Opinion ID: 1491046
Heading Depth: 1
Heading Rank: 2

Heading: Bonds of Appalachian Power Company.

Text: We have held that there could be no deductions for amortization in case of the bonds of Virginian and of Electric Company of New Jersey because the obligations of the original obligors were not carried forward against the transferees by consolidation or merger so as to preserve the identities of the transferor companies. But the situation of the bonds of the Appalachian Power Company is different. Under the decisions of New York Central R. Co. v. Commissioner, 79 F.(2d) 247 (C. C.A.2), and Western Maryland R. Co. v. Commissioner, 33 F.(2d) 695 (C.C.A.4), deductions should be allowed in the case of those bonds if there was a merger of Appalachian Power Company in the Appalachian Electric Power Company which essentially preserved the identity of the transferor. In Langhorne v. Richmond Ry. Co. (1895), 91 Va. 369, at pages 374, 375, 22 S.E. 159, 161, where there had been a consolidation, the court said: The corporation which is created by such consolidation, or the surviving corporation, where another or others are merged into it or consolidated with it, is ordinarily deemed the same as each of the corporations which formed it for the purpose of answering for the liabilities of the old corporation, and may be sued under its new name or under the name of the surviving company for their debts as if no change had been made in the name or in the organization of the original corporation.    Since, by authority of law and the act of the parties, the consolidated corporations are moulded into one with none of their rights impaired, and none of their responsibilities lessened, there is no good reason why the same proceedings may not be had against the new corporation as might have been had against the old to compel payment of liabilities. The decisions of the Virginia Court of Appeals in American Ry. Exp. Co. v. Downing (1922) 132 Va. 139, 111 S.E. 265 and in American Ry. Exp. Co. v. Fleishman, Morris & Co., Inc. (1928) 149 Va. 200, 141 S.E. 253, as well as in the Langhorne decision, supra, seem to show that, where there is a merger or consolidation under the Virginia law, the transferee corporation succeeds by operation of law to all the rights and liabilities of the former company and carries forward its identity. The allowance of the deductions for the bonds of the Appalachian Power Company is governed, then, by our decision in New York Central R. Co. v. Commissioner, supra. Order affirmed, and deductions disallowed as to the bonds of Virginian and bonds of Electric Company of New Jersey, and reversed as to the bonds of Appalachian Power Company, with directions to the Board of Tax Appeals to allow the deductions as to those bonds.