If one of the consolidating corporations has no exemption from taxation, the property derived from it is not exempt in the hands of the new corporation unless the legislature expressly so provides, although the other consolidating corporation or corporations may have had such an exemption, and although the statutes authorizing the consolidation may give the new corporation all the rights, property and privileges of the old corporations. The effect is merely to give the new corporation such rights and privileges with respect to the property owned by each one of the old companies as were enjoyed by that particular company under its charter.56 Thus, where several railroad companies chartered by different states were consolidated under authority from the legislature of the several states, and the corporation created by one of the states had no exemption from taxation, it was held that the new corporation had no exemp tion in that state, although one of the other companies, created by another state, enjoyed such an exemption.57 And where a corporation which had no exemption from taxation was merged in another corporation of the same state, which had such an exemption, under a statute giving the latter company all the rights, property and privileges of the former, it was held that no exemption from taxation attached to the property of the former in the hands of the latter, in the absence of express provision to that effect.58 § 4727. - Exemption from taxation. Exemptions from taxation are to be strictly construed and their operation is never to be extended by construction.59 When there is no constitutional pro 56 Chesapeake & O. R. Co. v. Virginia, 94 U. S. 718, 24 L. Ed. 310; Central Railroad & Banking Co. v. Georgia, 92 U. S. 665, 23 L. Ed. 757; The Delaware Railroad Tax, 18 Wall. (U. S.) 206, 21 L. Ed. 888; Tomlinson v. Branch, 15 Wall. (U. S.) 460, 21 L. Ed. 189; Philadelphia & W. R. Co. v. Maryland, 10 How. (U. S.) 376, 13 L. Ed. 461. 57 Philadelphia & W. R. Co. v. Maryland, 10 How. (U. S.) 376, 13 L. Ed. 461. In a later case, a Maryland railroad company and a Delaware railroad company were consolidated under acts of the Maryland and Delaware legislatures providing that the consolidated corporation should have all the rights, powers and privileges vested in the original companies. It was held that a provision in the charter of the Maryland company exempting the shares of its capital stock from taxation only applied to taxation in Maryland (the charter of the Delaware corporation containing no such exemption), and that the shares of the consolidated company were not ex empt from taxation in Delaware. The Delaware Railroad Tax, 18 Wall. (U. S.) 206, 21 L. Ed. 888. 58 Chesapeake & O. R. Co. v. Vir ginia, 94 U. S. 718, 24 L. Ed. 310. 59 Supra, chapter on Taxation. hibition in the way, whether an exemption enjoyed by the old corporations passes to the consolidated corporation depends upon the intention of the legislature. It passes if the legislature so intends and provides, but not otherwise.60 Ordinarily an exemption from taxation possessed by a constituent corporation does not pass to the consolidated company although it is well settled that such exemption may pass by the use of proper words in the statute authorizing the consolidation. As stated in another chapter,61 a statute is to be strictly construed in favor of the public, and against the corporation, in determining whether an exemption from taxation is thereby transferred to it from another corporation. And it has been held. that a statutory provision that a corporation succeeding to the rights, franchises and property of another corporation shall have all the rights, franchises and privileges enjoyed by the latter, is not to be construed as including an exemption from taxation, unless there is something else to show such an intention on the part of the legislature.62 However, the decisions are conflicting and like language has often been held sufficient to pass an exemption from taxation,63 although the later decisions of the Supreme Court of the United States expressly hold that a transfer of the "privileges" of the constituent companies does not include their exemption from taxation.64 When corporations are combined by merger of one in the other, without dissolution of the latter, 65 the latter does not thereby lose an exemption of its property from taxation, granted by its charter, 60 United States. Tennessee V. Whitworth, 117 U. S. 129, 139, 29 L. Ed. 833; Philadelphia & W. R. Co. v. Maryland, 10 How. 376, 13 L. Ed. 461; Keokuk & W. R. Co. v. Scotland County Court, 41 Fed. 305. Arkansas. Arkansas Midland R. Co. v. Berry, 44 Ark. 17. Georgia. Atlanta & R. Air-Line R. Co. v. State, 63 Ga. 483. Kentucky. Com. v. Nashville, C. & St. L. R. Co., 93 Ky. 430, 20 S. W. 383. Maryland. State v. Philadelphia, W. & B. R. Co., 45 Md. 361, 24 Am. Rep. 511. Mississippi. Natchez, J. & C. R. Co. v. Lambert, 70 Miss. 779, 13 So. 33; Louisville, N. O. & T. Ry. Co. v. Taylor, 68 Miss. 361, 8 So. 675. Missouri. State v. Keokuk & W. R. Co., 99 Mo. 30, 6 L. R. A. 222, 12 S. Virginia. Petersburg v. Petersburg See also § 4649, supra. 61 Supra, chapter on Taxation. 62 Phoenix Fire & Marine Ins. Co. v. Tennessee, 161 U. S. 174, 40 L. Ed. 660, reviewing conflicting cases at length and holding that the use of the word "immunity" or "exemption" is ordinarily necessary to pass such exemption. 63 Supra, chapter on Taxation. 64 Wright v. Georgia Railroad & Banking Co., 216 U. S. 420, 437, 54 L. Ed. 544; Rochester R. R. Co. v. Rochester, 205 U. S. 236, 252, 51 L. Ed. 784. 65 See § 4703, supra. but the exemption does not attach to the property and franchises acquired by it from the other corporation.66 When two corporations, whose capital stock is by statute exempted from taxation, consolidate themselves into a new corporation under a statute which makes no provision to the contrary, and issue shares in the new company in exchange for shares in the old companies, the right of exemption from taxation attaches to the new shares.67 It has also been held that when two railroad companies whose capital stock is exempted by statute from taxation within the state, and a third corporation created under the laws of another state, and whose road is in the latter state, consolidate into a new company, and issue shares in the new company in exchange for the shares in the old companies, the right of exemption from taxation in the first state passes into the new shares, unless a law of the first state makes provision to the contrary.68 When two or more corporations, with a special immunity from general taxation, the amount of taxation being dependent upon certain precedent acts to be done by such corporations, are consolidated into a new corporation, and the new corporation is neither required nor able to do the acts which are to precede such immunity from taxation, the new corporation cannot claim such immunity.69 When corporations which enjoy an exemption from taxation are consolidated under legislative authority, and a new corporation is created, and vested with all the property, rights, franchises and privileges of the consolidating corporations, the new corporation cannot acquire an exemption from taxation, whatever may be the intention of the legislature, if, at the time of the consolidation, there is a constitutional prohibition against exemptions from taxation. And it can make no difference that the prohibition was not in force at the time the exemption was granted to the consolidating corporations.70 § 4728. Rate exemptions. It has been held that a provision in the charter of a railroad company, giving it the right to fix the rate 66 Central Railroad & Banking Co. v. Georgia, 92 U. S. 665, 23 L. Ed. 757. 67 Tennessee v. Whitworth, 117 U. S. 129, 29 L. Ed. 830. 68 Tennessee v. Whitworth, 117 U. S. 139, 29 L. Ed. 833. 69 Maine Cent. R. Co. v. Maine, 96 U. S. 499, 24 L. Ed. 836; State v. Maine Cent. R. Co., 66 Me. 488. 70 Chesapeake & O. R. Co. v. Miller, 114 U. S. 176, 29 L. Ed. 121; St. Louis, I. M. & S. R. Co. v. Berry, 113 U. S. 465, 28 L. Ed. 1055; Memphis & L. R. R. Co. v. Railroad Com., 112 U. S. 609, 28 L. Ed. 837. See also Louisville & N. R. Co. v. Palmes, 109 U. S. 244, 27 L. Ed. 922. And see § 4724, supra. of fares on its road within certain limits, is a term of the contract between the state and the corporation and a corporate franchise which passes upon a sale of its property and franchises to another corporation empowered by its charter to make the purchase, and that it is no more subject to impairment by the state after its transfer than before.71 But in an Ohio case, where a railroad company chartered by a special private act was authorized to charge a certain rate of toll, and its road was purchased, under legislative authority, and operated by another corporation, it was held that the special privilege or franchise as to the rate of tolls did not so inhere in the road as to pass to the purchasing corporation, so as to give it the right to charge higher tolls than were permitted under the general law applicable to railroads generally.72 Since a statute is to be strictly construed when it is claimed that it confers rights or privileges against the state, it has been held that a statute dividing a turnpike company into two distinct corporations, controlling different portions of the road, and providing that each shall retain "all the powers, rights, and capacities" granted by the charter of the original company, does not pass to the new companies a right of exemption from legislative control of tolls which was reserved to the original company by its charter.73 If the charter of a corporation, whose property is purchased under legislative authority by another corporation or by a natural person, and afterwards transferred by him to another corporation, contains restrictions as to the rates which it may charge for transportation, the restrictions, in the absence of provision to the contrary, attach to the property in the hands of the purchasing corporation.74 Exemption from rate regulations possessed by a corporation does not pass to a consolidated corporation so far as the plants and territory of one of the consolidating corporations which had no exemption rights are concerned.75 And where a new corporation is formed by consolidation, it is held that it takes its charter subject to existing constitutional provisions as to its amendment or repeal, and hence rate exemptions are subject to subsequent laws fixing lower rates.76 71 Ball v. Rutland R. Co., 93 Fed. 513. 72 Pittsburgh, C. & St. L. Ry. Co. v. Moore, 33 Ohio St. 384. 73 Covington & L. Turnpike Road Co. v. Sandford, 164 U. S. 578, 41 L. Ed. 560. 74 Campbell v. Marietta & C. R. Co., 23 Ohio St. 168. 75 People's Gas Light & Coke Co. v. Chicago, 194 U. S. 1, 48 L. Ed. 851, aff 'g 114 Fed. 384. See also note in L. R. A. 1915 C 261, 279, and see § 4726, supra. 76 Shields v. Ohio, 95 U. S. 319, 24 L. Ed. 357, aff'g 26 Ohio St. 86, and see § 4724, supra. So a consolidated company which accepts its charter with a distinct provision that the company shall be subject to general laws cannot claim rate exemptions of a constituent company.77 VI. DEBTS, LIABILITIES AND BURDENS § 4729. General considerations. In order to determine whether one company is liable on the contracts, debts or other liabilities of another company or companies, or is subject to the burdens imposed upon them, where there has been a combination of corporations, the first question is as to whether the claim was an express lien on property of the constituent, absorbed or selling company, because if it was, then of course it remains a lien, regardless of any combination of corporations or sale of the property, unless the creditor has agreed otherwise.78 Secondly, in case the liability is unsecured, the question which should be at once determined is whether the statute authoriz ing the combination or purchase makes any provision in regard to what corporation is liable and if so what is such provision and how it is to be construed.79 Thirdly, a necessary inquiry is whether the one corporation has expressly agreed to assume the debts and liabilities of the other company or companies, since, of course, if it has done so then it is liable.80 In this connection, however, some difficulty is experienced in construing such agreements to assume, as to just what debts or liabilities are covered thereby.81 Fourthly, if the liability is unsecured, and there is no statute which determines the question, and there has been no express assumption of the debts and liabilities of the one corporation by the other, the question narrows down to the implied effect of the combination or purchase, and this is to be determined according to whether the transaction whereby the property of one corporation is taken over by another corporation or by a new corporation is (a) a statutory consolidation whereby the constituent companies are wholly or practically dissolved and a new corporation created,82 or (b) a statutory merger whereby one corporation absorbs another, the former remaining in existence and the latter ceasing to exist,83 or (c) a mere purchase by one company of the assets of another company, without any consolidation or merger,84 or (d) a mere continuation of the old corporation under a new |