company, chartered or to be chartered, under the laws of this commonwealth; and the consolidated companies may have and exercise the powers of both companies, and act in the name of either of them, or in a joint name to be agreed upon in the articles or deeds of consolidation; but no such consolidation shall be effectual until the same shall have been ratified by a majority in value of the shareholders of the said company, at a regular or called meeting of said company."

The Kentucky Union Railway Company was organized under a special charter granted by Kentucky in 1854. Under its charter the stock might be subscribed for by "any individual or corporation." This company was authorized to build and operate a railway from a point on the Ohio river opposite Cincinnati to a point on the Virginia or Tennessee line at or near Cumberland Gap. By an amendment of charter it was given the discretion to make its northern terminus at Lexington, Ky. Prior to 1883 it built a road 14 miles long, connecting Clay City, in Powell county, with the line of the Newport News & Mississippi Valley Road.

Without undertaking, to state the details as to how and under what circumstances, and upon what consideration, it is sufficient for the purpose of this case to say that, at the date of the contract of guaranty in question, shares of stock in the railway company to the amount of $1,800,000 were held and owned by the land company. This constituted the whole of the shares issued by that company, except, perhaps, nine, which were held by the directors of the railway company in order that they might be qualified to act. The land company at the same time had acquired the title to between 300,000 and 500,000 acres of mountain lands on the line of the projected continuation of this railway. to the development of these lands, and to the utilization of the timber and mines thereon, it became most essential that this railway should be completed. Did the land company have the power to aid in the extension and completion of this railway? The powers expressly mentioned in its charter were: (1) To purchase and lease mineral and timbered land. (2) To purchase ore, timber, and machinery for manufacturing. (3) To open and develop mines of iron, coal, or other minerals. (4) To acquire by purchase or condemnation the necessary rights of way for exporting the products of the mines and the timber, either in crude or manufactured state. (5) To establish such works, rolling mills, sawmills, stove factories, and furniture factories "as may be expedient or necessary in the reduction and manufacturing of ores and the manufacturing of timber or implements for mining, or cutting and preparing timber." (6) It is given power to cut and prepare timber for market, and ship either in logs or manufactured articles. (7) It is finally declared that "it shall have all rights, privileges, powers, and franchises, necessary to the full use and enjoyment of the powers herein granted."

To make more plain the intent of the legislature that this company should have all the powers necessary to the full and beneficial use of the express powers and privileges granted, and in recognition of the fact that railroad facilities will be essential

to the utilization of the very wide and composite powers expressly conferred, the seventh section is concluded by adding these most significant words:

"And may in furtherance of the powers granted in this section, effect a temporary or permanent consolidation with any railroad or transportation company, chartered or to be chartered, under the laws of this commonwealth; and the consolidated companies may have and exercise the powers of both companies, and act in the name of either of them, or in a joint name to be agreed upon in the articles or deeds of consolidation.

Now, the case, as it was presented to the land company, was this: "We have purchased, as authorized by our charter, a vast body of timbered and mineral lands. We are authorized, expressly, to utilize these lands by developing their timber and mineral interest. The intention of the legislature was that this buried natural wealth shall be utilized by the erection of sawmills, iron works, rolling mills, furniture factories, iron furnaces, and by the opening and operating of iron and coal mines. It contemplated that transportation of the products of these mines, mills, and factories would be a matter of great concern. The right to condemn rights of way is conferred."

That railroad transportation would be essential to get to market these products, and for the necessary development of the towns which must spring up around enterprises so numerous, was also in contemplation of the state when the charter was granted, is evident from several considerations:

(1) The coal, iron, and timber, and the manufactured products of the contemplated mills and factories could not be profitably utilized without cheap transportation.

(2) That the company should engage in transportation is indicated by the original title of the corporation. It was to be a transportation company as well as a mining and manufacturing company.

(3) The power to consolidate with any railroad company, chartered or to be chartered, is expressly conferred.

(4) In case of such consolidation the companies were to exercise the powers of both, and act in the name of either, or in an agreed name. The power did not stop here. There might be a

"temporary consolidation" with a railroad company. The meaning to be attached to the term "consolidation," as used in a law authorizing the consolidation of two or more corporations, is uncertain. It depends not often upon the particular terms of the act giving the power, and the legal effect resulting from "consolidation" will largely depend upon the character of the consolidation authorized by the permission, as well as upon the contract actually entered into by the consolidating companies. Generally, the merging of the companies into a new and distinct corporation is contemplated, and is the legal result. Not infrequently, the absorption of one corporation by the other is the consequence of consolidation. Railroad Co. v. Georgia, 98 U. S. 362, 363; Railway Co. v. Ham, 114 U. S. 595, 5 Sup. Ct. Rep. 1081; Mor. Priv. Corp.

§§ 942, 939. Mr. Morawetz states a third kind of consolidation as possible, "by preserving the legal identity of both companies. This may be done by issuing shares in the one company to the shareholders in the other company in exchange for their shares, thus making the one company the holder of all the shares in the other company, or by regarding the united shareholders of both companies as shareholders in each corporation; both corporations, however, acting under similar charters, and under the same management. These transactions would differ widely in their legal consequences. Whether the result be called a 'consolidation' or 'merger,' or 'amalgamation' is merely a matter of definition." Section 942. The power to consolidate a land, mining, and manufacturing company with a railroad company, and to make such consolidation either permanent or temporary, must enlarge the general scope of the powers of such a corporation. It contemplates the absorp tion of the railroad company by the land company, and the absolute assumption by the latter of the debts of the former. It also contemplates the acquisition of all the franchises of the railway company. The greater power, of entirely absorbing and extinguishing the railway as an independent entity, clearly includes the lesser power, of a union by which the railway company might retain its identity, and yet be in such connection with the land company as to amount to what the legislature defines as a "temporary consolidation." The case of Branch v. Jesup, 106 U. S. 468, 1 Sup. Ct. Rep. 495, is an instance of construction of charter powers much in point. There a power conferred on one railway company to incorporate its stock with the stock of any other company was held to so enlarge the powers of the company as to enable it to sell and dispose of a part of its line of said railway to another company. To consolidate so as to create a new company out of the old consolidating companies would inevitably operate to dissolve the old companies. To consolidate so as to bring about the absorption of one by the other would as inevitably dissolve the absorbed company. Clearly, neither of these consolidations could be "temporary." A dissolved corporation is an extinct corporation, and when, by the death of both, a new corporation is created, there cannot be, without new legislative birth, a resurrection of the dissolved and extinct factors. Yet the Kentucky Union Land Company was expressly empowered to consolidate with a railroad company in such a way as that the union should be "temporary." If a reasonable and useful meaning can be given to this alternative power, it ought to be done, rather than that the power to make a "temporary consolidation" be considered as an idle and useless term. The legislature has not used technical language in conferring this power, and we ought not to attach a technical meaning to the words unless such meaning is otherwise required in order to give effect to the legislative intent. There is nothing in this charter to indicate that only a technical consolidation was authorized. On the contrary, the power to make a "temporary consolidation," looking to all the four corners of this charter, clearly implies the

power to make such an alliance or bring about such a union and co-operation of interests between the land company and a railway company as shall be to the mutual interest of each, and place both under the same control and management. This could be done by the plan suggested by Mr. Morawetz in section 942, whereby the shares of one company should be held by the other, or by the same persons. This meaning seems reasonable and proper, looking to the objects and purposes of this corporation, and any steps which brought about unity of interest and co-operation in purpose as being legitimate and authorized. Under this power, we are of opinion that the Kentucky Union Land Company had the power to acquire the shares in the railway company, and the right to exercise control over the railway company through the ownership and control of those shares.

Undoubtedly, the general rule is that a corporation has no implied power to acquire shares in another for the purpose of controlling it. Marble Co. v. Harvey, 92 Tenn., 20 S. W. Rep. 427. This would be contrary to the well-understood public policy concerning such companies. But this objection does not lie here:

(1) Because the charter of the railway company expressly provides that its shares may be owned by any other corporation.

(2) The express power in the charter of the land company removes all objections, based on grounds of public policy, to its control of a railway company by and through its shares.

What the legislature of Kentucky has expressly permitted cannot be void, as against public policy, in the absence of any violation of a constitutional provision. Under such circumstances it is not for the courts to say that what the legislature authorizes is unlawful, because contrary to public policy. Having authority to acquire this stock, the land company became the sole stockholder in the railway company. Each had express authority to borrow money and issue bonds to carry out the purposes of the organization. The completion of this railway was an object within the scope of its charter powers. It could do so by its own name, or by aiding the railway company to negotiate its securities, by guarantying their payment. The guaranty was not for the accommodation of the railway company. The guarantor being the sole shareholder of the railway company, it was a contract for its own benefit, and therefore rested upon a sufficient security. In addition, the land company was a creditor of the railway company, and was to, and did, receive the proceeds arising from sale of one-half million of these bonds. The remainder of the money thus raised was to be applied to the building of the railway line. The consideration was sufficient to fully support the contract.

A like question arose in Chicago, R. I. & P. Ry. Co. v. Union Pac. Ry. Co., 47 Fed. Rep. 16, where Mr. Justice Brewer held that:

"Where one railroad company owns substantially all the stock of another railroad company, a lease of the latter line for rent to be paid to the former company is not void for want of consideration, since it amounts merely to an agreement to pay the rent directly to the stockholders."

Upon appeal to the United States circuit court of appeals for the sixth circuit, this ruling was affirmed. 51 Fed. Rep. 329, 2 C. C. A. 242.

The directors of the railway company held the property of that company, including these bonds and their proceeds, when sold, in trust for the Kentucky Union Land Company, as holders of the shares in that company. To say that its guaranty of these bonds was a mere accommodation guaranty, when it was the cestui que trust in the proceeds of the bonds, and thereby enable it to defeat its responsibility, as a contract ultra vires, would be sticking in the bark, and result in manifest injustice. That at some future day this union may be dissolved by a sale of the stock owned by the land company is not of importance. The real and substantial owner of the railroad company at the time these bonds were guarantied was the land company. The guaranty was for the benefit of the guarantor. Union Pac. Ry. Co. v. Chicago, R. I. & P. Ry. Co., 51 Fed. Rep. 310, 2 C. C. A. 174.

The case is not like that of Davis v. Railroad Co., 131 Mass. 258. That was a donation to support a musical festival. The benefit to the railroad company was in the supposition that it would profit by increased travel. This was altogether too remote, and the contract properly held void.

When the question is, as here, whether or not a particular act is ultra vires, decided cases are of little value. Each case must be largely a question of fact. Yet, by reference to a few of the decided cases, we can discover the principle upon which other courts have proceeded in deciding such questions. We will refer to a few cases: In Louisville & N. R. Co. v. Literary Society of St. Rose, 15 S. W. Rep. 1065, the court of appeals of Kentucky passed upon a question involving the implied powers of a corpora tion. It appeared that the Literary Society of St. Rose and the Literary Society of St. Catherine were corporations for educational purposes, existing in or near the town of Springfield, in Washington county, Ky. They had power to contract, and to buy and sell real and personal property, for the purpose of sustaining and carrying on said institutions of learning, and not otherwise. Each of them owned and operated a farm of about 1,000 acres, of very considerable value. This, in the language of the court, "created a large industry in the way of supplies furnished to them, and they, in turn, furnishing to others." Each of these corporations signed an obligation to pay a certain amount of money, by way of a donation, to a railroad company, to induce it to extend its line near their property. In an action upon these obligations it was contended that they were ultra vires. The court said:

"Corporations derive their powers from their charters. They are those which are expressly given, or, by fair implication, are necessary to the execution of their object. Cases may be found where the officers of a corporation have exceeded their powers, but the corporation, nevertheless, held liable, because the transaction was within the scope of its business, and it had received a benefit from it. The only trouble arose from a defect of power in the managers. This case is not within this class, however, because it ap