Case ID: ohio-st_26/html/0223-01.html
Source: Caselaw Access Project
Author: {"author": "McIlvaine, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

The Mansfield, Coldwater and Lake Michigan Railroad Company v. William Brown et al.
    1. The defendants executed and caused to "be delivered to the Mansfield, Coldwater and Lake Michigan Bailway Company, which was then engaged in constructing its railroad through the town of "Weston, Wood county, Ohio—the bridging and grading being substantially completed and some portions of the road in running order—an instrument in the following words:
    “ Weston, May 17, 1871.
    
    
      “ We, the undersigned, heirs of Alexander Brown’s estate, of Weston township, Wood county, Ohio, agree to take one thousand dollars in stock in the Mansfield, Coldwater and Lake Michigan Railroad, if it comes near enough to the town of Weston, Wood county, Ohio, to suit the convenience of said town.”
    
      Held: 1. These facts and circumstances show an agreement between the defendants and the railway company. 2. The condition named in-the instrument having been performed, the contract of subscription was absolute. 3. A promise on the part of the defendants to pay, and of the company to issue its stock upon a receipt of the money, are implied from the facts stated.
    2. Under the railroad consolidation act of April 10, 1856 (53 Ohio L. 143), corporations, parties to an agreement to consolidate, continue in the full' enjoyment of their powers and franchises respectively, and may accept subscriptions to their capital stock at any time before consolidation is consummated by filing the agreement of consolidation with the secretary of state.
    3. Subscriptions to the capital stock of such corporations are to be construed with reference to consolidation statutes in force, and subscribers are-bound thereby as if the statutes were part of the contract of subscription.
    4. A person who 7)ecomes a subscriber to such stock during the progress of consolidation, is to be regarded as a stockholder within the meaning of . section 10 of the statute.
    5. After consolidation is completed by filing a certificate with the secreta: y of state, the new corporation thereby created can succeed to the rights*, powers, and franchises of the original corporation only by operation of the statute, which provides for such succession only upon the election of the first board of directors of the new corporation.
    6. Such election is not authorized by the statute before consolidation has been consummated by filing the certificate with the secretary of state.
    7. The new consolidated company, in an action for money due on subscriptions to the capital stock of the original corporations, must show that it has succeeded to the rights of its predecessors upon an election of a board of its own directors.
    Error to the District Court of "Wood county.
    In March, 1872, the plaintiff in error brought its action,, in the Court of Common Pleas of Wood county, against defendants to recover $1,000 and interest, alleged to be due it on a written instrument, of which the following is a copy:
    “ Weston, May 17,1871.
    “We, the undersigned, heirs of Alex. Brown’s estate, of Weston township, Wood county, Ohio, agree to take one thousand dollars in stock in the Mansfield, Coldwater and Lake Michigan Railroad, if it comes near enough to the town of Weston, in Wood county, Ohio, to suit the convenience of said town. [Signed,]
    “ Wm. Brown,
    “ Samuel Brown,
    - “ Newton Brown,
    “ Mor&an Brown.”
    It was alleged in the petition, and was not denied in the answer, that, at the commencement of the suit, the Mansfield, Coldwater and Lake Michigan Railroad had been and was then permanently located through the town of Weston, in Wood county, Ohio, and that it was substantially graded and bridged throughout "its entire length in the State of Ohio, and that many miles of the road were in good running order.
    On the trial in the Court of Common Pleas, a jury being waived, the court found the following facts :
    “1. That on and for some time prior to the 28th day of December, 1870, the Mansfield, Coldwater and Lake Michigan Railway Company was a railroad corporation, duly incorporated and organized under and in pursuance of the provisions of the statutes of the State of Ohio, and,, was so incorporated and organized for the purpose of building and constructing.a railroad, from the town of Mansfield, in the State of Ohio, through the town of Weston, in Wood county, Ohio, to the state line between said state and the State of Michigan, and on a line which, if extended, would pass through the town of Coldwater, and strike the town of Grand Haven, on the eastern shore of Lake Michigan, in said State of Michigan.
    “ 2. That said Mansfield, Coldwater and Lake Michigan Railway Company was then building and constructing its said line of railroad as above described, and its said line of railroad was then in the actual process of construction.
    “ 3. That on and for some time prior to th$ said 28th day of December, 1870, the Ohio and Michigan Railway Company was also a railroad corporation duly incorporated and organized under and in pursuance of the provisions of the statutes of the State of Michigan, and was so incorporated and organized for the purpose of building and constructing a railroad from the terminus of the said line of railroad of the said Mansfield, Coldwater and Lake Michigan Railway Company at the state line between the State of Ohio and the State of Michigan, through the said town of Coldwater, to the said town of Grand Haven, on the eastern shore of Lake Michigan, in said State of Michigan.
    “ 4. That said Ohio and Michigan Railway Company was also then building and constructing its said line of railroad as above described, and its said line of railroad was then also in the actual process of construction.
    “ 5. That said two lines of railroad above mentioned when constructed and completed, would so unite as to form .a continuous line for the passage of railroad cars from said town of Mansfield, in the State of Ohio, to said town of ■Grand Haven, in the State of Michigan.
    “ 6. That thereupon, on the said 28th day of December, 1870, the said Mansfield, Coldwater and Lake Michigan Railway Company and the said Ohio and Michigan Railway Company duly entered into a joint agreement, under, the •corporate seal of each of said companies, for the consolidation of said companies, under and in pursuance in all respects of the provisions'of the statutes of the State of Ohio, in such case made and provided.
    “ 7. That afterward, on the 18th day of April, 1871, the said joint agreement for the consolidation of said railway companies above mentioned, was under and in pursuance in all respects of the provisions of the statutes of the State of Ohio, in such case made and pi-ovided, duly adopted by more than two-thirds of all the votes of all the stockholders of the said Mansfield, Coldwater and Lake Michigan Railway Company, and that thereupon the fact of said adoption was duly certified upon said joint agreement by the secretary of the said company.
    “ 8. That afterward, on the 10th day of May, 1871, the said joint agreement for the consolidation of said railway companies above mentioned was under and in pursuance in .all respects of the provisions of the statutes of the State of Michigan in such ease made and provided, also duly adopted by more than three-fourths of all the votes of all the stockholders of the said Ohio and Michigan Eailway Company, and that thereupon the fact of such adoption was also duly certified upon said joint agreement by the secretary of the said company.
    “ 9. That afterward, on the 17th day of May, 1871, the said defendants, William Brown, Morgan Brown, Samuel Brown, and Newton Brown, made the said agreement and subscription mentioned and referred to in the petition herein, and upon which this action is founded, and delivered the same to a person who was in fact acting in the interest and soliciting subscriptions to the capital stock of the said Mansfield, Coldwater and Lake Michigan Eailway Company.
    “ Í0. That afterward, on the 23d day of May, 1871, the said subscription of the said defendants was delivered by .said person to the proper officer of the said Mansfield, Cold-water and Lake Michigan Eailway Company.
    “11. That afterward, on the 1st day of June, 1871, the said joint agreement of consolidation so adopted by said railway companies, with the said fact of such adoption so ^ certified thereon, as aforesaid, was duly filed in the office of the secretary of state of the State of Ohio, according to the statute in such case made and provided.
    “ 12. That the said plaintiff, the Mansfield, Coldwater and Lake Michigan Eailroaci Company is such new and consolidated company and railroad corporation formed by the said consolidation of the said Mansfield, Coldwater and Lake Michigan Eailway Company and the said Ohio and Michigan Eailway Company as aforesaid.
    “13. That the intention and object of the said defendants in making said subscription above mentioned, was to aid, to the extent of said subscription, in the construction of the railroad that Avas to pass by the said toAvn of Weston, in Wood county, Ohio, without regard to the names of the corporation or company which, was to construct such railroad, without regard to or with no knowledge of the particular course, or the exact termini of such railroad, except that it was to start at the town of Mansfield, in the State of Ohio; that it should run near enough to said town of 'Weston, in Wood county, Ohio, to accommodate the business of said town, and was to run in the direction of the town of Coldwater and Lake Michigan, to or into or through, the State of Michigan, and to take of the capital stock of srfch railroad company to the amount of their subscription.
    “And that when the said defendants so made their said subscription above referred to, they had no knowledge whatever of the said joint agreement of the said Mansfield, Coldwater and Lake Michigan Railway Company and the said Ohio and Michigan Railway company to consolidate, nor of the adoption of said joint agreement to consolidate by the stockholders of said companies or of either of them.”
    It was also averred in the petition, and not denied in the-answer, that on the 5th of November, 1871, the plaintiff duly called upon subscribers to the capital stock for payment of subscriptions by installments, as follows, to wit: 80 per cent, on November 15,1871; 10 per cent, on December 15, 1871, and 10 per cent, on January 15, 1872.
    It was also averred in the petition: “ That on the 10th day of May, 1871, a board of directors for the plaintiff—. to wit, the corporation created by the consolidation—was duly elected; ” which averment was specifically denied in the answer.
    Upon the case thus made by the pleadings' and special findings of fact, judgment was rendered for the defendants, which was afterward, on error to the District Court, affirmed.
    To reverse these judgments, this proceeding is prosecuted.
    
      Gr. F. Seney and 8. F. Fink, for plaintiff in error:
    I. It is possible that the letters “R. R.” do not sufficiently designate the road or company, in which the defendants in error agreed to take stock. This omission, upon familiar principles, may be supplied by parol testimony, if necessary to give effect to the contract. It will be noticed also that the defendants in error did not contract with the company, but with its agent.
    The law is well settled, that where an agent contracts with another, and omits the name of his principal, or names himself as the contracting party, the contract is that of the principal, and he may enforce it.
    It is a well-settled rule also, that when parties contract, and a part is omitted through mistake, the mistake may be corrected, and the contract as corrected enforced.
    Upon another well-settled principle, the omission to name the road or the company in the contract is not fatal to a recovery.
    In construing a written instrument, all the attendant and surrounding circumstances may be shown for the purpose of enabling the Court to give application and meaning to the words used, and to arrive at the motives and inducements that led to the contract, and the object to be attained ■by it. Hildebrand v. Fogle, 20 Ohio, 157.
    II. The stipulation in the contract, that “ if the road comes near enough to the town of Weston to suit the convenience of the town,” was the inducement upon the part of the defendants in error for making this contract. The location of the road through the town, the partial construction and partial operation, was a full and complete compliance with the stipulation of the contract. Chamberlain v. Painesville and Hudson R. R. Co., 15 Ohio St. 225; 15 Ohio St. 328; Warner v. Callender, 20 Ohio St. 190; McMillan v. M. $ L. R. R. Co., 15 B. Mon. 218; Miller v. P. C. R. R. Co., 40 Penn. St. 237.
    III. Under the provisions of the statute (1 S. & C. 327, and 66 Ohio L. 127), the consolidating companies, upon the execution of the agreement to consolidate, do not cease to be bodies corporate, but continue such until the corporate .existence of the consolidated company is complete.
    If the corporate existence of the consolidated company dates from the time the agreement is filed with the secretary of state, then, until this time, the Ohio company had' a corporate existence, and full power to take and enforce subscriptions to its capital stock.
    The defendants in error made and delivered their subscription to the Ohio rail way company after it had made the agreement to consolidate, and before the agreement was filed with the secretary of state. Unquestionably, the rail way company acquired some right to the subscription upon its delivery and acceptance, notwithstanding its agreement to consolidate its capital stock. This right, whatever it may have been, by the express terms of the statute, passed to and vested in its successor, the consolidated company.
    IY. It was not necessary that the stockholders should have actual notice of the agreement to consolidate. Sparrow v. E. § C. B. B. Co., 7 Ind. 371; Bish v. Johnson, 31 Lid. 299.
    Y. A subscriber to the capital stock of a railroad company makes his subscription with reference to the statute in force at the time he executes and delivers his contract.
    The defendants in error say that they are under no legal obligation to pay their subscription, for the reason—
    1. That at the time it was made and delivered the consolidated company had no corporate existence, and therefore it could neither take nor enforce it.
    2. That it was delivered to the Mansfield, Coldwater and Lake Michigan Railway Company, when it and the Ohio and Michigan Railway Company were consolidating their capital stock, and for this reason the Ohio railway company could neither take nor enforce it. If for these reasons the defendants in error can avoid the payment of their subscription, then for the same reason the plaintiff in error might avoid issuing the stock upon tender of the money. Let us suppose that these twenty shares of fifty dollars each of the stock of the consolidated company- are worth more than one thousand dollars in money. In this condition of things the defendants in error tender their money and demand their stock. The consolidated company refuses to accept the money and issue the stock. The defendants in error bring their action against the consolidated company to compel the issue and delivery of the stock. Will it be contended for a moment that the consolidated company can defeat the action upon the ground that when the subscription was made the Ohio railway company was consolidating its capital stock with that of the Michigan company ? The law is the same, the facts are the same, and the rights of the parties are the same, whether the action is to get the money or to get the stock.
    
      Asher Cook and F. $■ JD. K. Hollenbeck, for defendants in error :
    It is averred in the petition that “ the contract of subscription [was] to be delivered to this plaintiff for its use and benefit.” The document does not so state. It is denied by the defendants, and the court below did not so find. To permit this addition to be made to the assumed contract would be in direct conflict with the established rule of evidence that “parol contemporaneous evidence is inadmissible to contradict or vary the terms of a valid written instrument.” 1 Greenleaf Ev., sec. 275.
    In the instrument before the court no certain company is named; no valuable consideration is expressed ; no agreement is made with any company or person, and there is no expressed engagement to pay. It lacks every element of a valid contract, and it amounts to nothing, more or less, than a mere voluntary statement that upon the happening of a certain event they would take stock. They do not by the instrument take, or say they have taken, but say that upon the happening of the event named they will take— that is, subscribe stock. Saying that they will take is equivalent to saying they have not yet taken. Fpressio unius, etc.
    The person receiving said writing from the defendants was not an officer of the company, nor authorized nor empowered in any manner to receive subscriptions to the capital stock thereof. He could neither bind, nor loose. He was a mere volunteer, doing that which he supposed would tend to promote the best interests of the village in which he resided, and secure for himself the reputation of being a “ public-spirited citizen.” A delivery by him of said writing to the company could not have been enforced.
    But, admit for a moment that the defendants, in good faith, attempted and intended by signing said writing to subscribe stock in the Mansfield, Coldwater and Lake Michigan Rail way Company. Did they do it? Could they do it—that is, on May 17th ? When the certified agreement or a certified copy thereof was filed in the office of the secretary of state on June 1st, it related back in its effects to the 10th of May, and the consolidation dates from that day, as, if a man deliver a deed as an escrow, to be delivered by the party holding it to the grantee on the performance of some act, the delivery to the latter will have relation back to the first delivery; or, as if a sheriff sells lands upon execution or order of court, and the sale be confirmed and deed executed, the right of property will relate back to date of sale.
    On the 13th of April and 9th of May, 1871, the old companies adopted and ratified, respectively, the articles of consolidation, and on the 10th of May the new company organized by the election of directors, etc. On the 10th of May, at the latest, both the old companies passed out of existence. They were no more. Their beings were merged in the new company. We presume and assume that it will not be claimed that the Mansfield, Coldwater and Lake Michigan Railway Company had authority or power to transact any business after that date, save what was necessary to perfect the consolidation. It could do nothing further in the prosecution of the enterprise for which it had been called into being. Its powers were exhausted. It was dead, absolutely dead, beyond the power of resurrection.” And being dead, an attempt to take stock in it was futile, as much so as if it had never been incorporated. Eor the same reason, it could not perform the duties of agent or trustee of another corporation. It had become impossible for it to either issue stock certificates or to transfer stock.
    We have discussed this case upon the assumption that plaintiff' was in a condition, and authorized by statute, to institute and prosecute this action. Was it in that condition ? It could not be, unless it was fully organized by the election of a hoard of directors, as the law required. Plaintiff’, in its petition, averred that a board of directors had been duly elected. This was a material allegation, and was denied by the answer. It then became necessary to the plaintiff' to sustain the averment by proof. It failed to make the proof, and the court below, in its findings of fact, did not find that the consolidated company ever organized by the election of a board of directors. By reason, therefore, of the fact that the plaintiff never organized as a corporation, it must fail through want of capacity to sue. A. & A. on Corp., secs. 631-635.
   McIlvaine, J.

The first question in this case is made on the instrument sued on. Does it show a contract ? The point made is, that it lacks mutuality.

It is true, the name of the party with whom the signers of the instrument were dealing is not set out in the writing ; but the special findings of fact show the party to whom it was delivered, and the purpose for which it was made. The person who solicited the subscription in aid of the construction of the road named, and into whose hands the paper was placed by the defendants, not being an authorized agent of the railway company, must, under the circumstances, be regarded as the agent of the defendants for the purpose of delivering it to the company. If, then, it were conceded that the Mansfield, Coldwater and Lake Michigau Railway Company, to which the instrument was delivered, and which was then engaged in constructing the railroad named in the instrument, had at the time capacity to accept subscriptions to its stock, there can be no doubt that, by accepting the instrument, the company became' bound, upon the payment of the money, to issue its stock to the defendants; and, on the other side, upon the performance by the company of the condition named in the instrument, the defendants were bound to pay the amount of their subscription. The introduction of parol testimony to prove the delivery of the instrument, and thus establish the mutuality of engagements between the parties, was no infringement of the rule of evidence which forbids the use of pai’ol contemporaneous evidence to contradict or vary the terms of wi’itten instruments.

It is also claimed by defendants that this writing was a mere voluntary statement that, upon the happening of a certain event, they -would take stock; that it was without considex’ation, and contains no expressed engagement to pay.

As to the condition—to wit, that the railroad should come near enough to the town of Weston to suit the convenience of the town—there is no pretense that it has not been pei’formed. And the supposed defect as to the contracting party having been supplied by proof of its delivery to the M., C. & L. M. Railway Company, and other circumstances attending its execution, there is left no doubt as to the sufficiency of the consideration. As to the last proposition, it is enough to say that the agreement of defendants to take the stock of the railway conrpany necessarily implies a promise on their part to pay for it.

Other and the principal questions in the case relate to-the construction and effect of the consolidation act of April 10, 1856 (53 Ohio L. 143), the first section of which was amended May 6,1869 (66 Ohio L. 127). The first five sections of that act are as follows :

“ Section 1. That whenever the lines of railroad of any x’ailroad companies in this state, or any portion of such lines, have been or may be constructed so as to admit the passage of burden or passenger cars over any txvo or mox-eof such roads continuously, without break or interruption,, such companies are hereby authorized to consolidate themselves into a single corporation; and that it shall be lawful' for any railroad company in this state, organized under the general or any special law, or which may hereafter be organized in this state, and whose line of road shall be made or in progress of construction to the boundary line of the state, or to any point either in or out of this state, to consolidate its capital stock with the capital stock of any railroad in an adjoining state, the line of whose road has been made, or is in process of construction to the same point, and where the several roads so unite as to form a continuous line for the passage of cars; provided, that roads running to the hank of any river which is not bridged shall be held to be continuous under this act.

“ Sec. 2. That said consolidation shall be made under the conditions and restrictions following, that is to say: First. The directors of the several corporations may enter into a joint agreement, under the corporate seal of each company, for the consolidation of said companies, and prescribing the terms and conditions thereof, the mode of carrying the same into effect, the name of the new corporation, the number of the directors and other officers thereof, and their place of residence; the number of shares of the capital stock, the amount of each share, and the manner of converting the capital stock of each of the said companies into that of the new corporation, with such other details as they shall deem necessary to perfect such new organization and the consolidation of said companies. Second. Said agreement shall be submitted to the stockholders of each of the said companies, at a meeting thereof, called separately, for the purpose of taking the same into consideration ; due noticie of the time and place of holding such meeting, and the object thereof, shall be given by written or printed notices, addressed to each of the persons in whose names the capital stock of said companies stands on the books thereof, and also- by a like notice published in some newspaper in the city or town where such company has its principal office or place of business.

“ And at the said meeting of stockholders the agreement of the said directors shall be considered, and a vote by ballot taken for the adoption or rejection of the same, each .share entitling the holder thereof to one vote, and the ballots shall be cast in person or by proxy, and if two-thirds of all the votes of all the stockholders shall be for the adoption of said agreement, then that fact shall be certified thereon by the secretary of each of said companies, and the agreement so adopted, or a certified copy thereof, shall be filed in the office of the secretary of state, and shall be deemed and taken to be the agreement and act of consolidation of said companies. And a copy of said agreement and act of consolidation, duly certified by the secretary of state, under the great seal- of the State of Ohio, shall be evidence of the existence of said corporation.

Sec. 3. Upon the making and perfecting the agreement and act, as provided in the preceding section, and filing the same or a copy with the secretary of state, the several corporations, parties thereto, shall be deemed and taken to be one corporation, possessing within this state all the rights, privileges, and franchises, and subject to all the restrictions, disabilities, and duties of such corporation of this state so consolidated.

“ Sec. 4. It shall be the duty of the stockholders, at the meeting called to take into consideration said agreement, as hereinbefore provided, after the adoption of the same, to appoint a time and place for the election of the directors and other officers of the new corporation, which may be provided for in said agreement, notice whereof shall be given by the secretary of each of said companies, in some newspaper printed at the place of the principal office of each of said companies, of the time and place of said election, at least three weeks previous thereto, which election shall be conducted in the manner that may be prescribed by said meeting of stockholders.

“ Sec. 5. Upon the election of the first board of directors of the corporation created by said agreement of consolidation, and by the provisions of this act, all and singular the rights, privileges, and franchises of each of said corporations, parties to the same, and all the property, real, personal, and mixed, and debts due on account of subscriptions of stock or other things in action, shall be deemed to be transferred and vested in such new corporation without further act or deed; and all property, all rights of way, and all other interests shall be as effectually the property of the new corporation as they were of the former corporations, parties to said agreement; and the title to real estate, either by deed, gift, grant, or by appropriations under the laws of this state, shall not be deemed to revert or be impaired by reason of this act: Provided, that all rights of creditors, and all liens upon the property of either of said corporations, shall be preserved unimpaired, and the respective corporations may be deemed to be in existence to preserve the same; and all debts, liabilities, and duties of either of said companies shall thenceforth attach to said new corporation and be enforced against it to the same extent as if said debts, liabilities, and duties had been contracted by it.”

1. Had the Mansfield,' Coldwater and Lake Michigan Raihoay Company, on the 23d of May, 1871. capacity to accept subscriptions to its capital stock ?

It will be observed that this date was after the adoption of the agreement to consolidate by the stockholders of this company and the Ohio and Lake Michigan Company, but before the certified agreement had been filed with the secretary of state. The foregoing question must therefore be answered in the affirmative. There is nothing in this statute which deprives the consolidating companies, respectively, of the full enjoyment and use of all their powers and franchises at any time before consolidation is consummated. Where, therefore, all the capital stock of such consolidating companies has not been previously subscribed, we can find no ground for denying to them the privilege of placing their stock during the pendency and progress of steps preliminary to consolidation; and, from the provisions of section 3 of the act, it is clear that consolidation is not consummated until the certified agreement of consolidation has been filed with the secretary of state.

2. Another point made by defendants’ counsel may be stated thus: Their agreement was to take stock in the Mansfield, Coldwater and Lake Michigan Raihoay Company. The stock of that company was consolidated with that of the Ohio and Michigan company, so as to form the stock of plaintiff in error. The first-named company made it impossible, by reason of the consolidation, to perform the ■contract by the delivery of its stock upon payment of the subscription, and the defendants never having assented to take the consolidated company’s stock in lieu of the stock subscribed for, they should not be obliged to pay their subscription. -

It will be observed that defendants’ subscription became absolute, by performance on the part of the company before consolidation was perfected; in fact, the condition was performed at the time the subscription was made.

And it must also be observed that, at the date of defendants’ subscription, the statute of 1856, under which consolidation was effected, was then in force.

Under these circumstances, we are of opinion that the provisions of the 10th section for the relief of stockholders refusing assent to the consolidation, were available to the defendants to the same extent as to stockholders similarly situated.

It is not now necessary, however, to determine what relief could be afforded under the circumstances or the mode in which it could have been obtained; it being enough for the purposes of this case to say, that they were not, by reason of consolidation, released from the payment of their subscriptions to the capital stock of the original companies, or at least from the payment of the difference, as against them, between the amount of their subscription and the value of the stock for which they subscribed.

This conclusion results from the fact that their contract ■of subscription must be construed as having been made with reference to the consolidation act, by which they are bound, as fully as if its provisions had been copied into their ■contract of subscription.

Nor does it avail the defendants to say now, that at the time of their making the subscription, they were not informed that steps preliminary to consolidation were in progress. They have made no allegation of fraud, and, indeed, the special findings of fact show that knowledge of the progress of consolidation would not have deterred them from making the subscription.

8. An averment in the original petition, to the effect that the contract of subscription sued on, was executed to the Mansfield, Coldwater andLake Michigan Railway Company^ to be delivered to the plaintiff for its use and benefit, has been commented on by defendants’ counsel. Ve attach no importance to the literal meaning of this averment. The whole case, as made in the petition and in the special findings by the Court of Common Pleas, shows that the plaintiff, if it can recover at all, must recover on the ground that it has succeeded to the rights of the railway company, by virtue of the 5th section of the consolidation act, and not upon a contract made with the plaintiff', or for its use and benefit.

4. When consolidation, under this statute, is consummated, a new corporation is thereby created (Shields v. The State, ante, p. 86.), which is capable of succeeding to all the rights, privileges, and franchises of the corporations, parties to the agreement of consolidation, including debts due to them on account of subscriptions of stock. But such succession does not take place until the happening of another event—• to wit, the election of a board of directors of such new corporation. The succession is provided for and controlled by the 5th section of the act, which is in these words:

“ Upon the election of the first board of directors of the corporation created by said agreement of consolidation, and by the provisions of this act, all and singular the rights, privileges, and franchises of each of said corporations, parties to the same, and all the property, real, personal, and mixed, and debts due on account of subscriptions of stock or other things in action, shall be deemed to be transferred and vested in such new corporation without further act or deed.”

On the record before us, it is found that the certified agreement to consolidate between the Mansfield, Coldwater and Lake Michigan Railway Company and the Ohio and Michigan Railway Company was filed with the secretary of state of the State of Ohio, on the 1st of June, 1871, and not before. From this finding it follows, under section 3 of the consolidation act, that the consolidated corporation—to wit, the plaintiff in error’—had no existence before the 1st of June, 1871. It does not appear, however,anywhere in the record, that a board of directors of the plaintiff' in error was elected at any time after the date of its creation—to wit, June 1, 1871. True, it is alleged in the original petition that such board was duly elected on. the 10th of May, 1871. Now, if the alleged date of such election be material, it is clear that the election was premature, and was not and could not have been a legal election. There was then no corporation, no stockholders; therefore, no board of directors.

It certainly was not the intention of the legislature to authorize, under section 5 of the statute, an election of directors before the corporation was brought into existence. It is absurd and impossible that all the property,, rights, powers, and franchises of the consolidating corporations could be transferred to and vested in a nonentity.

If this construction of the statute be objected to on the-ground that it places all the rights and franchises of the consolidated companies in abeyance during the interval between the creation of the new company and.the election of its first board of directors, we answer not so. The consolidating corporations continue for the purpose of holding and controlling them until the election takes place. The divesting of the old and the investing of the new corporation are simultaneous.

If, however, the date of the alleged election, as stated in the petition, be immaterial, and it might have been shown-that an election of directors took place after the consolidation was consummated, still the plaintiff in error is not relieved from difficulty. The defendants took issue upon the only allegation of an election made in the petition, and thus placed the burden of proving it upon the plaintiff'. Upon this state of pleading, the plaintiff was not entitled to judgment until the issue was found in his favor. There is no such finding in the record. This issue must therefore be resolved in favor of defendants

The plaintiff below having failed to show that it had succeeded to the rights of the consolidating companies, the judgments were properly rendered against it.

Judgment affirmed.

Welch, C. J., White, Rex, and Gilmore, JJ., concurred.