emption or immunity. See also Picard v. Tennessee, etc., Railroad, 130 U. S. 637.

Upon the other hand, it was held in Tennessee v. Whitworth, 117 U. S. 139, that the right to have shares in its capital stock exempted from taxation within the state is conferred upon a railroad corporation by state statutes granting to it "all the rights, powers and privileges" conferred upon another corporation named, if the latter corporation possesses by law such right of exemption, citing in support of this principle a number of prior cases. See also Wilmington and

Weldon Railroad v. Alsbrook, 146 U. S. 279, 297.

But the decisive answer to this objection is that the legislature had no power, in 1869, to extend to a new corporation created by the consolidation an exemption contained in an act passed in 1857, before the constitution was adopted, and hence that, under the terms of this act, we can not hold that immunity from taxation passed as a franchise or privilege to the consolidated corporation. The construction claimed by the defendant would be directly in the teeth of the constitutional provision that no property shall be exempted from taxation. While, as heretofore observed, an exemption from taxation contained in a charter previously granted could not be taken away by this constitutional provision without the impairment of the obligation of a contract, it doubtless applies to all corporations thereafter formed either by original charter or by the consolidation of prior corporations under the act of 1869.

Affirmed. Harlan and Brewer, JJ., dissent.

Note. See note at end of section 283, infra, Nos. 1, 4 and 5; 1901, Vicksburg, etc., Tel. Co. v. Citizens' Tel. Co., 79 Miss. 341, 89 Am. St. R. 656, 30 So. 725.

Sec. 287. (d) Effect of consolidation upon creditor's rights.

COMPTON v. RAILWAY COMPANY.1

1888. IN THE SUPREME COURT OF OHIO. 45 Ohio State Reports 592-625.

[In 1862 the Toledo and Wabash Railway Company, formed by the consolidation of a road in this state with one in the state of Indiana, issued $600,000 of what were termed convertible equipment bonds, payable in 1883, and bearing interest at the rate of seven per cent., payable annually. It operated its road until 1865, when it was consolidated with certain roads in the state of Illinois, the new company being called the Toledo, Wabash and Western Railway Company. It was stipulated in the agreement forming the basis of the consolidation that these equipment bonds should be "protected" by the new company at their maturity. In 1873 the last-named company, continuing to own and operate its road, issued certain bonds amounting to $5,000,000, and secured the same by a mortgage upon all its 1 Statement of facts abridged, arguments and part of opinion omitted.

property. Under proceedings begun in 1875 for the foreclosure of this mortgage in the courts of Ohio, Indiana and Illinois, the road was sold in 1877 to one Ellis and two others associated with him, it being specially provided in the decree rendered in the court of this state, the common pleas of Lucas county, that the sale should be made "without prejudice to any claim which may be made by the holders" of the above-named equipment bonds. The owner of the road at the commencement of this suit, The Wabash, St. Louis and Pacific Railway Company, derives its title from Ellis and his associ

ates.

The case, after judgment for plaintiff in the common pleas court, was appealed by the defendants to the district court, where it was reserved for decision to the supreme court upon an agreed statement of facts.]

MINSHALL, J. The principal grounds upon which the plaintiff asserts his right to relief are (1) the provisions of the statute under which the proceedings in consolidation were had; (2) the stipulation in the agreement forming the basis of the consolidation; and (3) the mortgage executed by the new company in 1867, known as the consolidated mortgage.

(1) The bonds owned by the plaintiff, amounting at their face value to $150,000, were issued by the Toledo and Wabash Railway Company in 1862, were unsecured by mortgage on the property of the company, and the entire series, of which they were part, were denominated convertible equipment bonds, and amounted to $600,000, payable in 1883, bearing interest at the rate of 7 per cent., payable semi-annually, with the usual coupons attached. The company had been formed by the consolidation of the road of a company in Ohio with one of a company in Indiana, under the laws of these states, and its road extended from Toledo in the former, to State Line city in the latter, state. It operated its road until in 1865, when it was consolidated with certain other roads in the state of Illinois, the new company thus formed taking the name of the Toledo, Wabash and Western Railway Company.

The consolidation was had under the laws of the several states in which the constituent roads were located, the statute in this state applicable to the transaction being the act of April 10, 1856 (1 S. & C. 327). The act required that an agreement forming the basis of the consolidation should be presented to the stockholders of the respective companies at separate meetings called for that purpose upon due notice; and then provided that upon its adoption by a vote of twothirds of the stockholders, the filing of the agreement with the requisite certificate of its adoption, by the secretary of each company, in the office of the secretary of state, and the election of directors by the stockholders of the new company, the consolidation should be deemed complete, and that all the rights, privileges and franchises and all the property of every description "of each of the corporations, parties to the same shall be deemed to be transferred and vested in such new corporation without further act or deed," with this express

proviso, "that all rights of creditors, and all liens upon the property of either of said corporations, shall be preserved unimpaired, and the respective corporations may be deemed to be in existence to preserve the same; and all debts, liabilities and duties of either of said companies shall thenceforth attach to said new corporation and be enforced against it to the same extent as if said debts, liabilities and duties, had been contracted by it." Whilst the Indiana statute is not so definite in its provisions as to the rights of creditors of the constituent companies as our own, yet an effect has been given it by the construction of its courts that is substantially the same. McMahan v. Morrison, 16 Ind. 172; Indianapolis, C. & L. R. Co. v. Jones, 29 Ind. 465.

What, then, is the sum of the rights of creditors that, as against proceedings had under it, are to be preserved unimpaired? It is true that, ordinarily, a creditor has no right that will interfere with that of his debtor to sell and dispose of his property for a valuable consideration, unless he has taken the precaution to acquire some lien upon it, by mortgage or otherwise, as a security in his own behalf. As a rule the right of an unsecured creditor is confined to the personal obligation and the undisposed of property of his debtor; still it is not strictly accurate to say that such creditor has no claim upon the property of his debtor, for in one sense all the property owned by a debtor, unless exempt by statute from sale on execution, is subject to the claims of his creditors, and he can not dispose of it, unless for a valuable consideration, so as to defeat this right. It is upon this principle that relief is constantly afforded creditors in equity against conveyances in fraud of their rights. Hence the right of a creditor, though unsecured, to maintain an action for a personal judgment, is not the sum of his rights. These may arise from a variety of circumstances, conferring not merely a right to a personal judgment for money, but to have it satisfied from certain specific property formerly owned by the debtor, irrespective of its acquisition by others. The decease of the debtor, assignments made by him, his bankruptcy, loss of the power to own and acquire property, as, for example, the dissolution of a corporation, or the civil death of the debtor, are some of the most frequent instances in which this right of the creditor has been recognized.

But the question presented here is not general, but special: It is, what are the rights of unsecured creditors of an incorporated railway company whose entire road and property have been transferred to a new company, formed by its consolidation with other roads, under the laws of this state? The general doctrine that all the property of a corporation is a trust fund for its creditors, and that upon its dissolution they have the right to require that it be applied in payment of their claims, is not controverted by the defendants. There seems to

be no conflict in the authorities as to this, and that the right gives rise to an equitable lien upon the property in favor of the creditor that is superior to the claims of every one but purchasers for value without notice. Story Eq. Juris., § 1252; 2 Kent Com., 307, and note b; Mor.

Priv. Cor., §§ 780, 1035; Mont. and West Point R. Co. v. Branch, 59 Ala. 153.

Nor can there be much question but that by consolidation the prior companies are extinguished for all purposes except to preserve the rights of their creditors, for which purpose they "may," in the language of the law, "be deemed to be in existence." The observation of Mr. Justice Swayne, in construing this statute in Shields v. Ohio, 95 U. S. 319, that "it was a condition precedent to the existence of the new corporation that the old ones should first surrender their vitality and submit to dissolution" is quite accurate.

It is, however, claimed by the defendants that no new rights are conferred by the statute upon creditors; that if they were unsecured before, they remain such after, the consolidation; and that the new company may deal with the property-may sell or mortgage it—as could have been done, and with like effect, by the former company had it continued the owner thereof. This argument is placed upon two grounds, (1) the assumption that the transaction is analogous to a sale, and (2) that such is the effect of the statute upon all contracts made subsequent to its passage. We will consider them seria

tim.

1. The first is, as we think, certainly erroneous. Whilst the transaction has some of the features, it is wanting in the essential elements of a sale. A sale implies a vendor and a vendee, and by it the former sells and transfers a thing that he owns to the latter for a price paid or to be paid to himself. The vendor parts with nothing but his property, and for it receives a quid pro quo. Such is not the case where companies are consolidated under this statute. It is true that the owner of each constituent road parts with its property. But it does much more; it not only parts with its property, but ceases to be a juristical entity, capable of owning or acquiring property. It does not, and could not, receive any consideration for the transfer, because it is extinguished and dissolved by the act of its stockholders in assenting to the proposed agreement. It is futile to urge that the consideration is received by the stockholders. They are not the corporation, nor do they represent it in its relation to its creditors. "An essential incident of corporations is that their rights are not vested in the aggregate of individuals, but in the ideal whole, regarded as distinct from the members of which it is composed." Per Mr. Poste in his edition of Gaius, 154. And see Bank of Augusta v. Earle, 13 Pet. 519, 587. There has been no relaxation of this principle in its application to the relation of an incorporated company to its creditors. It is the owner in law and equity of all its corporate property, and it, and not the stockholders, is the debtor in all corporate obligations. Mor. Priv. Corp., 2 ed., § 227. Moreover, in a consolidation of companies, the stockholders receive no part of the property or assets of their respective companies; these pass to the ownership of the new company. All that the stockholders of either of the old companies receive is stock in the new company in exchange for what they held in the former company. We must look elsewhere for the analogies

to the transactions whereby, through consolidation, a new company acquires the property of certain old ones. We are not without such analogies. They are to be found in the numerous instances in ancient and modern law, where, to use the terminology of the Roman civil law, a universitas juris is transferred. The term expresses the legal conception of a university or bundle of rights and liabilities, belonging to one person and constituting, as it were, his legal personality; and where these are transferred by one and the same act to another, the latter is said to acquire per universitatem, that is, he becomes clothed with the rights and legal duties of the individual to whose personality he succeeds. Among some of the leading instances of such acquisition are―(1) a succession to an inheritance by an heir-somewhat obscured in the common law by its division between the heir and the personal representative of the deceased (Maine Anc. Law, 180); (2) where, by adrogation, one not under power became the son of another, and the adrogator by the diminution of the status of the adrogatus, or adopted son, acquired his property and, by prætorian law, became liable for his debts to the extent of the property so acquired; (3) co-emption, where the husband acquired, by the marriage, the property of the wife, and by a remedy furnished by the prætor, was made liable for her debts in the same manner as in the case of adrogation. And in the common law may be suggested, not merely the case of an inheritance transmitted by the death of the ancestor, but also the estate of one regarded as civiliter mortus, which was transmitted and administered upon as that of a person in fact deceased. And the succession of an assignee in bankruptcy to the entire property of a bankrupt is, as observed by Sir Henry Sumner Maine, a modified form of a universal succession. And, he says: "Were it common among us for persons to take assignments of all a man's property on condition of paying all his debts, such examples would exactly resemble the universal successions known to the oldest Roman law." Maine Anc. Law, 180.

In all these cases the point most to be observed, is the extreme care of the law to secure the rights of creditors. The case of an inheritance is familiar and needs little or no comment-the creditors of the deceased are regarded as having a lien upon the property of the deceased, and this is secured to them through the methods of administration, and so in the case of those regarded as being civilly dead, for example in the case of a monk, the individual, in anticipation of becoming a "monk professed," could make a will and appoint his own executor, but if he did not, administration was awarded by the ordinary as upon the estate of one in fact deceased. 1 Bl. Com., 132.

For some reason, not well understood, neither the adrogator nor the husband in a marriage by co-emption was, by the ancient civil law, liable to creditors for the debts of the person thus reduced to his

But a remedy was provided at an early period through an action given by the prætor, in which, by a fiction, the former status of the debtor was deemed to continue, and this, like all fictions introduced to favor the remedy, could not be disputed, and preserved the