Page:Henry Osborn Taylor, A Treatise on the Law of Private Corporations (5th ed, 1905).djvu/423

 PART V.] SUCCESSION. [§ 415. hand, it is usually held that the consolidated corporation assumes all the liabilities of the corporations of which it is composed. 1 Thus, when the property and franchises of a rail- road company are sold out under the foreclosure of a mortgage, the purchasers are not liable on a judgment against the corpo- ration, 2 although they organize and form a corporation under the name used by the old company. 3 And a company which purchases the railroad of another corporation, sold for the pay- ment of its debts, is not responsible for the damages which, at the time of the sale, had already accrued to adjoining lands through failure of the former company to maintain proper drain- age. 4 So when a railroad company competently purchases at a foreclosure sale the franchises and property of another corn- pan} 7, it will be affected only by such contracts of the other as constitute a lien upon or otherwise bind the property and franchises thus acquired. The purchasing company will not be bound, for instance, by a contract of the former company not to extend the railroad in a certain direction. 5 etc., Ry. Co., 25 Wis. 46; Peunison v. R. R. Co., 93 Wis. 344, and cases in next notes. Compare Pfeifer v. She- boygan, etc., R. R. Co., 18 Wis. 155; McLellan u. Detroit File Works, 56 Micb. 579; Campbell ». Farmers, etc., Bk., 49 Neb. 143; Reed Bros. v. Nat. Bk., 46 Neb. 168; see Archambeau v. N. Y., etc., R'y Co., 169 Mass. 272; Sherwood v. A. & D. R. Co., 94 Va. 291. But by special provision a suc- cessor may be liable. New Bedford R. R. Co. o. Old Colony R. R. Co., 120 Mass. 397. Thus, a corporation organized under and pursuant to an agreement sanctioned by competent legislation, is bound by its provisions, and by all the liabilities it imposes in favor of third persons. Welsh v. First Div. St. Paul, etc., R. R. Co., 25 Minn. 314. See, also, St. Louis, A. & T. R. R. Co. ». Miller, 43 111. 199. If the succeeding corporation assumes them, it will be bound. Island City Sav. Bk. v. Sachtleben, 67 Tex. 420. Cf. Fernschild v. Brewing Co., 154 N. Y. 667. Otherwise, to render the new corporation liable, it must affirmatively appear that it is but a continuation of the old. Austin v. Tecumseh Bk., 49 Neb. 412. Of. Reed Bros. v. Nat. Bk., 46 Neb. 168. See § 416, note. 1 Sappington v. L. R. M. R. & T. R. R. Co., 37 Ark. 23. See §§ 425-427. 2 Pennsylvania Transportation Co.'s Appeal, 101 Pa. St. 576; Vilas o. Milwaukee, etc., R. R. Co., 17 Wis. 497; Smith v. Chicago & N. W. Ry. Co., 18 Wis. 17; Hatcher ». Toledo, etc., R. R. Co., 62 111. 477; Gil man u. Sheboygan, etc., R. R. Co., 37 Wis. 317; Cook v. Detroit, etc., Ry. Co., 43 Mich. 349. See Lake Erie & N. Ry. Co. v. Griffin, 92 Ind. 487. 8 Memphis Water Co. v. Magens, 15 Lea (Tenn.), 37. 4 Hammond v. Port Royal, etc., R. R. Co., 15 S. C. 10; Same v. Same, 16 S. C. 567. See Neff v. Wolf River Boom Co., 50 Wis. 585. 6 City of Menasha v. Milwaukee, 403