New Bedford R.R. Co. v. Old Colony R.R. Co., 120 Mass. 397 (Mass. 1876)

Colt, J.

The St. of 1874, c. 55, authorizes the defendant cor poration “ to purchase the rights, franchise and property of the Middleborough and Taunton Railroad Corporation,” and gives to the latter corporation, upon such purchase, power to convey to the Old Colony Railroad Company “ its franchises and property, and all the rights, easements, privileges and powers granted to it.” It also declares that upon such conveyance the defendant corporation shall “have and enjoy all the rights, powers, privileges, easements, franchises and property of said Middleborough and Taunton Railroad Corporation, and be subject to all the duties, liabilities, obligations and restrictions to which said last named corporation may be subject.”

This action is to recover damages for a tortious act of the Middleborough and Taunton Railroad Corporation, for which it was liable previously to the time of the purchase; and the questions raised by the demurrer are, whether the defendant is liable for that act, and, if so, whether an action can be maintained directly against it, or must be first brought against the other corporation.

The answer to these questions depends upon the intention of the Legislature, to be deduced from the terms of the statute and the manifest purpose of the act. The language is broad enough to place the defendant in all respects in the position of the other

corporation, upon the conveyance and assignment provided for It is equivalent to an amalgamation of the two; all the franchises, privileges and powers are transferred, without reservation ; not merely the franchise to own and manage a railroad, but the franchise of being a body politic, with rights of succession, of acquiring, holding and conveying property, and of suing and being sued by its corporate name. It puts out of the reach of creditors all property liable to attachment to satisfy claims, either in contract or tort. It practically terminates the corporate existence of the selling corporation, except, perhaps, so far as such existence may be necessary in order to hold and distribute the consideration received for the sale, or to meet the requirements of the statute which prolongs the life of all corporations for three years after dissolution, for the purpose of enabling them to close their concerns. Gen. Sts. c. 68, § 36. It operates as a dissolution of the corporation by force of the statute and of the assent manifested by the sale. Lauman v. Lebanon Valley Railroad, 30 Penn. St. 42.

In view of these results, it would be a narrow construction to hold that when the statute subjects the purchasing corporation “ to all the duties, liabilities, obligations and restrictions ” of the other, it only intended to impose those obligations which the corporation owed the public under its charter and the laws of the Commonwealth, and that the property transferred was only that by which it served the public in the exercise of its franchise. In the absence of express provision, it cannot be inferred that it was the intention of the act to impair claims of third parties for fiTiating liabilities, or to shorten the time within which the remedy must be pursued. The question is not whether the statute compels the creditor to accept the defendant corporation as a new debtor against his will, or an injured person to resort to a stranger for satisfaction, but whether it empowers the creditor or the person injured to resort, if he chooses, in the first instance, to the corporation which, by the terms of the statute, is made liable to him. And we are of opinion that it does, an! that the privity necessary to support this action is created by the statute and the purchase and conveyance under it.