would have prevented them from becoming subject to the deed. So much of the chancellor's decree as relates to this matter is not

erroneous.

10. The cars and locomotives called "the Breed rolling-stock," were purchased or manufactured by Mr. Breed, and used by him on the railroad while it was in his possession under the lease to him embodied in "the Breed contract;" and we do not think the title to them had passed to the railroad company, when, in August, or September, 1870, he transferred them to the New York Guar anty and Indemnity Company. It was a provision of the Breed contract, that when Mr. Breed should return the railroad and other property received by him under the lease, a schedule should be made of the items and their appraised values, to be compared with the same as set forth in the similar schedule made when he received the property; and it was further agreed that, "in the second schedule, all property that may be returned, of like kind with that leased and set forth in the first schedule, will be listed and valued;" and the difference between the amounts of these values, if against the railroad company, was to be settled, as a part of its debt to Mr. Breed, by the delivery to him of securities of a kind specified in the contract. Mr. Breed was, also, according to the same instrument, entitled to keep and use the railroad and its appurtenances, and appropriate its revenues to the payment of its debt to him, until it was reduced to $500,000; which reduction was never made. The company owed him about $4,000,000, when, in the autumn of 1870, he turned over to it, and surrendered his right to keep and operate, the completed road; and before doing so, he expressly reserved, with the consent of the company, his title to this new rolling-stock, and they agreed to hire it from him, with a knowledge that he intended to transfer his interest in it to the guaranty company for the repayment of money it had advanced to aid him. The railroad company, also, afterwards hired this stock from the guaranty company, agreeing at the same time to buy it from that company, on terms which it never complied with. The conditions, therefore, never existed upon which title to this rolling-stock was to be vested in the railroad company, and the property to become subject to the mortgage trust deed of 1852. The chancellor's order, overruling the contrary finding of the register, was correct, and is affirmed.

11. The payments made by authority of the chancellor, to an amount between $8000 and $9000, to other railroad companies, of moneys due to and previously received for them, according to a necessary usage in the business of connecting railroads, was approved by this court, on the former appeal."To withhold the payment of these moneys," it was then said, "from the corporations for which they were collected, would have been a breach of trust; and probably it would have been resented, by the refusal

of those companies to keep up business relations with the defendant company, or the receivers; without which relations the business and receipts from the road would have been greatly diminished;" and in support of our approval we cited a ruling of Mr. Justice Bradley, on the circuit, in Cowdrey v. Galveston R. R. Co., 2 Woods, which allowed a rebate of freights for the purpose of obtaining custom. It may be, as contended, that the authority is not directly in point. But we think the principle upon which it was founded is applicable in this case. It was manifestly impor tant to the economical management of the railroad, with a view to preserve its value, and prevent the loss of its business, that good faith should be kept, in a trust of this kind, with those companies, by and over whose roads passengers and goods were transmitted to and from this railroad. The chancellor's ruling on this point is therefore again approved.

It is proposed in the following note to discuss the chief principles of law involved in the consolidation of railroad companies. The subject is an extremely interesting one, and is of growing importance. Most of the adjudications on the point have been rendered within the past twenty years. Hence the cases have been collected in few of the text-books, and it seems peculiarly desirable to present the readers of these Reports with a brief mention of the most important of them.

As a general rule corporations cannot consolidate without the consent of the legislature. State, ex rel., v. Bailey, 16 Ind. 46; Union Pass. Ry. Co. v. Continental Ry. Co., 11 Phila. 321.

This consent may be expressed either by a special clause in the charters of the consolidating companies or by a special act of assembly. The effect of the consolidation is in general to destroy the identity of the old companies and to constitute a new and distinct corporation. Shields v. Ohio, 95 U. S. 319; Atlantic and Georgia R. R. Co. v. Georgia, 98 U. S. 359. Where the consolidation of two distinct railroad companies is effected without the consent of a stockholder of either of them, it is said that such stockholder will be released from liability upon his contract of subscription. McCray v. Junction R. Co., 9 Md. 358; Booe v. Junction R. Co., 10 Md. 93; New Jersey Midland R. Co. v. Strait, 6 Vroom, 322; Clearwater v. Meredith, 1 Wall. 25.

It seems, however, that no such effect will be produced by the consolidation of companies owning connecting or intersecting lines. Sprague v. Illinois River R. Co., 19 Ill. 174; Hanna v. Cincinnati and Ft. Wayne R. Co., 20 Ind. 30. But see Tuttle v. Mich. A. R. Co., 35 Mich. 247.

Nor where the charter of the company to which the stockholder in question belongs has especially reserved to the legislature the power of consolidation. Bishop. Brainerd, 28 Conn. 289; Smith v. Boston and M. R., 6 Allen, 262; Scotland v. Thomas, 94. And even in that case, it seems that if the new corporation has entirely distinct purposes and powers from the old one, the stockholder will be in like manner relieved from liability. Kenosha R. and R. I. R. Co. v. Marsh, 17 Wisc. 13; Noesen v. Port Washington, 37 Wisc. 168; Perkins o. Ft. Washington, 37 Wisc. 177; Zabriskie v. Hackensack and N. Y. R. R. Co., 3 C. E. Green, 178.

Where two railroad companies have consolidated illegally, a stockholder in either of them, whose stock has been depreciated in consequence, may sue and recover from the consolidated company damages for his injuries. International and Gt. N. R. R. Co. v. Bremond, 53 Tex. 96. In general, however,

where two corporations have consolidated without legislative permission, this will be deemed an informality of which the State alone can take advantage by means of a quo warranto. Houston and Texas Central R. R. Co. v. Shirley, 54 Tex. 125.

Where one having a right to have certain bonds converted into others at the time of the consolidation of two companies, fails to do so and acquiesces in the consolidation, whereby such conversion becomes impossible, he will be held estopped from setting up the invalidity or illegality of the consolidation. Tagart v. N. Cent. R. R. Co., 29 Md. 557.

Where two corporations, one being exempt from taxation by its charter and the other not, are consolidated by virtue of a statute whereby in general terms the rights and privileges of the former companies are conferred upon the new one, said new corporation can claim exemption only to the extent of the property acquired by it from the exempted corporation. Chesapeake and Ohio R. Co. v. Virginia, 94 U. S. 718; Branch. Charleston, 92 U. S. 677; Central R. R. Co. v. Georgia, 92 U. S. 665; Delaware Railroad Tax, 18 Wallace, 206; Tomlinson v. Branch, 15 Wall. 460; Phila., Wilm. and Balt. R. R. Co. v. Maryland, 10 How. 376; State v. Comm'rs of Railroad Taxation, 8 Vroom, 240.

And not even then if the terms of the statute seem clearly to indicate that the legislative intent is to abolish the exemption. Maine Central R. Co. v. Maine, 96 U. S. 499.

And where, when the identity of a corporation was merged in the consolidated company, a constitutional provision was in force to the effect that all charters should be liable to legislative amendment, it was held that this provision would apply to the charter of the consolidated road, and that hence the legislature could not insert into such charter any clause investing the corporation with an irrepealable exemption from taxation. State v. Northern Cent. R. R. Co., 44 Md. 131; Shields v. Ohio, 95 U. S. 319.

But if the effect of the consolidation be not to destroy the old corporations and to create a new one, the grant of exemption to the corporation will continue and will not be affected by a statute reserving the power to amend, which took effect between the time when the grant was made and the time when the consolidation was effected. Central R. and B. Co. v. Georgia, 92 U.

S. 665.

In general a consolidated railroad company has the powers and rights of all the various corporations of which it may be composed. Marsh v. New York, etc., R. R. Co., 45 Conn. 199; Paine v. Lake Erie and Louisville R. R. Co., 31 Ind. 283.

It may accordingly enforce all debts and take advantage of all contracts belonging to the old companies. Where, therefore, a township has contracted to issue aid bonds to a railway company, and before the bonds are actually issued the company consolidates with another corporation, it has been held that the consolidated company may enforce the contract against the township. Atchison and Colorado, etc., R. R. Co. v. Phillips Co., Commrs., 25 Kans. 261; Niantic Savings Bank v. Douglas, 5 Ill. App. 579.

But where a railroad company is empowered by its charter to receive municipal subscriptions to aid it in constructing its road, and fails to avail itself of the privilege, and afterwards consolidates with another corporation, the consolidated company will not be held to have the power to receive such subscriptions. Wagner v. Meety, 69 Mo. 150.

In general a consolidated company is held to have assumed the liabilities of all the companies of which it is composed. Miller v. Lancaster, Coldw. 513; Columbus, etc., R. R. Co. v. Powell, 40 Ind. 37; Ind., Cin. and Lafayette R. R. Co. v. Jones, 29 Ind. 465; Northern Cent. R. R. Co. v. Drew, 3 Woods,

391.

The dissolution of the old companies does not extinguish their debts.

Powell. Northern Mo. R. R. Co., 42 Mo. 63. Such debts survive and may be enforced against the consolidated company.

Where two or more railroad companies are consolidated as far as the creditors of the original companies are concerned the consolidated company is successor to the old company, but in respect to the property of the other companies, it is a new and independent company, and such creditors have no claim against it upon their original contracts only by virtue of the assumption of the obligation of the old companies. Prouty v. Lake S. and Mich. S. R. Co., 52 N. Y. 363.

Where an act to promote the consolidation of two railroad companies provides that all statutory liens upon the property of the companies shall be postponed to mortgages given thereon by the consolidated company, and also that after consolidation the bonds held in both companies may be endorsed by the consolidated company, the provisions of such act cannot be enforced if the consolidation does not actually take place. Gibbes v. Greenville and Columbia R. R. Co., 13 S. C. 228.

A consolidated company is in like manner liable for all torts committed by the companies of which it is composed prior to the consolidation. Chicago, R. I. and P. R. Co. v. Moffitt, 75 Ill. 624; Coggin v. Central R. Co., 62 Ga. 685; New Bedford R. Co. v. Old Colony R. Co., 120 Mass. 397.

The mere leasing, however, of one railroad by another does not affect the identity of the companies. Hence in an action against the leasing road for a tort committed on the road leased, the fact that it was committed on such road should be alleged in the declaration. Central R. R. Co. v. Brinson, 64 Ga. 475.

Where suits are pending against a railroad company at the time of its consolidation with another company, such suits do not abate, but may be continued against the consolidated corporation. Balt. and Susq. R. R. Co. v. Musselman, 2 Grant's Cases (Pa.), 348.

It is, however, error to take judgment in such case against the consolidated corporation without having first formally made it a party defendant. Selma, Rome and Dalton R. R. Co. v. Harbin, 40 Ga. 706.

In a suit against a consolidated corporation to recover the amount of a dividend guaranteed by one of the former companies, it is error to join the officers and directors of the consolidated corporation as parties defendant. Chase v. Vanderbilt, 62 N. Y. 307.

And where two roads have consolidated, a bill in equity filed by a stockholder in one of the former companies in his capacity as stockholder in such company, has been held not to be maintainable. Ridgway v. Griswold, 1 McCrary, 151.

Where judgment has been obtained against a consolidated company and afterwards before execution issues the consolidation dissolves, the execution may be directed against either or both of the companies of which the consolidated corporation has been composed. Ketcham v. Madison, Ind. and Penn. R. R. Co., 20 Ind. 260.

See for construction of acts of consolidation in special cases, Black v. Delaware, etc., Canal Co., 7 C. E. Green, 130; Penn. R. R. Co. v. N. Y. and Long B. R. R. Co., 8 C. E. Green, 157.

Closely allied to the cases which have been just considered are those in which the status of railroad companies created by the laws of two or more States is discussed. There is a decided diversity of opinion in the courts of the United States as to what this status is.

According to some authorities two distinct and separate legal entities are to be regarded as having been called into existence. Ohio and M. R. R. Co. v. Wheeler, 1 Black, 286; Racine and M. R. Co. v. Farmer's Loan Co., 49 Ill. 331; Cram v. Farmer's Loan and Trust Co., 5 Rob. (N. Y. 226).

The better opinion, however, is that the effect of such concurrent legislation

1

1

is to constitute the same body a corporation of each several State from which it receives a charter. McGregor v. Erie R. Co., 88 Ill. 615; State v. Metz, 3 Vroom, 199; Quincy Bridge Co. v. Adams Co., 88 Ill. 615; Chicago and N. W. R. Co. v. Chicago and P. R. Co., 6 Biss. 219; Sprague v. Hartford, P. and F. R. Co., 5 R. I. 233.

It is clear both on principle and authority that a corporation of one State may constitute the corporation of another a body politic within its own limits. Balt. and Ohio R. R. Co. v. Gallahue, 12 Gratt. 655; Balt. and Ohio R. R. Co. v. Wightman, 29 Gratt. 431; Balt. and Ohio R. R. Co. v. Noell, 32 Gratt. 394; Goshorn v. Ohio Co., 1 W. Va. 308; Indianapolis and St. L. Co. v. Vance, 96 U. S. 450.

And in such case the results above indicated will of course follow. A company accepting such a charter does not forfeit its franchises in the State from which its original charter was derived, nor does it on the other hand relieve itself from any of its obligations to that State. Commonwealth v. Pittsburgh and C. R. Co., 58 Pa. St. 26.

Where a corporation is created by the concurrent legislation of two States, both charters will be liberally construed as a compact between the States intended to advance the interests of the citizens of both of them. Brocket v. Ohio and P. R. Co., 14 Pa. St. 241; Cleveland and P. R. Co. v. Speer, 56 Pa. St. 325; Union Branch R. Co. v. East Tenn. and G. R. Co., 14 Ga. 327; Covington v. Covington and C. Bridge Co., 10 Bush. 69.

From the cases above mentioned must be carefully distinguished those where a corporation of one State is merely invested by the legislature of another with the right of exercising its powers and franchises in such other State. This does not constitute such company a corporation of such other State. Wheeling. Baltimore, 1 Hughes, 90; Pomeroy v. N. Y. and N. H. R. R. Co., 4 Blatch. 120; Chicago and N. W. R. Co. v. Chicago and P. R. Co.. 6 Biss. 219; St. Louis, A. and T. H. R. Co. v. Indianapolis and St. Louis R. R. Co., 9 Rep. 103; Balt. and Ohio R. R. Co. v. Harris, 12 Wall. 65; Chicago and N. W. R. Co. v. Whitton, 13 Wall. 270; Balt. and O. R. R. Co. v. Cary, 28 Ohio St. 208; Erie R. Co. v. Stringer, 32 Ohio St. 498; State v. Del., L. and W. R. R. Co., 1 Vroom, 473, 2 Vroom, 531; Sprague v. Hartford, P. and F. R. Co., 5 R. I. 523; Dennistown v. N. Y. and Ñ. H. R. R. Co., 1 Hilt. 62.

A grant of authority to a foreign corporation to exercise its franchises, and to hold property in a State, does not confer jurisdiction on the courts of the foreign State as to such property. Thus where two corporations of different States are consolidated under lawful authority, one of which was subject in one State to a mortgage prior to such consolidation, the courts of the other State do not thereby acquire jurisdiction so as to enforce foreclosure of the mortgage. Eaton and H. R. Co. v. Hunt, 20 Ind. 457.

Where two corporations of different States are consolidated by virtue of acts of assembly of the two States, the consolidated company is subject to the control of each State as far as concerns its property and business therein. Peck v. Chicago and N. W. R. Co., 94 U. S. 164; and is to be treated in each as a domestic corporation. In re Sage, 70 N. Y. 220. Its property in each State is therefore subject to the jurisdiction of the courts of that State both as regards the appointment of receivers and otherwise. Taylor v. Atlantic and G. W. R. Co., 57 How. Pr. 9; Ellis v. Boston, H. and E. R. Co., 107 Mass. 1; Richardson v. Vt. and M. R. Co., 44 Vt. 613; In re United States Rolling Stock Co., 57 How. Pr. 16.

Where a railroad corporation created under an Illinois statute was consolidated with railroad companies of other States by virtue of an Illinois statute empowering it to effect such consolidation, it was held that the consolidated company was "incorporated under the laws of the State," within the meaning of the revenue acts of Illinois. Ohio and Miss. R. R. Co. v. Weber, 96 Ill.

443.