§ 1011. Dissolution by consolidation with another corporation. Whether a consolidation effects a dissolution of the consolidating corporations is a question of law, and generally depends upon the construction of the statute or provision in the charter under which it is brought about. In most cases it results in dissolution.1 The general rule is subject to exceptions arising from the wording of the statutes and the peculiar circumstances of each case. General statutory provisions in most of the states impose upon the new corporation the obligations of the consolidating companies.3

§ 1012. Consent of members required.—In the absence of statutory provisions for voluntary dissolution, it is an important and a somewhat unsettled question by whom the power to effect a dissolution may be exercised; whether a bare majority have power to dissolve the corporation or unanimous consent is required.* The weight of authority is to the effect that, without authority in the charter or general law, a majority have no such power. But here again, it is necessary to dis

1 Shields v. Ohio, 95 U. S. 319; R. R. Co. v. Ga., 98 U. S. 359; Atlanta .etc., R. R. Co. v. Ga., 63 Ga. 483; Clearwater v. Meredith, 1 Wall. 25, 40; McMahon v. Morrison, 16 Ind. 172; State v. Bailey, 16 Id. 46; Powell v. North Mo. R. R. Co., 42 Mo. 63; Racine, etc., R. R. Co. v. Farmers' Loan & T. Co., 49 Ill. 331, 349; Charity Hospital v. New Orleans, etc., Co. (La.), 4 So. Rep. 433; Ohio, etc., Co. v. People, 123 Ill. 467; 14 N. E. Rep. 874; N. O., etc.. Co. v. Louisiana, etc., Co., 11 Fed. Rep. 277. See Meyer v. Johnson, 64 Ala. 603; Central R. R. Co. v. Ga., 92 U. S. 665.

2 Wabash, etc., R. R. Co. v. Ham, 114 U. S. 587, 595; State v. Merchant, 37 O. St. 251; Prouty v. Lake Shore, etc., R. R. Co., 52 N. Y. 363; Henderson v. Central Pass. Ry. Co., 21 Fed. Rep. 358; Kohl v. Lillienthal, 81 Cal. 378.

3 For construction of N. Y. Stat. 1884, see Edison Electric Light Co. v. New Haven Elec. Co., 35 F. 233.

+ Where the constitution of a building association provides that it shall continue for eight years, unless all its debts are paid and stock redeemed in a shorter time, a resolution of such corporation dissolving itself before the expiration of such time is of no effect, unless all the shareholders consent to the dissolution. Barton v. Enterprise Loan & Bldg. Ass'n of Wabash, 114 Ind. 226; 16 N. E.

tinguish between a formal dissolution and an abandonment or surrender. There is no doubt that if the corporation is insolvent or doing a failing business and is unable to accomplish the objects for which it was formed, a minority cannot compel a majority to proceed, and perhaps a majority would be restrained in some cases from imperiling the interests of a minority by so doing. Thus an abandonment would be brought about, from which by lapse of time a surrender would be presumed.1

It has been held, however, that the majority have this power under ordinary circumstances. Where the corporation is solvent and proceeding with its business and the term during which the corporation was to exist has not expired; where a dissolution is desired in order to obtain a new charter for a different object; where the object is to effect a consolidation which

1 The corporation may be dissolved by unanimous consent. See Mobile & Ohio R. R. Co. v. State, 29 Ala. 573; Savage v. Walsh, 26 Id. 619; Atty.-Gen. v. Clergy Society, 10 Rich. Eq. 604; Chesapeake & Ohio Canal Co. v. Balt. & 0. R. R. Co., 4 Gill. & J. 1, 121; McIntyre Poor School v. Zanesville, etc., Canal Co., 9 O. 203; Lagrange, etc., R. R. Co. v. Reimey, 7 Coldw. 430; Slee v. Bloom, 19 Johns. 456; Webster v. Turner, 12 Hun, 264; Houston v. Jefferson Cal., 63 Pa. St. 428; Denike v. N. Y. etc., Co., 80 N. Y. 599, 606. Where a statute creating a corporation, and authorizing it to build a railroad, provides that, if the corporation shall not begin construction within a certain time, the corporation shall be dissolved, such failure does not ipso facto dissolve the corporation. In re Kings County Elevated Ry. Co., 105 N. Y., 97; 13 N. E. 18; Day v. Ogdensburg & L. C. R. Co., 107 N. Y. 129.

2 Treadwell v. Salisbury Mfg. Co., 7 Gray, 393; Hancock v. Holbrook, 9 Fed. Rep. 353; Wilson v. Central Bridge, 9 R. I. 590. But see N.O. etc., Co. v. Harris, 27 Miss. 577; Ward v. Society, etc., 28 Eng. Ch. 370; Berry v. Broach, 65 Miss., 450; 4 South. Rep. 117; and contra, Zabriskie v. Hackensack, etc., R. R. Co., 18 N. Y. Eq. 178; Mowrey v. Indianapolis, etc., R. R. Co., 4 Bliss. 78; Lauman v. Lebanon, etc., R. R. Co., 30 Pa. St. 42.

8 Kean v. Johnson, 9 N. J. Eq. 401; In re Imp. & Groc. Exch., 28 N. Y. St. R. 416; 2 N. Y. S. 257; Sportsman's Ass'n, 2 N. Y. S. 63. It is otherwise in Louisiana, where the directors are vested with power to dissolve a corporation. Hancock v. Holbrook, 40 La., Ann. 53; 3 So. 351; Van Schmidt v. Huntington, 1 Cla. 25; Barton v. Enterprise, etc., Ass'n, 114 Ind., 226; 16 N. E. Rep. 486. 4 Ward v. Soc. of Attys. 1 Coll. 370.

would otherwise be ultra vires,1 or it is a device for other unauthorized purposes, a bare majority cannot effect a dissolution.

§ 1013. Recognition of the fact of dissolution by the state.—It is not clear upon the authorities whether at common law, after the stockholders have voted a dissolution, any act on the part of the state is necessary to carry the dissolution into effect. The prevailing opinion is, that some form of legislative recognition of the dissolution, or the decree of a court possessing statutory jurisdiction is required to consummate the dissolution.3

§ 1014. Resulting legal and equitable rights.—After a dissolution a corporation was not recognized at common law for any purpose. The corporate entity was totally extinguished, and the corporators could no longer act in its name to do any corporate act. All suits by or against it abated.*

1 Black v. Del., etc., Canal Co., 22 N. J. Eq. 403.

2 Polar Star Lodge v. Polar Star Lodge, 16 La. Ann. 53; Curren v. Sontini, Id. 27; Mobile, etc., R. R. Co. v. State, 29 Ala. 573.

8 LaGrange & M. R. R. Co. v. Ramsey, 7 Coldw. 420; Harris v. Muskingman Mfg. Co., 4 Blackf. 267; Town v. B'k, etc., Raisin, 2 Doug. (Mich.) 530; Currier v. Santim, 16 La. Ann. 27; Norris v. Mayor, etc., 1 Swan. 164; Bradt v. Benedict, 17 N. Y. 93, 99; Boston Glass Co. v. Langdon, 24 Pick. 49; Wilson v. Propr. of Cent. Bridge, 9 R. I. 590; Penobscot Broom Corp. v. Lamson, 16 Me. 224; Engfield, etc., Co. v. Conn. Riv. Co., 7 Conn. 28, 45; Mumma v. Potomac. etc., Co., 8 Pet. 281, 287; N. Y. etc., Wks. v. Smith, 4 Duer, 362; Powell v. Oregonian Ry. Co., 38 Fed. Rep. 187. A notice of the dissolution sent to the governor is insufficient. Merchants' B'k v. Heard, 37 Ga. 401; Revere v. Boston, etc., Co., 15 Pick. 351. But the governor may be authorized by statute to accept dissolution and make proclamation of the same. Campbell v. Miss. Un. B'k, 7 Miss. 625. The sale, by legislative permission, of the franchises of a toll-road company operates, in the absence of any rights in third persons, as a dissolution of the corporation. Snell v. City of Chicago (Ill.), 24 N. E. 532.

4 McCulloch v. Norwood, 58 N. Y. 562; In re Norwood, 32 Hun, 196; Greeley v. Smith, 3 Story C. C. 657; Saltmarsh v. Planters, etc., B'k, 17 Ala. 761; Merrill v. Suffolk B'k, 31 Me. 57; Ingraham v. Terry, 11 Humph. 572; Life Ass'n v. Fassett, 102 Ill. 315; Platt v. Ashman, 32 Hun, 230; Dobson v. Simonton, 86 N. C. 492.

But state legislatures have generally provided for the maintainance of new suits and the prosecution of such as have been already instituted. Such acts are constitutional.1

By act of Congress, July 12, 1882, extending for the purpose of liquidation the franchises of such national banking asociations as do not extend the periods of their charters and making applicable to them the statutes relating to liquidation of banking associations, such an association may continue to elect officers and directors for the purpose of effecting the liquidation."

A corporation could not be a party at common law to any action, and suits already brought against it were abated by its dissolution, for a judgment rendered against a defendant not in existence was a nullity.3 Under the statute, however, the trustees or the receiver appointed by the court stand for the corporation and keep it before the court for purposes of judgment, and appeal therefrom.*

1

Laws N. Y. 1867, c. 254, as amended by Laws 1879, c. 503, provides that any railroad company may take a transfer of any or all of the stock of a railroad. 2 Stetson v. City B'k, etc., 2 O. St. 167; Foster v. Essex B'k, 16 Mass. 244. See also, Miller v. Newburg, etc., Co., 31 W. Va., 836; 8 S. E. Rep. 600, holding that an action will lie under such statute for a tort committed after dissolution.

8 See Richards v. Attleborough Nat. B'k, 148 Mass., 187; 19 N. E. 353. The dissolution of a national bank by decree of a federal court does not affect rights of a creditor whose action against the bank was pending at the time in a state court. Bank of Montreal v. Fidelity Nat. Bank, 17 N. Y. St. Rep. 88; 1 N. Y. S. 852.

4 Hightower v. Thornton, 8 Ga. 486; Mayor of Colchester v. Seaber, 3 Burr. 1866; Rex v. Pasmore, 3 T. R. 242; Commercial B'k of Natchez v. Chambers, 8 Sm. & M. 9; Port Gibson v. Moore, 13 Sm. & M. 157; Fox v. Horah, 1 Ired. Eq. 358; Commercial B'k v. Lockwood, 2 Harr. (Del.), 8; Ingraham v. Terry, 11 Humph. 572; Malloy v. Mallett, 16 Jones, Eq. 345; 1 Bl. Com. 484.

5 Kelsey v. Pfaudler, etc., Co., 45 Hun, 10. Plaintiff, in a pending action against a corporation for personal injuries, is not a creditor, within the meaning of the Revised Laws of New York, providing that, upon dissolution of a corporation, the directors shall be trustees for the creditors, with power to settle the affairs of the corporation; and such action, on expiration of the charter of the corporation, cannot be continued against the directors. Grafton v. Union Ferry Co., 13 N. Y. S. 878.

A quo warranto proceeding against an individual for usurping a corporate franchise does not abate by the death of the defendant, since it is in the nature of a proceeding in rem.1 And the same rule would apply if the corporation should be dissolved pending the action. No judgment could, in such case, be rendered forfeiting the franchise of being a corporation, but only the franchises possessed by the corporation.

It has been held that proceedings in bankruptcy in the federal courts did not abate by the dissolution. And an injunction will be granted to prevent dissolution where justice demands that a pending suit shall proceed to judgment.3

Generally speaking, however, the dissolution of a corporation puts an end to the enterprise and suspends all legal rights. The extinction of the corporation terminates its ownership of property, and at common

company of which it is lessee, and may issue its stock in lieu thereof; that "whenever the whole of the said capital stock shall have been so surrendered or transferred ... the estate, property, rights, privileges, and franchises of the said corporation whose stock shall have been so surrendered or transferred shall thereupon vest in" the company to which the transfer shall have been made; and that "existing liabilities or the rights of creditors of the corporation whose stock shall have been so surrendered or transferred" shall not "be in any way affected or impaired by this act." Held, that the lessor corporation did not, by such transfer of its stock, lose its corporate character, so as to abate condemnation proceedings instituted before the transfer of its stock. In re Metropolitan El. Ry. Co., 12 N. Y. S. 506; In re Jones, Id.; In re New York El. R. Co., Id.; In re Clarkson, Id.

A federal circuit court, which has obtained possession of the property of an insolvent corporation in proceedings instituted against it by its creditors, and which has been directed by the United States supreme court to make a distribution of such property among the creditors in a specified manner, does not lose its jurisdiction by the dissolution of the corporation and the appointment of a receiver by a state court; nor do such proceedings in the state court necessitate a revival of the suit in the federal court. Lake Superior Iron Co. v. Brown, Bonnell & Co., 44 F. 539.

1 2 Kyd on Corp. 503; Rex v. Emery, 2 T. R. 397, 399.

2 Platt v. Archer, 9 Blatchf. 559. But see Hart v. Boston, etc., R. R. Co., 40 Conn. 524.

8 Fisk v. Un. Pac. R. R. Co., 10 Blatchf. 518.