The new corporation is no more a corporation of one State than of the other, 53 and as it cannot be created by the States jointly, it must be the anomalous association already considered,―a separate corporate body in each State, all however being as it were federated together, and in many respects capable of acting as one.54 In the language of Chief Justice Cooley in Chicago & Northwestern Railway v. Auditor General: 55

"When the two unite they severally bring to the new entity the powers and privileges already possessed, and the consolidated company simply exercises in each jurisdiction the powers the corporation there chartered had possessed, and succeeds there to its privileges.56 . . . When, therefore, two corporations created in different states consolidate, though for most purposes they are not thereafter to be separately regarded, yet in each state the consolidated company is deemed to stand in the place of the corporation to which it there succeeded, and of its members, and consequently to be a citizen of that state for many purposes, while in the other state it would stand in the place of the other corporation in respect to citizenship there."

We must conclude then that when a number of corporations, created by different States, are allowed to consolidate by the States that created them, the constituent corporations may or may not be merged in the consolidated body and so lose their corporate existence, this depending in each case upon the will of the State of charter; but that by the consolidation new corporations are formed, equal in number to the number of enabling States, and each empowered to act in connection with the others. The consolidated corporation therefore does not differ in status from the corporation rechartered in another State than that which first created it.

53 Ohio & M. Ry. v. People, 123 Ill. 467, 14 N. E. 874.

54 Winn v. Wabash R. R., 118 Fed. 55; Ohio & M. Ry. v. People, 123 Ill. 467, 14 N. E. 874; Kincaid v. People, 139 Ill. 213, 28 N. E. 1060.

55 53 Mich. 79, 91.

56 Citing Mississippi Valley Co. v. Chic., etc., R. R., 58 Miss. 846.

780. Consolidation of a corporation which has been rechartered. One more complication may ensue. A corporation formed in a State may be rechartered in a second State, and then consolidated with a corporation of a third State; what is the effect of the consolidation upon the rechartered corporation of the second State? Is it federated with the original corporation still? And what if the original corporation is dissolved by merger in the consolidated corporation?

This question was raised by the case of Louisville Trust Company v. Louisville, New Albany and Chicago Railway.57 An Indiana corporation had been rechartered in Kentucky; and the Indiana corporation was then in accordance with legislation of both States concerned consolidated with an Illinois. corporation. It was argued that since the consolidated company succeeded to all the property of the original company, and since the Kentucky company had no relation with the consolidated company, it ceased thereafter to exercise its franchises. But Taft, Circuit Judge, said:

"We do not perceive that this consolidation creates any difficulty. The Kentucky corporation, having been once established, could not die except by its own act or that of the State which gave it being. Everything it had acquired in the way of property remained in it after the consolidation of its constituent with the Illinois corporation. It was not and could not be ousted of its franchises thereby. The Kentucky corporation, when incorporated, was intended by the legislature of Kentucky to be under the same organization and management as the Indiana company. When the incorporators of the Indiana company added others to their number by virtue of the laws of Indiana, and to this extent changed the management, the franchises which the incorporators had obtained by the incorporation of the old company in Kentucky was simply transferred by express provision of the articles of consolidation to the new organization. If it were necessary to

57 75 Fed. 433.

61

have such a transfer approved by the Kentucky legislature, we have it recognized and approved in the act of April 7, 1882, in recognizing and adding to the powers of the Kentucky corporation, which was then being managed by the consolidated corporation of Indiana and Illinois. The possibility of implied recognition and acquiescence in the effect of a consolidation by subsequent legislation is very clearly shown in the case of McAuley v. Railroad,58 and in Mead v. Railroad.59 Analogous instances of legislative recognition and acquiescence in corporate consolidation are found in U. S. v. Southern Pac. Railroad, 60 and Railroad v. Poole. It is argued that, by the consolidation, the entity of the Indiana corporation, which had been adopted as the constituent of the Kentucky corporation, ceased to be, and a new being appeared, a wholly different individual, in the shape of the consolidated corporation. It is clear from the Indiana statute of consolidation, and the decisions of that State construing their effect, that, whether the old constituent survives in the new consolidated corporation or dies, the new corporation has all the attributes of the old.62 If one of these attributes was that of being the constituent of a Kentucky corporation, there was no reason why the new corporation should not continue to enjoy that relation, provided objection was not made by the Kentucky legislature. Instead of objecting, the legislature, as we have seen, affirmatively approved the new condition brought about by the consolidation by the act of 1882."

From this opinion it would seem that upon the consolidation of the Indiana corporation with the Illinois corporation the rechartered corporation would ipso facto become federated with the consolidated company; a result which could be prevented only by the affirmative action of the Kentucky

58 83 Ill. 348.

59 45 Conn. 199.

60 45 Fed. 596.

61 32 Fed. 451.

62 Citing Railroad Co. v. Boney, 117 Ind. 501, 504, 20 N. E. 432.

[Chap. XXXI. legislature, thus exercising its power over its own corporation.

781. Which constituent corporation is responsible for act of consolidated corporation.

Certain consequences of the principles we have been investigating remain to be considered. Suppose an act is done on behalf of the whole consolidated corporation, of which individual corporation is it the act? If done through an agent, it would seem that he is agent for all the corporations jointly; and indeed there is authority for holding that every act done on behalf of the consolidation, even if it is clearly done by one of the corporations, is done in behalf of all jointly. In short, this view would make all the corporations partners, and all responsible for the acts of each.63 And it seems to be clear that a corporation of two States may be garnisheed in one of the States for wages due a servant for work done in the other State,64 even though the garnishment proceedings were brought in one State for the express purpose of avoiding the exemption laws of the other.65 And so it has been held that a ticket issued by a railroad chartered in two States may be treated as the contract of either corporation ;66 and that a judgment obtained in one State against a consolidated corporation there will support an action of debt on the judgment in the other State.67 And it is clear that the consolidated corporation may be restrained in either State from acting contrary to its legal duty on any part of the line.68 It was the intention of the legislature, said Judge Doe, "to create a corporation that 63 Newport & C. Bridge Co. v. Wooley, 78 Ky. 523; Smith v. New York, N. H. & H. R. R., 96 Fed. 504.

64 Georgia & A. Ry. v. Stollenwerck, 122 Ala. 539, 25 So. 258; Railroad v. Barnhill, 91 Tenn. 395, 19 S. W. 21.

65 Wabash R. R. v. Dougan, 142 Ill. 248, 31 N. E. 594.

66 Miss. & T. R. R. v. Ayres, 16 Lea (Tenn.), 725.

67 Union Trust Co. v. Rochester & P. R. R., 29 Fed. 609.

68 McDuffee v. Portland & R. R. R., 52 N. H. 430; Scofield v. L. S. & M. S. R. R., 43 Oh. S. 571, 3 N. E. 107; Providence Coal Co. v. Providence & W. R. R., 15 R. I. 303, Atl. 394.

might act, and be dealt with, as one and not two, in such matters as those involved in this suit." 69 "The railroad is an entirety, whether within the State or without; and the artificial person, by the acts of the several States authorizing consolidation, has been created one, and not two or more, and no reason is perceived why it may not be dealt with by the courts of either State that has procured jurisdiction." 70

But on the other hand an act done by the consolidated corporation in one State is to be taken as the act of the corporation of that State, since that corporation has been expressly created to act there.71 It has accordingly been held that where an accident happens upon a railroad chartered in two States, it is chargeable to the corporation of that State within which it happened; 72 that a mortgage of that part of a railroad which lies in one State is the act of the corporation there chartered; 7 that a contract touching a right of way for a railroad is made with the corporation of the State in which the right of way lies; 74 and that assignment for benefit of creditors made by the corporation in one State does not carry the assets of the corporation in the other State.75 But the cases are not consistent upon this point. Thus it has been held that the railroad company chartered in one State may be sued for a tort committed in another.76 This confusion of opinion, though to be regretted, is not an unnatural result of the anomalous position of the corporation.

One may, perhaps, on the authorities and the reason of the thing, reach the following conclusions: An agent for the consolidated corporation may act for and bind all the members;

69 McDuffee v. Portland & R. R. R., supra, at p. 458.

70 Atherton, J., in Scofield v. L. S. & M. S. Ry., supra, at p. 622.

71 Stout v. S. C. & P. R. R., 3 McCr. 1, 8, 8 Fed. 794; State v. Northern C. Ry., 18 Md. 213.

72 Kahl v. Memphis & C. R. R., 95 Ala. 337, 10 So. 661. 73 Racine & M. R. R. v. Farmers' L. & T. Co., 49 Ill. 331. 74 Port Royal R. R. v. Hammond, 58 Ga. 523.

75 Grangers' L. & H. Ins. Co. v. Kamper, 72 Ala. 325. 76 Horne v. Boston & M. R. R., 18 Fed. 59.