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stock which it is authorized to have, a consolidated company, it has been held, must pay such tax on all of its corporate stock which it is authorized to issue although part of it was to be cancelled after its issuance.30

§ 4696. Election of officers. Election of a board of directors of the consolidated corporation is sometimes made a condition precedent to the creation of a consolidated company.31 Ordinarily, however, they cannot be elected until after the articles of consolidation are filed.32

§ 4697. Curing defective proceedings. A defective consolidation or merger may be cured and rendered valid by legislative ratification or recognition.33

§ 4698. Enforcement of agreement. An agreement to consolidate will not be specifically enforced where uncertain as to important particulars.34 And injunction does not lie to restrain the breach of an agreement in a consolidation contract for the election of complainant as an officer of the new company, where he did not personally agree to serve the new company, for the reason that there is want of mutuality.35

IV. EFFECT OF CONSOLIDATION OR MERGER AS TO CREATING NEW CORPORATION AND DISSOLVING OLD ONES

§ 4699. General considerations. Three conditions may result from a combination of corporations. First, the corporate existence of each of the constituent companies may be continued.36 This is the result

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power of the legislature to provide for a combination of corporations without the dissolution of either of them, and it might call the combination a consolidation. The term "consolidation," however, cannot properly be applied to such a combination, unless it is so applied by the legis lature, for the term signifies "the act of bringing together and uniting several particulars, details, or parts into one body or whole" (Century Dict. & Cyc. "Consolidation"), and if two corporations enter into a combination, in which each continues its separate

generally where one company merely purchases or leases the property of another corporation, or obtains control of a majority of its stock, without any intent to merge or consolidate the corporations.37 Second, the agreement may result in the absorption of one or more companies into another so as to continue in existence only one of the companies and result in the extinguishment of the others. This is what is technically called a merger.38 Third, the combination may result in the formation of a new corporation as the successor of all the contracting parties. This is what is known, strictly speaking, as a consolidation.39 In determining which of these results follows in any given case it is necessary to consider the true intent and purpose of the contracting parties as expressed in the agreement, in the light of the statute under which the union is effected.40

§ 4700. Consolidation as creating new company-General rule. A consolidation, using the term in its strictly legal sense, always creates a new corporation, and this effect is usually produced by

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existence, there is not one body or whole, but two separate and distinct bodies.

37 See § 4709, infra.

Where a holding corporation negotiated a loan to obtain working capital for the corporations merged, one of the constituent companies, to which a portion of the money so raised was loaned, was properly chargeable with its proportion of the expenses incurred by the holding company in negotiating the loan. Dittman v. Distilling Co. of America, 64 N. J. Eq. 537, 54 Atl. 570.

38 See § 4662, supra. 39 See § 4661, supra.

40 Chicago & E. I. R. Co. v. Doyle, 256 Ill. 514, 517, 100 N. E. 278.

41 United States. Minneapolis & St. L. R. Co. v. Gardner, 177 U. S. 332, 44 L. Ed. 793; Keokuk & W. R. Co. v. Missouri, 152 U. S. 301, 38 L. Ed. 450; Atlantic & G. R. Co. v. Georgia, 98 U. S. 359, 25 L. Ed. 185; Maine Cent. R. Co. v. Maine, 96 U. S. 499, 24 L. Ed. 836; Shields v. Ohio, 95 U. S. 319, 24 L. Ed. 357; Clearwater v. Meredith, 1 Wall. 25, 17 L. Ed. 604; Ridgway Tp.

v. Griswold, 1 McCrary 151, Fed. Cas. No. 11,819.

Alabama. Alabama, T. & N. Ry. v. Tolman, 76 So. 381.

Arkansas. See St. Louis, I. M. & S. Ry. Co. v. Berry, 41 Ark. 509, aff'd 113 U. S. 465, 28 L. Ed. 1055.

California. See Market St. Ry. Co. v. Hellman, 109 Cal. 571, 42 Pac. 225.

Illinois. Chicago Title & Trust Co. v. Zinser, 264 Ill. 31, Ann. Cas. 1915 D 931, 105 N. E. 718; Chicago Title & Trust Co. v. Doyle, 259 Ill. 489, 47 L. R. A. (N. S.) 1066, 102 N. E. 790; W. Scheidel Coil Co. v. Rose, 242 Ill. 484, 90 N. E. 221; Ohio & M. R. Co. v. People, 123 Ill. 467, 14 N. E. 874; People v. Louisville & N. R. Co., 120 Ill. 48, 10 N. E. 657.

Indiana. Norton v. Union Traction Co. of Indiana, 183 Ind. 666, 681, Ann. Cas. 1918 A 156, 110 N. E. 113; Crawfordsville & S. W. Turnpike Co. v. Fletcher, 104 Ind. 97, 2 N. E. 243; McMahan v. Morrison, 16 Ind. 172, 79 Am. Dec. 418; State v. Bailey, 16 Ind. 46, 79 Am. Dec. 405.

Kansas. Kansas, O. & T. Ry. Co. v. Smith, 40 Kan. 192, 19 Pac. 636.

reason of express provisions to that effect in the consolidating statute.42 If a new corporation is not created thereby, then the combination is not, strictly speaking, a consolidation. This new corporation is an entity distinct from any of its constituents, although it takes over their assets and liabilities. For instance, the corporate

life is not the unexpired term of the constituent companies, but is the same as that of any other corporation.* 44

4.5

Now, there are decisions apparently contrary to what has just been stated, and which seem to hold that whether a new corpora tion is created by a consolidation depends upon the legislative intent as expressed in the statute. However, such decisions use the word "consolidation" in the broad sense as meaning any combination, and as so used the decisions are undoubtedly correct. For instance, the statute authorizing a combination of corporations may be so worded as to make one corporation survive and the other be absorbed by the survivor, in which case there is no new corporation created, but such a combination is not a consolidation, strictly speaking, but only a merger.46

Louisiana. Board of Administrators Charity Hospital v. New Orleans Gas-Light Co., 40 La. Ann. 382, 4 So. 433; Fee v. New Orleans Gas Light Co., 35 La. Ann. 413.

Maine. State v. Maine Cent. R. Co., 66 Me. 488.

Maryland. Diggs v. Fidelity & Derosit Co., 112 Md. 50, 72, 20 Ann. Cas. 1274, 75 Atl. 517; State v. Consolidated Gas, Elec. Light & Power Co., 104 Md. 364, 65 Atl. 40.

Massachusetts. Day v. Worcester, N. & R. R. Co., 151 Mass. 302, 23 N. E. 824; Hamilton Mut. Ins. Co. Hobart, 2 Gray 543.

V.

Michigan. Marquette, H. & O. R. Co. v. Langton, 32 Mich. 251.

Minnesota. Gardner v. Minneapolis & St. L. Ry. Co., 73 Minn. 517, 76 N. W. 282.

Mississippi. Adams v. Yazoo & M. Val. R. Co., 77 Miss. 194, 60 L. R. A. 33, 28 So. 956, 24 So. 200, 317.

Missouri. State v. Lesueur, 145 Mo. 322, 46 S. W. 1075.

New York. People v. New York,

C. & St. L. R. Co., 129 N. Y. 474, 15
L. R. A. 82, 29 N. E. 959.

North Carolina. Cheraw & S. R. Co. v. Commissioners of Anson, 88 N. C. 519.

Pennsylvania. Com. v. Atlantic & G. W. Ry. Co., 53 Pa. St. 9.

South Carolina. Charlotte, C. & A. R. Co. v. Gibbes, 27 S. C. 385, 4 S. E. 49.

Utah. Rio Grande Western Ry. Co. v. Telluride Power & Transmission Co., 16 Utah 125, 51 Pac. 146.

In case of consolidation of domestic and foreign corporation, see § 4819, infra.

42 See cases cited in preceding note. 43 See § 4665, supra.

44 See § 4702, infra.

45 Central Railroad & Banking Co. v. Georgia, 92 U. S. 665, 23 L. Ed. 757; Meyer v. Johnston & Stewart, 64 Ala. 603, 656; Chicago, S. F. & C. R. Co. v. Ashling, 160 Ill. 373, 43 N. E. 373; Crawfordsville & S. W. Turnpike Co. v. Fletcher, 104 Ind. 97, 2 N. E. 243.

46 See § 4662, supra.

§ 4701. As dependent upon intention of parties. If there is a statute authorizing a consolidation resulting in the creation of a new company, and there is no statute authorizing a mere merger, or if there is both a statute authorizing a consolidation and also one authorizing a merger, but a combination of corporations is attempted to be formed in pursuance of the consolidation statute, then a new corporation is created regardless of any provisions in the agreement to combine. In other words, what the effect is depends entirely upon the provisions of the statute authorizing the consolidation or merger, where the effect is stated in such statute, as it usually is, and it has been held that such intent as expressed in the statute will prevail over any statement in the agreement to merge or consolidate as to the effect to be given thereto,47 and that this is true notwithstanding statutory authority to consolidate "upon such terms as they may agree upon." 48 The effect of a consolidation depends "upon the will and purpose, not of the corporations, but of the state, speaking through the legislature. In other words, if a statute providing for a consolidation fixes the effect of the consolidation as to whether a new corporation is created thereby, then it seems that the effect of a consolidation attempted pursuant to such a statute is to be determined by the terms of the statute, regardless of any provision in the agreement for consolidation,50 and this is so notwithstanding the statute permits a consolidation "upon such terms as they may agree upon.

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47 Chicago Title & Trust Co. V. Doyle, 259 Ill. 489, 47 L. R. A. (N. S.) 1066, 102 N. E. 790.

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The fact that the corporations give to their consolidation the form and language of a merger does not affect the question whether a new corporation is thereby formed, where the proceedings are taken under a statute providing for consolidation only. "The corporations could not control the statute, but the statute controlled them, and effect must be given to the consolidation according to the legis lative intent. The question of the effect of the consolidation must be answered by a consideration of the terms of the statute under which the consolidation took place, and not what the parties resolved or did not resolve as to such effect." Chicago Title &

50 What the effect of consolidation is, depends upon the will and purpose, not of the corporation, but of the state, speaking through the legisla ture." Adams v. Yazoo & M. Val. R. Co., 77 Miss. 194, 60 L. R. A. 33, 28 So. 956, 24 So. 200, 317.

51 Adams v. Yazoo & M. Val. R. Co.,

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§ 4702. - Duration of corporate existence. The duration, and extension, of corporate existence has been treated of generally in a preceding volume.5 Suffice it to state in this connection that it is the better rule that the life of the new company is the same as that of any other company formed under existing statutes and is not limited to the unexpired term of the constituent companies.53 So where the act of incorporation of a railroad company was to be void unless the road was finished within ten years after filing its "original articles of association," it was held that a railroad company formed by the consolidation of such company with another had ten years from the time it filed its articles of incorporation to finish the road rather than the unexpired term of the consolidating corporations.54

§ 4703. Extinguishment of constituent corporations-In general. The effect of a consolidation with respect to the extinction of the constituent corporations, or the continued existence of one or both. of the constituent corporations, depends generally upon the terms of the statute under which the consolidation is effected. The legislature has the undoubted power to declare what shall be the status of the constituent companies, and where it does so declare it is conclusive as to such effect.55 The statutes may be so worded as to leave one or all of the constituent corporations in existence as corporations; 56 or it may expressly or impliedly provide for the absorption of one company by the other, the former going out of existence and the latter remaining in existence, which constitutes a merger rather than a consolidation; 57 or it may expressly or impliedly

77 Miss. 194, 60 L. R. A. 33, 28 So. 956, 24 So. 200, 317.

52 See §§ 407-415, supra.

53 Market St. Ry. Co. v. Hellman, 109 Cal. 571, 587, 42 Pac. 225. But see, as contra, dieta in New Orleans Gas-Light Co. v. Louisiana Light & Heat Producing & Manufacturing Co., 11 Fed. 277.

See also Board of Adm'rs Charity Hospital v. New Orleans Gas-Light Co., 40 La. Ann. 382, 4 So. 433, holding obligation imposed on constituent company adhered to the consolidated company without limitation to the term or duration of the charter of the constituent company.

By a legislative act providing for consolidation new life may be granted

to the corporation and the period of its corporate franchise extended. Colgate v. New York Cent. & H. River R. Co., 51 N. Y. Misc. 503, 100 N. Y. Supp. 650.

Consolidated companies may agree as to the period of the corporate life of the consolidated company without regard to the period of life of either of the consolidated companies. New York Cent. & H. River R. Co. v. Yonkers, 103 N. Y. Supp. 252.

54 Rio Grande Western Ry. Co. v. Telluride Power & Transmission Co., 16 Utah 125, 51 Pac. 146.

55 Succession of Hutchinson, 112 La. 656, 36 So. 639.

56 See § 4705, infra.
57 See § 4708, infra.

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