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§ 333. Legislative authority requisite. As a corporation can not be created except by the legislature, so it can not, without the authority of the legislature, merge its existence in that of another. And railway companies, being chartered to perform public duties, can not evade their obligations to the public by a transfer of their franchises, either by lease, sale or consolidation, without express legislative sanction. Therefore, where

1 "Consolidation of Corporations," by S. D. Thompson, (1890) 31 Cent. L. J. 4; Hoadley v. County Commissioners, 105 Mass. 526; Stowe v. Flagg, 72 Ill. 397; New York &c. Canal Co. v. Fulton Bank, 7 Wend. 412; Pearce v. Madison &c. R. Co., 20 How. 441; Clearwater v. Meredith, 1 Wall. 25, 39; State v. Bailey, 16 Ind. 46; In re Era Insurance Society, 9 Week. Rep. 67; s. c. 30 L. J. (N. S.) 137; Winch v. Birkenhead &c. R. Co., 16 Jur. 1035, 1037. Mr. Taylor says the reasons why legislative authority is requisite are twofold: In the first place, since a consolidation ordinarily brings a new corporation into existence, the authority of the legislature is as necessary for the incorporation of a company out of pre-existing corporations as it is under other circumstances. And in the second place, the rights of dissenting shareholders would be impaired; for the implied agreement made by every one subscribing for shares, that the corporate affairs shall be subject to the will of the majority and of the corporate management, does not extend beyond the doing of acts contemplated in the original constitution. Taylor on Corporations, § 419. 2 Thomas v. The Railroad Co., 101 U. S. 71; Pearce v. Madison &c. R. Co., 21 How. 441; Pullan v. Cincinnati &c. R. Co., 4 Biss. 35; Mowrey v. Indianapolis &c. R. Co., 4 Biss. 78; American Union Tel. Co. v. Union Pacific Ry. Co., 1 McCrary, 188; Troy &c. R. Co. v. Boston &c. R.

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Co., 86 N. Y. 107; Abbott v. Johnstown &c. Horse R. Co., 80 N. Y. 27; s. c. 36 Am. Rep. 572, where it is said that like a special charter the right conferred under the general law is in the nature of a contract. lows that upon principles of public policy and the ordinary rules of law applicable to contracts that the corporation can not, without the consent of the other party, change its terms or absolve itself from its obligations to any conventional arrangement made with third persons as to the control and management of its road; Middlesex &c. R. Co. v. Boston &c. R. Co., 115 Mass. 347; Richardson v. Sibley, 11 Allen, 65; s. c. 87 Am. Dec. 700; Commonwealth v. Smith, 10 Allen, 448; s. c. 87 Am. Dec. 672; State v. Sherman, 22 Ohio St. 411, 428; Black v. Delaware &c. Canal Co., 24 N. J. Eq. 456; Stewart's Appeal, 56 Pa. St. 413; Wood v. Bedford &c. R. Co., 8 Phila. 94; Tippecanoe County v. Lafayette &c. R. Co., 50 Ind. 85. It is bound by reciprocal obligations to the State and on reciprocal duties to the public.” Peoria &c. Ry. Co. v. Coal Valley Manuf. Co., 68 Ill. 489, according to which case, when roads accept their charters, it is with the implied understanding that they will perform these duties to the public as common carriers of both persons and property, under the responsibility which that relation imposes. parte Williamson, L. R. 5 Ch. 309; East Anglian Ry. Co. v. Eastern

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two separate corporations are created to build railroads they have no right, without authority, to unite and conduct their business under one management; nor have they the right to establish a steam-boat line to run in connection with them.' In the absence of authority clearly conferred, the amalgamation of companies is an act beyond the scope of the powers, not only of the directors but of the company. Where power is given by statute to one railroad company to consolidate with any other, whatever other corporation it selects for a union, has power to unite with it, although it be not named in the statute. And after a consolidation is effected, the new company enjoys the same presumptions as to the rightfulness of its legal existence as an original company.

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§ 334. How legislative sanction may be expressed.— Authority to consolidate may be conferred in the original charters of the companies concerned; or by the provisions of a general or special act of the legislature passed prior to consolidation, and after the organization of the original corporations. But general statutes authorizing the consolidation of corporations are not retroactive, and do not apply to consolidation agreements made prior to their enactment. Laws of that character are designed to apply to companies only which may effect a consolidation after their enactment. Curative acts, validating defects in corporate organization, are genally upheld where the legislature could have given the corpo

Counties Ry. Co., 11 C. B. 775;
Chambers v. Manchester &c. Ry. Co.,
5 Best & Smith, 588; Winch v.
Birkenhead &c. Ry. Co., 5 De Gex &
S. 562; McGregor v. Dover &c. Ry.
Co., 17 Jur. 21; London &c. Ry. Co. v.
London &c. Ry. Co., 5 Jur. N. S. 801.
1 Pearce v. Madison &c. R. Co., 21
How. 441.

2 Charleston v. Newcastle &c. Ry. Co., 5 Jur. N. S. 1096; Blatchford v. Ross, 5 Abb. Pr. N. S. 434; s. c. 54 Barb. 42.

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6 Bishop v. Brainerd, 28 Conn. 289; Black v. Delaware &c. Co., 22 N. J. Eq. 130; s. c. 24 N. J. Eq. 455; Southall v. British &c. Soc., L. R. 11 Eq. 65.

7 Hatcher v. Toledo &c. R. Co., (1872) 62 Ill. 477, 480.

8 Hatcher v. Toledo &c. R. Co., (1872) 62 Ill. 480; Garrett v. Wiggins,

In re Prospect Park &c. R. Co., 67 1 Scam. 335; Thompson v. Alex

N. Y. 371.

ander, 11 Ill. 54; Marsh v. Chesnut,

* Bell v. Pennsylvania &c. R. Co., 14 Ill. 223.

ration a valid organization in the first instance. So, therefore, by the express sanction of the legislature an unauthorized agreement to consolidate may be validated. Furthermore, an invalid consolidation may be rendered valid by necessary implication from an act of legislature recognizing the existence of the consolidated company. Most of the statutes allowing consolidations, subject the new company to the general laws relating to corporations; and it acquires its new franchises subject to legislative alteration or repeal. Some parts of an executed agreement in relation to consolidation if legislative consent can be obtained, may be enforced even if assent/ be withheld."

1 Syracuse City Bank v. Davis, 16 Barb. 188; Mitchell v. Deeds, 49 Ill. 416, 419. Cf. People v. Plank Road Co., 86 N. Y. 1.

fund. After this the consolidation
agreement was filed.
And it was
decided that an advance by the com-
mittee to the R. & A. Company for
the purpose of effecting the consoli-
dation was authorized, though the
legislature refused to assent to its

2 McAuley v. Columbus &c. R. Co., 83 Ill. 348; Mead v. New York &c. R. Co., 45 Conn. 199. Fisher v. Evansville &c. R. Co., entering the combination. Defend7 Ind. 407.

4 Railroad Co. v. Maine, 96 U. S. 499; affirming State v. Maine Cent. R. Co., 66 Me. 488; New Jersey v. Yard, 95 U. S. 104; Tomlinson v. Jessup, 15 Wall. 454.

5 A consolidation of three railroad companies was proposed, the necessary funds to be raised by subscription of the stockholders of the several companies. It was doubtful whether one of the companies (the R. & A.) could obtain legislative consent to enter the combination, but it was arranged that the other two should combine at all events; and the subscribers were aware of this. The first call under the subscription stated that it was for the extension of one of the two roads whose consolidation was definitely arranged for, and for "other purposes." Afterwards the entire fund was paid in. A committee was appointed, after the first installment was paid, to receive and disburse the

928; s. c. 7 Ry.

ants, a committee appointed to re-
ceive and disburse subscriptions for
the purpose of effecting a consoli-
dation of certain railroad compa-
nies, and extending the lines, may
be required to account to the sub-
scribers for the amount so received,
and it is immaterial whether or not
they were originally trustees or were
legally appointed. Gould v. Seney,
(1889) 5 N. Y. Supp.
& Corp. L. J. 143. But on appeal of
this case it was held that the loan
by the committee to the R. & A.
Company, for the purpose of com-
pleting its line of railroad, to be re-
paid in case the agreement should
not become operative as to that com-
pany, was a misappropriation of the
fund, for which they became liable
to account to the subscribers upon
the legislature refusing to consent
to the company entering the combi-
nation; but that the shareholders
could not, at the time of compelling
such accounting, insist that the com-

§ 335. Inter-State consolidation.- Any such thing as a single corporation created concurrently by the legislation of two or more States is impossible.' And where two States have each created a corporation with the same name, for the same purposes, and composed of the same natural persons, it must, nevertheless, be considered as a distinct corporation in each. It has been decided, however, with perhaps only a

mittee should also account for bonds taken by them as collateral for the loan. Gould v. Seney, (1889) 9 N. Y. Supp. 818, reversing s. c. 5 N. Y. Supp. 928.

1 Allegheny Co. v. Cleveland &c. R. Co., (1865) 51 Pa. St. 228, following Ohio &c. R. Co. v. Wheeler, 1 Black, 286; Newport &c. Co. v. Woolley, (1880) 78 Ky. 523, where the court very vigorously states the rule: "In the case before us it appears that the States of Kentucky and Ohio each created a corporation which was given the same name. The object of each was to construct a bridge across the Ohio river, between Newport and Cincinnati. The powers conferred by each State upon its creation are complete; so full, that if either State had not given its corporation any powers, the other would still remain invested with full power to construct the bridge to the extent of the territorial jurisdiction of the State which gave it life, but no farther. . . . The appellant claims that it is one entity by two laws emanating from different sovereignties with no joint governmental powers over such a subject. This seems to be an absurdity, because the law-making power of neither State can bind the other. Kentucky or Ohio has plenary power to create a corporation, but neither can create a part of the elements of a corporation, and rely upon the other to complete it, and by this unauthorized marriage of

distinct legislative powers, produce a being which has not received full life from either. Each legislative power must complete the corporation, or it can never be one, because the completing act of one State is not binding upon the State which began, but failed or refused to complete and give legal existence to a corporation. Otherwise persons who should receive from a State only part of the powers, but were denied the rest which were necessary to create a corporation, could apply to a foreign State for supplementary legislation, which would authorize the building of railroads and bridges upon one soil, and give to its laws an extra-territorial force- a doctrine that has always been successfully denied among these States, which hold the relation to each other of foreign States in close friendship. The creative power of two States can neither be added to nor subtracted from by another, so as to strengthen or weaken the power of the former in its own territory, and the proposition that two States can jointly create, by partial legislation in each, a corporation which has a complete legal existence in either, must fall to the ground.

2 Racine &c. R. Co. v. Farmers' Loan &c. Co., 49 Ill. 331, 348; s. c. 95 Am. Dec. 595; Quincy &c. Co. v. County of Adams, 88 Ill. 615; Burger v. Grand Rapids &c. R. Co., 22 Fed. Rep. 561; Colglazier v. Louisville &c. Ry. Co., 22 Fed. Rep. 568.

verbal distinction, that a corporation may have a twofold organization, and be, so far as its relation to one State is concerned, both foreign and domestic. It may have a corporate entity in each State, being in its general character of a bifold organization. Yet it has no legal existence in either State, except by the laws thereof. And neither State can confer upon it a corporate existence in the other, nor add to or diminish the powers to be there exercised. It may, indeed, be composed of and represent, under the corporate name, the same natural persons. But the legal entity or person, which exists by force of law, can have no existence beyond the limits of the State or sovereignty which brings it into life or endows it with its facilities and powers. But there seems to be no reason why several States can not, by competent legislation, unite in combining several pre-existing corporations into a single one, nor why one State may not make a corporation of another State, as there organized and conducted, a corporation of its own, quoad hoc, any property within its territorial jurisdiction. On the same principle and to the same effect as in the case of the creation of companies by the concurrent legislation of several States, consolidations take place between corporations created by adjoining States for the operation of

1 McGregor v. Erie Ry. Co., 35 N. J. 118; Bishop v. Brainerd, 28 Conn. 289; Ohio &c. R. Co. v. Wheeler, 1 Black, 286, limited by Railroad v. Harris, 12 Wall. 65; Copeland v. Memphis &c. R. Co., 3 Woods, 651, 658; Blackburn v. Selma &c. R. Co., 2 Phil. 525; Allegheny Co. v. Cleveland &c. R. Co., 51 Pa. St. 228; Newport &c. Co. v. Woolley, 78 Ky. 523; Burger v. Grand Rapids &c. R. Co., 22 Fed. Rep. 561; Colglazier v. Louisville &c. R. Co., 22 Fed. Rep. 568; State v. Northern Central Ry. Co., 18 Md. 193; Sprague v. Hartford &c. R. Co., 5 R. I. 233; State v. Metz, 32 N. J. 199; Bridge Co. v. Mayer, 31 Ohio, 317.

65, citing Wilmer v. Atlanta &c. R. Co., 2 Woods, 409; Easton v. Delaware &c. Co., 32 N. J. L. 199; Taney, C. J., in Philadelphia &c. R. Co. v. Maryland, 10 How. 376.

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4 Railroad Co. v. Harris, 12 Wall. 65, where the court continued: "That this may be done was distinctly held in Ohio &c. R. Co. v. Wheeler, 1 Black, 286. far as there is anything in the language of the court in Ohio &c. R. Co. v. Wheeler, in conflict with what has been here said, it is intended to be restrained and qualified by this opinion." Mitchell v. Bunch, 2 Paige Ch. 606; Wilmer v. Atlanta &c. R. Co., 2 Woods, 409; Ramsey v. Bradford, 2

Ohio &c. R. Co. v. Wheeler, 1 Dess. 587; Coggar v. Howard, 1 Barb. Black, 286, per Taney, C. J. Ch. 368; Dennistown v. New York

3 Railroad Co. v. Harris, 12 Wall. &c. R. Co., 1 Hill, 62.

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