as far as one of the creditors of one of the original companies is concerned, the consolidated company is the successor of the old company, but in respect to the properties of the other companies it is a new and independent company, and such a creditor has no claim against it upon the original contract, but only by virtue of its assumption of the obligation of the old companies. Boardman v. Lake Shore &c. Ry.

344. The same subject continued.- Liabilities of the old companies may be enforced by direct actions against the new;' therefore where a railroad company, after the execution of promissory notes, is consolidated with another company, and the newly formed company assumes a new name, it may be sued by the name thus assumed, and it will be estopped from denying the name by which it is sued. The statutes of consolidation generally provide that the old companies shall be deemed to continue in existence for the purpose of preserving remedies, and there are judicial decisions which support this theory where the statute does not expressly so provide.3 And even where the consolidating statute provides simply that the president of the new company "shall be held in law, as to service of process, as the president of " each of the constituent companies, an unliquidated claim, as, for example, for personal injuries, may be made the basis of an action against the consolidated company in the first instance. But of course where two or more railroad corporations are consolidated, and the new corporation thus formed assumes the debts and obligations of the original companies, the official representatives individually of the new organization are not necessary or proper parties to enforce a liability of one of the old companies. If the plaintiff has a cause of action, it is against the new corporation alone, and not against its individual directors

Co., 84 N. Y. 157, 181; Chase v. Vanderbilt, 62 N. Y. 307; Prouty v. Lake Shore &c. Ry. Co., 52 N. Y. 363; Houston &c. R. Co. v. Shirley, 54 Tex. 125. Cf. Sage v. Lake Shore &c. Ry. Co., 70 N. Y. 220.

1 Western &c. R. Co. v. Smith, 75 Ill. 496; Warren v. Mobile &c. R. Co., 49 Ala. 582; Pullman Car Co. v. Missouri Pacific R. Co., 115 U. S. 581; Louisville &c. R. Co. v. Boney, 117 Ind. 501; Thompson v. Abbott, 61 Mo. 176. According to some opinionsthe remedy is in equity; but the better opinion is that a direct action at law will lie upon an implied assumpsit. Warren v. Mobile &c. R. Co., 49 Ala. 582. In one case it was held that the new company could

not be substituted in place of the old, after a referee had reported in favor of judgment against the old, merely for the purpose of having the judgment entered against it in form, the court reasoning that in some way it was entitled to make a separate defense. Prouty v. Lake Shore &c. R. Co., 52 N. Y. 363, 368; "Consolidation of Corporations," by S. D. Thompson, (1890) 31 Cent. L. J. 4.

2 Columbus &c. Ry. Co. v. Skidmore, 69 Ill. 566.

3 S. D. Thompson in 31 Cent. L. J. 4; State v. Maine Central R. Co., 66 Me. 488, 500.

4 Warren v. Mobile &c. R. Co., 49 Ala. 582.