$355. Payment for dissenting stock.-Statutes exist in some of the States, providing for the appraisement and purchase of the shares of the dissenting minority; and where these statutes are in existence and operative at the date of the contract of subscription, that course is to be taken. The New York "Business Corporation Law" of 1890 provides that if any stockholder, not voting in favor of such agreement to consolidate, shall at such meeting, or within twenty days thereafter, object to such consolidation and demand payment for his stock, such stockholder or such new corporation, if the consolidation takes effect at any time thereafter, may at any time within sixty days after such meeting apply to the supreme court at any special term thereof held in the district in which any county is located in which such new corporation may have its place of business, upon at least eight days' notice to the new corporation, for the appointment of three persons to appraise the value of such stock, and the court shall appoint three such appraisers, and designate the time and place of their first meeting, with such directions in regard to their proceedings as shall be deemed proper, and also direct the manner in which payment for such stock shall be made to such stockholder. The court may fill any vacancy in the board of appraisers occurring by refusal or neglect to serve or otherwise. The appraisers shall meet at the time and place designated, and they or any two of them, after being duly sworn honestly and faithfully to discharge their duties, shall estimate and certify the value of such stock at the time of such dissent and deliver one copy to such new corporation, and another to such stockholder if demanded; the charges and expenses of the appraisers shall be paid by the new corporation. When the new corporation shall have paid the amount of such appraisal, as directed by the court, such stockholder shall cease to have any interest in such stock and in the corporate property of such corporation, and such stock may be held or disposed of by such new corporation. The legislature may, by the exercise of the right of eminent domain, grant authority to corporations having public duties to perform to consolidate without

1 See N. J. Laws 1878, p. 58, § 2; N. J. Laws 1881, p. 221, § 8; N. J. Laws 1883, p. 242, § 2; New York

Laws 1884, ch. 237. So in England: 25 & 26 Vict., ch. 89, §§ 161, 175.

2 N. Y. Laws 1890, ch. 567, § 14.

consent of stockholders. As for example, when public necessity requires it, the legislature may grant authority to consolidate existing connected railroad routes, if they provide a just compensation for the shares of such stockholders as dissent.1 Such statutes, however, are strictly construed, and accordingly it has been decided that authority to condemn for the purpose of consolidation, is no warrant for such proceedings against a shareholder dissenting from a lease. And so the majority can not force a dissenting minority into such an arrangement, without first purchasing their shares at their market value, though no provision is made for compensation therefor. The ground upon which the majority can force the minority to sell out, even for full value, has been somewhat criticised, though probably ineffectually. It is, however, certainly not within. the power of courts of law or equity to decree that the stock of shareholders dissenting from a plan of consolidation, shall be condemned, appraised and sold, for the purpose of quieting factious opposition. When a consolidation is effected wrongfully, and against the protest of a shareholder who has partially paid up his shares, the consolidated company is liable to him for the value of them. The interest of a dissenting stockholder is reckoned upon the proportionate share of his stock in the old company. When an unauthorized consolidation is annulled, the shareholders of the consolidated corporation may recover the amounts paid in by them.

8

1 Black v. Delaware &c. Co., 24 it to a new corporation, to complete N. J. Eq. 455. the road, and operate it, for the pur

2 Mills v. Central R. Co., 41 N. J. pose of securing their debts. SubseEq. 1. quently this corporation was con

3 Lauman v. Lebanon Valley R. solidated with another, and plaintiff Co., 30 Pa. St. 42, 49. sued to recover the value of its in

4 Mowrey v. Illinois &c. R. Co., 4 terest in the property, as having Biss. 78. been converted without its consent.

Eq. 1.

6 Taylor on Corporations, § 536; International &c. R. Co. v. Bremond, 53 Tex. 96.

5 Mills v. Central R. Co., 41 N. J. It was decided that plaintiff was only entitled to recover its proportionate share of the stock of the corporation to which the road, with plaintiff's consent, was transferred after its purchase. Deposit Bank v. Barrett, (Ky. 1890) 13 S. W. Rep. 337. 8 In re Bank of Hindustan, L. R. 16 Eq. 417.

7 Plaintiff and other creditors of an insolvent railroad company authorized their agents to purchase the road, and afterwards to transfer

§ 356. Enjoining unauthorized consolidations. A dissenting stockholder, under any circumstances, is entitled to an injunction to restrain an ultra vires consolidation.1 A consolidation of the corporate property, not expressly authorized by statute, is ultra vires, and may be set aside or enjoined at the instance of a single dissenting shareholder. This is strictly true at least until his interest is purchased or secured.3 Of course, however, such dissenters may lose their right to object by acquiescence or laches. A dissenting stockholder may maintain a suit to enjoin the illegal consolidation of the corporation of which he is a member with another corporation, with the consent of the directors, and a majority of the stockholders acting in connection, but without notice to, and to the injury of, the minority thereof, without averring that

1 Charlton v. Newcastle &c. R. Co., 5 Jur. (N. S.) 1096; s. c. 72 Week. Rep. 731; Nathan v. Tompkins, 82 Ala. 437. That he must first ask the directors to bring the action in the name of the corporation, see Mozley v. Alston, 1 Phil. Ch. 79; denied in Nathan v. Tompkins, 82 Ala. 437.

2 Clearwater v. Meredith, 1 Wall. 40; Mowrey v. Indianapolis &c. R. Co., 4 Biss. 78; Cass v. Manchester &c. Co., 9 Fed. Rep. 640; Atlantic &c. R. Co. Case, 3 Hughes, 320; 4 Hughes, (N. S.) 151; Gardner v. Hamilton &c. Ins. Co., 33 N. Y. 421; Blatchford v. Ross, 34 Barb. 42; Stevens v. Davison, 18 Gratt. 819; s. c. 98 Am. Dec. 692; South Georgia &c. R. Co. v. Ayres, 56 Ga. 230; International &c. R. Co. v. Bremond, 53 Tex. 96; Hamilton &c. Ins. Co. v. Hobart, 2 Gray, 543; Boston &c. R. Co. v. New England &c. R. Co., 13 R. I. 260; Stevens v. Rutland &c. R. Co., 29 Vt. 545; Terhune v. Midland R. Co., 38 N. J. Eq. 423; New Jersey Midland Ry. Co. v. Strait, 33 N. J. 325; Black v. Delaware &c. Canal Co., 24 N. J. Eq. 455, reversing 22 N. J. Eq. 130; Zabriskie v. Hacken

sack &c. R. Co., 18 N. J. Eq. 178; s. C. 90 Am. Dec. 617; Kean v. Johnson, 9 N. J. Eq. 401; Tippecanoe County v. Lafayette &c. R. Co., 50 Ind. 85; Tuttle v. Michigan &c. R. Co., 35 Mich. 247; Clinch v. Financial Corporation, L. R. 5 Eq. 401; In re Empire Assurance Co., L. R. 4 Eq. 341; Winch v. Birkenhead &c. Ry. Co., 5 De Gex & S. 562; McDonnell v. Grand Canal Co., 3 Ir. Ch. N. S. 578; Bryson v. Warwick &c. Co., 1 Smale & G. 447; Charlton v. Newcastle &c. Ry. Co., 5 Jur. N. S. 1096; Dougan's Case, 28 L. T. N. S. 60. But see Lauman v. Lebanon Valley R. Co., 30 Pa. St. 42; s. c. 72 Am. Dec. 685; State v. Bailey, 16 Ind. 46; s. c. 79 Am. Dec. 405. Cf. Mills v. Central R. Co., 41 N. J. Eq. 1; Trask v. Peekskill &c. Works, 6 Hun, 236. 3 Lauman v. Lebanon &c. R. Co., 30 Pa. St. 42; State v. Bailey, 16 Ind. 46; Mowrey v. Indianapolis R. Co., 4 Biss. 78; Nathan v. Tompkins, 82 Ala. 437; s. c. 19 Am. & Eng. Corp. Cas. 336.

4 Deadrick v. Wilson, 8 Baxt. 108. Cf. International &c. R. Co. v. Bremond, 53 Tex. 96, and Mowrey v. Indianapolis &c. R. Co., 4 Biss. 78.

he has appealed to the governing body or the shareholders to prevent such illegal action, and has failed to obtain redress.1 In such a suit averments in the answers that the defendants had, after the resolutions to consolidate were adopted, determined to abandon, and had abandoned, the consolidation, can not be considered on a motion to dissolve the injunction, as such an averment is affirmative matter, and not responsive to any allegation in the bill. In a suit to enjoin the consolidation of two turnpike companies, under an act one provision of which was that, when the agreement between the two companies should be entered into and ratified by a majority of the stockholders of the two companies, the consolidated company should have all the powers previously enjoyed by both, the defendant's answer alleged that the consolidation was made as provided by statute, but failed to allege that this was done with the consent of plaintiffs, thereby showing that the majority consented, and not the whole, and it was decided that the consolidation, not being authorized by the companies' charters, was void. A bill to annul a consolidation made by several railroad corporations, and to have declared void a mortgage executed by the consolidated roads on the aggregate property on the ground that one of the roads taken into the combination had no legal existence, can not be maintained by the stockholders. Such proceedings should be instituted by the State, through its attorney-general.'

1 Nathan v. Tompkins, (1887) 82 (Ky. 1889) 10 S. W. Rep. 134; Ky. Ala. 437. Act Feb. 20, 1884.

2 Nathan v. Tompkins, (1887) 82 Ala. 437.

Bell v. Pennsylvania &c. R. Co., (1887) 10 Atlan. Rep. 741, not re

Botts v. Simpsonville &c. Co., ported officially.

§ 357. Power to sell property.-Ownership of property, whether real or personal, carries with it the same general power of disposition, in corporations as in individuals, except when that power is restrained by statute, or by considerations of public policy. Except when restricted by law or public policy corporations have an absolute right of disposition, and in its exercise are unlimited as to objects, circumstances or quantity. Therefore a company may sell all its corporate property for a corporate or lawful purpose. Naturally fol

1 Angell & Ames on Corp. § 187; White Water &c. Co. v. Vallette, 21 How. 424. In this case Campbell, J. says: "It is well settled that a corporation without special authority, may dispose of lands, goods, and chattels, or of any interest in the same, as it deems expedient, and in the course of its legitimate business may make a bond, mortgage, note or draft; and also may make compositions with creditors, or an assignment for their benefit, with preferences, except when restrained by law." Partridge v. Badger, 25 Barb. 146; Barry v. Merchants' Exch. Co., 1 Sand. Ch. 280; Burr v. Phoenix Glass Co., 14 Barb. 358;

Dater v. Bank of United States, 5 Watts & S. 223; Frazier v. Wilcox, 4 Rob. 517; United States Bank v. Heth, 4 B. Mon. 423; State v. Bank of Maryland, 6 Gill & J. 323; Pierce v. Emery, 32 N. H. 486; Reynolds v. Commissioners, 5 Ohio, 205; De Reuyter v. St. Peter's Church, 3 N. Y. 238; Clark v. Titcomb, 42 Barb. 122; Central Gold Min. Co. v. Platt, 3 Daley, 263; Miners' Ditch Co. v. Zellerbach, 37 Cal. 588.

22 Kent's Com. 281; Burton's Appeal, 57 Pa. St. 213; Reichwald v. Commercial Hotel Co., 106 Ill. 439, 451; Binney's Case, 2 Bland, 142.

3 Miners' Ditch Co. v. Zellerbach, 37 Cal. 543; Sargent v. Webster, 13