Berry v. Kansas City, Port Scott & Memphis Railrod

52 Kan. 774
Supreme Court of Kansas·Decided January 15, 1894·Published·Cited by 13 cases

Opinion

Per Curiam:

Upon the motion for a rehearing, it is insisted again that on the record the Kansas City, Fort Scott & Memphis Railroad Company is not liable for the wrong complained of, which was committed by the Kansas City, Fort Scott & Gulf Railroad Company before its consolidation with the former company. We did not rest the decision in the original opinion upon the ground that the statute made the [775] new company liable for the torts of the constituent companies. It was intimated that the statute might be construed as conferring such liability, as both “obligations” and “liabilities” were used. (Gen. Stat. of 1889, ¶ 1268.) It might perhaps have been better to have omitted the comments upon the statute. (Act of February 13, 1865; Laws of 1865, ch. 44; Gen. Stat. of 1889, ¶ 1268.) It was decided, however, that, where two or more railroad companies were consolidated under the statute, the new company is answerable for the obligations of the constituent companies, including torts, in the absence of any arrangement respecting their liabilities. This court did not decide that a consolidated company could not by an express stipulation limit its liability for the debts and torts of its constituent companies. It is doubtful, however, whether the new company can, by express agreement, relieve the property of the old company, which it has obtained by consolidation, from a judgment recovered against the new company by a creditor of the old company.

^tion°wh°cn an-liabiiMesof companies. All of the authorities seem to agree that, “ unless the statute or articles of consolidation make express provision therefor, the new corporation assumes all the liabilities of the old ones, at least in equity, to the extent of the property received by it from the old corporation.” (3 Wood’s Rly. Law, § 486; Brum v. Insurance Co., 16 Fed. Rep. 140; Railway Co. v. Ham, 114 U. S. 587.) The foundation of the liability of a consolidated corporation may rest on a statute, or on an agreement, either expressed or implied. If the statute does not provide that the new company shall assume the debts and lia-Lilities of the constituent companies, and there is 110 express agreement respecting the same, the debts ot the original companies follow as an incident of the consolidation, and become by implication the obligations of the new corporation. (Railroad Co. v. Powell, 40 Ind. 37; Railroad Co. v. Hendrick, 41 id. 48; Railway Co. v. Boney, 117 id. 501; Railroad Co. v. Shirley, 54 Tex. 125.) In the latter case it was said: “If neither statute nor [776] agreement make mention of creditors, the consolidated corporation is held to have assumed the liabilities of its constituents.”

Jones on Railroad Securities (2d ed.), in his note to § 364 quotes the following, from Railway Co. v. Boney, supra:

“The rule which the authorities support seems to be, that where one corporation goes entirely out of existence' by being incorporated into another, if no arrangements are made respecting the property and liabilities of the corporation that ceases to exist, the corporation into which it is merged will succeed to all its property and be answerable for all its liabilities.”

In the Whipple case, 28 Kas. 474, the railway company, in its defense, offered in evidence the articles of consolidation, and these articles showed that the company did not assume any of the debts or liabilities of the constituent companies, but that the corporate existence of the companies was preserved for the purpose of adjusting all claims and demands. If, upon the trial of this ease, the railroad company had offered in its defense its articles of consolidation on file in the public récords of the office of the secretary of state, it would have been shown that the articles expressly provided that the new company should “pay, perform and discharge all the debts, duties, contracts and obligations of every description of each of its several constituent corporations.”

It is further insisted, that this court ought not to have directed judgment upon the special findings and the general verdict returned in the first instance by the jury. In support of this, it is urged that the verdict and special findings were not received or recorded, and, therefore, were without force or validity; further, that the railroad company, if judgment be entered, will be prevented from having a review of the errors of law occurring upon the trial. Other reasons are also assigned..

It is unnecessary to repeat the portions of the record contained in the former opinion. After the general verdict and [777] special findings had been returned by the jury, the railroad company made the following motion:

“And now that the jury has brought in a general verdict for the plaintiff, together with answers to certain questions propounded by the plaintiff’s counsel, the defendant asks the court to instruct and require the jury to bring in a general verdict in favor of the defendant, upon the unquestioned law of the case.”

The trial court granted the motion, and, under the direction of the court, the jury then returned a verdict for the defendant. The motion of the railroad company refers to the first verdict and answers brought in by the jury, and it is the fair inference from its motion and other parts of the record that the railroad company asked the court, upon the special findings, to instruct the jury for a verdict in its favor. The plaintiff below demanded judgment upon the special findings in her favor. This was refused. .

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Berry v. Kansas City, Port Scott & Memphis Railrod, 52 Kan. 774 (kan 1894).

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