capable of being converted into money at any time and of being distributed as money among shareholders not consenting to the arrangement.' Statutory authority to transfer "the work done, together with all rights, privileges and easements," of a railroad company, unable to complete the construction of its line, to another company, not competing, does not empower the assigning of the railroad company's contracts of subscription payable upon completion of the road. A contract in restraint of trade, running to a corporation, "its successors and assigns," is assignable to and enforceable by a corporation who succeeds to the business and property of such obligee.3 -- § 360. The same subject continued. Where an old-established corporation sells out to a newly-organizeed one, and turns over all its property, the new company becomes liable upon the debts and contracts of the old. Therefore, when a 1 Treadwell v. Salisbury Manuf. Co., 73 Mass. 393; s. c. 66 Am. Dec. 480; Morawetz on Corporations, 212. 2 Toledo &c. R. Co. v. Hinsdale, (1888) 45 Ohio St. 556. which was contemplated. One of the considerations of the assignment was the payment of the old company's debt. In 1874 the new company was organized and received 3 Diamond Match Co. v. Roeber, a transfer of all of the property. (1887) 13 N. E. Rep. 419. 4 Slattery v. St. Louis &c. Co., (1886) 91 Mo. 217; Hibernia Ins. Co. v. St. Louis &c. Co., 10 Fed. Rep. 596; s. c. 13 Fed. Rep. 516; Fogg v. Receiver, 17 Fed. Rep. 516; Brum v. Insurance Co., 16 Fed. Rep. 140; Railroad v. Boring, 51 Ga. 582; Dean v. La Motte Lead Co., 59 Mo. 523; Town of Reading v. Wedder, 66 Ill. 80; Charitable Soc. v. Episcopal Church, 1 Pick. 371; Railroad v. Bee, 48 Cal. 398; Miners' Ditch Co. v. Zellerbach, 37 Cal. 543; City of St. Louis v. Gas Co., 70 Mo. 98; Fastings v. Drew, 50 How. Pr. 254; Railroad v. Evans, 6 Heisk. 607; Thompson v. Abbott, 61 Mo. 176. B. recovered a judgment in 1868, against a railroad company shortly after it had assigned all its property to trustees as one of the means of transferring it to a new company In 1880 the holder of the judgment brought suit upon it against the trustees, who defaulted, and the new company, pleaded that the debts due the creditors of the old company of the same class as plaintiffs' claim exceeded its assets, and that plaintiff was only entitled to a pro rata of such assets upon distribution among all the creditors; and it was held that it should be presumed the claims of the other creditors had been paid, or that the assets were ample for the full satisfaction of the remaining ones, so that the suit might be maintained without making the other creditors parties. Galveston, Harrisburg &c. Ry. Co. v. Butler, 56 Tex. 506. By deed from one railroad company to another, the title was reserved in the vendor till the vendee had discharged the vendor's floating debt corporation, after contracting debts, transfers, without consideration, all of its property to another corporation having notice of the indebtedness, equity has jurisdiction of a suit to enforce the indebtedness against the latter corporation, although no judgment has been obtained against the former one.1 And where a corporation, organized by the members of a partnership, passes a resolution to purchase the assets of the partnership, and assumes its indebtedness, it can not, by a secret understanding between the trustees that certain claims are not included, prevent the creditor from following the firm's assets into the hands of the corporation. While consolidation is frequently effected by the sale of the property and franchises of one corporation to another, every case of sale is not necessarily a consolidation, properly so called; it may be a mere succession, as it has been felicitously termed by a learned writer. The same writer says that a succession differs from a consolidation in this respect among others, that the purchaser acquiring the property and franchises of a cor-' poration does not thereby become responsible for its liabilities already accrued. It will have been seen, however, that the later cases show a disposition to follow the assets of the former corporations even after a sale for the purpose of insuring that the full amount of the same shall be rendered to the creditors of the original corporation. But that the president of the former corporation is not properly a party to such suit. Hibernia Ins. Co. v. St. Louis &c. Co., 3 McCrary, 368. § 361. The sale of the corporate franchise.-The cases are agreed that a railroad corporation can not, independent of legislative authority, alienate or mortgage its franchise to by certain methods of payment. The vendee made partial payment in that way by cash and bonds to A., one of the vendor's creditors and directors, with the approval of the vendor's president, and his consent that A. might appropriate the sum to his own use, the directors of the company taking no action; and it was held that this was not a compliance with all the conditions so as to estop the vendor from asserting his title. Tennessee & Coosa R. Co. v. East Alabama Ry. Co., 73 Ala. 426. 2 Williams v. Colby, (1889) 53 Hun, 637. 3 Taylor on Corporations, § 415; Hammond v. Port Royal &c. R. Co., 15 S. C. 10; and 16 S. C. 567; Cook v. Detroit &c. Ry. Co. 43 Mich. 349; City of Menasha v. Milwaukee &c. R. Co. 52 Wis. 414; Gilman v. Sheboygan &c. R. Co., 87 Wis. 317. be a corporation. Under the general incorporation law of Texas, one railroad company has no power to buy another railroad company, or to sell its road to another company or to another person. Any contract made by a quasi public corporation, such as a railway, canal or turnpike, which undertakes without the consent of the State to transfer to others the rights and powers conferred by the charter, and to relieve the grantees of the burdens which it imposes, is held to be a violation of the contract with the State and void as against public policy. Or it may be said that such a corporation, in the absence of statutory authority, has no right to sell its franchise to be a corporation, or any property essential to its exercise acquired under law of eminent domain. So also transfers of powers of one such corporation to another are against public policy, and the courts will not promote transfer. For a corporation can not evade liability by delegating to another the performance of its public duties. And, negatively, a corporation owing a public duty can not contract not to perform that duty. The general rule holds good that a bank incor 1 Coe v. Columbus &c. Ry. Co., (1859) 10 Ohio St. 372; Commonwealth v. Smith, 10 Allen, 448; East Boston &c. R. Co. v. Hubbard, 10 Allen, 459; Richardson v. Sibley, 11 Allen, 65; Hall v. Sullivan R. Co., 21 Law Rep. 138; 1 Brun. Col. Cas. 613; Pierce v. Emery, 32 N. H. 484; Richards v. Merrimack &c. Co., 44 N. H. 127, 136; Bardstown &c. R. Co. v. Metcalfe, 4 Metc. (Ky.) 199; Arthur v. Commercial &c. Bank, 9 Smed. & M. 394; Kennebec &c. R. Co. v. Portland &c. R. Co., 59 Me. 9, 23; Shepley v. Atlantic &c. R. Co., 55 Me. 395, 407; Stewart's Appeal, 56 Pa. St. 413, 422; Pittsburg &c. R. Co. v. Allegheny Co., 63 Pa. St. 126, 135; Clarke v. Omaha &c. R. Co., 4 Neb. 458, 465; State v. Consolidation Coal Co., 46 Md. 1, 9; Hays v. Ottawa &c. R. Co., 61 Ill. 422; Wood v. Bedford &c. R. Co., 8 Phila. 94; Pearce v. Madison &c. R. Co., 21 How. 441. 2 Gulf &c. R. Co. v. Morris, (1887) 67 Tex. 692. 3 Thomas v. Railroad Co., 101 U. S. 71, 83; Pennsylvania R. Co. v. St. Louis &c. R. Co., 118 U. S. 290; Troy &c. R. Co. v. Boston &c. R. Co., 86 N. Y. 107; Fanning v. Osborne, 102 N. Y. 441; Stewart's Appeal, 56 Pa. St. 413; Commonwealth v. Smith, 114 Mass. 448, 456; Middlesex R. Co. v. Boston &c. R. Co., 115 Mass. 347; Branch v. Jesup, 106 U. S. 468, 484. 4 Fietsam v. Hay, (1887) 122 Ill. 293; s. c. 3 Am. St. Rep. 492. 5 Chicago Gas Light Co. v. People's Gas Light Co., (1887) 121 Ill. 530; s. c. 2 Am. St. Rep. 124. 6 Lancaster &c. Co. v. Rhoads, (1887) 116 Pa. St. 377; s. c. 2 Am. St. Rep. 608. 7 So a contract, by a corporation authorized to make and sell gas, to discontinue such manufacture and sale, is ultra vires and void. Chicago porated under a special act of the legislature can not, in the absence of statutory enactment, sell, transfer or assign its franchise; that is, the corporate rights and privileges conferred upon it by the legislative grant. So, also, where some of the stockholders of one railway company bought up all the stock and bonds of another and destroyed them, without, however, buying the road itself, yet taking themselves to be owners of the road from the purchase of the stock and bonds, sold it to a third company, it was held that a creditor of the second company having obtained judgment against it, had the right to levy execution on the road and franchise, the purchase and destruction of the stock and bonds, and subsequent sale to the third company, not constituting a dissolution of the second so as to relieve it, as a corporation, from all its debts and obligations.2 § 362. The same subject continued. As to what is included under the term franchise, it has been decided that a railroad with all its rights, franchises and property, is not an entirety. And the line has been clearly drawn between it and alienable property. It is that a railroad company can not alienate real property, acquired and held for the exclusive purpose of the exercise of a franchise which can not be alienated, but it may alienate things requisite for its use after the road is constructed and prepared for use, which are to be regarded as personal property. The distinction is made that the franchise to build or manage a railroad, and take tolls thereon, are not necessarily corporate rights, and may be assigned and enjoyed by an individual, but the right to be or form a corporation is not the subject of sale or transfer in the Gas Light Co. v. People's Gas Light Fietsam v. Hay, (1887) 122 Ill. 293. 2 Gulf &c. R. Co. v. Morris, (1887) 67 Tex. 692. 3 Dinsmore v. Racine &c. R. Co., 12 Wis. 659, 663; Hill v. La Crosse &c. R. Co., 11 Wis. 226. 4 Coe v. Columbus &c. R. Co., (1859) 10 Ohio St. 372; Shaw v. Norfolk Co. R. Co., 5 Gray, 162, 180; Arthur v. Commercial Bank, 9 Smed. & M. 394; Miller v. Rutland &c. R. Co., 36 Vt. 452, 473; Kelly v. Trustees, 58 Ala. 489; Wood v. Bedford &c. R. Co., 8 Phila. 94; Richards v. Merrimack &c. Co., 44 N. H. 127, 136. absence of statute, and does not go with the property and franchises when sold. The power to sell, mortgage or lease the franchises or property, even the franchise to be a corporation, may of course be expressly authorized by the legislature.? So the legislature may ratify and confirm such acts when done without authority. Of course general laws may authorize a telegraph company to sell to another company all its property, rights, privileges, and franchises, when each company has been incorporated under the law of the same State.* Where the act under the authority of which a certain company purchased the property and franchises of another provides that all existing contracts for water privileges "shall be respected and maintained at rates not exceeding the present rates," it is held that this provision does not make perpetual, at the option of the lessee, such contracts, but merely binds the purchaser to respect them during the remainder of the unexpired term which they have to run.5 § 363. Power to lease property.- Private corporations may lease their property with the same freedom as individuals, there being no public interest involved. Under laws providing that an association may erect and maintain docks along the shore of its lands, and have the exclusive control of them, the association may lease the exclusive control of such docks 1 Ragan v. Aiken, (1882) 9 Lea, 609; Hall v. Sullivan R. Co., 21 Law Rep. 138; Meyer v. Johnson, 53 Ala. 237; State v. Sherman, 22 Ohio St. 428; Smith v. Gower, 2 Duer, 17; Wilson v. Gaines, 3 Tenn. Ch. 602. In the principal case the bill alleged that a particular railroad, with all its property, effects and franchises, was sold under the proceeding by the State against delinquent railroads, and subsequently resold by the purchaser to an individual named, and by him to the defendant, who had continued to operate the road under the charter of the original corporation, and had charged and received from the complainants excessive freight, and it was held, upon demurrer, that the defendant was not the corporation, and that the bill was properly filed against him as an individual. 21 Rorer on Railroads, 257; State v. Sherman, 22 Ohio St. 411, 428; State v. Richmond &c. R. Co., 72 N. C. 634; Mahaska &c. R. Co. v. Des Moines Valley R. Co., 28 Iowa, 437; East Boston &c. R. Co. v. Eastern R. Co., 13 Allen, 422. 3 Shaw v. Norfolk Co. R. Co., 5 Gray, 162, 179; Richards v. Merrimack &c. Co., 44 N. H. 127, 136. 4 Hatch v. American Union Telegraph Co., 9 Abb. N. Cas. 223; New York Laws 1870, ch. 568. 5 Hurt v. Terrill, (1887) 83 Va. 167; Va. Acts 1878-9, p. 118, § 6. 6 See cases cited infra. |