Court Opinion

ID: 7929890
Source: CourtListenerOpinion
Date Created: 2022-09-08 23:03:10.006195+00
Date Added: 2024-06-11T16:33:18.274336
License: Public Domain

Campbell, J.
(dissenting). This case depends, so far as its merits go, on a very simple state of facts. "While I am not clear that there are not fatal defects of proof, yet I do not think it necessary to consider them.
In 1871 a corporation was -in existence under the name of the Toledo, Ann Arbor & Northern Railroad Company. Plaintiff in error and several other persons signed papers which were severally obligatory, and in the following form: “For the purpose of promoting and aiding the construction of the Toledo, Ann Arbor & Northern Railroad, and in consideration of the benefits to be derived therefrom, I do hereby pledge and agree to pay to the order of the Toledo, Ann Arbor & Northern Railroad Company, the sum of $300, in instalments . of 20 per cent on each eight miles of iron laid on the line of said road, except the last instalment, which shall be payable on the ironing of the said road from State line to Ann Arbor, and upon the further condition that said road shall be built within one-half mile of the Whiting Hotel in the village of Milan.” This was dated August 21,1871. The corporation did considerable grading and other work, but finished no part of the railroad in Michigan, and laid no iron. In the early part of 1874 it was prosecuted in bankruptcy in the eastern district of Michigan, and in June, 1874, E. D. Kinne became assignee in bankruptcy. There is no adequate proof of these proceedings, but enough appears to show the steps taken by the assignee.
In August, 1875, Kinne advertised for sale a list of assets which was made up as follows: (1) Of stock subscriptions, and agreements to take stock, and of promissory notes and judgments for stock subscriptions. (2) Of the road-bed and right of way. (3) Certain wood and *592ties. (4) Certain promissory notes conditioned on placing the iron. (7) Certain land.
In September, 1875, Kinne sold the property set forth in this inventory or list to Benjamin P. Crane. The sale, as Mr. Kinne shows, and so it appears from the papers, covered only this list. The list undoubtedly contained enough to reach the paper now in suit.
Mr. Crane in 1877 transferred his purchase to James M. Ashley. On the twenty-third of November, 1877, Mr. Ashley made and filed with the Secretary of State a certificate as purchaser, undertaking to organize a new corporation, which is the plaintiff in this case, purporting to be made under Act No. 198 of 1873, article 1, section 2, and asserting the intention of exercising the functions of the older corporation.
The plaintiff corporation built a railroad from the State line to Ann Arbor, which, if built by the old company seasonably would have fulfilled the condition of the paper sued on.
The question therefore is whether the plaintiff, without any dealings with defendant, could assume the place of the old corporation, and by building this road compel Wilcox to pay his subscription, when nothing had occurred before the bankruptcy to earn any portion of it.
I do not see how the fact that this is a railroad agreement puts it on any different footing from any other conditional agreement. Any money actually earned by the old corporation could be assigned. But I do not think there is any rule of law which will authorize a party who has had an offer made to him of payment of a certain pjemium if he performs a certain condition, to substitute f )me one else in his stead, not as agent, but as a new p incipal. No authority was produced for any such doctrine, and I do not believe such a principle is tenable. No doubt it is competent in some cases to merge an old corporation in a new one, and we have had several charters as well as general laws, under which the corporate identity has been kept up in a new name, and with larger as well as smaller powers. But *593there can be no shifting of corporate identity except by statute, and I am not able to find any such statutory change here. 'I think the case fails on any such claim. If there is no corporate identity the failure of the' old company and its bankruptcy before any money was earned put an end to the relations of the parties. Such a liability could not be kept up indefinitely. Interests might and probably did change when there was no assurance that the plaintiff in error’s property could be benefited. The original road could claim no rights after seven years from its organization. Comp. L. § 47.
It is plain that the bankrupt law favored no such doctrine. There is nothing in that act which attempts to transfer to the assignee in bankruptcy any of the corporate franchises. The power to exercise corporation franchises in a state, derived from the corporate charter, is preserved expressly so as to prevent dissolution. The law, while it provided for disposing of corporate assets, distinctly declares that no discharge shall be granted to any corporation. The bankrupt company must continue to exist as a corporation, and still exists for all purposes north of Ann Arbor.
There has never been any difficulty in obtaining corporate powers to make use of or finish a purchased road, as well as to build a new one. By Act No. 190 of the laws of 1873, which is set up in the brief of counsel for the railroad as covering this case, a railroad company is allowed, under certain restrictions and conditions, to sell all or part of its road to another existing incorporated company. That statute, however, does not reach sales in bankruptcy, but requires confirmatory action by the stockholders. It requires the sale to be to an existing company, which thereby becomes liable to duties. And it does not merge the selling in the buying company. 1 Sess. L. 1873, page 478.
Act 198 of 1873, which is the general revisory act eon- ' cerning railways, is the one under which the new company was actually organized. It was done under section *5942 of article 1. That section, however, applies by its terms, as the previous analogous statute of 1859 did (Laws 1859, p. 252), only to sales under mortgages and trust deeds, and allows purchasers of all and any specific part of a railroad to organize for the purpose of its management with the same powers as to such purchased property as were possessed by the mortgaging company. This statute does not purport to reach sales on execution or’in bankruptcy, and it does not refer to purchases of anything but a road or a part of one. It has no reference to general assets or personalty, and it does not purport to extinguish the old company or to merge it wholly or partially. The new company is not bound to any of the Labilities of the old one, or substituted in its place.
The statute makes no provision for incorporating by the purchaser’s certificate, except as to the purchase of the road itself; and if the new corporation obtains any other assets, it is only on the footing of any other assignee, and with no greater or different interest from that which might be retained by a private purchaser without any attempt to incorporate.
I think the judgment against Wilcox should be reversed.