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were conferred or imposed upon the dissolved company, and which but for the passing of the amalgamating act, might have been exercised by or enforced against the dissolved company.1

1 26 & 27 Vict. ch. 92, § 45.

§ 559. (k). Upon liability for torts.-No liability is imposed upon the companies entering into a consolidation for the torts of the new organization. For all purposes except the settlement of their affairs they are considered dissolved. On the other hand, the consolidated company becomes liable for to: ts committed by the original companies before the consolidation, and actions to recover damages for injuries to persons or property done by the latter, may be maintained against the former. But while this is the rule in cases of consolidation properly so called, the principle does not apply to cases where the union between two companies has been effected by lease.3 The consolidated company cannot plead in an action against it in tort that the consolidation was not authorized by law.*

1 And a judgment against one of the original companies for a tort committed by the consolidated company being void, no cxecution can issue thereon even against the consolidated company: Gray v. National Steamship Co. 115 U. S. 116, 121.

2 St. Louis etc. R. R. Co. v. Marker, 41 Ark. 542; Warren v. Mobile etc. R. R. Co. 49 Ala. 582; Coggin v. Central R. R. Co. 62 Ga. 685; 35 Am. Rep. 132; Texas etc. R. R. Co. v. Murphy, 46 Texas, 353; 23 Am. Rep. 272; Stephenson v. Texas etc. R. R. Co. 42 Texas, 162; New Bedford R. R. Co. v. Old Colony R. R. Co. 120 Mass. 397; Railroad Co. v. Hutchins, 37 Ohio St. 282; Chicago etc. R. R. Co. v. Moffitt, 75 Ill. 524. Sec Columbus etc. R. R. Co. v. Skidmore, 6) Ill. 566; Indianola R. R. Co. v. Fryer, 56 Texas, 609. Cf. Houston etc. R. R. Co. v. Shirley, 54 Texas, 125.

3 Vide infra, § 563.

4 Bissell v. Michigan Southern etc. R. R. Co. 22 N. Y. 258, 263: Reynolds v. Myers, 1 Vt 444; Callender v. Painesville etc. R. R. Co. 11 Ohio St. 516; Racine etc. R. R. Co. v. Farmers Lean and Trust Co. 49 Ill. 331, 347; 95 Am. Dec. 595. Cf. Carey v. Cincinnati etc. R. R. 5 Iowa, 357.

§ 560. (1) Upon the rights of creditors.-Unless otherwise provided in the statute authorizing a consolidation, or by the terms of agreement between the companies, the consolidated corporation assumes all the liabilities of the companies composing it, and they may be enforced by proceedings against the new company,' at least to the extent of the prop. erty derived by it from each of its constituent parts;2 for equity regards the property so acquired as held in trust for the creditors of each of the original companies. While this is the rule with respect to the secured debts of the old corporations, and ordinarily also with respect to the unsecured claims of creditors, yet it has been held that a mortgage given by the consolidated company upon all the property under its control is superior to the claims of the unsecured creditors of the companies from which that property was derived.5

4

1 Harrison v. Union Pacific R. R. Co. 13 Fed. Rep. 52; 15 Fed. Rep. 563; Tysen v. Wabash R. R. Co. 11 Biss. 510; Western R. R. Co. v. Davis, 66 Ala. 578; Sappington v. Little Rock etc. R'y Co. 37 Ark. 23; Elattery v. St. Louis etc. Transp. Co. 91 Mo. 217; 60 Am. Rep. 245; Thompson v. Abbott, 61 Mo. 176; Miller v. Lancaster, 5 Coldw. 514, 520; Columbus ctc. Ry Co. v. Powell, 40 Ind. 37: Indianapolis etc. R. R. Co. v. Jones, 20 Ind. 455; 95 Am. Dec. 651; Columbus etc. Ry Co. v. Skidmore, 63 Ill. 565; Caley v. Coburg etc. R. R. Co. 14 Grant. (U. C.), 531. See Houston etc. R. R. Co. V. Shirley, 54 Tex. 125; Warren v. Mobile etc. R. R. Co. 49 Ala. 5S2. But see Shaw v. Norfolk County R. R. Co. 16 Gray, 407. Cf. Chase v. Vanderbiit, 5 Jones & S. 334.

2 Harrison v. Arkansas etc. R. R. Co. 4 McCrary, 264, and cases cited in the following section; Brum v. Merchants' etc. Ins. Co. 16 Fed. Rep. 14; Hibernia Ins. Co. v. St. Louis etc. Transp. Co. 13 Fed. Ren. 516; Prouty v. Lake Shore etc. R'y Co. 52 N. Y. 363; Booth v. Bunce, 33 N. Y. 139; 83 Am. Dec. 372; Barclay v. Quicksilver Mining Co. 9 Abb. Pr. N. S. 283. Cf. Kelly v. Mari osa etc. Co. 4 Hun, €32.

3 Powell v. North Missouri R. R. Co. 42 Mo. €3.

4 Ritter v. Union Pacific R. R. Co. (U. S. Cir. Ct.) 12 Am. & Eng. R. R. Cas. 374; IIazard v. Vermont etc. K. R. Co. 17 Fed. Rep. 753. 5 Tysen v. Wabash R. R. Co. 15 Fed. Rep. 763.

§ 561. The same subject continued-Extent of the liability of the consolidated company. Where, however, it is not otherwise provided by

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the enabling act or the contract of consolidation,
the new company is not liable upon the debts of
the original corporations except so far as the prop-
erty derived from each may suffice to satisfy their
respective creditors. It is held that, where two
railroads are consolidated, as far as one of the cred-
itors of one of the original companies is concerned,
the consolidated company is the successor of the
old company; but, in respect to the properties of
the other companies, it is a new and independent
company, and such a creditor has no claim against
it upon the original contract, but only by virtue of
its assumption of the obligations of the old compa-
nies. 2 The consolidated company may be expressly
required, however, to assume personally all the
debts of each of its constituent parts, without re-
gard to the sufficiency of the property derived from
them to satisfy the claims." Thus, in New York,
it is enacted that the rights of all creditors of and
all liens upon the property of either of the corpora-
tions parties to the agreement and act shall be pre-
served unimpaired, and the respective corporations
shall be deemed to continue in existence to pre-
serve the same, and all debts and liabilities in-
curred by either of the corporations, except mort-
shall thenceforth attach to the new corpora-
gages,
tion, and be enforced against it and its property
"to the same extent as if those debts and liabilities
had been incurred or contracted by it."

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statute providing that, in case of the consolidation of two or more companies, the new corporation shall be liable for all the debts of each company entering into the arrangement, applies only to companies which may thereafter consolidate. And

the foregoing principles with respect to the liability of the consolidated company are restricted to consolidations voluntarily entered into by the several companies."

1 Prouty v. Lake Shore etc. R. R. Co. 52 N. Y. 363; Shackleford v. Mississippi Central R. R. Co. 52 Miss. 159. Cf. Indianola R. R. Co. v. Fryer, 56 Tex. 609; Houston etc. R. R. Co. v. Shirley, 54 Tex. 125.

2 Boardman v. Lake Shore etc. R'y Co. 84 N. Y. 157, 181; Chase v. Vand rbit, 62 N. Y. 307; Provty v. Lake Shore etc. R'y Co. 52 N. Y. 33; Houston etc. R. R. Co. v. Shirley, 54 Tex. 125. Cf. Sage v. Lake Shore etc. R'y Co. 70 N. Y. 220.

3 Warren v. Mobile etc. R. R. Co. 49 Ala. 582; Western Union R. R. Co. v. Smith, 75 Ill. 496.

4 N. Y. Laws of 1869, ch.

5 Wood's Railway Law,

Ill. 477.

917, § 5.

1682; Hatcher v. Toledo etc. R. R. Co. 62,

6 Houston etc. R. R. Co. v. Shirley, 54 Tex. 125.

§ 562. The consolidated company not a purchaser without notice.-The consolidated company does not stand in the shoes of a purchaser without notice with respect to the property derived from the original companies. All subsisting liens on that property remain unimpaired, and although dormant and unrecorded, the consolidated company cannot plead ignorance of them.3 Nor can it plead ignorance of a contract made by one of the original companies to sell its property. The equitable liens of creditors of the old companies are superior to the liens of the same class of creditors of the new; but the claims of unsecured creditors of the constituent corporations are inferior to a mortgage upon the whole of the consolidated property."

1 The Key City. 14 Wall. 653; North Carolina R. R. Co. v. Drew, 3 Woods, 691; Mississippi Valley R. R. Co. v. Chicago etc. R. R. Co. 58 Miss. 89; 38 Am. Rep. 318. Cf. Whipple v. Union Pacific R'y Co. 23

Kans. 474.

2 Rutten v. Union Pacific R'y Co. 17 Fed. Rep. 480; The Key City, 14 Well. 653; North Carolina R. R. Co. v. Dr., 3 Woods, 69; Msissippi Valley R. R. Co. v. Chicago etc. R. R. Co. 53 Miss. 896; 38 Am. Rep. 348.

3 The Key City, 11 Wall. 653; Mississippi Valley R. R. Co. v. Chicago

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etc. R. R. Co. 58 Miss. 896; 38 Am. Rep. 348. See McAlpine v. Union Pacinc R'y Co. 23 Fed. Rep. 168.

4 McAlpine v. Union Pacific R'y Co. 23 Fed. Rep. 163.

5 Shackleford v. Mississippi Central R R. Co. 52 Miss. 159.
6 Tysen v. Wabash R. R. Co. 15 Fed. Rep. 763.

§ 563. The remedies of creditors of the original companies.-Actions against a company, which has consolidated with another, may be brought against it under the consolidated name, and it will be estopped from denying its identity. When the articles of consolidation provide that the constituent companies shall continue in existence for the purpose of adjusting all claims against them, an unliquidated claim against one of the old companies must be adjudicated in an action against the latter before it can be enforced against the new corporation." Where, however, the consolidating statute provides that the president of the new company

shall be held in law, as to service of process, as the president of" cach of the constituent companies, an unliquidated claim, as, for example, for personal injuries, may be made the basis of an action against the consolidated company in the first instance. And it has been held, that after a railroad company has consolidated with another as authorized by their charters, and confirmed by legis lation conferring all rights, powers, and privileges belonging to either on the new corporation, liabilities of either of the old companies can be enforced only against the new corporation. Judgment against the consolidated company, on claims against one of the original corporations, may be enforced by levy of execution upon the property of the latter, notwithstanding its dissolution. Where, however,

BEACH ON RAILWAYS-58

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