Consolidated Companies

“ It is true these expressions have not all the weight of authority, for they were not necessary to the decisions made, but they are worthy of consideration, and they are in accordance with what seems to be sound reason. When, as in this case, the stock of two companies is consolidated, the stockholders become partners, or quasi partners, in a new concern. ”

“ He has seemed to overlook the fact that the Consolidated Companies is not a private corporation, but rather one in which several of the Directors are even more heavily interested, in a financial way, than he is himself.
"There is no question in the minds of any of us that the services of our president are still absolutely essential to the success of the corporation, and we have no wish or intention of having him separate himself from it ”

“ Such consolidation shall be made by agreement in writing, by or under the authority of the board of directors, and the assent of the owners of at least three-fifths of the capital stock of each of said corporations or companies, and a certificate of the fact of such consolidation, with the name of the consolidated company, shall be filed and recorded in the office of the secretary of state: provided, no such consolidation shall in any manner affect or impair the right of any creditors of either of said companies. ”

“ The consolidated corporation would have acquired, as we have seen, no greater immunities from taxation than the constituent companies had prior to the union, and would have held them distributively; that is to say, whatever privileges and advantages either of them possessed would have been held by the new company to the extent of the road occupied by each respectively upon the consolidation. ”

“ The only remaining objection to the judgment is that the bonds were delivered to the consolidated company, when they were not voted to that company. We concur with the court below in holding that the aid voted must be deemed to have been given in view of the then existing statute, authorizing two or more railroad companies forming a continuous or connected line to consolidate and form one corporation, and investing the consolidated company with the powers, rights, property, and franchises of the constituent companies. ”

“ This is often desirable because of the value of the good-will accruing to the constituent companies from years of business dealing with their customers. The advantages of the close consolidation may be often obtained by stimulating rivalry between the various plants of the same industry and by exchanging information as to successful methods of operation.
A holding company does not generally own all the stock of the subsidiary. ”

“ That generally the effect of consolidation, as distinguished from a union by merger of one company into another, is to work a dissolution of the companies consolidating, and to create a new corporation out of the elements of the former, is asserted in many cases, and it seems to be a necessary result. ”

“ Looking thus at the legislative intent appearing in the consolidation act, we are constrained to the conclusion that a new corporation was created by the consolidation effected thereunder in the place and in lieu of the two companies previously existing, and that whatever franchises, immunities, or privileges it possesses, it holds them solely by virtue of the grant that act made. ”

“ In the formation of a consolidation or a merger the services of a promoter may be necessary. This is especially true if the various companies are direct competitors and deep-rooted jealousies exist. Under the circumstances an outsider has the best chance of effecting an agreement between the parties. The difficulty encountered in all consolidations and mergers is the exaggerated idea of officials regarding the importance and value of their own plant and organization as related to the rest. ”

“ If the company issues different classes of shares, special provisions may be made from class to class with respect to the subscription for new shares, the consolidation, split, or retirement of shares or the allotment of shares in consequence of a merger or split of companies, even where no such matters have been provided in the articles of incorporation. ”

“ There is every indication that we are to see new developments of the power of aggregated capital to serve civilization, and that the new developments will be made right here in America. Joint-stock companies are yet in their infancy, and incorporated capital, instead of being a thing which can be overturned, is a thing which is becoming more and more indispensable. ”

“ Most of these large corporations have been in existence for such a short time that one cannot yet judge accurately regarding their permanent success. Many of them seem to have been over-capitalized and their dividends have not always met shareholders' anticipations. There has been no active popular movement against consolidation in England, and the government has passed no laws opposed to it. Parliament, however, has passed stringent amendments to the Companies Acts, changes enforcing publicity regarding the organization of all limited liability companies and their methods of management. ”

“ To the advantages derived from consolidation would accrue those arising from administration by the state, which would look to securing a working advantageous to the whole public, while to private companies the advantage of stockholders would always be sought first. ”

“ Besides these territorial corporations for purposes of government, as counties, towns, cities, &c., there are incorporated companies for carrying on business of various kinds, as turnpike and rail-road companies, and companies for the purposes of banking, insurance, manufacturing, &c. These kinds of business, to be carried on successfully, sometimes require a larger amount of money than one man possesses. A number of persons, therefore, unite their capital under an act of incorporation granting them power to manage their business which they could not have in an ordinary business partnership. ”

“ In order to prevent co-operative societies from degenerating into ordinary-middle class joint-stock companies (sociétés par actions) , all workmen employed, whether shareholders or not, ought to share alike. ”

“ A company with a large burden of that kind would be in a precarious position, because any of the other existing companies, or some new company, might take advantage of the situation and cut heavily into that part of the company’s business that was carried on between the large cities and was bearing the burden of the non-paying extensions. But if the existing companies were to consolidate, the resulting company would become so strong that it need not fear such competition from any company newly to be organized. ”

“ It should be clearly understood that the consolidated balance sheet is not a balance sheet of the holding company except and only when the holding company owns the entire capital stock of all the subsidiaries. ”

“ Louis and Des Moines companies, became the property of these respective companies, and these corporations did not cease to exist, as would be the necessary result of a consolidation, but still continued in existence as corporate entities. ”

“ The corporation, as a means of organizing and directing business enterprise is a product of the last hundred years. A century ago the business of the United States was carried on by individuals, partnerships, and a few joint stock companies. At the time of the last Census, more than four-fifths of the manufactured products were turned out under corporate direction; most of the important mining enterprises were corporate, and the railroads, public utilities, banks and insurance companies were virtually all under the corporate form of organization. ”

“ The plan of reorganization calls for the formation of a new corporation to which will be transferred all of the assets of Consolidated, Union, [8] and Consumers free of all claims. [9] The securities of the new corporation are to be distributed as follows:
Union and Consumers bonds held by the public will be exchanged for income bonds [10] and preferred stock [11] of the new company. For 50 per cent of the principal amounts of their claims, those bondholders will receive income bonds secured by a mortgage on all of the property of the new company ”

“ We have now to inquire whether production upon a large scale is in turn to be supplanted by single consolidated enterprises, by those combinations of capital known as trusts. Under one of these three conditions industry must be carried on; few people wish to revert to the stage when production was carried on in small establishments, but warm controversy and difference of opinion still exist as to whether centralized management by a single company or combination offers superior advantages to production by independent competing establishments. ”

“ Manufacturing, mercantile, and banking companies have all tended to combine in large corporations, partly for greater economy, partly for an increase of profits through manipulating reorganization of stock companies, and partly for centralization of control. ”

“ While the plant value and the past earnings of each of the companies may be considered in allotting them their respective interests, these are not a safe guide as to future earnings. In the case of partnerships especially and often in the case of corporations, there is a loss of valuable good-will. It is generally held that the benefits of consolidation greatly overbalance these disadvantages. ”

“ The shares in existing companies rose in value, a number of new companies were formed, and companies already operating projected branches in defence of their own interests against threatened competition. ”

“ The congressional purpose in allowing consolidated returns was to eliminate exactly this kind of dependence on corporate form and leave corporations free to continue business in whatever corporate form best suited them. ”

“ Research has rendered it probable that the companies of the time were composed of an outer as well as of an inner circle; that the mass of shareholders differed from those who were the promoters, managers and active agents in the concern, that the liability of the former at least was limited and that their shares, whether small or great, were transmissible and subject to the fluctuations of the market. ”

“ The general power to perform all corporate acts refers to the ordinary business transactions of the corporation, and does not extend to a reconstruction of the body itself, or to an enlargement of its capital stock. A corporation, like a partnership, is an association of natural persons who contribute a joint capital for a common purpose, and although the shares may be assigned to new individuals in perpetual succession, yet the number of shares and amount of capital cannot be increased, except in the manner expressly authorized by the charter or articles of association. ”

“ The Companies Act 1907 (s. 39) gives a company a further power by special resolution, confirmed by an order of the court, to reorganize its capital, whether by the consolidation of shares of different classes or by the division of its shares into shares of different classes—but no preference or special privilege attached to any class of shares is to be interfered with except by a resolution passed by a majority of shareholders of that class representing three-fourths of the capital of that class. A limited company cannot reduce its capital without the sanction of the court. ”

“ All parties to the suit, and the new companies who are made parties are enjoined perpetually from in any way effecting any combination between any of the companies in violation of the statute by way of resumption of the old trust. Each of the fourteen companies is enjoined from acquiring stock in any of the others. All these companies are enjoined from having common directors or officers, or common buying or selling agents, or common offices, or lending money to each other. ”

“ Mere acquisition by one corporation of a majority of the stock or all the assets of another corporation does not of itself constitute a reorganization, where such acquisition takes the form of a purchase and sale and does not result in or bear some material resemblance to a merger or consolidation.'
True, the mere acquisition of the assets of one corporation by another does not amount to reorganization within the statutory definition. ”

“ Undoubtedly the states possess power over corporations created by them, to permit or forbid consolidation, whether accomplished by stock ownership or otherwise, to forbid one corporation from holding stock in another, and to impose on this or other subjects such regulations as may be deemed best. ”

“ When the employer is in danger of losing valuable assistants, he sometimes gives them a share in the business. In the ordinary partnership, two or more men divide the ownership and duties, agreeing as to the division of control. Coöperation among workmen, though rare, gives an unusual opportunity for the discovery of special talent. The dominant form of organization to-day is that of the stock company, or corporation, the ownership of which is divided among the holders of shares of stock, or of certificates of membership. ”

“ The incorporation of a single individual is not legally possible in this country.
The corporation, because of its peculiar advantages over other forms of business organization, has become the accepted form for most large enterprises. The gathering together of large capital funds, the ease and efficiency of management and control, continuous life, the facility of transfer of ownership, and the limited liability of the stockholders, make the corporate form attractive to the investor and absolutely necessary to the large businesses carried on today. ”