its assets to another company, the latter is not liable for the debts and liabilities of the transferee.84 Stating the rule more fully, it is gen

erally held that a separate and distinct corporation, which has succeeded, by a valid purchase and transfer, to the property and franchises of another corporation, is not liable, merely by reason of its succession, for the general debts or on the general contracts of the

Wisconsin. National Foundry & Pipe Works v. Oconto City Water Supply Co., 105 Wis. 48, 81 N. W. 125; Pennison v. Chicago, M. & St. P. Ry. Co., 93 Wis. 344, 67 N. W. 702; Neff v. Wolf River Boom Co., 50 Wis. 585, 7 N. W. 553; Wright v. Milwaukee & St. P. Ry. Co., 25 Wis. 46.

An action for damages for the value of stock in a corporation, based upon a refusal to transfer the same on its books, cannot be maintained by a stockholder or his assignee against another corporation, which has succceded to all the property, rights and interests of the corporation which is sued the stock. Huggins v. Milwaukee Brewing Co., 10 Wash. 579, 39 Pac. 152.

Where a street railroad company issued to a person a pass for life, and afterwards sold its road to another company, it was held that the latter was not liable to an action for damages for refusal to recognize the pass, in the absence of an agreement to do 80. Eddy v. Hinnant, 82 Tex. 354, 356, 18 S. W. 562; Dallas Consol. Traction Ry. Co. v. Maddox (Tex. Civ. App.), 31 S. W. 702.

In a Michigan case it was said: "Even though the shareholders and officers of both corporations be the same, where no intention appears to transfer the old obligations to the new company, the new company is not liable, but creditors must look to the assets of the old company." And it was held that proof that a corporation which had purchased all the property and franchises of another corporation owned nearly all the latter's stock at the time of the sale, that all the latter's employees continued in the former's employ after the sale,

and that the business had been conducted in the same manner as before, did not show that the purchasing company assumed the selling company's liabilities. Chase v. Michigan Tel. Co., 121 Mich. 631, 80 N. W. 717.

Where cash is paid for the entire property of another company, it is held that the purchasing company is not liable on claims against the selling company which were not liens on the property at the time of the sale and transfer, where the selling company was not insolvent and there was no fraud in the sale. Hageman v. Southern Elec. R. Co., 202 Mo. 249, 100 S. W. 1081.

Where it appears that the purchasing corporation was not merely the old one under a new name, and that while the new company was in corporated for the purpose in part of taking over the property of the old company, it was also incorporated for other purposes, including the purchase of still another which company it did purchase and take over, the new company is not liable for the debts of the old, in the absence of fraud or an intention to be so bound. Colorado Springs Rapid Transit R. Co. v. Albrecht, 22 Colo. App. 201, 123 Pac.

957.

Where the business and assets of a foreign corporation in a particular part of the country are transferred to a domestic corporation merely in the capacity of a general agent of the foreign company, the former is not liable on the obligations of the parent company. Koch v. Speedwell Motor Car Co., 24 Cal. App. 123, 140 Pac. 598, 600.

other corporation. It is not liable at all for such debts or on such contracts, in the absence of a special agreement to pay or assume the same, nor is the property in its hands liable to be subjected to the same, in the absence of a valid lien thereon, unless it affirmatively appears that the transfer of the property and franchises of the other corporation constitutes, in fact or in law, a fraud upon its creditors, or the circumstances attending the creation of the new corporation, and its succession to the property and franchises of the old corporation, are such as to warrant a finding that it is in reality a mere continuation of the old corporation.

There are four important exceptions to this rule as follows, viz.: 1. The transfer or sale must not constitute a statutory consolidation or merger.85 If it does, then the liability exists.86

2. There must be no agreement to assume such liabilities, either express 87 or implied.88

3. The transaction must not be such as to warrant a finding that the purchasing corporation was a mere continuation of the selling corporation.89

4. The transaction must not be fraudulent in fact, i. e., in order to escape liability, it must be (a) in the usual course of business, (b) without notice of the existing debts or claims, (c) for a valuable and sufficient consideration, and (d) without intent to defraud existing creditors of the transferee.90

The purchasing company is not liable for the debts of the seller where the conveyance was for an adequate consideration, notwithstanding the two companies had common directors and stockholders, especially where the seller retained property sufficient to pay its debts.91

85 Luedecke v. Des Moines Cabinet Co., 140 Iowa 223, 32 L. R. A. (N. S.) 616, 118 N. W. 456.

The purchasing company is not liable unless (a) there is an agreement to assume such debts, or (b) the circumstances warrant a finding that there was a consolidation of the two corporations, or (c) the purchasing corporation was a mere continuation of the selling corporation, or (d) the transaction was fraudulent in fact. Ezzard v. State Nat. Bank,

Okla.

87 Swing v.

Empire Lumber Co., 105 Minn. 356, 117 N. W. 467, and see §§ 4741-4745, supra.

88 See § 4753, infra.

89 Swing v. Empire Lumber Co., 105 Minn. 356, 117 N. W. 467, and see § 4760, infra.

90 Boyd v. Northern Pac. Ry. Co., 170 Fed. 779, aff'd 177 Fed. 804; Swing v. Empire Lumber Co., 105 Minn. 356, 117 N. W. 467. See also S$ 4754, 4755, infra.

§ 4752. Liability for torts. This general rule, subject to the exceptions noted, as stated in the preceding section, applies equally well to the liability of the transferee company for the torts of the transferrer company.92 In Kansas, however, it has been held that a transfer of all its property by one company to another, together with the cessation of doing business by the selling company, makes the purchasing corporation liable for torts of the selling company, apparently upon the theory that such a sale is a consolidation.98

§ 4753.- Implied assumption of liabilities. Ordinarily a promise on the part of a corporation to pay or assume the debts or other

92 Arkansas. Ferguson & Wheeler Land, Lumber & Handle Co. v. Good, 97 Ark. 106, 133 S. W. 183.

Georgia. Louisville & N. R. Co. v. Hughes, 134 Ga. 75, 67 S. E. 542; Hawkins v. Central of Georgia R. Co., 119 Ga. 159, 46 S. E. 82; Seaboard Air Line Ry. v. Leader, 115 Ga. 702, 42 S. E. 38.

Michigan. Chase v. Michigan Tel. Co., 121 Mich. 631, 80 N. W. 717.

Missouri. Burge v. St. Louis, M. & S. E. R. Co., 100 Mo. App. 460, 74 S. W. 7.

Pennsylvania.

Pittsburgh, C. & St.

L. Ry. Co. v. Fierst, 96 Pa. St. 144.

South Carolina. Hammond v. Port Royal & A. Ry. Co., 15 S. C. 10, 16 S. C. 567.

Texas. Abilene Cotton Oil Co. v. Anderson, 41 Tex. Civ. App. 342, 91 S. W. 607.

Utah. Cooper v. Utah Light & Railway Co., 35 Utah 570, 136 Am. St. Rep. 1075, 102 Pac. 202.

Wisconsin. Pennison v. Chicago, M. & St. P. Ry. Co., 93 Wis. 344, 67 N. W. 702; Neff v. Wolf River Boom Co., 50 Wis. 585, 7 N. W. 553.

Thus, it is not liable for a conversion of property by the selling corporation. Farris v. Hodges, Okla. -, 158 Pac. 909.

So it does not make the purchasing company liable to account for the infringement of a patent by the selling company. Racine Engine & Ma

chinery Co. v. Confectioners' Machinery & Manufacturing Co., 234 Fed. 876.

A corporation succeeding by purchase and transfer to the steamships of another corporation is not liable upon a judgment recovered against the other corporation for damages caused by a collision after the transfer. Gray v. National Steamship Co., 115 U. S. 116, 29 L. Ed. 309.

Of course, a corporation succeeding to the property of another corporation is liable for its own torts with respect to property received from the other corporation. Where a railroad company commits a trespass in taking and appropriating land, and constructing its road thereon, another corporation, which purchases its property and succeeds to its rights, and which takes possession of the land so taken, is equally a trespasser, and is liable to pay all damages occasioned by the trespass. Indiana, B. & W. Ry. Co. v. Allen, 113 Ind. 308, 3 Am. St. Rep. 650, 15 N. E. 451; Bloomfield R. Co. v. Grace, 112 Ind. 128, 13 N. E. 680; Bloomfield R. Co. v. Van Slike, 107 Ind. 480, 8 N. E. 269; Lake Erie & W. Ry. Co. v. Griffin, 92 Ind. 487, 107 Ind. 464, 8 N. E. 451; Donald v. St. Louis, K. C. & N. R. Co., 52 Iowa 411, 3 N. E. 462.

93 Ledbetter v. Sunflower State Oil Co., 96 Kan. 636, 152 Pac. 763.

liabilities of another corporation cannot be implied from the fact that it has received the assets of the latter; but there may be special circumstances which will give rise to an implied promise. If a corporation purchases the property and franchises of another corporation, whether directly from the latter, or at a mortgage foreclosure sale, and takes possession of all the property, including property for which the other corporation was under obligation to pay, and to which it could acquire no right without payment, the purchasing corporation impliedly assumes the obligation. For example, if a railroad company appropriates or condemns land for the purpose of its road, and a judgment is rendered against it for the value of the land, and a new corporation purchases, at a foreclosure sale or otherwise, and enters upon and occupies the land, including the right of way, it may be held liable to pay the judgment, on the ground that it has adopted and ratified the original appropriation.94

In order that a promise may be implied, on the part of a corporation, to pay the debts of another corporation, to the property and franchises of which it has succeeded by a valid purchase, the conduct. relied upon must show such an intention.95 The mere fact that the new corporation has voluntarily paid some of the debts of the old corporation is no ground for inferring that it assumed the latter's debts.96 The fact that a new bank receives some of the notes or bills of an old bank of the same name, and reissues them, does not impose upon it liability to pay all the notes or bills of the old bank,97

§ 4754. Fraud in general. The rule that a corporation taking a transfer of the property and franchises of another corporation takes the same free from any liability for the general debts of the latter does not apply where the transfer constitutes, either in fact or as a matter of law, a fraud upon the creditors of the other corporation. In such a case, the creditors defrauded by the transfer may, in equity, follow the property into the hands of the new corporation, and subject it to the satisfaction of their claims, or hold the corporation liable

94 Lake Erie & W. Ry. Co. v. Griffin, 92 Ind. 487; Pfeifer v. Sheboygan & F. du L. R. Co., 18 Wis. 155, 86 Am. Dec. 751.

95 Colorado Springs Rapid Transit R. Co. v. Albrecht, 22 Colo. App. 201, 123 Pac. 957.

98 The fact that a new fair association, a corporation, bought an old fair association's grounds, and volun

tarily paid premiums offered by, and advertising claims against, the latter, does not charge it with the latter's debts. Texas State Fair & Dallas Exposition Ass'n v. Caruthers, 8 Tex. Civ. App. 474, 29 S. W. 48.

97 Bellows v. Hallowell & A. Bank, 2 Mason 31, Fed. Cas. No. 1,279; Wyman v. Hallowell & Augusta Bank, 14 Mass. 57, 7 Am. Dec. 194.