Page:Harvard Law Review Volume 12.djvu/506

486 486 / HARVARD LAW REVIEW. RAILWAY CONSOLIDATION ON THE INDIANA-ILLINOIS LINE. IN 1895 the Supreme Court of Illinois decided that in the ab- sence of authority granted by special charter before the present Constitution, railway corporations of Illinois had no authority to consolidate with corporations of other States, and that for this rea- son where a combination formed by a railway company organized under the general laws of Illinois and corporations of other States had given a mortgage upon their entire property, the mortgage constituted no lien whatever upon the property in Illinois, and that the bonds were to this extent without security.^ This decision surprised many of the Illinois bar and many hold- ers of railway securities. All roads of importance operating within the State extend beyond its limits, and changes of corporate organi- zation are continually necessary. Prior to 1874 railways were au- thorized by statute to consolidate with companies whether organized in Illinois or elsewhere, but in that year this statute was repealed, and the legislature appeared to declare a policy adverse to such consolidations. In subsequent legislation this policy has been em- phasized, as in the Act of May 24, 1877, which expressly provides that nothing therein contained shall authorize consolidation of rail- way corporations of Illinois with those of other States,^ and in the proviso of the Act of March 30, 1 875,^ that nothing therein should be construed to authorize foreign railways to become the owners of any railroad in Illinois.* By the Act of June 14, 1883, an exception was made to the general rule forbidding consolidation with railway companies of other States, so far as to provide that whenever a railroad situated partly in Illinois and partly in another State and theretofore owned by a consolidated corporation had been sold under decree of court and purchased as an entirety in the name of cor- porations organized under the laws of different States, these cor- porations might consolidate. With this exception, however, the 1 American Loan & Trust Co. v. Minnesota & Northwestern R. R. Co., 157 111. 641. 2 Starr & Curtiss, Stats, of 111., 2d ed., iii, 3248. 8 Starr & Curtiss, Stats, of 111., 2d ed., iii, 3240.
 * Starr & Curtiss, Stats, of III, ist ed., ii, 1917.