Page:Henry Osborn Taylor, A Treatise on the Law of Private Corporations (5th ed, 1905).djvu/426

 § 419.] THE LAW OF PRIVATE CORPORATIONS. [CHAP. VII. thus, where certain persons purchased at a sheriff's sale all the rights, privileges, franchises, and property of a railroad corpo- ration, and then operated the road themselves, they were held jointly liable on an obligation issued by them in the name of the corporation. 1 5. CONSOLIDATION. No implied power to consolidate, §419. Authority to consolidate, §420. Effect of consolidation, §421. Meaning of phrases, §422. Essential questions, §423. Capacities of consolidated corpora- tion, §424. Its liabilities, §§425-427. § 419. It is almost self-evident that a corporation has no im- plied power to consolidate with another. 3 Special w)wer?o ied authority from the legislature is necessary. 3 Reasons consoli- for this are twofold. In the first place, since a con- date. ... solidation ordinarily brings a new corporation into existence, 4 the authority of the legislature is as necessary for the incorporation of a company out of pre-existing corporations as it is under other circumstances. And in the second place, the rights of dissenting shareholders would be impaired ; for the implied agreement made by every one subscribing for shares that the corporate affairs shall be subject to the will of the majority and of the corporate management, does not extend beyond the doing of acts contemplated in the original consti- tution. 5 special rates of fare, are not so in- herent in the road as to pass to any corporation or person authorized to work it. Pittsb., Cin., etc., Ry. Co. v. Moore, 33 Ohio St. 384. But com- pare Detroit v. Mutual Gas Co., 43 Mich. 594. 1 Chaffe v. Ludeling, 27 La. Ann. 607; compare Beesen v. Lang, 85 Pa. St. 197. 2 An unauthorized consolidation does not create a corporation de facto. Amer. L. & T. Co. v. Minn., etc., R. R. Co., 157 111. 641. 8 Pearce v. Madison, etc., R. R., 21 406 How. 442; Clearwater v. Meredith, 1 Wall. 25; Cole v. Millerton Iron Co., 133 1ST. Y. 164. Power to connect or unite with another road refers merely to physical connection of the tracks; it does not authorize pur- chase, lease, or consolidation. Louis- ville, etc., R. R. v. Kentucky, 161 U. S. 677. As to "Trusts" and monopolies, see §§ 309a-309c. « §421. 5 Clearwater v. Meredith, 1 Wall. 25, 40. See § 536 for the right of a shareholder to prevent a consolida- tion.