than a majority, such as two-thirds, three-quarters, or the like. § 4691. Contents of the articles or agreement. The consolidation or merger agreement must contain the matters required by the governing statute. If the statute merely confers the power to consolidate, without prescribing any mode of effecting consolidation, the consolidating corporations may agree upon any terms they may see fit, provided they are not unlawful. Statutory power to consolidate with other companies "upon such terms as they may agree 6 See § 4685, supra. 7 The agreement must state matters required by the statute to be stated, as the number and residence of the new directors, etc. State v. Vanderbilt, 37 Ohio St. 590. Where an agreement of consolidation is duly signed and sealed after the meetings of the stockholders of both companies have been held as required by the statute, and the consolidation has been ordered, it is not invalid because it bears a date prior to such meetings. Wells v. Rodgers, 60 Mich. 525, 27 N. W. 671. In some states, the agreement must prescribe the terms and conditions of the merger or consolidation, the mode of carrying it into effect, the name of the new corporation, the number of directors who shall manage its affairs, the names and postoffice addresses of the directors for the first year, the term of its existence, the name of the town or towns, county or counties, in which its operations are to be carried on, the name of the town or city and county in which its principal place of business is to be situated, the amount of its capital stock, which shall not be larger in amount than the fair aggregate value of the property, franchises and rights of such corporations, and the number of shares into which the same is to be divided, the manner of distributing such capital stock among the holders thereof, and if such corporations, or either of them, shall have been organized for the purpose of carrying on any part of its business in any place out of the state, the agreement shall so state, with such other particulars as they may deem necessary. 8 Dimpfel v. Ohio & M. Ry. Co., 9 Biss. 127, Fed. Cas. No. 3,918. Under a statute authorizing consolidation of companies and authorizing corporations to enter into agreements specifying the terms and conditions of the consolidation, it is competent for an agreement to provide that the consolidated company, when formed, shall be free from debt, and that of the stock of the new companies passing to one of the constituent companies a sufficient portion shall be sold to pay the indebtedness of that company and the remainder distributed among the stockholders thereof. Cleveland City Ry. Co. v. First Nat. Bank, 68 Ohio St. 582, 67 N. E. 1075. Upon consolidation, one corporation to take the property of the other and issue certain stocks and bonds in payment therefor with provision for the retiring of certain bonds of the corporation absorbed and the disposition of any surplus remaining there from among the stockholders of the constituent corporations, there was held to be a valuable consideration for the disposition of the surplus. Read v. Citizens' St. R. Co., 110 Tenn. 316, 75 S. W. 1056. upon" simply means such terms as may be agreed upon "consistent with the law as announced in their charters or otherwise."9 And where the consolidation may be on such terms as may be "mutually agreed upon," a dissenting stockholder cannot object on the ground that the consolidation agreement reduces the amount of capital stock one-third, at least where the stock of the constituent companies had been copiously watered.10 A consolidation agreement is illegal where one company was to issue stock worth a certain sum in payment for stock of the other company which was worth much less, where a statute limits an original issue of stock for property purchased to the actual value of such property.11 In some states, the agreement may provide for the period of the corporate life of the consolidated company, without regard to the restricted life of either of the constituent companies.12 It has been held that a consolidation agreement fixing the number of directors for the new corporation does not necessarily prevent a subsequent reduction in the number of directors by the consolidated company.13 § 4692. Construction of articles or agreement. The construction of consolidation agreements as between the parties thereto is governed by no special rules.14 They are to be construed the same as other contracts, with due consideration to all the negotiations leading up thereto, their subject-matter, and the end to be accomplished.15 9 Adams v. Yazoo & M. Val. R. Co., 77 Miss. 194, 60 L. R. A. 33, 28 So. 956, 24 So. 200, 317, aff'd 180 U. S. 1, 45 L. Ed. 395. These words "perhaps appear substantially in all grants of power to consolidate railroad or other corporations. They have no magic in them. They are plain everyday phrases, and relate only to the mere administrative details attending the consolidation of corporations." Adams v. Yazoo & M. Val. R. Co., supra. 10 Thomson v. Indiana Union Traction Co., 183 Ind. 690, 110 N. E. 121. 11 Strickland v. National Salt Co., 77 N. J. Eq. 328, 76 Atl. 1048. 12 New York Cent. & H. River R. Co. v. Yonkers, 103 N. Y. Supp. 252. 13 Bond v. Atlantic Terra Cotta Co., 137 N. Y. App. Div. 671, 122 N. Y. Supp. 425, rev'g on this ground 66 14 Logan v. Simpson, 60 N. Y. App. Div. 617, 70 N. Y. Supp. 86. A consolidation certificate, duly filed, will not be deemed affected or varied by a consolidation plan issued prior to the consolidation setting forth the amount of capital stock for which consolidation stock deposited would be canceled. State v. Consolidated Gas, Elec. Light & Power Co., 104 Md. 364, 65 Atl. 40. 15 In re Myers' Estate, 238 Pa. 195, 86 Atl. 89. But it has been held that effect must be given to an agreement, as to whether a new corporation is created, according to the legislative intent, regardless of the form and language of the agreement to combine. Chicago Memoranda of agreement referred to and made a part of the consolidation agreement must be construed with the latter as one agreement.16 If provisions in a consolidation agreement are not severable, then of course the invalidity of one provision invalidates the entire agreement.17 § 4693. Authentication of agreement. It has been held that a consolidation is not invalid because the agreement of consolidation has no certificate upon it by the secretaries of the several companies that it has been accepted.18 § 4694. Filing of agreement. The articles or agreement having been adopted by the stockholders, and having been duly authenticated, the next step is to file the articles or agreement, or a certified copy thereof, or a certificate of consolidation, in the office of the secretary of state or with some other officer, as required by statute,19 Title & Trust Co. v. Doyle, 259 Ill. 489, 47 L. R. A. (N. S.) 1066, 102 N. E. 790. 16 Cleveland City Ry. Co. v. First Nat. Bank, 68 Ohio St. 582, 67 N. E. 1075. 17 Miller v. Chicago & A. R. Co., 193 Fed. 41. 18 Phinizy v. Augusta & K. R. Co., 62 Fed. 678. 19 Indiana. State v. Chicago & E. I. R. Co., 145 Ind. 229, 43 N. E. 226. Michigan. Peninsular Ry. Co. v. Tharp, 28 Mich. 506. Nebraska. Trester v. Missouri Pac. R. Co., 33 Neb. 171, 49 N. W. 1110. Ohio. Mansfield, C. & L. M. R. Co. v. Brown, 26 Ohio St. 223. Pennsylvania. Com. v. Atlantic & G. W. Ry. Co., 53 Pa. St. 9. If the statutes permit a sale of the corporate property with the consent of a certain per cent of its capital stock, articles of incorporation authorizing a sale with the consent of a smaller per cent of the capital stock, may, it has been held, be rejected by the secretary of state, and he cannot be compelled to file such articles. People v. Whalen, 56 N. Y. Misc. 278, 106 N. Y. Supp. 434, aff'd 119 N. Y. App. Div. 749, 104 N. Y. Supp. 555. A statutory provision requiring a copy of the resolution uniting railroad companies to be filed in the office of the recorder of each county through which the road extends is held, in Indiana, to relate only to the union of two roads under a common name for the purposes of operation within the state and not to a consolidation and merger of the capital stock of the corporations. Smith v. Cleveland, C., C. & St. L. R. Co., 170 Ind. 382, 81 N. E. 501. In Pennsylvania, the certificate of merger need not be recorded in the office of the recorder of deeds. Keller v. Riverton Consol. Water Co., 34 Pa. Super. Ct. 301. In Indiana, by statute, a consolidated company may be compelled to file its articles of incorporation. Chicago & E. I. R. Co. v. State, 153 Ind. 134, 51 N. E. 924. Failure to file does not affect rights previously acquired. Atlantic & P. R. Co. v. St. Louis, 66 Mo. 228. much the same as original incorporation papers are required to be filed.20 Such filing, where required by statute, is necessary to a valid consolidation,21 and the filing makes the new company an existing corporation.22 § 4695. Payment of incorporation fees. As in case of an original corporation, 23 incorporation fees must generally be paid the same as in case of any other company, although of course each case is 20 See §§ 215-224, supra. 21 Under an act authorizing consolidation of corporations, and providing that the agreement of consolidation, or a certified copy thereof, should be filed in the office of the secretary of state, and that it should from thence be deemed the agreement and act of consolidation," it was held that such filing was essential to a valid consolidation. Com v. Atlantic & G. W. R. Co., 53 Pa. St. 9. Where corporations, however, were consolidated under such a statute, and a subscription was made after the agreement for consolidation, but before the certificate or agreement was filed in the office of the secretary of state, the subscription was held valid. McClure v. People's Freight Ry. Co., 90 Pa. St. 269. Failure to file resolution was held not fatal where articles were filed, in Leavenworth County Com'rs v. Chicago, R. I. & P. R. Co., 134 U. S. 688, 33 L. Ed. 1064, aff 'g 25 Fed. 219. 22 Com. v. Atlantic & G. W. R. Co., 53 Pa. St. 9. 23 See § 225, supra. 24 State v. Lesueur, 145 Mo. 322, 46 S. W. 1075; People v. Rice, 68 Hun (N. Y.) 24, 22 N. Y. Supp. 631; People v. Rice, 57 Hun (N. Y.) 486, 11 N. Y. Supp. 249, aff'd 128 N. Y. 591, 28 N. E. 251; Ashley v. Ryan, 49 Ohio St. 504, 31 N. E. 721, aff'd 153 U. S. 436, 38 L. Ed. 773, where consolidation was of domestic and foreign corporation. The state cannot recover the fees VII Priv. Corp.-64 24 or tax unless the agreement or certificate is filed, and it is not filed where the agent of the companies, upon applying to the secretary of state to file the same, and being informed of the amount required to be paid, refuses to pay the same, and carries the papers away with him, with the consent of the secretary of state or his deputy. State v. Chicago & E. I. R. Co., 145 Ind. 229, 43 N. E. 226. In Illinois, the certificate of the consolidation proceeding must be filed with the secretary of state and the same fees paid as upon the organization of a new company notwithstanding the constituent companies have paid their incorporation fees. W. Scheidel Co. v. Rose, 242 Ill. 484, 90 N. E. 221, and see infra, this section. Fecs must be paid for the issuance of stock by the consolidated company as provided for by statute. New York Cent. R. Co. v. Stevenson, 277 Ill. 474, 115 N. E. 633. In Indiana, fees must be paid on filing the articles of incorporation of consolidated companies the same as in the case of other corporations. Chicago & E. I. R. Co. v. State, 153 Ind. 134, 51 N. E. 924; State v. Chicago & E. I. R. Co., 145 Ind. 229, 43 N. E. 226. In New York, a statute requiring payment of a tax on its capital stock, upon the filing of incorporation papers, by "every corporation incorporated by or under any general or special law of the state,'' requires payment of such a tax by a new cor governed by the wording of the particular statute in the state where the papers are sought to be filed.25 In many cases, the question largely depends, at least as to the amount of the fee, on whether there is a consolidation creating a new corporation, in which case the fee payable on original incorporation must generally be paid,26 or whether there is a mere merger by which no new corporation is created but which continues in existence the absorbing corporation, in which case no fee is payable, or at least no fee except on the amount of the increase in stock.27 But in determining whether a new company is created, it is generally held that the terms of the governing stat ute, rather than the terms of the agreement for consolidation or merger, control.28 No charter fee is payable upon the consolidation of several existing corporations, where the consolidation is illegal for want of legislative authority.29 Under a statute providing that every new corporation shall pay to the state a bonus of a certain per cent on the amount of capital poration formed by consolidation of pre-existing corporations, although each of them may have paid such a tax upon its own incorporation. People v. Rice, 57 Hun (N. Y.) 486, 11 N. Y. Supp. 249, aff'd 128 N. Y. 591, 28 N. E. 251. Compare People v. Rice, 66 Hun (N. Y.) 130, 21 N. Y. Supp. 48, 138 N. Y. 614, 33 N. E. 1083. In Ohio, under a statute requiring the payment of a fee to the secretary of state for filing articles of incorporation or consolidation, the fee is payable upon the filing of articles of consolidation between a corporation of the state and a corporation or corporations of another state, as well as in the case of consolidation of corporations of the state. Ashley v. Ryan, 49 Ohio St. 504, 31 N. E. 721, aff'd 153 U. S. 436, 38 L. Ed. 773. 25 New York Cent. R. Co. v. Stevenson, 277 Ill. 474, 115 N. E. 633; People v. New York, C. & St. L. R. Co., 129 N. Y. 474, 15 L. R. A. 82, 29 N. E. 959, rev'g 61 Hun 66, 15 N. Y. Supp. 635, consolidation of domestic and foreign corporation. Statute providing that three or more "persons" may form a corporation does not apply to a consolidation, since a corporation is not a person within such a statute. State v. Rutland Railway, Light & Power Co., 85 Vt. 91, Ann. Cas. 1914 A 1305, 81 Atl. 252. In Kentucky, a consolidated company, with certain exceptions as stated in the statute, is not chargeable with an organization tax. Louisville Gas & Electric Co. v. Bosworth, 169 Ky. 824, 185 S. W. 125. 26 This is so although the consolidation agreement is worded as a merger where there is in reality a consolidation rather than a merger because of the terms of the statute. Chicago Title & Trust Co. v. Doyle, 259 Ill. 489, 47 L. R. A. (N. S.) 1066 with note, 102 N. E. 790. 27 Chicago & E. I. R. Co. v. Doyle, 256 Ill. 514, 100 N. E. 278. 28 See § 4700, infra. 29 State v. Rutland Railway, Light & Power Co., 85 Vt. 91, Ann. Cas. 1914 A 1305, 81 Atl. 252. |