CO. v. CHICAGO, B.
CO. v. CHICAGO, B. & Q. R. 00.
(C£rcuit Cou'J't,D. NelYra8ka.
The Uhicago. Burlington & Quincy Railroad Company, created under the laws of Illinois, was consolidatedwith the Burlington & Missouri River Railroad Company of lowa, and sUbsequently entered into articles of consolidation with the Burlington & Missouri River Railroad Company in Nebraska, the latter being a Nebraska corporation, by a sale and transfer· to it of the Nebraska road: Held, that the Chicago, Burlington & QUihcy Railroad Company did not, under the Nebraska laws, become a domestic corporation, but remained an lllinois corporation for the purposes of the jurlsdict'ion ofthe·federal court.
2. SAME-FOREIGN CORPORA'rION-JuRISDIOXlON. Where the state (iees not assume by He iegislation to create a, corporation, or
to require ,a foreiA'n corporatiQn to becolllCl domestic, but recognizes the existence of such foreign corporation and: its right to come tbe,etllote and transact business therein, such foreign corporation r,emains a <¥)rporationof the state under whosll laws it was created, .and, for the purposes of the jurlsdicVon of the federal courts, a citizen of that state.
Plea to Jurisdiction of Court. Mr. Munger, for plaintiff. J.llr. Marquett, for defendant. MCCRARY, J. This case is before the court on a, plea in abate. ment, raising the question whether the defendant is a corporation of Nebraska. The essential facts are as follows:
(1) The Chicago, Burlington & Quincy Railroad Company was originally created a corporation of the state of Illinois under the laws of that state. (2) Afterwards said corporation was consolidated with the Burlington & Missouri River Railroad Company of Iowa, and thereby became the owner of a line of railway extending across that state from the Mississippi to the Missouri.river, which has for a number of years been operated as a part of the Chicago, Burlington & QUincy Railroad, and as part of a through line from Chicago, Illinois, to the Missouri river. This consolidated company appears to have been regarded in the courts of Iowa as an Illinois corporation. (3) On the first of January, 1880, the said ChicagO, Burlington & QUincy Railroad Company l\ond the Burlington & Missouri River Railroad,Qompany in NebrasklY-thelatter being a corporation of Nebraska-entered into artide!! of consolidation. These articles provide---: . . "That for the purpose of consolidating the stock, property,. and franchIses of the parties hereto, and of making of said corporations one joint-stock company, Which, as the lines of railroad of the respective parties hereto connect at the boundary line between the states of Iowa and Nebraska, may'be done under ,the laws of said states and the contracts aforesaid. it is agreed as follows; that is to say:
FEDERAL REPORTER. "ARTICLE
"Such consolidation should be effectf'd by a sale, assignment, and which is hereby made, of the railroad leaseholds, rights, and rights of action. contracts, moneys, stocks, franchises, and all other property of every nature and description whatsoever, of the second party to the first party, the Chicago, Burlington & Qnincy Railroad Company." In pursuance of this contract a formal conveyance of all the property of the Burlington & Missouri River E,ailroad Company in Nebraska was dulyexecuted to the Chicago, Burlington & Quincy Railroad Company. (4) A statute of Nebraska provides that"Every railroad company shall have power to intersect, join, and unite their railroads constructed or to be constructed in this state, or in adjoining states and territories, at SUdl points on the boundary line of each or at such other point as may be mutually agreed upon by said companies. And such railroads are authorized to merge and consolidatr;l the stock of the respective companies, making one joint-stock company of the railroads thus connected, upon .such terms as may by them be mutually agree1 upon, in accordance with the laws of the adjoining state or territory with whose road or roads connections are thus formed: provided, that the consent of three-fourths of all the stockholders in amount in any road whose stock is proposed to be consolidated shall be obtained."
It is admitted that the assent of stockholders was obtained, and the question is whether these articles of consolidation, and the conveyance by the Nebraska corporation of all the property and franchises to the Chicago, Burlington & Quincy Railroad Company, makes the latter a domestic corporation. The same individuals may constitute separate and distinct corporations, either under the same or different names, in each of several states. It is also true that it is competent for the legislature of a state to prescribe the terms and conditions upon which foreign corporations shall have the right to engage in business in the state, and may require all such to become domestic corporations if it see fit to do so. Stout v. Sioux City cf; Pac. R. 00. 3 McCrary, 1; [So C. 8 FED. REP. 7M.] But it is clear that the legislature of Nebraska has not seen fit to require that a foreign corporation, which has constructed a railroad to the boundary line of the state, shall become a corporation of Nebraska before it shall be permitted to consolidate with a Nebraska corporation. The statute permitted the two corporations in question "to merge and consolidate the stock of the respective companies, making one jointstock company of the railroads thus connected," It seems that the purpose was not to provide for a continuance of both corporations, and it is scarcely to be presumed that there was any purpose to require a dissolution of the Illinois corporation, as that would have been quite beyond the scope of its powers. How, then, was the consolidation of both companies into one to be accomplished? The an-
CLAYBROOK v. CITY OF OWENSBORO.
swer is to be found in the words of the statute: "upon such terms liS may by them be mutually agreed upon, in accordance with the laws of the adjoining state or territory with whose road or roads connections are thus formed." The conaolidation here was by a sale of the Nebraska road, with all its property and franchises, to the minois corporation, and, if there is to be but one consolidated company, the intention must have been to make the Illinois company that one. unless it violated some law either Was this unlawful? Clearly of Nebraska, Iowa, or Illinois. The statute of Iowa expressly authorizes consolidation by sale. I assume, as nothing appears to the contrary, that no provision of any law of Illinois has been violated. There is nothing in the above-quoted statute of Nebraska to prevent aeonsolidation by the sale of a domestic road to a foreign tion which has built a line of railroad teo the' state bonnditlj". On the contrary, the parties are expressly empowered to fix their own terms of consolidation, subject only to the condition that' they shall not violate any law of the other state or states interested. The true · rule upon this subject is that where the state does not assume,'by its legislation, to create a corporation, or to require a foreign corporation to become domestic, but recognizes the existence of such foreign corporation, and its right to come into the state and transact business therein, such foreign corporation remains a corporation of the state under whose laws it was created, and, for purposes of the jurisdiction of the federal courts, a citizen of that state. M., K. x T: Ry. Co. v. T. et St. L. Ry. Co. 10 FED. REP. 497. . Within this rule r hold that the defendant is an TIlinois corporation. The plea to the jurisdiction is accordingly overruled.
CLAYBROOK and others
OWENSBORO and others.
(Di8t1"i6t Court, D. Kentucky.
An act of a state legislature authorizing a municipal corporation to levy a tax for the benefit of public schools within its limits, but directing that the tax collected of the white people should be used to sustain public schools for white children only, and the tax collected of the colored people should be ueed to sustain schools for colored children, the effect of such discrimination being to give the whites excellent school facilities and a school session annually of nine