Clearwater v. Meredith
68 U.S. 25

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U.S. Supreme Court

Clearwater v. Meredith, 68 U.S. 1 Wall. 25 25 (1863)

Clearwater v. Meredith

68 U.S. (1 Wall.) 25

Syllabus

1. The statute of Indiana, passed February 23, 1853, which authorizes connecting railroad corporations to merge and consolidate their stock and make one joint company of the roads thus connected causes, when the consolidation is effected -- as is declared by the supreme court of the state in McMahon v. Morrison, 16 Ind. 172 -- a dissolution of the previous companies, and creates a new corporation with new liabilities derived from those which have passed out of existence. Hence, where the declaration avers that the defendant had agreed that stock of a particular railroad in Indiana should be worth a certain price at a certain time and in a certain place, and the plea sets up that under the above mentioned statute of February 23, 1853, the stock of the railway named was merged and consolidated by the consent of the party suing, with a second railway named, so forming "one joint stock company of the said two corporations" under a corporate name stated, such plea is good, though it does not aver that the consolidation was done without the consent of the defendants. And a replication which tenders issue upon the destruction of the first company and upon the fact that its stock is destroyed, rendered worthless, and of no value traverses a conclusion of law and is bad.

2. Such a plea as that just mentioned contains two points, and two points only, which the plaintiff can traverse -- the fact of consolidation and the fact of consent -- and these must be denied separately. If denied together, the replication is double, and bad.

3. When a plaintiff replies to a plea, and his replication, being demurred to, is held to be insufficient, and he withdraws that replication and substitutes a new one -- the substituted one being complete in itself, not referring to or making part of the one which preceded -- he waives the right

Page 68 U. S. 26

to question in this Court the decision of the court below on the sufficiency of what he had first replied. The same is true when he abandons a second replication, and with leave of the court files a third and last one.

4. On demurrer to any of the pleadings which are in bar of the action, the judgment for either party is the same as it would have been on an issue in fact joined upon the same pleading and found in favor of the same party, and judgment of nil capiat should be entered notwithstanding there may be also one or more issues of fact, because, upon the whole, it appears that the plaintiff had no cause of action. This rule of pleading declared and applied.

Under the provisions of a statute of Indiana passed May 11, 1852, for the incorporation of railroads, the Cincinnati, Cambridge & Chicago Short Line Railway Company -- frequently entitled throughout the case, for brevity, "The Short Line Railway" -- was created and made a "corporation" in that state. [Footnote 1] This act contained no provision by which any railroad company incorporated under it could consolidate its stock with the stock of any other corporation. In February of the year following, however, the legislature did pass an act [Footnote 2] allowing any railway that had been organized, to intersect with any other road, and to merge and consolidate their stock; an act whose privileges, on the 4th of the month following, were extended to railroad companies which should afterwards be organized. The language of the act was:

"Such railroad companies are authorized to merge and consolidate the stock of the respective companies, making ONE JOINT STOCK COMPANY of the two railroads thus connected."

With these statutes in force, Clearwater, on the 12th July, 1853, sold a tract of land to Meredith and others for $10,000, taking 200 shares of the already mentioned Short Line Railway Company's stock in payment; Meredith and they, however, by written contract, guaranteeing to Clearwater, that the stock should be worth par -- that is to say, $50 a share -- in Cincinnati, on the 1st October, 1855.

The 1st October, 1855, having arrived and passed, and Clearwater, considering that the stock was not worth par at Cincinnati, brought assumpsit in the Circuit Court for the

Page 68 U. S. 27

Indiana District, against Meredith and his co-guarantors, on the contract. The declaration set forth the sale, acceptance of the stock, and guaranty; that Clearwater still held possession of the stock; and it assigned for breach, that the stock was not worth par at the time and place stipulated, but on the contrary, was of no value at all.

To this declaration there were six pleas. Issues, in fact, were joined on the first and fourth, and demurrers sustained to the second, third, and sixth.

The fifth plea set forth substantially, that after the execution of the guaranty, and before the 1st of October, 1855, to-wit &c., the stock of the said Short Line Railway was merged and consolidated with the stock of a second railway company named; [Footnote 3] making one joint stock company of the two, under a new corporate name, which was given; [Footnote 4] that the said corporations were organized and formed under the already mentioned act of May 11, 1852, to provide for the incorporation of railroad companies; that the roads were connecting and intersecting roads; that the consolidation was made with the consent of the stockholders and directors of both companies; that afterwards, in August, 1854, the said newly formed joint company was merged and consolidated with a third railway corporation of the State of Indiana, whose name was also given; [Footnote 5] which company was constructing a road that intersected with the said already mentioned newly formed joint company; that by the said consolidation, the stock of the said two companies was merged and consolidated, "forming one joint stock company out of said two companies;" that the said consolidation was made with the consent of the directors and stockholders of said two companies, and with the consent of said plaintiff; that the said consolidated company assumed a third corporate name, which was stated; [Footnote 6] and that, by reason of the said consolidation, the stock of the Short Line Railway Company in said agreement specified, was destroyed,

Page 68 U. S. 28

and rendered wholly worthless and of no value. A demurrer was interposed to this plea, which was overruled.

Then the plaintiff filed a replication. To this a demurrer was put in by the other side, and the court having sustained it, an amended or rather a substituted replication was put in. To this a demurrer was also sustained. Whereupon, on motion and by leave of the court, the plaintiff withdrew his joinder in demurrer, and filed the following second amended replication:

"And the plaintiff, as to the plea of the defendants fifthly above pleaded, says that he ought not, by reason of anything therein alleged, to be debarred or precluded from having and maintaining his aforesaid action against the defendants, because he says that the said stock of the Cincinnati, Cambridge & Chicago Short Line Railway Company was not destroyed, either in whole or in part, nor was the same rendered worthless and of no value, in manner and form as the defendants by their said plea have alleged. And this he prays may be inquired of by the country."

This replication was also demurred to, and the demurrer sustained. The plaintiff now saying nothing further, and choosing to abide by his last-named amended replication, judgment was rendered for the defendant.

The question presented on error here was this: did the court below commit error when it sustained a demurrer to the last replication, and gave judgment against the plaintiff, Clearwater, as it did?

Page 68 U. S. 38

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