36 IIIDIBAL BIPOBTIL
Bmra v. Sr. Lours, H. & K. B. Co. and others}
(Uircuit Oaurt, E. D. Missouri. October 20, 1884.)
1. Co1u·oaa·rroNs—FasunuLmnr Couvauiwoas.
A transfer of all the assets of one corporation to another, whereby, through s
mere change of name, an attempt is made to defraud creditors, or which would
operate a fraud, will not be upheld as against creditors, and the transferee, if
he takes with notice, takes ewm onero.
2. SAME.—MORTGAGE—PRIOR1TY.
If, in such a case, the transferee mortgages its property to secure the pay-
ment of bonds, the lien of creditors of the old corporation upon the property
transferred will be prior in right to that of bondholders with notice.
5. SAME-Uurna Vmns.
Where a railroad company was created by a special act of the general assem-
‘ bly of Missouri, which contained minute provisions as to the rights of stock-
holders and as to their duties to each other, the public, and the state, to which
last annual reports were to be made, and which provided that the construc-
tion of the road was to be begun within 10 years and completed within 20, and
that a fair record of the whole expense of construction should be kept, and re-
served to the state the privilege of purchasing the road after the expiration of
50 years, held, that the corporation had no authority to transfer all its assets to
another corporation. _
Demurrer to Answer and Cross-bill.
The St. Louis & Keokuk Railroad Company being largely in-
debted, the stockholders and officers of the company organized the
St. Louis, Hannibal & Keokuk Railroad Company, to which they
transferred the assets of the St. Louis & Keokuk Railroad Company,
in consideration of stock in the new company. The other material
facts are stated in the opinion of the court.
Walter O'. Learned and Theodore G. Case, for complainant.
Geo. D. Reynolds and Jas. Carr, for defendant.
Tamar, J . As the allegations are necessarily taken as true on the
demurrers submitted, the question may be briefly stated: A former
railroad corporation, being largely indebted, transferred to another
corporation all of its assets. The latter corporation proceeded with
the contemplated and unfinished work, taking possession of all the
railroad bed, etc., of the prior corporation, with notice of the respond-
ent’s demand, not then reduced to judgment. It subsequently issued
a. mortgage to secure its bonds, and the plaintiff filed his bill to· fore-
close the same, with an intervening receiver, duly appointed. The
bill makes the respondent a defendant, and he has answered, setting
up his demand, now reduced to judgment, and by a cross—bill, praying
for a decree establishing his demand as a lien prior in right to the
mortgagee, as against so much of the property of the old corpora-
tion as is included in the mortgage by the new corporation, etc.;
that a. transfer of the assets of one corporation to another, whereby,
through a. mere change of name, an attempt is made to defraud
creditors, or which would operate a fraud, cannot be upheld against
*Reported by Ben]. F. Rex, Esq., of the Bt. Louis bar.