121 Mich. 631 | Mich. | 1899
{after stating the facts). 1. Plaintiff introduced a certified copy of a report made by the construction company, filed with the secretary of state, as the law required, that that company had “sold and transferred all of its property and franchises, at private sale, to the Michigan Telephone Company.” He also introduced evidence showing that the Michigan Telephone Company owned all but eight shares of the stock of the construction ■company at and prior to the sale, that all the employés of the construction company were continued in the employment of the Michigan Telephone Company after the sale, and that the business was conducted in the same manner as before. It appeared, however, that billheads and other stationery were changed from the construction company to the Michigan Telephone Company. This constitutes all the evidence in the record in regard to the sale and transfer from the construction company to the defendant.
The fact that the same employés were continued in the employment of the defendant after the transfer, and that its business continued to be carried on the same as before, is without significance, and has no tendency to show consolidation, or assumption of the obligations of the old company. Naturally, there would be no change of employés upon a bona fide sale and transfer by corporations of this kind to others. The fact that defendant owned a majority of the stock in the construction company does not tend to show consolidation, or an assumption of the obligations of the vendor. There is no testimony tending to show the terms of that sale. For all that appears, the consideration for the sale had been paid into the treasury of the construction company, to pay its debts and to be divided among its stockholders, and it may still possess ample assets to meet all its obligations. 3 How. Stat. §§ 4904e,
Although one person owns a majority of the stock, or all but two shares, or all of it, he does not thereby acquire the right of acting for the corporation, or as the corporation, independently of the directors. 2 Cook, Stock, Stockh. & Corp. Law, § 709; McLellan v. File Works, 56 Mich. 579, 584; New Haven Wire Co. Cases, 57 Conn. 352; Richmond, etc., Construction Co. v. Railroad Co., 15 C. C. A. 289, 68 Fed. 105. A coi’poration, by virtue of being a stockholder in another corporation, is not liable for the acts of the other. Atchison, etc., R. Co. v. Cochran, 43 Kan. 225 (19 Am. St. Rep. 129). Nor is that fact evidence of merger. Jessup v. Railroad Co., 36 Fed. 735. It follows that the defendant, as a stockholder in the construction company, could not act for that company in making this purchase. It could only act through the board of directors of that company. The eight other stockholders were as fully entitled to their share of the property as would be 800, or 1,000, or
In Whipple v. Railway Co., 28 Kan. 474, in January, 1880, three companies consolidated to form the defendant. The articles of consolidation expressly stipulated that the consolidated company should not be liable for the individual debts of the constituent companies, but that such companies should continue in existence for the purpose of adjusting all claims and demands. ■ Plaintiff sued the consolidated company for a tort of one of the consolidating companies. Held, that the original company was alone liable for the demand, and that, if plaintiff had any right against the new company, it was only after judgment rendered against the old. That decision was rendered in 1882. In 1889 the legislature of that State passed an act authorizing the consolidation of railroads, and expressly made the consolidated company “subject to all the obligations and liabilities to the State which belonged to, or rested upon, either of the companies making such consolidation.” It was said in the case of Berry v. Railroad Co., 52 Kan. 759 (39 Am. St. Pep. 371), that the term “all obligations” might with propriety be applied to all claims, debts, or demands of the original companies; but the court held that, if the statute is not so construed, where two or more railroads consolidate under the statutes of the State, the new company is answerable for all the obligations of the old, in the absence of all evidence or stipulations to the contrary. That was a case of consolidation, and does not overrule the Whipple Case. On the contrary, it expressly approves it. Counsel for plaintiff cite New Bedford R. Co. v. Old Colony R. Co., 120 Mass. 397. That was a purchase under a statute which expressly made the purchasing company “subject to all the duties, liabilities, obligations, and restrictions of the old
2. 3 How. Stat. § 4161c, provides :
“If the capital stock of any such corporation shall be withdrawn, and refunded to the stockholders, before the payment of all the debts of the corporation for which such stock would have been liable, the stockholders of such corporation shall be jointly and severally liable to any creditor of such corporation, in an action founded on this statute, to the amount of the sum refunded to him or them respectively.”
Plaintiff’s counsel urge that the defendant is liable under this statute. There are two obvious replies to this
3. It is unnecessary to discuss the question of negligence. The party upon whom negligence is charged is entitled to be heard in court before negligence is fixed upon it. If this defendant is liable because property of the construction company has heen fraudulently transferred to it, then defendant can only be held liable when that liability has been established against the other company by a judgment, which can then be enforced against this defendant, as was done in Grenell v. Gas Co., supra, and Grenell v. Ferry, 110 Mich. 262. If it is liable because it has assumed that liability, that fact must first be established. For these reasons, we decline to discuss the question of negligence.
Judgment reversed, and new trial ordered.