Pass, 60 S. W. 325, decided by the Court of Civil Appeals of Texas in 1900.

That was an action in which a stockholder sought to recover damages for the action of the corporation in depriving him of his right to acquire his quota of newly issued shares of stock, such stock having been issued to the stockholders of another bank whose assets had been taken and liabilities assumed by the defendant under authority of the National Banking Act then in force. The principal question was whether there had been a mere purchase of the assets of the bank whose assets were taken. The court, just prior to the extract from the opinion which is set out in the Musser appeal, asks: "Was the consolidation (for it is treated by appellant as a consolidation) or amalgamation of the banks ultra vires, and therefore void?" It appears that the court had itself some doubt whether there was a consolidation or amalgamation (merger) but in its opinion it followed the theory of the appellant. Whether there was a consolidation or a merger, the result would be the same, and while the opinion contains a statement concerning the effect of a consolidation, and a further statement that, in effect, a new corporation existed, it can not be considered authority for the proposition that a consolidation, rather than a merger, resulted, or that a new legal entity came into being. We must also bear in mind that the consolidation or merger in that case did not take place under the provisions of the law which is here involved.

The opinion in Bonnet v. First National Bank of Eagle Pass relies upon Adams v. Yazoo & M. V. R. R. Co., 77 Miss. 194; 24 So. 200 (which was subsequently appealed to the United States Supreme Court and is discussed below) and upon Railway Co. v. Ashling, 160 Ill. 373; 43 N. E. 373. The question involved in the latter case was whether an award of damages for personal injuries against one corporation could be recovered from a successor corporation. The decision does not differentiate between a merger and a consolidation, nor was it necessary in that case to do so. During the course of its opinion the court says:

The general rule that the consolidation of two or more corporations into one creates a new company, and works a dissolution of the original corporations forming the consolidated company, is subject to exceptions, and depends upon the statute under which the consolidation is effected. *

We see no reason why, under the statutes in question, one corporation may not be consolidated with another, under the name of such other, which is continued in existence with enlarged powers, franchises, and property rights. It is, in substance, so provided, and such consolidations are frequently made. The court then proceeds to determine that one of the "consolidated" companies remained in existence. Surely this case can not be cited as authority for the proposition that in all consolidations

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each of the consolidating companies goes out of existence and a new legal entity comes into existence.

This case was discussed in Collinsville National Bank v. Esau, 74 Okla. 45; 176 Pac. 514, where the court said:

A "consolidation" takes place where two or more existing corporations are united into a single corporation, and the existence of the uniting corporation is terminated, and the organization succeeds in a general way to the franchise and acquires the property and assets and assumes the debts and obligations of the constituent companies.

In ordinary legal phraseology, the term "consolidation" is generally used to indicate the act and result of uniting two or more corporations into one under a new name. A "merger" takes place where one of the constituent corporations remains in existence absorbing or merging in itself all the other companies. In a merger of two or more companies, one of the merging corporations continues to survive and succeeds to the franchise and acquires the property and assets of the other constituent corporations; that is, the merger consists from the uniting of two or more corporations by the transfer of the property to some one of the existing corporations, which continues its existence while the others are swallowed up or consumed by the one that survives. It differs from a "consolidation" wherein all the corporations cease to exist and unite in the interest of a new one. Rightly understood, there never can be a consolidation of corporations except where the constituent corporations cease to exist as separate entities, and a new corporation with the property and assets of the old one comes into being. Thus it will be seen that a "merger" is not the equivalent of a "consolidation" at all. Whether a particular transaction is in reality a sale, conversion, consolidation, or merger, to a great extent depends on the circumstances surrounding each particular

case.

In the case of C., S. F. & Cal. Ry. Co. v. Ashling, 160 Ill. 373, 43 N. E. 373, it is held that, where one corporation takes over all of the property and assets and succeeds to the franchise of another corporation and issues stock in the new corporation to the stockholders of the old corporation in exchange for an equal amount held by them in the old company, and the officers of the old corporation are made officers in the new, it amounted to a consolidation of the two entities. While we do not agree with the Illinois court that such transaction amounted to a consolidation, nevertheless we do believe it was a merger, and the same conclusion and result must follow as to the rights of creditors of the old corporation to assert their claims against the new organization.

The opinion in the Musser appeal then goes on to say that the legal effect of a consolidation is to extinguish the constituent companies and create a new corporation with appropriate liabilities and stockholders derived from those then passing out of existence, and cites Adams v. Yazoo & M. V. R. R. Co., supra. That case was subsequently appealed to the Supreme Court of the United States and is reported as Yazoo & M. V. Ry. Co. v. Adams, 180 U. S. 1. In that case the statute under which the companies were consolidated provided:

All of the companies so consolidating shall be merged into and become one company, and the companies so formed by such consolidation shall be deemed and held to be a corporation created by the laws of this State.

The Supreme Court held that under the statute there was a grant of corporate power creating a new corporation, and affirmed the decision of the Supreme Court of Mississippi holding that a new corporation was created. In the course of its opinion the Supreme Court

says:

But if, as was the case in Tomlinson v. Branch [15 Wall. 460], one road loses its identity and is merged in another, the latter preserving its identity, and issuing new stock in favor of the stockholders of the former, it is not the creation of a new corporation but an enlargement of the old one. In such case it was held that where the company which had preserved its identity held as to its own property a perpetual exemption from taxation, it would not be extended to the property of the merged company without express words to that effect.

In Central Railroad & Banking Company v. Georgia, 92 U. S. 665, 670, an act of the legislature authorized the Central Railroad and the Macon Railroad to unite and consolidate their stock, and all their rights, privileges, immunities and franchises, under the name and charter of the Central Railroad, in such manner that each owner of shares of stock of the Macon Road should be entitled to receive an equal number of shares of the stock of the consolidated companies. “Whether," said Mr. Justice Strong, “such be the effect [consolidation or amalgamation] or not, must depend upon the statute under which the consolidation takes place, and of the intention therein manifested. If, in the statute, there be no words of grant of corporate powers, it is difficult to see how a new corporation is created." It was held that the act did not work a dissolution of the existing corporations and the creation of a new company, since there was no provision for a surrender of the stock of the shareholders of the Central, and none for the issue of other certificates to them. In that case, the road, whose charter contained the exemption from taxation, was preserved intact by the consolidation, and it was held that its exemption continued, while the other road was to go out of existence.

*

Other cases to the same effect, holding that the consolidation did not operate as a dissolution of the constituent companies, are Chesapeake & Ohio Railroad v. Virginia, 94 U. S. 718; Greene County v. Conness, 109 U. S. 104, and Tennessee v. Whitworth, 117 U. S. 139.

• In Railroad Company v. Georgia, 98 U. S. 359, two railroad companies were consolidated by an act of the legislature, which authorized the consolidation of their stocks, conferred upon the consolidated company full corporate powers, and continued to it the franchises, privileges and immunities which the companies had held by their original charters. We held in that case that a new corporation was created, which became subject to the provisions of a statutory code, adopted January 1, 1863, permitting the charters of private corporations to be changed, modified or destroyed at the will of the legislature. The case was distinguished from Railroad Company v. Georgia, 92 U. S. 665, as being a consolidation instead of a merger. "Nor was it," said Mr. Justice Strong, a mere alliance or confederation of the two. If it had been, each would have preserved its separate existence as well as its corporate name; but the act authorized the consolidation of the stocks of the two companies, thus making them one company in place of two. It contemplated, therefore, that the separate capital of each company should go out of existence as the capital of that company." To the same effect is St. Louis, Iron Mountain de. Railway v. Berry, 113 U. S. 465. (Italics ours.)

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The distinction between a consolidation and a merger has been laid down in a number of cases in addition to those quoted above. In State v. Atlantic Coast Line R. R. Co., 202 Ala. 558; 81 So. 60, the court says:

* * *

Accurate logicians very properly distinguish between the meanings of consolidation" and "merger." Strictly speaking, a consolidation means the unifying of two or more corporations into a single new corporation, having the combined capital, franchises, and powers of all of its constituents. And, strictly speaking, a merger means the absorption of one corporation by another, which retains its name and corporate identity, with the added capital, franchises, and powers of the merged corporation. For most purposes, however, and apart from mere questions of identity, the result is in each case practically the same; and so it is that courts and text-writers have usually used the terms "consolidation" and "merger" interchangeably, and, in cases of doubt, conjunctively, to express the idea of complete corporate union, whether a new corporation nominally results or whether a constituent corporation is nominally preserved.

To the same effect, see Alabama, T. & N. Railway v. Tolman, 200 Ala. 449; 76 So. 381; and Chicago Title & Trust Co. v. Doyle, 259 Ill. 489; 102 N. E. 790.

In Keokuk & Western R. R. Co. v. Missouri, 152 U. S. 301, the court said:

In the numerous cases which have arisen in this court as to the effect of a consolidation upon the existence and status of the constituent corporations, it has been held that the question of the dissolution of such corporations depended upon the language of the statute under which the consolidation took place.

In Chicago Title & Trust Co. v. Doyle, supra, the court said:

The question of the effect of the consolidation must be answered by a consideration of the terms of the statute under which the consolidation took place, and not what the parties resolved or did not resolve as to such effect.

In Central Railroad and Banking Co. v. Georgia, 92 U. S. 665, the act in question provided:

Be it enacted by the general assembly of the State of Georgia, that the Macon and Western Railroad Company, and the Central Railroad and Banking Company of Georgia, be, and they are hereby, authorized and empowered to unite and consolidate the stocks of the said two companies, and all the rights, privileges, immunities, property, and franchises belonging or attaching to said companies, under the name and charter of the said "The Central Railroad and Banking Company of Georgia," in such manner that each and every owner and holder of shares of the capital stock of the Macon and Western Railroad Company shall be entitled to and receive an equal number of shares of the capital stock of the consolidated companies: Provided, that nothing herein contained shall relieve or discharge either of said companies from any contract heretofore entered into, but that all such contracts shall be assumed by, and be binding on, the Central Railroad and Banking Company of Georgia, and all benefits and rights under the same shall accrue to, and vest in, the

said last-mentioned company: And provided further, that, upon such union and consolidation, the capital stock of the Central Railroad and Banking Comny of Georgia shall not exceed the amount of the authorized capital thereof, and the present authorized capital of the Macon and Western Railroad Company added thereto.

Be it further enacted, that upon the union and consolidation herein provided for, each stockholder in the Macon and Western Railroad Company shall be entitled to receive a certificate of stock as a shareholder in the Central Railroad and Banking Company of Georgia for a like number of shares, upon the surrender of his certificate of stock in the former company, which new certificate shall entitle the holder thereof to the same rights, privileges, and benefits as attach to the holders of stock now held by the shareholders in said companies, or either of them.

The question involved was whether certain exemptions contained in the charter of the Central Railroad and Banking Co. survived. The court, in the course of its opinion, says:

It may be that the consolidation of two corporations, or amalgamation, as it is called in England, if full and complete, may work a dissolution of them both, and its effect may be the creation of a new corporation. Whether such be the effect or not must depend upon the statute under which the consolidation takes place, and of the intention therein manifested. If, in the statute, there be no words of grant of corporate powers, it is difficult to see how a new corporation is created. If it is, it must be by implication; and it is an unbending rule that a grant of corporate existence is never implied. In the construction of a statute, every presumption is against it. We

are not called upon, however, now to determine whether a consolidation, effected under a statute making no express grant of new corporate existence, may not, in some cases, work a dissolution of the existing corporations, and at the same time the creation of a new company; for, in the present case, we think the act of 1872 plainly contemplated no such thing. It is true, the act speaks of union and consolidation. It authorizes the two companies to unite and consolidate their stock, and all their rights, privileges, immunities, property, and franchises; but it prescribes the manner in which this may be done, and its effect. It is to be done under the name and charter of the Central Railroad and Banking Company; that is, the union is to be under that charter, not under a new charter of a company bearing that name. The union is also to be in such a manner that every holder of the shares of the capital stock of the Macon and Western Railroad Company shall be entitled to, and shall, on the surrender of their certificates, receive, an equal number of shares of the capital stock, as a shareholder in the Central Railroad and Banking Company of Georgia, as declared in the fourth section. But there is no provision for a surrender of the certificates of stock of the shareholders of the Central, and none for the issue of other certificates to them. Their rights, whatever they may be after the union, are evidenced only by certificates of stock of the company chartered in 1835. If that charter has gone out of existence, they are stockholders in no company. Again: the act declared that all contracts of either of the companies should be assumed by and binding on the Central Railroad and Banking Company, and all benefits and rights under the samethat is, under the contracts-should vest in that company, not in a new corporation then springing into life, Nowhere in the act is there an intimation