Chicago Title & Trust Co. v. Doyle

• Decision Date: 16 October 1913
• Citation: 102 N.E. 790,259 Ill. 489
• Court: Illinois Supreme Court
• Parties: CHICAGO TITLE & TRUST CO. v. DOYLE, Secretary of State.

259 Ill. 489

102 N.E. 790

CHICAGO TITLE & TRUST CO.

v.DOYLE, Secretary of State.

Supreme Court of Illinois.

June 18, 1913.

Rehearing Denied Oct. 16, 1913.

Appeal from Circuit Court, Sangamon County; James A. Creighton, Judge.

Suit by the Chicago Title & Trust Company against Cornelius J. Doyle. Decree for the complainant, and defendant appeals. Reversed, and bill dismissed.P. J. Lucey, Atty. Gen., and T. E. Dempcy, of Springfield, for appellant.

Lackner, Butz, Von Ammon & McGregor, of Chicago, for appellee.

CARTWRIGHT, J.

On June 21, 1912, the Chicago Title & Trust Company and the Real Estate Title & Trust Company, two corporations of this state organized to carry on the same kind of business in the city of Chicago, entered into an agreement that the Real Estate Title & Trust Company should be consolidated into the Chicago Title & Trust Company, which should retain its corporate name, by-laws, officers, directors, term of existence, corporate organization, and its existing capital of $5,000,000, divided into 50,000 shares of the par value of $100 each; that the capital stock of the Real Estate Tital & Trust Company of $1,000,000, divided into 10,000 shares of the par value of $100, should be surrendered, canceled, and extinguished; that the Chicago Title & Trust Company should take the necessary steps to increase its capital stock to $5,600,000, and should deliver the $600,000 of additional stock for distribution among the stockholders of the Real Estate Title & Trust Company, in the proportion of $60 par value of the stock of the consolidated company for $100 par value of stock of the Real Estate Title & Trust Company to be surrendered, canceled, and extinguished; and that the necessary steps should be taken to increase the number of directors of the consolidated company to 19 or more. On July 29, 1912, meetings of the stockholders of the two corporations were held and the agreement was ratified. The agreement to increase the capital stock and number of directors was carried out, and certificates of the consolidation and the increase of stock and number of directors were presentedon July 31, 1912, to Cornelius J. Doyle, Secretary of State. A fee of $649 was paid to the secretary for the increase of the capital stock alone, but he refused to accept, file, or record the certificates without the payment of $5,000 additional, claiming that the consolidation created a new corporation and that he was entitled to fees on its capital stock. The $5,000 was paid under protest and a receipt was given, which contemplated a suit for an injunction to test the right of the state to the fee. The consolidated corporation, the Chicago Title & Trust Company, thereupon filed its bill in this case in the circuit court of Sangamon county against Cornelius J. Doyle, individually and as Secretary of State, praying for an injunction restraining him from paying over said sum of $5,000 to the State Treasurer. The defendant demurred to the bill, and it was stipulated that, if the effect of the consolidation was not to form a new corporation but merely to continue the original Chicago Title & Trust Company as a corporation with increased capital stock, the plaintiff was entitled to the relief prayed for; but, if a new corporation was created, it was not so entitled. The chancellor overruled the demurrer, and, the defendant electing to stand by it, a decree was entered in accordance with the prayer of the bill and commanding the defendant to repay to the plaintiff said sum of money.

[1][2][3] Corporations are creations of the General Assembly, which grants to them such privileges and endows them with such powers as are deemed for the public good. As a corporation must be created originally by statutory authority, any consolidation, purchase, or merger by which it acquires the franchises of another corporation must also have statutory authority. Scheidel Coil Co. v. Rose, 242 Ill. 484, 90 N. E. 221. As the whole matter is under the control of the General Assembly, the effect of a consolidation, with respect to the extinction of the constituent corporations and the creation of a new corporation or the continued existence of one or both of the constituent corporations, depends upon the statuteunder which the consolidation is effected. The general rule is that the consolidation effects the dissolution of the original corporations and brings into existence a new corporation possessed of the property, rights, and franchises, and assuming the liabilities of those passing out of existence. 6 Am. & Eng. Ency. of Law (2d Ed.) 810; 10 Cyc. 302. If the General Assembly simply authorizes a consolidation, it must be held to have in view that general rule and intend that it shall apply. It may, however, authorize the merger of one corporation into another and the continuance in existence of the latter, as where it authorizes the purchase by one corporation of the franchises, stock, and property of another. It may also result, as a matter of law, from a consolidation, that each of the constituent corporations remains in existence in a certain sense and a new corporation is also created.

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