Tompkins v. Augusta Southern R. Co.

• Decision Date: 11 June 1897
• Citation: 30 S.E. 992,102 Ga. 436
• Parties: TOMPKINS v. AUGUSTA SOUTHERN R. CO.
• Court: Georgia Supreme Court

30 S.E. 992

102 Ga. 436

TOMPKINS v. AUGUSTA SOUTHERN R. CO.

Supreme Court of Georgia

June 11, 1897

Syllabus by the Court.

1. Where, by reason of the consolidation of two corporations one of them goes entirely out of existence, and no arrangements are made respecting the liabilities of the one which ceases to exist, the corporation resulting from such combination will, as a general rule, be entitled to all the property, and answerable for all the liabilities, of the corporation thus absorbed.

2. Where a statute authorizes the consolidation of two railroad companies "upon such terms as may be agreed upon," and does not declare how the existing liabilities or obligations of either shall be settled or performed, and a consolidation thereunder between two such companies is effected by a written contract providing for the absorption of one of them by the other, but making no provision at all for a certain class of liabilities existing against the absorbed company, these liabilities become binding upon the new or surviving company,--at least, to the extent of the assets of the absorbed company, or of its ability to perform the contracts out of which such liabilities arose.

3. Where an agreement between two such companies, designated respectively, as the "first party" and the "second party," in effect provided that the second party should cease to exist, and that all its property rights, and franchises should go to the first party, and stipulated that "the first party hereby assumes the payment of all and every indebtedness and liability of the second party; it being understood, and the second party hereby covenanting, that there are no liabilities for unsecured debts, and that the only secured debt and liability is its bonded debt,"-- held, that such an agreement did not provide for the performance of contracts of carriage embraced in mileage or trip tickets which had been issued by the second party, and it was incumbent on the new company to carry out such contracts as if they had been made by itself.

4. The expulsion from a passenger train of such new company of a person who presented for passage a ticket of this kind, which had not expired by limitation, was wrongful, and gave him a right of action against such new company.

Error from superior court, Washington county; R. L. Gamble, Judge.

Action by W. H. Tompkins against the Augusta Southern Railroad Company. Judgment for defendant. Plaintiff brings error. Reversed.

B. I. Rawlings, Evans & Evans, and Jas. K. Hines, for plaintiff in error.

Leonard Phinizy, for defendant in error.

FISH J.

1. It is essential to a proper determination of the present controversy to enter into a brief discussion concerning the legal status of a railway company which, under authority of law, has been formed by the consolidation of two separate and independent corporations, whereby one of them is merged into the other, and thus entirely loses its corporate existence. We cannot hope to better present the law governing in a case such as the one at bar than by quoting at length from the able and exhaustive treatise on this subject to be found in 1 Thomp. Corp. This distinguished author says: "As a general rule, the new company succeeds to the rights, duties, obligations, and liabilities of each of the precedent companies, whether arising ex contractu or ex delicto. The charter powers, privileges, and immunities of the corporations pass to, and become vested in, the consolidated company, except so far as otherwise provided by the act under which the consolidation takes place, or by other applicatory constitutional or legislative provisions. As the power to amalgamate with another corporation is in the nature of a privilege or franchise, the legislature may grant it on terms. It may require, as a condition of the grant, the new company to assume liabilities of the old corporations; and in most cases, no doubt, statutes authorizing the consolidations so provide in express terms. The mere fact that a corporation is created with the same name and with the same franchises as those possessed by a preceding corporation does not make it a continuation of the preceding corporation, and liable for its debts. But where the legislature authorizes the surrender of the charter of one company and its incorporation into another existing company, in such a sense that the latter company succeeds to the property, rights, and privileges of the former, and becomes merely its successor, it will be bound for its liabilities." See section 365. "Where the new corporation is thus made the heir, so to speak, of the obligations of the old, if the new company refuses to carry out such an obligation the obligee can maintain an action against it for the resulting damages." Id. § 382. "After the consolidation the new company becomes liable to perform the public duties required of the precedent companies; and, if no part of the franchise is reserved to either of the old companies, they will not be liable to the public for the nonperformance of the duties thus devolved on the new company. The duties which railroad companies owe to the public, and which are the considerations upon which their privileges are conferred by the legislature, cannot be cast off by an agreement between such companies and other persons or corporations. Therefore so much of a contract for the consolidation of two railway companies as operates to prevent a faithful discharge by the new company of its public duties is void, as against public policy." Id. § 386. And, to the same effect, see 4 Am. & Eng. Enc. Law, 272n. As will be seen from an examination of the numerous decisions cited by Judge Thompson in support of his text, the law bearing upon the points dealt with is now well settled. That "a railroad company which succeeds to the rights and privileges conferred upon another by its charter becomes also subject to the same liabilities" imposed upon it was distinctly held by this court in Railroad Co. v. Boring, 51 Ga. 582. Further discussion on this line would therefore be unprofitable.

2. In this state it is provided by legislative enactment that "any railroad company incorporated under the provisions of" the general law for the incorporation of such companies shall have authority "to sell, lease, assign or transfer its stock, property and franchises to, or to consolidate the same with, those of any other railroad company incorporated under the laws of this or any other state or of the United States, whose railroad within or without this state shall connect with or form a continuous line with the railroad of the company incorporated under this law, upon such terms as may be agreed upon." See Code 1882, § 1689z; Civ. Code, § 2179. The legislature has not however, undertaken expressly to provide how the existing liabilities of, or obligations resting upon, the respective companies entering into a consolidation, shall be settled or performed. Precisely what is meant by declaring that such a consolidation may be effected "upon such terms as may be agreed upon" is not clear. Obviously, however, the phrase quoted is not to be understood as authorizing an agreement between two companies, the effect of which would be to transfer to one of them all the property and franchises, and to invest it with all the rights, privileges, and immunities, of the other, free from all the liabilities, duties, and obligations which the latter company owed to...