Case Name: Cameron et al. v. New York & M. V. Water Co. et al.
Court: New York Supreme Court, General Term
Jurisdiction: New York
Decision Date: 1891-12-14
Citations: 16 N.Y.S. 757
Docket Number: 
Parties: Cameron et al. v. New York & M. V. Water Co. et al.
Judges: 
Reporter: West's New York Supplement
Volume: 16
Pages: 757–760

Head Matter:
Cameron et al. v. New York & M. V. Water Co. et al.
(Supreme Court, General Term, Second Department.
December 14, 1891.)
1. Corporations—Sale op Stock to New Corporation.
Where a new corporation purchases and pays cash for all the capital stock of a prior corporation with the assent of the stockholders of the latter, who receive the money therefor, the stock becomes the property of the new corporation, and the stockholders of the old corporation are not entitled to scrip therefor.
2. Same—Stockholders—Estoppel.
The stockholders of the old corporation in such case cannot complain that the new corporation has no power to hold the stock by purchase.
3. Same—Consolidation.
Under Laws 1877, c. 374, which allowed two corporations of the same nature, and covering the same territory, to consolidate, and the provisions of the corporation acts of 1890, saving the existing rights of existing corporations, (chapter 503, § 24; chapter 567, §22; chapter 564, §71,) two water companies organized before the taking effect of the acts of 1890, for the purpose of supplying water to the same village, may consolidate.
4. Same.
The consolidation of corporations engaged in the same general line of business is not against public policy, nor prohibited by Laws 1890, c. 564, § 7, which provides that no stock corporation shall “ combine ” with any other corporation for the prevention of competition.
Appeal from special term, Westchester county.
Action by D. F. Cameron and Henry Huss, stockholders, etc., against the New York & Mt. Vernon Water Company, the Mt. Vernon Water Company, and the New York City Suburban Water Company, to recover certain shares of stock, and for an injunction to restrain the consolidation or combination of such companies. From an order denying a motion to vacate and set aside .a preliminary injunction restraining them from transferring stock or consolidating, defendants appeal. Reversed.
The Mt. Vernon Water Company was incorporated in 1882 under the village water-works act of 1873. The New York & Mt. Vernon Water Company was incorporated in 1886. The New York City Suburban Water Company was incorporated in March, 1891. All of these companies were incorporated for the purpose of supplying water to the village of Mt. Vernon, and covered the same territory. The New York & Mt. Vernon Water Company was incorporated as the successor of the Mt. Vernon Water Company, and purchased its capital stock, paying therefor in cash, and operated its plant. Plaintiffs were stockholders in the Mt. Vernon Water Company, and brought the action to recover their shares of stock, which had been delivered to the New York & Mt. Vernon Water Company, and to restrain the proposed absorption of the prior companies by the New York City Suburban Water Company. A preliminary injunction was granted.
Argued before Barnard, P. J., and Pratt, J.
John S. Gleason, for appellants. Albertus Perry, (Martin J. Keogh, of counsel,) for respondents.

Opinion:
Barnard, P. J.
In 1882 a to furnish water to the of Mt. Vernon was incorporated under the village water-works act of 1873, with a capital of $25,000, under the name of the Mt. Vernon Water Company. In 1886 the defendant the New York & Mt. Vernon Water Company was incorporated under the general act authorizing the formation of corporations for manufacturing and other purposes. This company obtained a contract from the village in March, 1886, to furnish water, if pure, for 20 years. An exclusive privilege for establishing and maintaining water-works within and near the village was given by ordinance of the village. The stock of the Mt. Vernon Water Company was purchased by the new company, and held for the stockholders in the same. The stockholders in the old Mt. Vernon Water Company were paid the full par value of their stock; and as the object was to exterminate the prior company, and merge it in the New York & Mt. Vernon Water-Works Company, no right exists in the stockholders of the old company to demand new scrip for the stock for which they have been paid. No newright exists in respect thereto beyond whatever advantage may result from the purchase of the old stock to the stockholders in the new company. The consolidation appears to have been mutually agreed upon, and the acquiescence of the old company has been so long continued that justice cannot be now done after the use of the franchise and the property of the corporation has been delivered over to the new company. The village of Mt. Vernon is not a party, and the plaintiffs have no duty in respect to the rights or obligations of the village. The sole question, therefore, is whether the Mt. Vernon Water-Works Company can consolidate with a corporation known as the "New York City Suburban Water Company," incorporated under the general law in respect to the formation of manufacturing corporations. The corporations are of the same nature, and they cover the same territory. In such a case the consolidation is authorized, or was at the passing of the resolution by the two companies to be consolidated, under chapter 374, Laws 1877. All the steps taken towards consolidation were in conformity with the act permitting "the consolidation, and the repeal of the consolidation act in 1891 subsequent thereto preserved such inchoate and ineompleted acts. The order should therefore be reversed, with costs and disbursements, and the motion to dissolve the injunction granted, with costs.