Aspinook Corp. Successor by Consol. to Arnold Print Works v. Commissioner of Corporations and Taxation

• Decision Date: 13 September 1950
• Citation: 326 Mass. 327,94 N.E.2d 366
• Parties: ASPINOOK CORPORATION SUCCESSOR BY CONSOLIDATION TO ARNOLD PRINT WORKS, Inc. v. COMMISSIONER OF CORPORATIONS AND TAXATION.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

Page 366

94 N.E.2d 366

326 Mass. 327

ASPINOOK CORPORATION SUCCESSOR BY CONSOLIDATION TO ARNOLD PRINT WORKS, Inc. v. COMMISSIONER OF CORPORATIONS AND TAXATION.

Supreme Judicial Court of Massachusetts, Suffolk.

Argued May 1, 1950.

Decided Sept. 13, 1950.

H. B. Holland, Boston, A. H. Cox, Boston, for appellant.

F. E. Kelly, Atty. Gen., H. William Radovsky, Asst. Atty. Gen., for appellee.

Before QUA, C. J., and RONAN, WILKINS, SPALDING and WILLIAMS, JJ.

QUA, Chief Justice.

An appeal describing the appellant as in the foregoing caption was taken to the Appellate Tax Board from the refusal of the commissioner to abate an excise tax assessed in the year 1948 to, and paid by, Arnold Print Works, Inc., under G.L. (Ter.Ed.) c. 63, §§ 39, 44, as most recently amended by St.1936, c. 362, §§ 6, 7. Arnold Print Works, Inc., was a foreign corporation organized under the laws of Delaware. It operated a factory at Adams in this Commonwealth. On November 19, 1948, that corporation filed with the commissioner a proper application for abatement of the tax. Section 51. On December 18, 1948, Arnold Print Works, Inc., consolidated under Delaware law with another Delaware corporation known as the Lawrence Print Works, Inc. The resulting consolidated corporation took the name of The Aspinook Corporation. On March 4, 1949, the commissioner 'notified the Arnold Print Works, Inc.' of his decision granting an abatement in part only. On April 1, 1949, The Aspinook Corporation filed an appeal to the board entitled as hereinbefore indicated. G.L.(Ter.Ed.) c. 63, § 71, as appearing in St.1945, c. 523, § 3. The commissioner moved to dismiss the appeal on the ground that The Aspinook Corporation was not a 'party aggrieved' by the assessment against Arnold Print Works, Inc., or by the refusal of the commissioner to abate that assessment. The board allowed the motion, and The Aspinook Corporation appealed to this court.

In our opinion the board erroneously dismissed the appeal.

Since the Delaware consolidation related to the existence and structure of Delaware corporations, its effect must be determined by the law of Delaware. Title Guarantee Loan & Trust Co. v. Alabama By-Products Corp., 214 Ala. 486, 108 So. 353; Graeser v. Phoenix Finance Co., 218 Iowa 1112, 1121-1124, 254 N.W. 859; Riddell v. Rochester German Ins. Co., 35 R.I. 45, 85 A. 273. See as to dissolutions Michigan State Bank v. Gardner, 15 Gray 362, 373; Olds v. City Trust, Safe Deposit & Surety Co., 185 Mass. 500, 503-506, 70 N.E. 1022, 102 Am.St.Rep. 356; Restatement: Conflict of Laws, §§ 157-161.

The Revised Code of Delaware 1935, in section 2091, being section 59 of the General Corporation Law, as amended by 43 Laws of Delaware 1941, c. 132, § 12, defines in detail the method by which Delaware corporations may agree to consolidate or merge. Section 2092, being section 60 of the General Corporation Law, as appearing in 43 Laws of Delaware 1941, c. 132, § 15, reads, 'Sec. 60. Consolidation or Merger; Status of Old and New Corporations:--When an agreement shall have been signed, acknowledged, filed and recorded, as in Section 59, Section 59B, or in Section 59C of this Chapter is required, for all purposes of the laws of this State the separate existence of all the constituent corporations, parties to said agreement, or of all such constituent corporations except the one into which the other or others of such constituent corporations have been merged, as the case may be, shall cease and the constituent corporations shall become a new corporation, or be merged into one of such corporations, as the case may be, in accordance with the provisions of said agreement, possessing all the rights, privileges, powers and franchises as well of a public as of a private nature, and being subject to all the restrictions, disabilities and duties of each of such corporations so consolidated or merged, and all and singular, the rights, privileges, powers and franchises of each of said corporations, and all property, real, personal and mixed, and all debts due to any of said constituent corporations on whatever account, as well for stock subscriptions as all other things in action or belonging to each of such corporations shall be vested in the corporation resulting from or surviving such consolidation or merger; and all property, rights, privileges, powers and franchises, and all and every other interest shall be thereafter as effectually the property of the resulting or surviving corporation as they were of the several and respective constituent corporations, and the title to any real estate vested by deed or otherwise, under the laws of this State, in any of such constituent corporations, shall not revert or be in any way impaired by reason of this Chapter; provided, however, that all rights of creditors and all liens upon any property of any of said constituent corporations shall be preserved unimpaired, and all debts, liabilities and duties of the respective constituent corporations shall thence forth attach to said resulting or surviving corporation, and may be enforced against it to the same extent as if said debts, liabilities and duties had been incurred or contracted by it.' See also section 2094, being section 62 of the General Corporation Law, which provides that any action or proceeding against any of the consolidated corporations may be prosecuted to judgment as if such consolidation had not taken place, or the resulting corporation may be substituted in its place.

The Court of Chancery of Delaware has said of section 60, 'When a consolidation or merger has taken place under the statute, the old corporations have their identity absorbed into that of the new corporation or the one into which they were merged.' Argenbright v. Phoenix Finance Co., 21 Del.Ch. 288, 292, 187 A. 124, 126. According to our best judgment it was not intended that consolidation of two corporations under the Delaware law should for all purposes work a complete termination of the existence of each of the constituent corporations as if those corporations had been separately dissolved. We think that the intent was rather that the existence of each corporation should the merged and integrated into and 'absorbed' within the consolidated corporation, which should thereupon become entitled to all the property and rights, including 'franchises,' and should be subject to all the liabilities and duties of the constituent corporations. There is to be no liquidation of the constituent corporations as would be expected in case of a complete dissolution. Consolidation and dissolution are in a sense inconsistent terms. Under the Delaware statute...