Day v. Worcester, Nashua, & Rochester Railroad

151 Mass. 302 | Mass. | 1890

Holmes, J.

This is an action against a corporation formed by the consolidation of the Nashua and Rochester Railroad and the Worcester and Nashua Railroad, to recover damages for a refusal to issue stock in exchange for bonds of the former road, in accordance with a provision in the bonds. The facts are the same as in John Hancock Ins. Co. v. Worcester, Nashua, & Rochester Railroad, 149 Mass. 214, except that it now appears affirmatively that the consolidation actually was carried out on the footing of equality between the shares of both the old corporations and the shares of the new one, as was contemplated by the statute authorizing it, a point which was doubtful before, (149 Mass. 219, 220,) and except that in the present case the demand was for stock in the new corporation alone.

The argument of the defendant has not been addressed to the technical sufficiency of the demand, but to showing that the former decision should be reconsidered. We do not accede to the argument, but, as there seems to have been some misapprehension of the meaning of the judgment in the former case, we shall add something to what was said there in the hope of making plainer our point of view.

For the purposes of the decision, we assume that the bonds did not import a contract by the Nashua and Rochester Railroad Company to continue in existence until they were satisfied; that the contract in the bonds to exchange them for stock was only binding so long as the Nashua and Rochester Railroad Company was in existence; and that the Legislature did not attempt to enlarge or change the liability created by the bonds. Therefore we do not stop to consider how the defendant can complain of the act under which it has come into existence, and which was voluntarily accepted by its constituent companies. Braintree Water Supply Co. v. Braintree, 146 Mass. 482, 486. New Bedford Railroad v. Old Colony Railroad, 120 Mass. 397. Pitkin v. Springfield, 112 Mass. 509.

The argument for the defendant tacitly assumes that the Nashua and Rochester Railroad Company has ceased to exist, to all intents and purposes, and concludes that therefore there is no longer any obligation to deliver stock for the bonds; a conclusion which would follow by the premise which we have conceded. But the very point decided in the case of the John Hancock Insurance Company was, that by the true construction of the consolidating act the Nashua and Rochester Railroad Company has not ceased to exist, but that for the present purposes the defendant is that company with a different name.

Assuming for the moment that this construction is correct, there can be no question of the power of the Legislature to authorize a consolidation upon those terms. A change of name, an acquisition of new property and rights, or both together, do not necessarily make a change of person. To add another illustration to those suggested formerly, if the Legislature authorizes one railroad, which has issued bonds like the present, to buy the franchise, property, and stock of another, and to issue new stock of its own to an equal amount, with an express proviso that the identity of the purchasing road shall remain unchanged, and thereupon the purchase is made, we conceive that there can be no doubt that the purchasing road is still bound to deliver stock for bonds as before. If the bondholder could not complain of the increased issue, (Pratt v. American Bell Telephone Co. 141 Mass. 225,) it is very certain that the company could not, and least of all on the ground that it was no longer the same company. Central Railroad & Banking Co. v. Georgia, 92 U. S. 665. See New Bedford Railroad v. Old Colony Railroad, 120 Mass. 397, 400.

In the case supposed, the identity of the purchasing road remains unchanged for all purposes. But the law is equally familiar with the preservation of identity for a particular purpose when in other' respects it is changed. More than that, it is familiar with an identification of natural persons, which of course is wholly feigned, for the preservation and transmission of rights and duties. The heir “ is the same person as his ancestor.” Oates v. Frith, Hob. 130. Bain v. Cooper, 1 Dowl. Pr. Cas. (N. S.) 11, 14. Executors “represent the person of their testator.” St. 9 Ed. III. St. 1, c. 3. Littleton, § 337. Coghil v. Freelove, 3 Mod. 325. Bain v. Cooper, 1 Dowl. Pr. Cas. (N. S.) 11. Administrators “represent the estate” of their intestate. North v. Butts, Dyer, 139 b, 140 a. Even assigns get the benefit of a warranty to which they were not parties through an attenuated form of the same notion. Norcross v. James, 140 Mass. 188, 189. Similar illustrations are referred to in Compton v. Railway Co. 45 Ohio St. 592, 616.

When two corporations are consolidated, no doubt for most purposes they cease to exist, and the new corporation is a distinct person in the eye of the law, although it is their “ legal successor.” Graham v. Boston, Hartford, & Erie Railroad, 118 U. S. 161, 168. But no fiction is necessary so far as the Legislature sees fit to say that the new corporation shall be regarded as the same with one of the old ones, or even alternately as the same with each; or, more explicitly, that although the new corporation is a new person for the acquisition of new rights or the making of new contracts, the old corporations shall not be altogether ended, but shall continue under the new name so far as to preserve all their existing obligations unchanged. Compton v. Railway Co. 45 Ohio St. 592, 618. If that is made a condition of the consolidation, the consolidating companies do remain in existence to that extent. There is no greater legal difficulty in continuing the liability upon a contract to exchange stock for the bonds, than there is for continuing it upon one to pay money for them. In neither case does the Legislature say, in terms, that the old corporation shall be taken to remain in existence for this purpose; but if it requires the end, it implies the means. Quando aliquid mandatur, mandatur et omne per quod pervenitur ad Mud. See Broughton v. Pensacola, 93 U. S. 266, 269, 270; Atlantic National Bank v. Harris, 118 Mass. 147, 151; Coffey v. National Bank of Missouri, 46 Misso. 140, 143; Board of Administrators v. New Orleans Gas Light Co. 40 La. An. 382.

To our mind the only really debatable point is not what the Legislatures of Hew Hampshire and Massachusetts could do as against the consolidating companies, but what they did in fact; that is, what is the true construction of the words of the New Hampshire St. of 1883, c. 239, and of our St. of 1883, c. 129. Railroad Co. v. Georgia, 98 U. S. 359, 362. Central Railroad & Banking Co. v. Georgia, 92 U. S. 665, 670. Upon that point we always have recognized that different minds might form different opinions. To justify our own, it is unnecessary to repeat the very sweeping language of the statutes, which seems to be as broad as could have been used had the Legislatures had this particular obligation in mind. The question is not whether words on their face insufficient should be stretched by construction to embrace the obligation in the bonds. It is whether the words “ all the obligations, debts, and liabilities,” and “all claims and contracts,” &c., shall be cut down upon some extrinsic reason.

We find no such reason. On the contrary, every extrinsic fact is in favor of giving its natural meaning to the laboriously comprehensive language of the acts. The road of the obligor was let to the Worcester and Nashua Railroad before it was built, by authority of statute. The statute which authorized the issue of these bonds, and required them to be convertible into stock, also required the Worcester and Nashua Railroad to guarantee them, and it did so. It paid the interest upon them directly to the bondholders, and its lease was changed so as to require it to do so. Afterwards it brought about an exchange of the original bonds for others at a lower rate of interest, but otherwise like the old ones, and mortgaged its road as additional security for them. In 1875 the Worcester and Nashua Railroad was authorized to purchase the bonds and stock of the obligor, providing for the continued exchange of stock for bonds on presentation. Finally, the last step was taken of authorizing a consolidation on terms of perfect equality, which was carried out. Under the existing relations of the companies it was little more than a formal act.

In view of the fact' that every step taken was in pursuance of special legislation, it is not to be believed that the most important obligations which then were outstanding were forgotten, or were not contemplated. It is probable that this particular feature of them, which had been protected in 1875, was before the mind of the Legislature. The effect of consolidation, if, as we must assume, the terms prescribed and assented to were just, was simply to bring together two groups of shares of equal value. Justice to the bondholders forbade allowing the Nashua and Rochester Railroad to extinguish itself to their detriment. No injustice was done to stockholders by continuing its existence under the altered name. We must decide a second time, that for the purpose of continuing the obligation of these bonds in existence according to their tenor the defendant is the Nashua and Rochester Railroad Company.

The reasoning which has led us to the conclusion that the defendant is bound to make good the contract of the Nashua and Rochester Railroad to exchangee its stock for bonds, and the fact that the Nashua and Rochester stock, if delivered, would have been exchangeable at once for the defendant’s stock, share for share, lead us to the further conclusion that the defendant was bound to deliver its own stock, and that the demand was sufficient.

Exceptions overruled.