§ 4746. Where new corporation created by consolidation-In general. Unless it is otherwise provided by statute,65 it is well settled that in case of a statutory consolidation, as that term has already been defined,66 the consolidated company becomes liable for and as sumes all the debts, contracts and liabilities of the constituent companies,67 to the extent that such debts and liabilities were valid 65 See § 4736, supra. 66 See § 4661 et seq., supra. 67 United States. Pullman's Palace Car Co. v. Missouri Pac. R. Co., 115 U. S. 587, 29 L. Ed. 499; Mt. Pleasant v. Beckwith, 100 U. S. 514, 25 L. Ed. 699; Continental Trust Co. v. Toledo, St. L. & K. C. R. Co., 86 Fed. 929; Harrison v. Arkansas Valley Ry. Co., 4 McCrary 264, 13 Fed. 522. Alabama. Meyer v. Johnston, 53 Ala. 237; Warren v. Mobile & M. R. Co., 49 Ala. 582. Arkansas. Sappington V. Little Rock, M. R. & T. R. Co., 37 Ark. 23. Georgia. Atlantic & B. Ry. Co. v. Johnson, 127 Ga. 392, 11 L. R. A. (N. S.) 1119, 56 S. E. 482; Tompkins v. Augusta Southern R. Co., 102 Ga. 436, 30 S. E. 992; Montgomery & W. P. R. Co. v. Boring, 51 Ga. 582. Illinois. Chicago, R. I. & P. R. Co. v. Moffitt, 75 Ill. 524; Western Union R. Co. v. Smith, 75 Ill. 496; Columbus, C. & I. C. Ry. Co. v. Skidmore, 69 Ill. 566. Indiana. Cox v. Baltimore & O. S. W. R. Co., 180 Ind. 495, 50 L. R. A. (N. S.) 453, 103 N. E. 337; Louisville, N. A. & C. Ry. Co. v. Boney, 117 Ind. 501, 3 L. R. A. 435, 20 N. E. 432; Jeffersonville, M. & I. R. Co. v. Hendricks, 41 Ind. 48; Columbus, C. & I. C. Ry. Co. v. Powell, 40 Ind. 37; Indianapolis, C. & L. R. Co. v. Jones, 29 Ind. 465, 95 Am. Dec. 654; Eaton & H. R. Co. v. Hunt, 20 Ind. 457; United States Capsule Co. v. Isaacs, 23 Ind. App. 533, 55 N. E. 832. M. R. Co., 52 Kan. 774, 39 Am. St. Rep. 381, 36 Pac. 724, 52 Kan. 759, 39 Am. St. Rep. 371, 34 Pac. 805. Mississippi. Mississippi Valley R. Co. v. Chicago, St. L. & N. O. R. Co., 58 Miss. 846. Missouri. Thompson v. Abbott, 61 Mo. 176. New York. Boardman v. Lake Shore & M. S. Ry. Co., 84 N. Y. 157. Tennessee. Miller v. Lancaster, 5 Cold. 514. Texas. Indianola R. Co. v. Fryer, 56 Tex. 609; Houston & T. Cent. R. Co. v. Shirley, 54 Tex. 125; Texas Seed & Floral Co. v. Chicago Set & Seed Co., Tex. Civ. App. 187 S. W. 747. Virginia. Langhorne v. Richmond Ry. Co., 91 Va. 369, 22 S. E. 159. The consolidated corporation takes the property of a consolidating corporation subject to an executory contract of sale made by it before the consolidation. Union Pac. Ry. Co. v. McAlpine, 129 U. S. 305, 32 L. Ed. 673; McAlpine v. Union Pac. Ry. Co., 23 Fed. 168. A consolidated railroad company is liable on a contract by one of the consolidating companies that, in consideration of a grant of a right of way to it, it would so construct its road as to protect the grantor's lands from overflow. Sappington v. Little Rock, M. R. & T. R. Co., 37 Ark. 23. Where a corporation, after it had issued bonds and secured them by a mortgage, was consolidated with two other corporations, under a statute which vested the property of the three Kansas. Ledbetter V. Sunflower State Oil Co., 96 Kan. 636, 152 Pac. 763; Berry v. Kansas City, Ft. S. & claims against the constituent company prior to the consolidation and no further; 68 and this liability is usually expressly imposed by the statute authorizing the consolidation.69 So the consolidated corporation takes the property and franchises of the consolidating corporations, subject to precisely the same burdens which attached to it under the charters of the consolidating corporations respectively.70 original corporations in the consolidated corporation and provided that the first corporation was not to be relieved from any liability and that, after the consolidation, all the franchises and property of the consolidating corporations should belong to the consolidated corporation, it was held that the consolidated corporation, having become the owner of the property of the first, might purchase its outstanding bonds, and either hold them as any other creditor, or pay and extinguish them for the relief of the mortgaged property. Shaw v. Norfolk County R. Co., 16 Gray (Mass.) 407. Where a statute authorized the consolidation of two railroad companies "upon such terms as may be agreed upon," and did not declare how the existing liabilities or obligations of either should be settled or performed, and a consolidation was effected thereunder by a written contract providing for the absorption of one of them by the other, but making no provision at all for a certain class of liabilities existing against the absorbed company, it was held that these liabilities became binding upon the new company, at least to the extent of the assets of the absorbed company, or of its ability to perform the contracts out of which such liabilities arose. Tompkins v. Augusta Southern R. Co., 102 Ga. 436, 30 S. E. 992. The consolidated corporation takes the property and assumes the liabili ties of the old corporations in the exact condition in which they exist at the time of the consolidation, except VII Priv. Corp.-67 as to suits then pending, and such liability cannot afterwards be extended by acts of members of the old companies. Franklin Life Ins. Co. v. Adams, 90 Ill. App. 658. On consolidation of railroad companies, the new company was held bound to recognize mileage books issued by the old. Tompkins v. Augusta Southern R. Co., 102 Ga. 436, 30 S. E. 992. The consolidated company is liable on a judment rendered against one of the constituent companies after the consolidation. Chicago & J. Elec. Ry. Co. v. Ferguson, 106 Ill. App. 356. The consolidated company is liable for license fees imposed upon constituent companies. See New York v. Sixth Ave. R. Co., 77 N. Y. App. Div. 367, 79 N. Y. Supp. 319. 68 Of course, the consolidated company is in no event liable for a debt of a constituent company which could not be enforced against the constituent company. Irvine v. New York Edison Co., 143 N. Y. App. Div. 344, 128 N. Y. Supp. 297, aff'd 207 N. Y. 425, Ann. Cas. 1914 C441, 101 N. E. 358. 69 See § 4736, supra. 70 Chesapeake & O. R. Co. v. Virginia, 94 U. S. 718, 24 L. Ed. 310; Central Railroad & Banking Co. v. Georgia, 92 U. S. 665, 23 L. Ed. 757; The Delaware Railroad Tax, 18 Wall. (U. S.) 206, 21 L. Ed. 888; Philadelphia & W. R. Co. v. Maryland, 10 How. (U. S.) 376, 13 L. Ed. 461; Board of Administrators of Charity Hospital v. New Orleans Gas-Light Co., 40 La. Ann. 382, 4 So. 433; United Railroad "For the purposes of answering for the liabilities of the constituent corporations," said the Indiana court, "the consolidated company should be deemed to be merely the same as each of its constituents, their existence continued in it, under the new form and name, their liabilities still existing as before, and capable of enforcement against the new company in the same way as if no change had occurred in its organization or name." 71 This liability extends to all obligations, including liability for torts as well as obligations arising ex tractu.72 Furthermore, a consolidated company cannot defend against liability for debts of the constituent companies by showing that they were insolvent at the time of the consolidation.73 In like manner, in the absence of provisions to the contrary, the duties imposed upon the consolidating corporations by their charters attach to the consolidated corporation.74 § 4747. Liability for torts. In conferring authority to consolidate, the legislature may exempt the consolidated corporation from any liability for the torts of the consolidating corporations, or it may expressly impose such liability. If it expressly declares that the consolidated corporation shall be subject to all the liabilities of the consolidating corporations, it thereby imposes liability for the negligence and other torts of the consolidating corporations, as well as on contracts, it is generally held.75 And, in the absence of any provision at all, one way or the other, the consolidated corporation impliedly assumes such liability, since it is to be presumed that such was the intention.76 & Canal Co. v. Commissioner of Railroad Taxation, 37 N. J. L. 240; Campbell v. Marietta & C. R. Co., 23 Ohio St. 168. Thus, if railroad companies are consolidated, the consolidated corporation takes the property of each of the original companies, in the absence of provision to the contrary, subject to a restriction in its charter as to the rate chargeable for transportation. Campbell v. Marietta & C. R. Co., 23 Ohio St. 168. 71 Indianapolis, C. & L. R. Co. v. Jones, 29 Ind. 465, 95 Am. Dec. 654. 72 See § 4747, infra. 73 Shadford v. Detroit, Y. & A. A. R. R., 130 Mich. 300, 89 N. W. 960. § 4748. Liability as limited to value of property received. A consolidated company is liable on the claims against constituent companies without regard to the amount of assets received from them.77 This is undoubtedly the true rule, although language used in some of the decisions might be construed to indicate a limitation of liability to the property received.78 § 4749. Effect of taking renewal notes. When corporations are consolidated into a new corporation, making the new corporation liable for all the debts and on all the contracts of the old corporations, outstanding notes of the old corporations are not paid or discharged, so as to relieve the new corporation from liability thereon, Arkansas. St. Louis & S. F. R. Co. v. Marker, 41 Ark. 542. Georgia. Atlantic & B. Ry. Co. v. Johnson, 127 Ga. 392, 11 L. R. A. (N. S.) 1119, 56 S. E. 482; Tompkins v. Augusta Southern R. Co., 102 Ga. 436, 30 S. E. 992. Illinois. Chicago, R. I. & P. R. Co. v. Moffitt, 75 Ill. 524; Chicago & J. Elec. Ry. Co. v. Ferguson, 106 Ill. App. 356. Indiana. Louisville, E. & St. L. Consol. R. Co. v. Summers, 131 Ind. 241, 30 N. E. 873; Louisville, N. A. & C. Ry. Co. v. Boney, 117 Ind. 501, 3 L. R. A. 435, 20 N. E. 432; Indianapolis, C. & L. R. Co. v. Jones, 29 Ind. 465, 95 Am. Dec. 654. Kansas. Kansas City-Leavenworth R. Co. v. Langley, 70 Kan. 453, 463, 78 Pac. 858; Berry v. Kansas City, Ft. S. & M. R. Co., 52 Kan. 759, 39 Am. St. Rep. 371, 34 Pac. 805, 52 Kan. 774, 39 Am. St. Rep. 381, 36 Pac. 724. Missouri. Palmer v. Chicago & A. R. Co., 142 Mo. App. 633, 121 S. W. 1087. Texas. Texas & P. Ry. Co. v. Murphy, 46 Tex. 356. Virginia. Langhorne v. Richmond Ry. Co., 91 Va. 369, 22 S. E. 159. In an Indiana case, a consolidated railroad company was held liable for stock killed by one of the constituent corporations before the consolidation, although there was no provision to this effect in the statute or in the agreement of the corporations under which the consolidation was effected. The court said in this case: "For the purposes of answering for the liabilities of the constituent corporations, the consolidated company should be deemed to be merely the same as each of its constituents, their existence continued in it, under the new form and name, their liabilities still existing as before, and capable of enforcement against the new company in the same way as if no change had occurred in its organization or name." Indianapolis, C. & L. R. Co. v. Jones, 29 Ind. 465, 95 Am. Dec. 654. Two railroads consolidated, the consolidation continuing a nuisance which one of the constituent comparies had erected. The court held that, although no notice and demand for the removal had been made as against it, it was subject to damages for the maintenance of the nuisance. Jones v. Seaboard Air Line R. Co., 67 S. C. 181, 45 S. E. 188. 77 Atlantic & B. Ry. Co. v. Johnson, 127 Ga. 392, 11 L. R. A. (N. S.) 1119, 56 S. E. 482. 78 Morrison v. American Snuff Co., 79 Miss. 330, 89 Am. St. Rep. 598, 30 So. 723. by the taking of renewal notes after the consolidation, unless the parties so intend.79 § 4750. In case of statutory merger. In case of merger of one corporation into another, where one of the corporations ceases to exist and the other corporation continues in existence, the latter corporation is liable for the debts, contracts and torts of the former; 80 and this liability is often expressly imposed by statute.81 Of course if the statute authorizing the "merging" of corporations provides that it shall be "without prejudice to any liabilities of such other corporation or the rights of any creditors thereof," such reservation permits creditors to proceed against the debtor corporation, notwithstanding it is merged in another.82 On the other hand, if the merger is a nullity because not authorized by any statute, it seems that the absorbing company is not liable for the debts of the other company.83 § 4751. In case of mere purchase or transfer of property of another company-General rule. The general rule, which is well settled, is that where one company sells or otherwise transfers all 79 In re Utica Nat. Brewing Co., 154 N. Y. 268, 48 N. E. 521. 80 Georgia. Atlanta, B. & A. R. Co. v. Atlantic Coast Line R. Co., 138 Ga. 353, 75 S. E. 468; Tompkins v. Augusta Southern R. Co., 102 Ga. 436, 30 S. E. 992. Illinois. Swing v. American Glucose Co., 123 Ill. App. 156. Kentucky. Louisville & N. R. Co. v. Central Kentucky Traction Co., 147 Ky. 513, 518, Ann. Cas. 1915 A 857, 144 S. W. 739; Camden Interstate R. Co. v. Lee, 27 Ky. L. Rep. 75, 84 S. W. 332. Missouri. Palmer v. Chicago & A. R. Co., 142 Mo. App. 633, 121 S. W. 1087. Wisconsin. National Foundry & Pipe Works v. Oconto City Water Supply Co., 105 Wis. 48, 81 N. W. 125, aff'd 183 U. S. 216, 46 L. Ed. 157. "The rule which the authorities support seems to be, that where one corporation goes entirely out of exist ence by being incorporated into an- The liability extends to torts, al- 81 See § 4736, supra. 82 Irvine v. New York Edison Co., 207 N. Y. 425, 430, Ann. Cas. 1914 C 441, 101 N. E. 358, aff'g 143 N. Y. App. Div. 344, 128 N. Y. Supp. 297. 83 Whaley v. Bankers' Union of World, 39 Tex. Civ. App. 385, 88 S. W. 259. |