Mb. Justice Gbay,
after making the foregoing statement of facts, delivered the opinion of the court.
The claim of the holders of the equipment bonds to a lien on the property of the Toledo, Wabash and Western Railway Company was asserted upon several grounds.
1. It was contended that the property of the Toledo and Wabash Railway Company was a trust fund for all its creditors, and that upon the consolidation the Toledo, Wabash and Western Railway. Company took the property of the Toledo and Wabash Railway Company charged with the payment of all its debts.
The property of a corporation is doubtless a trust fund for the payment of its debts, in the sense that when the corporation is lawfully dissolved and all its business wound up, or when it is insolvent, all its creditors are entitled in equity to have their debts paid out of the corporate property before any distribution thereof among the stockholders. It is also true, in the case .of a corporation, as in that of a natural person, that, any conveyance of property of the debtor, without authority of law, and in fraud of existing creditors, is void as against them. Story Eq. Jur. § 1252;
Curran
v. Arkansas, 15 How. 304;
Graham
v.
Railroad Co.,
102 U. S. 148, 161;
Railroad Co.
v.
Howard, 1
Wall. 392;
Goodin
v.
Cincinnati & Whitewater Canal,
18 Ohio St. 169.
But. upon the consolidation, under express authority of statute, of two or more solvent corporations, the business of the old corporations is not wound up, nor their property sequestrated or distributed, but the very object of the consolidation, and of the statutes which permit it, is to continue the business of the old corporations. Whether the old corporations are dissolved into the new corporation, or are continued in existence under a new name and with new powers, and whether, in either case, the consolidated company takes.the property of each of the old corporations charged with a lien for the payment of the debts of that corporation, depend upon the terms, of the agreement of consolidation, and of the statutes under whose authority that consolidation is effected.
In the present case, before the consolidation, no lien of any kind existed in favor of the equipment bonds; and the consolidation was made under. and pursuant to statutes of Ohio, Indiana and Illinois, passed befoi’e the issue of those bonds, .and to which the contract of the bondholders was therefore subject.
The effect of the Ohio Consolidation Act was to merge the old corporations into the new one, which took their place, succeeded to their property and assumed their liabilities.
Shields
v.
Ohio,
95 U. S.
319; Railway Co.
v.
Georgia,
98 U.S. 359. The liability imposed by that statute upon the new corporation for the debts of the old ones is the same as theirs, neither greater nor less. The provision of § 5 that “ all rights of creditors, and all liens upon the property of either of-said corporations, shall be preserved unimpaired,” clearly distinguishes debts secured by lien from debts not so secured, and indicates no intention to create a new lien in favor of creditors who before had none, but simply preserves to each class of creditors the rights belonging to it before the consolidation. The further provisions of this section, that “ the respective corporations may be deemed to be in existence to preserve the same,” and that all debts of either of the old companies shall henceforth attach
to tbe new corporation and be enforced against it to the samó extent as if it hadcontracted them, lead to the same conclusion.
The statute of Indiana is less specific in its provisions, but expressly authorizes railroad companies within the State to consolidate with railroad companies in an adjoining State “ in accordance with the laws of the adjoining State,” and, as is well settled by decisions of the Supreme Court of Indiana, does not give to unsecured creditors of the old companies any lien or precedence as against a subsequent mortgage of the consolidated property.
McMahan
v.
Morrison,
16 Indiana, 172;
Indianapolis, Cincinnati
&
Lafayette Railroad
v. Jones, 29 Indiana, 465;
Paine
v.
Lake Erie & Louisville Railroad,
31 Indiana, 283, 349; Jeffersonville,
Madison & Indianapolis Railroad
v.
Hendricks,
41 Indiana, 48.
It was not suggested in argument that there was any material difference in the statutes of Illinois upon the subject.
This court therefore concurs in opinion with the Circuit Court that the mere fact of consolidation, under these statutes, did not create any lien in favor of the equipment bonds.
2. It was next contended that the stipulation in the agreement of consolidation that the bonds and debts therein specified of the former companies shall “ be protected by the said consolidated company” created a lien in their favor.
But it is only “as to the principal and interest as they shall respectively fall due,” and “ according to the true meaning and effect ” of the instruments or bonds which are the evidence of the debts, that it is stipulated that the debts shall “ be protected by the said consolidated company; ” and thé stipulation covers debts secured by mortgage as well as unsecured debts. The agreement “ to protect ” referring to the time of payment, and “ the true meaning and effect ” of the equipment bonds having been to create only a personal and unsecured debt of one of the former companies, the words
“
shall be protected ” must have the same meaning which they ordinarily have in promises of men of business “ to protect ” drafts or other debts, not made or contracted^ by themselves, that is to say, a personal obligation to see that they are paid at maturity.
3. It was further contended that by the transfer of the prop
erty of the Toledo and Wabash Railway Company to the consolidated corporation, and the enumeration of the equipment bonds in the basis on which the former company entered into the consolidation, those bonds were part of the consideration of the transfer, and that the case comes within the principle of a vendor’s lien for unpaid purchase money.
But we are unable to perceive any analogy between the two cases. The doctrine of vendor’s lien applies only to sales of real estate. The consolidation of the stock and property of several corporations into one was not a sale; and it did not affect real estate only, but included franchises and personal property.
Green County
v.
Conness,
109 U. S. 104.
4.
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Mb. Justice Gbay,
after making the foregoing statement of facts, delivered the opinion of the court.
The claim of the holders of the equipment bonds to a lien on the property of the Toledo, Wabash and Western Railway Company was asserted upon several grounds.
1. It was contended that the property of the Toledo and Wabash Railway Company was a trust fund for all its creditors, and that upon the consolidation the Toledo, Wabash and Western Railway. Company took the property of the Toledo and Wabash Railway Company charged with the payment of all its debts.
The property of a corporation is doubtless a trust fund for the payment of its debts, in the sense that when the corporation is lawfully dissolved and all its business wound up, or when it is insolvent, all its creditors are entitled in equity to have their debts paid out of the corporate property before any distribution thereof among the stockholders. It is also true, in the case .of a corporation, as in that of a natural person, that, any conveyance of property of the debtor, without authority of law, and in fraud of existing creditors, is void as against them. Story Eq. Jur. § 1252;
Curran
v. Arkansas, 15 How. 304;
Graham
v.
Railroad Co.,
102 U. S. 148, 161;
Railroad Co.
v.
Howard, 1
Wall. 392;
Goodin
v.
Cincinnati & Whitewater Canal,
18 Ohio St. 169.
But. upon the consolidation, under express authority of statute, of two or more solvent corporations, the business of the old corporations is not wound up, nor their property sequestrated or distributed, but the very object of the consolidation, and of the statutes which permit it, is to continue the business of the old corporations. Whether the old corporations are dissolved into the new corporation, or are continued in existence under a new name and with new powers, and whether, in either case, the consolidated company takes.the property of each of the old corporations charged with a lien for the payment of the debts of that corporation, depend upon the terms, of the agreement of consolidation, and of the statutes under whose authority that consolidation is effected.
In the present case, before the consolidation, no lien of any kind existed in favor of the equipment bonds; and the consolidation was made under. and pursuant to statutes of Ohio, Indiana and Illinois, passed befoi’e the issue of those bonds, .and to which the contract of the bondholders was therefore subject.
The effect of the Ohio Consolidation Act was to merge the old corporations into the new one, which took their place, succeeded to their property and assumed their liabilities.
Shields
v.
Ohio,
95 U. S.
319; Railway Co.
v.
Georgia,
98 U.S. 359. The liability imposed by that statute upon the new corporation for the debts of the old ones is the same as theirs, neither greater nor less. The provision of § 5 that “ all rights of creditors, and all liens upon the property of either of-said corporations, shall be preserved unimpaired,” clearly distinguishes debts secured by lien from debts not so secured, and indicates no intention to create a new lien in favor of creditors who before had none, but simply preserves to each class of creditors the rights belonging to it before the consolidation. The further provisions of this section, that “ the respective corporations may be deemed to be in existence to preserve the same,” and that all debts of either of the old companies shall henceforth attach
to tbe new corporation and be enforced against it to the samó extent as if it hadcontracted them, lead to the same conclusion.
The statute of Indiana is less specific in its provisions, but expressly authorizes railroad companies within the State to consolidate with railroad companies in an adjoining State “ in accordance with the laws of the adjoining State,” and, as is well settled by decisions of the Supreme Court of Indiana, does not give to unsecured creditors of the old companies any lien or precedence as against a subsequent mortgage of the consolidated property.
McMahan
v.
Morrison,
16 Indiana, 172;
Indianapolis, Cincinnati
&
Lafayette Railroad
v. Jones, 29 Indiana, 465;
Paine
v.
Lake Erie & Louisville Railroad,
31 Indiana, 283, 349; Jeffersonville,
Madison & Indianapolis Railroad
v.
Hendricks,
41 Indiana, 48.
It was not suggested in argument that there was any material difference in the statutes of Illinois upon the subject.
This court therefore concurs in opinion with the Circuit Court that the mere fact of consolidation, under these statutes, did not create any lien in favor of the equipment bonds.
2. It was next contended that the stipulation in the agreement of consolidation that the bonds and debts therein specified of the former companies shall “ be protected by the said consolidated company” created a lien in their favor.
But it is only “as to the principal and interest as they shall respectively fall due,” and “ according to the true meaning and effect ” of the instruments or bonds which are the evidence of the debts, that it is stipulated that the debts shall “ be protected by the said consolidated company; ” and thé stipulation covers debts secured by mortgage as well as unsecured debts. The agreement “ to protect ” referring to the time of payment, and “ the true meaning and effect ” of the equipment bonds having been to create only a personal and unsecured debt of one of the former companies, the words
“
shall be protected ” must have the same meaning which they ordinarily have in promises of men of business “ to protect ” drafts or other debts, not made or contracted^ by themselves, that is to say, a personal obligation to see that they are paid at maturity.
3. It was further contended that by the transfer of the prop
erty of the Toledo and Wabash Railway Company to the consolidated corporation, and the enumeration of the equipment bonds in the basis on which the former company entered into the consolidation, those bonds were part of the consideration of the transfer, and that the case comes within the principle of a vendor’s lien for unpaid purchase money.
But we are unable to perceive any analogy between the two cases. The doctrine of vendor’s lien applies only to sales of real estate. The consolidation of the stock and property of several corporations into one was not a sale; and it did not affect real estate only, but included franchises and personal property.
Green County
v.
Conness,
109 U. S. 104.
4. The remaining question is whether the holders of the equipment bonds have acquired any lien under the provisions of the mortgage executed in 1867 by the consolidated company of all its franchises and property, to secure the payment of new bonds'to be issued by that company.
It is true that- the object of that mortgage, as appears by its recitals, was that the whole of the debts of the consolidated company, including the debts of either of the companies out of which it had been formed, whether secured by mortgage, or, as in the case of the equipment bonds, not secured at all, • “should be consolidated into one and the same mortgage debt, upon equitable principles.” The mortgage accordingly provided that $13,300,000 of the new bonds should be retained, in order “ to retire, in such manner and upon such terms as the directors of said company may from time to time prescribe,” a like amount of the earlier bonds.'
But that mortgage secured only bonds issued under it, and those bonds were all to be payable in forty'years from its date. The directors were authorized to exchange such bonds for existing bonds, and it is possible that any holders of existing bonds might have compelled such an exchange by seasonably applying for it. But the company could not compel any bondholder to accept, as a substitute for the bonds which he held, new bonds payable at a later period. The equipment bonds were payable according to their terms in 1883, and the bonds issued under the new mortgage would not be payable until
1907. The holders of the equipment bonds might prefer to hold -without sécurity their bonds payable in sixteen years, rather than to take instead bonds secured by mortgage, payable twenty-four years later. They took no steps to obtain such an exchange for more than eight years after the execution of the mortgage of 1867, nor until after the institution of proceedings to foreclose the subsequent mortgage, executed by the company in 1873, to secure the payment of a new issue of bonds. The lien created by the latter mortgage took precedence of any claims which, were not already secured by any prior mortgage. When the whole property of the consolidated company was sold under the decree of foreclosure of the mortgage of 1873, subject only to prior mortgages and liens, the purchasers took the property free from all debts not so secured.
The necessary conclusion is, that the property sold under the decree of foreclosure is not subject to any lien in favor of the holders of the equipment bonds.
Decree reversed.