
    McMahan v. Morrison and Others.
    
      Thursday, May 30.
    Where the Legislature gives its consent to the consolidation of existing corporations, the effect is to dissolve the former corporations, and at the same instant to create a now corporation, with property, liabilities and stockholders derived from the old, upon such terms and conditions as may be prescribed by the act of consolidation.
    A corporation may be dissolved by a surrender of its franchises and the acceptance of them by the Legislature.
    A precedent debt constitutes a valuable consideration for a conveyance.
    A creditor of one of the former corporations who takes a judgment on his debt against the consolidated company, can not enforce his judgment against real estate of the old company conveyed to Iona fide purchasers before the recovery of his judgment.
    The owner of property can sell it and give a good title to a ion a fide purchaser, as against his creditors, at any time before such creditors have acquired a lien.
    APPEAL from the Wayne Circuit Court.
   Perkins, J.

On April 13, 1854, “ The Cincinnati, Newcastle and Michigan Railway Company,” “ The Cincinnati, Logansport and Chicago Railway Company,” and “ The Cincinnati, Cambridge City and Chicago Short Line Railroad Company,” consolidated into a new corporation, styled “ The Cincinnati and Chicago Railway Company.” As the Legislature, by an act, had given its consent to such consolidation, the effect of it, under the act and terms of consolidation, was a dissolution of the three corporations named, and, at the same instant, the creation of a new corporation, with property, liabilities and stockholders derived from those then passing out of existence. A corporation may be dissolved by a surrender of its franchises, and the acceptance of them by the Legislature. Lauman v. The Lebanon, &c. Co., 30 Penn. St. Rep. 42. At the date of this consolidation, the plaintiff, McMahan, had a suit pending against The Cincinnati, Cambridge City, &c. Co., to recover a demand that company owed him. The same company, at the same time, owned a piece of real estate that had been conveyed to it by one John Hawkins. But McMahan, on the substitution of the new company as defendant, in place of The Cincinnati, Cambridge, &c. Co., took his judgment against the new company, viz., The Cincinnati and Chicago Co. This judgment he obtained on April 14, 1856.

Two years before the rendition of this judgment, however, The Cincinnati and Chicago Company, having succeeded to the property of The Cincinnati and Cambridge Co., as well as to that of the others consolidating, had conveyed the Hawkins lot, above mentioned, to Morrison, Blanchard dis Co., to pay a debt due to them, originally, from The Cincinnati, Logansport, disc. Co.

McMahan now contends that this lot is liable for the debts which were owing by The Cincinnati and Cambridge Co., at the time of the consolidation, the lot being then the property of that company; and hence, he sues Morrison, Blanchard <& Co., the present owners of the lot, to enforce payment of his judgment, of which mention has been made above.

The Court below sustained a demurrer to his complaint, and dismissed his suit. If the property in. the Hawkins lot was not transferred to the new company by the act of consolidation, it still remains out of that company and its grantees, and this suit can not be sustained, because it is not against the proper parties. But if the property in that lot was transferred by the act of consolidation to the new company, then the title to it has been conveyed to Morrison, Blanchard dis Co.; and the question fairly arises, whether it can be made subject, in the hands of those grantees, to the debts formerly owed by The Cincinnati and Cambridge Co. Those grantees are bona fide purchasers. They had no actual notice of the demand of McMahan. This is conceded. They had no constructive notice. McMaharis pending suit was not in relation to the Hawkins lot, and lienee was no notice to any one except a party to it. Ind. Dig., p. 594; Ray v. Roe, 2 Blackf. 258; Frakes v. Brown, id. 295. A precedent debt constitutes a valuable consideration for a conveyance. Work v. Brayton, 5 Ind. 397. It is not pretended that any lien had attached to the lot.

J. B. Julian, for the appellant.

O. P. Morton, J. F. Kibbey, J. S. Newman and J: P. Sid-doll, for the appelles.

We have not to consider, then, how the case might stand had this lot not passed into the hands of innocent purchasers. See Wright v. Bundy, 11 Ind. 405. Upon existing facts the case stands thus: On April 13, 1854, The Cincinnati and, Chicago Railroad Company owned a lot of ground, and conveyed it to a bona fide purchaser. The company was at the time in debt to other persons, among them McMahan. Two years afterward, viz., on April 14,1856, he obtained a judgment on his claim against the company; and the question is, can he enforce it against the lot sold as above? The owner of property can sell it and give a good title to a bona fide purchaser despite his creditors, up to the time when they shall have acquired a lien. McTaggart v. Rose, 14 Ind. 230.

We do not see that any thing more or less has been done in this case. Clark v. Rowling, 3 Comstock, 216, is cited to show that the Court may look behind the judgment against the Cincinnati and Chicago Co., to see upon whom and what it should, 'in equity, be executed. Suppose we admit the power; still, when in the exercise of it property, as in this case, is found in the hands of an honest purchaser for a valuable consideration, the Court will cease its action in such direction. See, 15 How. U. S. Rep. 307, and Am. L. Reg. 536.

As to the rights of a stockholder dissenting to a consolidation, see Lauman v. Lebanon, &c. Co., supra.

Per Curiam.

The judgment is affirmed, with costs. 
      
       By counsel for the appellees : “ In an action against the amalgamated compan3r, upon a contract for construction made by one of the consolidated companies, the admissions or acts of the company making the contract, will bind the aggregate company by \Ya3- of estoppel in pais.”
      
      “ It is no misapplication of the funds of the new company, to apply them first to the payment of a large debt of one of the original companies.” Redfield on Railways, 662; 1 American Railway Oases, 97, notes; also, 12 Howard, 307.
      
        “ According to the English authorities, the consolidated company would be bound to discharge the obligations of the original companies, without any special provision.” Pierce on American Railroad Law.
     