Hamilton v. Clarion R.

Citations

• 144 Pa. 34
• 23 A. 53
• 1891 Pa. LEXIS 581

Syllabus

<p>(а) Judgment creditors of a railroad company, created by the merger and consolidation of two other companies, under the provisions of the act of May 16, 1861, P. L. 702, and its supplements, filed a “ creditors ’ bill ” against the railroad company and its stockholders, for a decree subjecting the unpaid stock subscriptions to the payment of the corporate debts.</p> <p>(б) The bill averred and the master found that the corporation defendant was insolvent, and that certain of the stockholders defendant were subscribers for the stock of one of the prior companies merged and consolidated, and as .such were liable to the extent of their subscriptions unpaid for the ascertained claims of the plaintiffs. A final decree was entered accordingly.</p> <p>(c) Defendants appealing from the decree set up that neither the prior companies merged and consolidated, nor the corporation defendant itself, ever had any lawful corporate existence; that the said defendants never were stockholders in the defendant company, and that the latter was never so far organized that they could have obtained shares of stock therein:</p> <p>1. The corporate existence of a corporation de facto cannot be inquired into collaterally: Cochran v. Arnold, 58 Pa. 399. Much less can such a corporation, or a stockholder therein, set up a defect of incorporation against creditors who have contracted with it on the faith of its lawful corporate existence.</p> <p>2. By force of the articles of consolidation and the acts of assembly, the subscriptions to the stock of one of the prior companies enured to the benefit of the consolidated company, so as to become assets in its hands for the payment of its debts ; and the subscribers thereof became liable to the creditors, to the amount of their unpaid subscriptions.</p> <p>3. Such subscribers, it seems, were not released by a certain contract between the consolidated company and an improvement company, made immediately after the consolidation, whereby the latter co