- Obligations and covenants running with the property.

- Consolidation or agreement to assume liabilities as creating lien.
- Unrecorded mortgages.

- Extent of mortgage lien.

- Priorities.

§ 4736. Regulation of liability by statute-In general.

§ 4737. § 4738. § 4739. § 4740.

Statutes continuing existence of constituent companies.

- Effect of taking judgment against constituent company.
- Construction of statute as including liability for torts.
- Changing statutory liability by agreement.

§ 4741. Special agreement to pay or assume liabilities—In general.

§ 4746. Where new corporation created by consolidation-In general.

§ 4747. — Liability for torts.

§ 4748. — Liability as limited to value of property received.

§ 4749. - Effect of taking renewal notes.

§ 4750. In case of statutory merger.

§ 4751. In case of mere purchase or transfer of property of another company

Where consideration for transfer is shares of stock in transferee company.

§ 4755. § 4756.

- Where transferee takes with notice of claims.

§ 4757.

§ 4758.

§ 4759.

- Property as subject to equitable lien.

Liability as limited to value of property received.

- Personal liability of officers.

§ 4760. In case identity of corporation is unchanged.

§ 4761. In case of stock control of another company.

§ 4762. In case of lease of all the property.

§ 4763. Liability of constituent or merged or selling companies.

VII. RIGHTS AND LIABILITIES OF ASSENTING STOCKHOLDERS

4764. In general.

4765. Rights as dependent upon statute and consolidation agreement-General rule.

- Agreement to exchange stock.

§ 4767. Rights of holders of unexchanged stock.

§ 4768. Contract to exchange bonds for stock.

4769. Prior rights as to dividends.

84770. Distribution of stock as dividend.

4771. Rights as to assets not taken over.

4772. Consent of transferrer stockholder as binding on transferee. 4773. Right to rescind.

4774. Liability on subscription to stock.

4775. Liability for debts of the corporation.

VIII. EFFECT OF UNAUTHORIZED, IRREGULAR OR FRAUDULENT CON-
SOLIDATION OR COMBINATION

4776. Rights of public.

$4777. Rights of third persons.

4778. Rights of creditors.

§ 4779. Rights of consenting stockholders-In general.

4780.

Recovery by stockholder of stock delivered under illegal contract.

84781. Rights of dissenting stockholders.

4782. Rights of consolidated company. 4783. Rights of constituent companies.

§ 4784. Collateral attack.

4785. General rule.

IX. DE FACTO CONSOLIDATED CORPORATIONS

4786. Where there is no legislative authority for consolidation-In general. § 4787. Attempted consolidation as a dissolution.

§ 4788. Where there is legislative authority for consolidation-In general. § 4789. - Power to enforce subscriptions to stock.

4790. In general.

X. RIGHTS OF DISSENTING STOCKHOLDERS

4791. Injunction against consolidation.

4792. Grounds for enjoining or setting consolidation aside-General rule.

§ 4793. - Fraud or unfairness.

§ 4794.

- Effect of delay in suing.

§ 4795. Jurisdiction, parties and procedure in actions to prevent or set aside

consolidation.

4796. Rights against consolidated company-In general.

$ 4797.

§ 4798.

4799.

As dependent on consolidation agreement.

Action for value of shares.

Statutory proceedings for appraisement of value of stock.

4800. Rights against corporate officers.

§ 4801. Effect on subscription to stock.

XI. REMEDIES AND PROCEDURE RELATING TO ACTIONS BY OR AGAIN ST

COMPANIES

§ 4802. Remedies of creditors where transfer of property is fraudulent. 4803. Right of creditors to sue constituent corporations after consolidation. 4804. Actions against consolidated or purchasing corporation-General rules.

4805. Liability as enforceable at law or in equity.

§ 4806. — Right to follow assets into hands of consolidated company.

4807. Pleading.

§ 4808. Joinder of old and new corporation as defendants. 4809. Actions by consolidated or purchasing company.

4810. Actions by constituent or selling company.

4811. Effect of consolidation or merger while action is pending.

4812. Mode of enforcing liability of purchasing company where there is no

consolidation.

4813. Evidence of consolidation and presumptions in favor of.

XII. CONSOLIDATION OF CORPORATIONS CREATED BY DIFFERENT STATES

§ 4814. General considerations.

$4815. Power to consolidate.

4816. Validity of statutes authorizing consolidation.

§ 4817. How authority conferred.

4818. Proceedings to consolidate.

4819. Consolidation as creating new corporation.

4820. Power to transact business in each of states-In general.

$ 4821. - Power to hold meetings in any of the states.

4822. Control by courts of the respective states.

§ 4823. Corporation as domestic one in each of states-General rule. 4824.

§ 4825.

- Legislative control where power reserved in one state to amend or repeal charter.

Particular statutes of state as applicable thereto.

§ 4826. Incorporation fees and taxation of corporation. 4827. Jurisdiction of courts over actions-General rules. § 4828. Foreclosure suits.

§ 4829. When consolidation takes effect.

§ 4830. Judgment in one state as conclusive everywhere. 4831. Effect of injunction in one state.

I. GENERAL CONSIDERATIONS

§ 4660. Nature of combination and scope of chapter. A combination of two or more corporations may take place in various ways, and may result either in the dissolution or practical extinction (1) of one of the combining corporations or (2) of all the combining companies, and either (a) the creation of a new corporation or (b) the continued and enlarged existence of one of the companies and the dissolution or practical extinction of the others. Sometimes one company goes out of existence, in other cases it still continues to do business as a subsidiary corporation, and in still other cases it retains its corporate existence but is a mere shell and does no business. The combination may be effected by the creation of a holding

"" in the case

1 The word "successor, of corporations, ordinarily indicates a statutory succession. Automatic Strapping Mach. Co. v. Twisted Wire & Steel Co., 159 N. Y. App. Div. 656, 144 N. Y. Supp. 1037.

A mere agreement that earnings shall be pooled and, after expenses are

paid, net earnings shall be divided in certain proportions, the corporations keeping their property distinct, constitutes rather a combination than a partnership. White Star Line v. Star Line of Steamers, 141 Mich. 604, 113 Am. St. Rep. 551, 105 N. W. 135.

company, a sale of all the property of one corporation to another, a lease of all the property of one corporation to another, a statutory consolidation, or a statutory merger, or, in effect, by stock control of one company by another or by other like means. Such combinations are divisible into what are known as (1) consolidations, strictly speaking, (2) mergers, and (3) other combinations. For the most part this chapter is limited to consolidations (using the word in its strict legal sense) and mergers, although it is necessary to consider herein to some extent what is in effect a consolidation but is not strictly so, i. e., the purchase by one company of all the property of another company without taking any steps to consolidate or merge the two corporations as provided for by statute. In these cases, the important questions which arise include those as to (1) the po wer to combine, (2) the procedure to effect a combination, (3) the rights of stockholders in connection with the combination, (4) the status of the combining companies and the new company, if any, after the combination, (5) the rights and powers of the surviving or new company, (6) the liabilities of the surviving or new company to the creditors or persons having claims against the other combining corporations, and (7) the procedure in relation to actions by or against the new or surviving corporation.

The power of a corporation to sell all its property, as against the objection of minority stockholders, has been considered in a preceding chapter, as has the power of a public service corporation to dispose of all of its property, the power of a corporation to lease all its property, and the power of a corporation to take and hold stock in another company.5

Where a company conveys all its property to a new corporation formed to take over the business of the former, or under circumstances warranting the conclusion that the new company is merely a continuation of the old, there is a reorganization rather than a consolidation or merger, and the effect thereof will be considered in the chapter on reorganization.6

Whether a consolidation is in violation of federal or state antitrust acts is considered in another chapter.7

§ 4661. What constitutes consolidation-In general. The consolidation of corporations means, generally, the combination of two or

2 See §§ 1203-1215, supra.

3 See §§ 1216-1222, supra.

4 See $8 1235-1240, supra.

5 See §§ 1116-1133, supra.

6 Infra, Chap. 61.

7 Supra, Chap. 54.

more corporations of the same or different states, by an agreement between them, under legislative authority,10 by which their rights, franchises, privileges and property are united, and become the rights, franchises, privileges and property of a single corporation, composed generally, although not necessarily, of the stockholders of the original corporations.11 The corporation resulting from the consolidation is called the consolidated corporation, and the original corporations are called the consolidating or constituent corporations. Ordinarily, the consolidating corporations are dissolved by the consolidation, and cease to exist, and an entirely new and distinct corporation is created as of the time of the consolidation,12 and, according to the later and better considered authorities, a consolidation is limited to combinations of two or more corporations creating a new corporation as distinguished from a merger by one company absorbing another without the creation of any new corporation.13

A consolidation of two companies is not constituted by one bank transferring its depositors' accounts to another bank and borrowing money from such other bank by pledging its assets to pay its depositors.14 And an agreement, with the consent of stockholders, whereby one company assumes the business of the latter, is not a consolidation.15 Likewise, business arrangements with other railroad com

8 See §§ 4814-4831, infra, as to the consolidation of corporations of dif ferent states.

Agreement, see § 4690 et seq.,

infra.

10 See §§ 4670-4684, infra.

11 Atlantic & G. R. Co. v. Georgia, 98 U. S. 359, 25 L. Ed. 185; Wasley v. Chicago, R. I. & P. R. Co., 147 Fed. 608; Chicago, S. F. & C. Ry. Co. v. Ashling, 160 Ill. 373, 43 N. E. 373; McMahan v. Morrison, 16 Ind. 172, 79 Am. Dec. 418; People v. New York, C. & St. L. R. Co., 129 N. Y. 474, 15 L. R. A. 82, 29 N. E. 959. See also Kent v. Common Council City of Binghamton, 40 N. Y. Misc. 1, 81 N. Y. Supp. 198.

12 Atlantic & G. R. Co. v. Georgia, 98 U. S. 359, 25 L. Ed. 185; McMahan v. Morrison, 16 Ind. 172, 79 Am. Dec. 418; People v. New York, C. & St. L. R. Co., 129 N. Y. 474, 15 L. R. A. 82, 29 N. E. 959.

See also § 4700, infra.
13 See § 4662, infra.

14 Overstreet v. Citizens' Bank, 12 Okla. 383, 72 Pac. 379.

It is hardly necessary to state that a pledge of part of its assets by a bank to another bank to secure the latter against loss under its agreement to pay the depositors of the former, does not constitute a consolidation. La Rue v. Bank of Columbus, 165 Ky. 669, 178 S. W. 1033.

15 Palmer v. Bosley (Tenn. Ch. App.), 62 S. W. 195.

An agreement entered into by two building associations that one take over the business of the other to the extent that the stockholders and borrowers of the association whose business is so assumed are willing does not necessarily constitute a consolidation of the two associations. Palmer v. Bosley (Tenn. Ch. App.), 62 S. W. 195.