SECTION II.

What amounts to an Amalgamation of Railway Companies.

1. Mere association or alliance not sufficient. | 2. Agreement to dmalgamate from a day past.

§ 253. 1. It has been held that one railway company associating, allying, and connecting itself with another in regard to traffic, in which they have a common interest, does not amount to an amalgamation between the two companies. An amalgamation seems to imply such a consolidation of the companies as to reduce them to a common interest.

2. An agreement to amalgamate from a day past seems to be considered, in equity, as an actual amalgamation from that time. But an agreement to do so from a future time cannot amount to an amalgamation until the time arrive.1

SECTION III.

What Contracts made before Amalgamation enforced afterwards.

1. Where the amalgamation is legal, all prior | 6. Validity of proceedings in insolvency contracts may be enforced.

2. But where any formalities are not complied with, it is otherwise.

3. Admissions by the company contracting, good against consolidated company.

4. Consolidated company may apply funds to pay debts of former companies.

against one of the former corporations, after consolidation.

7. One of the consolidated companies may make a valid mortgage for its own debts after the consolidation.

5. Instance illustrating the right to amalga- 8. Contract of railway company for arbitratration, enforced after its consolidation.

mate.

§ 254. 1. Where the amalgamation is strictly legal, and no impediment arises in regard to the form of the remedy, it would seem a contract, made before amalgamation, should be capable of being enforced after. And where a clerk to a railway com

1 The Shrewsbury & B. R. v. Stour Valley, and The London & N. W. R., 21 Eng. L. & Eq. 628; Midland G. W. R. of Ireland v. Leech, 28 Eng. L. & Eq.

17.

pany had executed a bond, with surety, for the faithful discharge of his duty to one company, which was subsequently amalgamated by act of parliament with another railway company, saving to the consolidated company all remedies upon contracts to either, it was held an action will lie upon such bond.1 So, too, such bond is good security to the new company for the faithful conduct of such clerk in the employ of such new company.3

2. But where the amalgamation is illegal calls cannot be enforced, or, if the provisions for the amalgamation had not been fully carried into effect, no suit for calls in the name of the new company can be sustained.3

3. And in an important case in the United States Supreme Court, it seems to have been held, that in an action against the amalgamated company, upon a contract for construction made by one of the consolidated companies, the admission or act of the company making the contract will bind the aggregate company by way of estoppel in pais.

4. And where a railway and canal company were formed by the union of several ancient canals and three railway companies, and power was given to the united companies to issue new shares for the purpose of raising capital, it was held no misapplication of the funds of the new company to apply them first to the payment of a large debt of one of the canal companies.5

1 London, Br. & S. C. Railway v. Goodwin, 3 Exch. R. 320; s. c. 6 Railw. C. 177. And the same point is so ruled in Eastern Union Railway v. Cochrane, 24 Eng. L. & Eq. 495. In the former case the breach was committed before, and in the latter, after the amalgamation. And the same principle is applied to determine the liability of the companies, after consolidation, in Gould v. Langdon, 43 Penn. St. 365.

Eastern Union Railway Co. v. Cochrane, 24 Eng. L. & Eq. 495. And see Robertson v. Rockford, 21 Ill. R. 451.

Midland G. W. Railway of Ireland v. Leech, 3 House L. Cases, 872; s. c. 22 Eng. L. & Eq. 45; ante, § 56.

Philadelphia, Wilmington, and Baltimore Railway v. Howard, 13 How. 307. And see McMahan v. Morrison, 16 Ind. R. 172.

Cooper v. The Shropshire Union Railway and Canal Co., 6 Railw. C. 136. The Richmond and Miami Railway, which was created under the laws of Indiana, and owned a railroad running from Richmond to the Ohio State Line, and the Eaton and Hamilton Railway, which was created under the laws of Ohio, and owned a railroad running from Eaton, Ohio, to the state line of Indiana, in the direction of Richmond, were, by virtue of laws of these respective states, con

5. Where the preliminary contracts, by which two railway companies were set on foot, each provided that the managing. committees or directors might " demise or sell the undertaking, or any part thereof, or amalgamate the same or any part thereof, with any other railway or railways, and the directors of the two companies made and carried into effect an amalgamation of the solidated into one company, called the Eaton & Hamilton Railway Co. The law in neither state, in terms, surrendered to the other any jurisdiction over the property of the existing companies. Prior to the consolidation, the Indiana company issued sixty bonds, of one thousand dollars each, and executed a first mortgage on their road to secure payment of such bonds to a trustee, with interest payable semiannually, and these bonds were also guaranteed by the Ohio company. Afterwards, but also prior to the consolidation, the same company issued forty additional bonds, each for the same amount as before, and made a second mortgage on their road to the same trustee to secure their payment. By the articles of consolidation it was agreed that the companies should become united as one, under the name aforesaid; that the corporate name, franchise, &c., of the Eaton & Hamilton company should be preserved and remain intact as if no consolidation had been made, except as far as modified by the enlarged interests of the company and the laws of Indiana; that all property and franchises of the Indiana company were thereby transferred to and merged in the Ohio company, and the organization and name of the former should cease; that the Ohio company should assume such property and franchises, and pay all the liabilities of the Indiana company. Prior to the consolidation, bonds had been issued by the Ohio company which had been made liens on its road, and after the consolidation bonds were issued and made a lien on the entire road. The holders of the first bonds issued by the Indiana company sued to enforce payment of their bonds, by a foreclosure of their mortgage, the trustee having refused to sell under the power therein contained. The suit was instituted against the Eaton & Hamilton railway, which appeared and defended; and it was held by the Supreme Court of Indiana, first, that such consolidation at least effected a transfer of the property of the Indiana company to the Ohio company, and that the suit was therefore properly brought against the latter corporation. Secondly, that the Ohio company, having acquired property in the road in Indiana after the execution of the said two mortgages, took the same subject thereto; and that the holders of the first mortgage bonds had the right to enforce the payment thereof by proceedings for a foreclosure in the Indiana courts, and a sale of the property in Indiana. Thirdly, that the power given in said first mortgage to the trustee to sell the road in certain events, if it could be exercised by him at all, did not prevent the bondholders from asserting their rights by foreclosure, but was merely a cumulative remedy. Fourthly, that the courts of Ohio would have no jurisdiction to enforce the foreclosure of said mortgage, and that neither the agreements nor the laws above referred to gave them such jurisdiction, if indeed it could in any way be given. Eaton & Hamilton Railw. v. Hunt, 20 Ind. R. 457.

two companies, which necessarily interfered with each other's business, it was held, that the amalgamation of these two companies came fairly within the preliminary contracts, and that an action for calls might be maintained against any shareholder in either company who had executed the preliminary contracts."6

6. In a case before the highest court in the State of Connecticut, where the question arose in regard to proceedings in insolvency against one corporation, which by acts of different state legislatures had been consolidated with other companies in other states, considerable doubt is expressed in regard to the mode and the binding effect of such proceedings, and, although the proceeding seems to have been recognized as regular and valid in that case, it is very obvious there must always exist serious embarrassment in bringing such proceedings to any satisfactory determination.

7. And it has been considered that one of two or more consolidated railway companies may make a valid mortgage of its property for its own debts, even after the consolidation.8

8. And where a railway company entered into a contract, one of the terms of which was that the principal engineer, so long as he remained such, should be the arbitrator in all matters of difference in regard to the contract, and that company was subsequently amalgamated with another company, and, disputes having arisen in regard to the contract, it was held, that such person was still the proper arbitrator, he remaining in the same office.9

• Cork and Yougal Railway v. Patterson, 18 C. B. 414. See ante, § 56, n. 1. ' Platt v. N. Y. & Boston Railw., 26 Conn. R. 544.

' Wamsebuk Railw. Co. v. Tronsdale, 12 Jur. N. S. 740.

CHAPTER XXXIX.

MISCELLANEOUS MATTERS.

SECTION I.

Jurisdiction of the United States Courts.

6. Service of process upon authorized agent in another state.

1. Corporation sued as "citizen" of a state. 2. Residence of shareholders immaterial. 3-5. Review of decisions. Corporation lia- n. 6. Liability in foreign attachment process ble where it exists and was chartered. maintained by English courts.

§ 255. 1. CONTRARY to the earlier decisions of the United States courts it is now settled that a corporation is to be regarded as a "citizen" of the state where it exists, and as such may be sued, in that circuit, by a citizen of any other state.1

2. And it makes no difference that the shareholders and members of the corporation reside in different states, as it is the artificial being created by the act of incorporation which is the party, and not the corporators.2

3. But a railway company cannot be said, either at law or in equity, to reside in a different district from the one where it exists and was chartered. Nor can a circuit court of the United States take cognizance of a controversy in one district or state, where the subject-matter of the controversy lies beyond the limits of the district, and where the process of the court cannot reach the locality of the controversy.3 This was the case of a

1 Marshall v. Baltimore and Ohio Railw., 16 How. 314. Mr. Justice Grier, in giving the opinion in this case, cites the case of Louisville, Cincinnati, & Charleston Railw. v. Letson, 2 How. 497, as having virtually decided the question, and as having been so regarded and recognized by the profession and the court. See also Works v. Junction Railw., 5 McLean, 425; Culbertson v. Wabash Nav. Co., 4 McLean, 544.

Louisville Railw. v. Letson, 2 How. 407. See also ante, § 20, and cases cited. But see Ohio & Mississippi Railw. v. Wheeler, 1 Black (U. S.), 286; Wheeden v. Cam. & Amb. Railw., 2 Philadelphia R. 23; s. c. 1 Grant's Cases, 420.

• Northern Indiana Railw. v. Michigan Central Railw., 15 How. (U. S.) 233.