Page images

"Two or more railroad corporations may consolidate their capital stock, debts, property, assets, and franchises in such manner as may be agreed upon by their respective boards of directors. No such amalgamation must take place without the written consent of the holders of three-fourths in value of all the stock of each corporation; and no such amalgamation or consolidation nrust in any way relieve such corporation or the stockholders thereof from any and all just liabilities. In case of such amalgamation or consolidation, due notice of the same must be given, by advertisement for one month in at least one newspaper in each county, if there be one published therein, into or through which such roads run, and also for the same length of time in one paper published in Sacramento and two papers published in San Francisco; and when the consolidation and amalgamation is completed, a copy of the new articles of incorporation must be filed in the office of the Secretary of State."

Section Cited.

Cal. So. R. R. v. S. P. R. R., 67 Cal. 61, 7 Pac. 123; Cal. etc. Co. T. Hooper, 76 Cal. 405, 407, 18 Pac. 599; Smith v. Los. Angeles etc. Ry. Co., 98 Cal. 216, 33 Pac. 53; Market St. Ry. Co. v. Hellman, 109 Cal. 577, 583, 584, 586, 593, 601, 42 Pac. 225; Murphy v. Pacific Bank, 119 Cal. 343, 51 Pac. 317.


Construction of Section Prior to Code: Stats. 1861, p. 622.

Articles of Consolidation.-Certified copies from the office of the Secretary of State of the articles consolidating two or more railroads are admissible in evidence to prove such consolidation. (Vance v. Kohlberg, 50 Cal 346.)

Under Section 40 of the act of 1861, as under this section of the Civil Code, it is intended that the articles of consolidation-them. selves constituting the new articles of incorporation-shall be filed, and the persons named therein to act as directors until their successors shall be elected in the manner provided in the by-laws were properly named as directors. (Cal. S. R. R. v. S. P. R. R., 67 Cal. 59, 7 Pac. 123. To same effect: Cal. etc. Co. v. Hooper, 76 Cal. 406, IS Pac. 599; Market St. Co. v. Hellman, 109 Cal. 587, 42 Pac. 225.)

Construction of this Section.—The provision of the Civil Code in relation to the consolidation of railroad corporations apply equally to corporations formed and existing before and after the adoption of such code. (Market St. Ry. Co. v. Hellman, 109 Cal. 571, 42 Pac. 225.

Consent of Stockholders to Consolidation.-Under the California ('onstitution the right to consolidate without the unanimous consent of the stockholders exists. (Market St. Ry. Co. v. Hellman, 109 Cal. 571, 42 Pac. 225.)

And this section does not require an agreement upon a plan of consolidation, but simply upon the consolidation and a consent in writing of the holders of three-fourths in value of all the stock in each corporation to the consolidation “in such manner as may be agreed upon by the respective boards of directors of said companies," is sufficient. (Market St. Ry. Co. v. Hellman, 109 Cal. 571, 42 Pac.


In determining majorities where action in corporate meetings or assent of stockholders is involved, the term "stock” means the subscribed, issued, outstanding shares that can be voted, and the consent of the holders of three-fourths in value of the capital stock means three-fourths of the "outstanding” stock. (Market St. Ry. Co. v. Hellman, 109 Cal. 571, 42 Pac. 225.)

A corporation which is a stockholder in a consolidated corporation may authorize its secretary to vote its stock, and where a portion of its stock stood on the books of the company in the names of the pledgees who authorized the stock to be voted by proxy, it may ratify and confirm the acts of the proxy, and such ratification is equiv. alent to previous authority. (Market St. Ry, Co. v. Hellman, 109 Cal. 571, 42 Pac. 225.)

Where the trustees of stock consented to the consolidation of the corporation prior to the cancellation of the certificates held by them in trust, it is immaterial that the stock so held in trust by them was subsequently canceled. (Market St. Ry. Co. v. Hellman, 109 Cal. 571, 42 Pac. 225.)

Notice of Consolidation.- A publication in every issue of a paper from October 18th to November 17th, both days inclusive, is a publication for one month as provided in section 473 of the Civil Code. (Market St. Ry. Co. v. Hellman, 109 Cal. 571, 42 Pac. 225.)

A notice of consolidation of corporations, stating in substance that pursuant to statute, the several constituent corporations, naming them, upon the written consent of the stockholders holding more than three-fourths in value of all the stock of each of said corporations, and by agreement of the respective boards of directors of said corporations made and entered in accordance with such consent, and pursuant to the statute, have consolidated and amalgamated their capital stock, debts, property, assets and franchises, under a speci. fied corporate name and style is sufficient notice of consolidation. (Market St. Ry. Co. v. Hellman, 109 Cal. 571, 42 Pac. 225.)

Indebtedness of Constituent Companies.--Bonds of the constituent corporations are not, strictly speaking, obligations of the consolidated corporation, but it may agree with the constituent corporations to assume and pay the bonded indebtedness, and may provide for the payment of such bonds by the issuance of its own bonds. (Market St. Ry. Co. v. Hellman, 109 Cal. 571, 42 Pac. 225.)

There can be no novation of the indebtedness of the constituent corporations without the consent of the creditors of those corporations; but where the consolidated corporation has assumed the lia. bilities of the several constituent corporations, the creditors may elect to have recourse against the consolidated company and to recover against it. (Market St. Ry, Co. v. Hellman, 109 Cal. 571, 42 Fac. 225. See note: Austin v. Bank, 59 Am. St. Rep. 557.)

Consolidation does not relieve either of the consolidating companies from its liabilities. The consolidated company may assume and make itself liable for the antecedent liabilities of the consolidating companies. Such agreement does not bind creditors, yet suit brought by a creditor upon a demand so assumed against the corporation assuming it is of itself sufficient evidence of the acceptance of the new obligation in lieu of the old. (Morgan v. Overman 8. M. Co., 37 Cal. 534; Smith v. Los Angeles etc. Ry. Co., 98 Cal. 216, 33 Pac. 53.)


Sec. 474, C. C. There is granted to every railroad corporation the right of way for the location, construction and maintenance of their necessary works, and for every necessary adjunct thereto, over any swamp, overflowed, or other public lands of the state not otherwise disposed of or in use, not in any case exceeding in length or width that which is necessary for the construction of such works and adjuncts, or for the protection thereof, not in any case to exceed two hundred feet in width. En. March 21, 1872.

Legislative History,

This and the following section of the chapter are based on sections 20, 21 and 22 of the railroad act of 1861, pages 617, 618.

For Interpretation of this act, see Fox v. N. P. R. R. Co., 35 Cal. 542.


Sec. 475, C. C. The grants mentioned in the preceding section do not apply to public lands of the state within the core porate limits of towns and cities, or within three miles thereof. En. March 21, 1872.


LANDS. Sec. 476, C. C. The right to take from any of the lands belonging to the state, adjacent to the works of the corporation, all materials, such as wood, stone, and earth, naturally appurtenant thereto, which may be necessary and convenient for the original construction of its works and adjuncts, is granted to such corporations. En. March 21, 1872.


Sec. 477, C. C. If any corporation receiving state lands or appurtenances thereunder is dissolved, ceases to exist, is discontinued, or the route or line of its works is so changed as not to cover or cross the lands selected, or the use of the lands selected is abandoned, such selected lands revert, and the title thereto is reinvested in the state or its grantees, free from all such uses. En. March 21, 1872.


Sec. 478, C. C. When any selection of the right of way, or land for an adjunct to the works of a railroad corporation, is made by any corporation, the secretary thereof must transmit to the surveyor general, comptroller of state, and recorder of the county in which the selected lands are situate, a plat of the lands so selected giving the extent thereof and uses for which the same is claimed or desired, duly verified to be correct; and, if approved, the surveyor general must so indorse the plat, and issue to the corporation a permit to use the same, unless on petition properly presented to the court, a review is had and such use prohibited. En. March 21, 1872.

Section Cited.

San Pedro v. So. Pac. R. R. Co., 101 Cal. 336, 35 Pac. 993.


Construction of Section-Permit. This section does not limit the time within which work shall be commenced for the construction of the road, under the surveyor general's permit; but implies the con

Corporation Laws—23.

tinuance of the permit until the use is prohibited by a court in the manner prescribed. The surveyor general's permit operates as a license of a right of way over public lands of the state which may be revoked by the state, for unnecessary delay on the part of the railway company in availing itself of the privilege, but unless the state makes the objection, the privilege cannot be declared forfeited at the instance of any other person. (San Pedro v. So. Pac. R. R., 101 Cal. 333, 35 Pac. 993.)


BUSINESS, HOW CONDUCTED. $ 479. Checks to be affixed to all baggage-Damages. § 480. Annual report to be verified-Form of report. $ 481. Duties of corporation. § 482. Corporations to pay damages for refusal. § 483. Furnish room inside passenger-cars, and be responsible for

damages occurring on freight and other cars. $ 484. Corporations to post printed regulations, and not responsible

for damages in violation of rules. § 485. Fences-To pay damages, Not liable in certain cases-Cor.

poration may recover damages, when. § 486. Regulations of trains-Penalty. $ 487. Passenger refusing to pay fare. 8 488. Officers to wear badge. $ 489. Rates of charges. § 490. Passenger tickets, how issued, and to be good for six months.

491. Character of rails to be used. $ 492. Elevated or underground railways. $ 493. To apply to all railroad companies. § 494. Sale of property to another railroad.


Sec. 479, C. C. A check must be affixed to every package or parcel of baggage when taken for transportation by any agent or employee of such railroad corporation, and a duplicate thereof given to the passenger or person delivering the same in his behalf; and if such check is refused on demand, the railroad corporation must pay to such passenger the sum of twenty dollars, to be recovered in an action for damages, and no fare or toll must be collected or received from such passenger, and if

« PreviousContinue »