Opinion
6 Div. 612.
November 15, 1917.
Appeal from Circuit Court, Marion County; C. P. Almon, Judge.
S.D. Weakley, of Birmingham, A. F. Fite, of Jasper, and E. B. K. V. Fite, of Hamilton, for appellant. John H. Bankhead, Jr., of Jasper, and John C. Forney, of Birmingham, for appellees.
Appellant filed this bill to enforce the payment and satisfaction of a judgment which appellant's testator had obtained against the Aldrich Mining Company, a corporation.
The appellee corporation was formed under the laws of Alabama, by the consolidation or merger of the defendant in judgment corporation and other corporations; and by such consolidation it acquired the property of the merging corporations, and, in law, became liable for the debts and obligations of the merging corporations. The aim of the bill was to reach the assets of the defendant corporation which it acquired from the Aldrich Mining Company by virtue of the agreement between it and the merging corporations, and by virtue of the statutes or acts of consolidation, or merger, of the several corporations, and to subject such assets to the payment and satisfaction of that judgment against the Aldrich Mining Company. The agreement for merging the several corporations was made on the 31st day of December, 1906, and the merger was effected under and by virtue of the general act of the Legislature of this state of October 2, 1903 (page 310 et seq.).
Appellant's intestate commenced his action against the Aldrich Mining Company on October 5, 1905, more than a year before the act of consolidation. This action has quite a history, the case having come to this court three time on appeal. See reports of the case on these appeals: 169 Ala. 161, 52 So. 911, Ann. Cas. 1912B, 288, 184 Ala. 610, 64 So. 321, and 192 Ala. 195, 68 So. 900. On the last appeal the result was to affirm a judgment for plaintiff against the defendant for $3,000, which was obtained in the circuit court on the 18th day of August, 1914. This judgment of affirmance was rendered on the 15th day of January, 1915. The judgment sought to be enforced was not obtained, therefore, until after the lapse of five years from the consolidation or merger of the corporations; and the action was never revived or made to proceed against the appellee, the merged or consolidated corporation, but proceeded to the end against the Aldrich Mining Company, which, in 1906 or 1907, was merged in the appellee corporation.
The bill was demurred to on many grounds. Among others which were sustained by the trial court were the grounds that the bill showed that the judgment sought to be enforced was void for all purposes, because the defendant in judgment had ceased to have a corporate existence, for any purpose, before the rendition of the judgment; that the defendant corporation being defunct by virtue of the merger, and the five-year period allowed by the statute for winding up its affairs having expired, the action by force of law abated, without any step to that end on the part of litigants or court. Second, that appellee, the merged or consolidated corporation, was not made a party defendant to the action, as could have been done on the application of appellant's testator, the plaintiff below, and that the plaintiff in judgment thereby elected not to proceed against appellee; and that the claim or demand originally sued upon is barred, as affirmatively appears from the averments of the bill, by both the statutes of limitations (that of six years and that of ten years). The trial court seems to have taken this view of the case made by the bill. It sustained demurrers to the bill, and complainant appeals.
The reporter will set out the opinion of the chancellor or trial judge, so that this opinion may be the more easily understood.
Opinion.
We cannot agree with the chancellor in his holding that the judgment in the circuit court, here sought to be enforced, is void, on account of the merger of the defendant corporation into appellee corporation more than five years before the judgment was obtained, or on account of the failure to make the appellee a party defendant, or to revive the judgment against it before the filing of the bill or within the usual statutory limitations as to such proceedings. We are not willing to hold that the judgment here sought to be enforced or foreclosed is void or nonenforceable as for anything appearing on the face of the pleadings.
Whether or not the bill shows a complete and adequate remedy at law is not now before us, because the record affirmatively shows that this question was not passed upon or decided by the court below. It will be time enough to consider that when the question properly reaches this court.
The merger or consolidation was had under our general statute of 1903 (page 310) before the codification thereof. The statute provides for preserving the rights and liens of creditors of the merging and consolidating corporations. James Pearce is shown to have had, at the date of the consolidation, a right or claim against the Aldrich Mining Company, if not a lien. The statute, in substance, if not in terms contemplated and intended to preserve these existing rights and liens, as to both persons and property, of the consolidating or merging corporations, as if no merger or consolidation had ever occurred. While the statute makes the consolidated or merged corporation also personally liable as for the rights and claims of creditors against its factor corporations, yet it was not the intent to thereby relieve such constituent corporations of all enforceable liability, and substitute the new corporation as the exclusive repository of personal or corporate liability. While the creditor may proceed in an appropriate and timely manner against the new corporation, and enforce against it the liability of the old, as a personal or corporate liability, yet the creditor is not by the statute compelled so to do. He may proceed to judgment and execution against the old corporation alone, or possibly may proceed against both, but he is not required by the statute to proceed alone against the merged or consolidated corporation. If the creditor chooses to proceed against the old and merging corporation alone, he is not required to pursue it to judgment, execution, and satisfaction of his claim or demand, within five years from the date of consolidation with the new, or else lose his entire claim or demand, or the right to enforce it.
If section 3516 of the Code, or its progenitors, apply at all to a case like this (and if it does, to what extent we do not decide), it was never intended by the lawmakers that a diligent creditor should lose his claim or demand by pursuing one of the courses provided by law, purely on account of the law's own delay. This record discloses no delay or laches on the part of the creditor, which, without the aid of a statute, would deny his right to enforce his claims. It is true that he might have proceeded earlier, and in different modes, against this appellee corporation; but such is not true as to the institution or prosecution of the claim against the original and merging corporation. It does not yet appear affirmatively that the doctrine of either laches, estoppel, or election has barred all remedies against the appellee corporation in person, or against the property it acquired from the original corporation.
It is true that we have no exact precedent for this proceeding in this state under the present statutes or their progenitors. In the case of Birmingham Railway, Light Power Co. v. Cunningham, 141 Ala. 470, 37 So. 689, a creditor of the original corporation had obtained a judgment before the consolidation, but, pending appeal to this court, the consolidation was effected; and it was held that a scire facias was proper to revive the judgment in the names of the administrators of the deceased plaintiff, who had also died pending the appeal, and against, or in the name of, the new or consolidated corporation. As to the latter phase of the proceeding, this court, speaking through McClellan, C. J., said:
"In our opinion, for all the purposes of this proceeding the only effect of this consolidation was to change the name of the defendant in judgment from Birmingham Railway Electric Company to Birmingham Railway, Light Power Company, without change of entity or identity, so that the consolidated corporation in and by the new name is the proper party respondent to the petition for scire facias, along with the sureties on the appeal bond against whom also judgment was rendered in this court. Code 1896, §§ 1202, 1204; Hirschl, Combination, etc., Corporations, 184." 141 Ala. 474, 37 So. 690.
The text cited above thus states the law on the subject:
"Corporations acquiring a unity of interests and merging their committees, officers, subscribers and their operations into one joint enterprise do not on that account cease to exist as distinct and different corporations; as such they continue to act within the spheres of their respective charters for purposes of common interest. There may be a union of interests and of stocks without the surrender of personal identity or corporate existence. Legislative recognition may identify the consolidation to be the same entity as the prior corporation, or may preserve a corporate continuity by placing the consolidation in the place of the original corporation; a change of name and acquisition of new rights do not necessarily make a new person, nor does the substitution of a new set of stockholders. The original corporation remains in existence for purpose of suit upon its own debts, and may be sued in the new name acquired by reason of the consolidation. After consolidation, the old company exists under a new name and with enlarged powers. The test in all cases is to be found from the facts and circumstances, terms of contracts, texts of statutes, intent of parties; from these it must be determined whether the original companies passed out of existence, or remained under a new name and management with enlarged powers."
Our statute applicable provides:
"Rights of creditors and all liens upon the property of any of the said former corporations shall be preserved unimpaired, and the former corporations may be deemed to continue in existence in order to preserve the same; and all debts, liabilities, and duties of each of the said former corporations shall thenceforth attach to the consolidated corporation, and may be enforced against it to the same extent as if said debts, duties, and liabilities had been incurred or contracted by it." Code, § 3506.
The consolidation in this case having occurred prior to the adoption of the Code of 1907, and while the Code of 1896 was in force, it is claimed by appellee that section 1151 of the Code of 1896 applied, and that the original action abated by virtue of this section, because not revived against the appellee consolidating corporation. If this section were applicable there might be force in this contention, but as to this we do not decide, because we hold that this section was repealed by the general act of 1903, p. 310 et seq. It dealt with the same subject, and continued the first clause of this section, but omitted the latter clause, which seemed to make a revivor or change of defendants necessary to prevent an abatement of the action.
The code commissioner, the code committee, and the Legislature, of and as to the Code of 1907, evidently considered section 1151 of the Code of 1896 as being repealed, because it was omitted from the new Code, and the provisions of the general act, in lieu thereof, substituted for the section in question as well as its kindred ones. While, of course, this is not binding on this court or the lower court, in construing the question, yet it is a circumstance to be mentioned arguendo to support the construction that it was repealed by the later act. It may be that the statutes afforded the appellant or his testator remedies other and different from the one here pursued, and that other remedies would be more efficacious than this; but we are not of the opinion that the other remedies, if such there be, are exclusive, but that they are cumulative merely, if otherwise there be equity in this bill, which we do not now decide. It is proper, however, here to say that our statutes have been considerably changed as to proceedings in equity like that in the case of Nelson v. Hubbard, 96 Ala. 238, 11 So. 428, 17 L.R.A. 375, which rule is relied upon by appellee, and was quoted by the chancellor, to the effect that:
"But for this statute equity would take cognizance, but this statute provided a new remedy for the enforcement of his debt and a more efficacious one than was possible under the ordinary rule of equity. The remedy provided by this statute must be considered as superseding and substituted for the remedy provided by equity."
Since the date of that decision the Code of 1907 has been adopted, which contains several provisions conferring equity jurisdiction where otherwise it would not have existed. Among these is section 4829 of the Code, which reads as follows:
"The statutory modes provided in this Code for the enforcement of liens are not the exclusive modes of enforcing such liens; but are cumulative merely. Any lien may be enforced in the manner provided by statute, if so provided, or in equity, or by attachment for enforcing liens, or by any similar mode or remedy existing at common law."
We do not now mean to decide that a lien is, or is not shown, such as to invoke the above statute, nor that the present bill has not other defects; but we say this merely to show that the statutes of this state as to equitable jurisdiction are now different from what they were under the Code of 1896.
As the decree must be reversed, it is not improper for us to say that if the averments of this bill are true — and on demurrer they must be so treated — the very pertinent question is presented: Why is any proceeding, in a court of law or of equity, against either of the respondents, in personam, or in their corporate capacity, necessary to obtain a satisfaction of this judgment? Unquestionably they are proper parties, but are they necessary ones, under the law as above quoted from the case of Birmingham Railway, Light Power Co. v. Cunningham, supra, 141 Ala. 474, 37 So. 689?
It results that the decree below must be reversed, and the cause is remanded for further proceedings in accordance with this opinion.
Reversed, rendered, and remanded.
ANDERSON, C. J., and SOMERVILLE and THOMAS, JJ., concur.