Page:Henry Osborn Taylor, A Treatise on the Law of Private Corporations (5th ed, 1905).djvu/569

 CHAP. IX.] CORPORATION AND SHAREHOLDERS. [§ 536. solidate with another; and an attempted wrongful consolidation may be enjoined by a shareholder, like eonsoiida- any other ultra vires act. 1 Nevertheless, that an un- authorized consolidation, if actually effected, will release a dis- senting subscriber, has been held in more than one instance. 2 Every subscription, however, must be regarded as made with reference to any statute in force at the time allowing consoli- dation, and therefore by a consolidation will not be released ; 3 and if the original subscriptions were conditional, the consoli- dated company may entitle itself to sue by performing the con- dition. 4 Further, when a corporation is formed under a law respecting which the right to alter and repeal is reserved to the state, a consolidation authorized by an amendment will not release a subscriber, when the consolidation takes place with 1 Mowrey v. Indianapolis, etc., R. R. Co., 4 Biss. 78. Though it be authorized by a statute subsequent to the charter. Botts v. Turnpike Co., 88 Ky. 54. See §§ 419 et seq. But the shareholder may be estopped when he has taken part in the con- solidation proceedings. Bradford v. Frankfort, etc., R. R. Co., 141 Ind. 383. 2 McCray v. Junction R. R. Co., 9 Ind. 358 ; State v. Bailey, 16 Ind. 46 ; Shelbyville, etc., Turnpike Co. v. Barnes, 42 Ind. 498. A railroad company authorized to do so, may transfer its property to another company and dissolve ; thus effecting a consolidation. A share- holder cannot prevent this, as he cannot prevent the majority from dissolving. But he cannot be forced into a new enterprise, nor can he be compelled to take in payment for his 6tock the stock of the consolidated company, and he may enjoin the pro- ceeding until he has received secu- rity. Lauman v. Lebanon Valley B. R. Co., 30 Pa. St. 42. See Hamilton Mut. Ins. Co. v. Hobart, 2 Gray, 543 ; Gardner v. Hamilton Mut. Ins. Co., 33 N. Y. 421. When a consolidation is effected wrongfully, and against the protest of a shareholder who has partially paid up his shares, the consolidated company is liable to him for the value of them. International, etc., Rail- road Co. v. Bremond, 53 Tex. 96. See §§ 323, 324. 3 Bish v. Johnson, 21 Ind. 299 ; Sparrow v. Evansville, etc., R. R. Co., 7 Ind. 369 ; Edwards v. People, 88111. 340 ; Mansfield, etc., R. R. Co. v. Brown, 26 Ohio St. 233 ; Compare Same v. Stout, ib. 241. Otherwise, if the consolidation effects a radical change in the nature of the enter- prise, and a practical abandonment of the original scheme. Illinois Grand Trunk R. K. Co. v. Cook, 29 111. 237. Where a corporation, with- out authority, issues a scrip dividend in fraud of another corporation with which it was about to consolidate, the scrip may be declared void at the suit of shareholders in the latter corporation ; and even bona fide pur- chasers of the scrip may have to re- turn it. Bailey v. Citizens' Gas Light Co., 27 N. J. Eq. 196. 4 Mansfield, etc., R. R. Co. v. Stout, 26 O. St. 241. 549