Supreme Court of Canada
Ville de St. Jean v. Molleur, (1908) 40 S.C.R. 629
Date: 1908-10-06
La Ville De St. Jean (Plaintiff) Appellant;
and
Aglare L. Molleue et vir (Defendants) Respondents.
1908: June 12; 1908: October 6.
Present: Girouard, Davies, Idington, Maclennan and Duff JJ.
ON APPEAL FROM THE COURT OF KING'S BENCH, APPEAL SIDE, PROVINCE OF QUEBEC.
Waterworks—Statutory contract—Exclusive franchise—Condition of defeasance—Forfeiture of monopoly—Demurrer—Right of action by municipality—Rescission—Art. 1065 C.C.—40 V. c. 68 (Que.),
By the Quebec statute, 40 Vict. ch. 68, Louis Molleur and others, now represented by the defendants, were substituted as sole owners of the waterworks of St. John's in the place of "The Waterworks Co. of St. John's," incorporated under R.S.C. (1859) ch. 65, charged with all the obligations and responsibilities of said company, and, by the said Act, 40 Vict. ch. 68, the new proprietors were granted the exclusive right and privilege of placing pipes or water conduits under the streets and squares of the Town of Saint John's (now the City of St. John's, the-appellant), under certain other conditions and obligations in the last mentioned statute recited, and the monopoly created was, by section 3, liable to be forfeited in case of neglect of refusal in the discharge of the obligations thereby imposed.
Held, that the contract existing between the parties, in virtue of the above recited statutes, was liable to rescission under the provisions of article 1065 of the Civil Code of Lower Canada, upon default in the specific performance by the defendants of the obligations thereby imposed, and that, upon proof of default. in the specific performance of any of the said obligations, the municipal corporation was entitled to maintain an action in its corporate capacity to have the exclusive right and privilege granted by the statute declared forfeited, surrendered and annulled.
The judgment appealed from (Q.R. 16 K.B. 559) deciding that the action would lie only for breach of obligations expressly declared to involve forfeiture, was reversed, Davies J. dissenting.
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APPEAL from the judgment of the Court of King's Bench, appeal side, affirming the judgment of the Superior Court, District of Iberville (Paradis J.), allowing a demurrer to the plaintiff's action with costs.
The plaintiff's action was for a declaration that the defendants had forfeited certain exclusive privileges in respect to the construction and operation of a system of waterworks in the City of St. John's, Quebec, vested in them by virtue of an agreement under the Consolidated Statutes of Canada, 1859, ch. 65, and the Act 40 Vict. ch. 68 (Que.).
The portions of the statutes referred to, which affect the issues on this appeal, and the procedure in question, are referred to in the judgments reported on the appeal from the decision of the registrar upon the application for an order affirming jurisdiction and approving the security in this case.
Bisaillon K.C. and Aimé Geoffrion K.C. for the appellants.
Belcourt K.C. and J. F. St Cyr for the respondents.
Girouard J.—Voici une cause qui nous a causé beaucoup d'embarras. Nous ne sommes qu'au début de l'instruction, et déjà nous sommes en présence d'un dossier de cent pages d'impression. La déclaration couvre vingt-quatre pages; les plaidoyers au fonds aussi vingt-quatre pages; et dix pages de défense en droit partielle. Puis viennent une réponse en droit partielle de la demanderesse et une autre au fond qui
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couvre vingt-quatre pages. Il n'est pas surprenant que les parties aient fait des efforts pour en réduire le volume par des procédés préliminaires. Par le jugement de la cour de première instance, la défense en droit à toute l'action a été renvoyée, aussi bien que la réponse partielle de la demanderesse, et l'inscription sur la défense en droit partielle de la défenderesse a été maintenue en partie. Voilà pourquoi les deux parties ont interjeté appel à la cour du banc du roi, qui a confirmé le jugement de la cour inférieure. L'appel devant cette cour est seulement du jugement qui a maintenu la défense en droit partielle.
Sans entrer dans les détails nombreux de cette cause, qu'il nous suffise de dire que l'action intentée par l'appellante est en déchéance d'une franchise exclusive de construire et opérer un aqueduc dans la ville de St. Jean concédée par 40 Vict. eh. 68, des statuts de Québec. Ce statut forme ce que l'on est convenue d'appeler la charte de la compagnie et a toute la force d'un contrat entre elle et la ville de St. Jean, avec le monopole du service de l'eau que la municipalité ne pouvait octroyer sans l'autorisation de la législature. Par cette charte, la compagnie représentée aujourd'hui par l'intimée, en considération de la concession de ce "droit et privilège exclusif," s'est engagée à fournir à la ville de St. Jean et à ses habitants "une eau pure et saine," non-seulement pour les usages domestiques et leurs besoins en général, mais aussi pour la protection contre les incendies; et à défaut par elle de le faire, la charte décrète qu'elle sera déchue et privée "du privilège exclusif ci-dessus établi." L'appelante allègue que la compagnie n'a pas rempli cette obligation imposée par la charte, et comme preuve, elle énumère plusieurs
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faits, conventions et arrangements intervenus pour arriver au résultat prévu par la charte, qu'elle a tous violés, dit l'appelante; puis elle conclut à la déchéance. Le savant juge en chef Taschereau, parlant au nom de la cour, a résumé la situation entre les parties en quelques mots que voici:
Le tribunal de première instance a fait reposer sa décision sur la distinction entre les obligations de Mme. Roy imposées par la lai à peine de déchéance de ses droits, et celles dont le défaut d'exécution ne devait avoir d'autres conséquences que celles prévues pour les cas ordinaires d'inexécution d'obligations. Nous croyons qu'il a eu raison.
Il y aurait une autre distinction à faire entre les devoirs et obligations imposés par le statut et ceux qui résultent de conventions particulières. Il n'y a que la violation des premiers, et encore, comme je viens de le dire, seulement dans les cas où elle est prononcée expressément, que la déchéance peut avoir lieu.
L'inexécution des autres obligations, de toutes celles nées des conventions et de celles imposées par le statut où la déchéance n'est pas prononcée, ne peuvent donner ouverture qu'au recours en dommages ordinaires.
Avec toute la déférence possible, je ne puis accepter cette distinction, bien qu'elle ne soit pas importante pour décider le litige. Il me semble que s'il est un point bien établi dans notre jurisprudence, c'est que, dans certains cas, l'inexécution des obligations stipulées dans des conventions peut emporter la résolution du contrat, ce qui dans l'espèce est la même chose que la déchéance décrétée par le statut, car dans les deux cas il faut que la révocation soit prononcée en justice. L'article 1065 du code civil se lit comme suit:
Toute obligation rend le débiteur passible de dommages en cas de contravention de sa part; dans les cas qui le permettent, le créancier peut aussi demander l'exécution de l'obligation même, et l'autorisation de la faire exécuter aux dépens du débiteur, ou la résolution du contrat d'où naît l'obligation; sauf les exceptions contenues dans ce code et sans préjudice à son recours pour les dommages-intérêts dans tous les cas.
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Puis l'article 1066:
Le créancier peut aussi, sans préjudice des dommages-intérêts, demander que ce qui a été fait en contravention à l'obligation soit détruit, s'il y a lieu; et le tribunal peut ordonner que cela soit fait par ses officiers, ou autoriser la partie lésée à le faire aux dépens de l'autre.
Je crois que ce principe fut appliqué dans une cause de Valiquette v. Archambault. A la page 54, l'on trouve les considérants de ce jugement dont je détache le suivant:
Considérant que bien que l'article 1184 du code Napoléon qui énonce que la condition résolutoire est toujours sous-entendue dans les contrats, pour le cas où l'une des parties ne satisfera point à son engagement, n'ait pas été reproduite en termes exprès dans notre propre code civil, nos codificateurs ont pourvu au même cas et exprimé le même principe dans l'article 1065 de notre dit code civil, qui permet, même en l'absence de la condition résolutoire expresse, de demander la résolution du contrat d'où naît l'obligation qui n'a pas été accomplie. (Voir rapport des codificateurs, 7 DeLorimier, Bibl. du Code civil, pp. 626 et 627):
Considérant que les dits auteurs de notre code n'ont dérogé à ce-principe et n'ont fait exception à cette règle générale, applicable à tous les contrats, que dans le cas de vente d'immeubles.
Ce jugement, il est vrai, a été renversé par la cour de revision, mais sur un autre point: voir 8 id. 174. .
Dans une cause récemment décidée et rapportée dans le dernier numéro des rapports judiciaires de la cour du banc du roi, Corporation of the Town of G rand'Mère v. L'Hydraulique de Grand'Mère, la cour d'appel, composée de Tascliereau J.C., Bossé, Blahchet, Lavergne et Cross JJ., a reconnu l'existence d'une action comme celle-ci. Il ne s'agissait pas de contravention à des obligations imposées par un statut, mais uniquement d'inexécution des obligations stipulées par les parties. Le juge Cross, parlant au nom de la cour, dit:
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In such circumstances, the action in revocation of the privilege was a form of recourse properly open to the appellant.
La révocation ne fut pas prononcée vu le consentement des parties qu'un délai de neuf mois soit accordé au propriétaire de l'aqueduc pour compléter ses travaux. Le juge Cross n'hésite pas à déclarer que cet ordre de la cour n'est pas le meilleur remède. A la page 92 du rapport, il observe:
It is not to be overlooked that the supply of drinkable water is a matter of the most important necessity, that the appellant had alienated its rights respecting water supply and could do nothing to provide water to its people while this concession stood in the way. Under such circumstances, an action to coerce the respondent to fulfil its obligations in the many respects in which default had been made would have been an unsatisfactory recourse.
Le principe de Particle 1065 du code civil n'est pas particulier à la province de Québec. On le trouve aussi dans l'article 1184 du code Napoléon. Dans la note 4 à cet article, Gilbert sur Sirey nous donne l'historique de ce principe, aussi bien qu'une longue liste d'autorités.
Reste une difficulté qui a été soulevée pour la première fois devant nous. L'appelante n'a pas demandé par son action la résiliation ou la révocation des dits contrats et conventions. Elle va même plus loin; elle se réserve tout recours qu'elle pout avoir pour faire prononcer la résiliation d'un de ces contrats, le marché du 1er. juin, 1892. Elle demande seulement que tous les privilèges qui appartiennent à l'intimée en vertu de l'acte de Québec, 40 Vict. ch. 68, soient déclarés déchus, nuls et annullés, et cela suffit dans mon humble opinion. Il ne s'agit en effet que de la franchise exclusive conférée par le statut.
Nous croyons que tout ce qui se rattache à l'exécution des obligations de la charte peut et doit faire la matière de l'enquête.
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Citons un exemple, peut-être le plus favorable aux prétentions de l'intimée, celui de la compagnie "Singer," qui a été exlus par les tribunaux inférieurs. Elle n'est pas mentionnée dans la charte, pas plus que les autres habitants qui, à l'origine de l'aqueduc, formaient la population de St. Jean, ou y sont venus depuis ou y viendront pendant les quarante-six ans de l'exercise de la franchise. Ils sont tous compris dans l'obligation de fournir l'eau aux habitants de la ville, et, si c'est pour des fins industrielles, comme dans le cas de la "Singer," que la ville était anxieuse d'avoir dans ses limites, les parties peuvent faire des arrangements pour mieux remplir l'obligation de la charte. Et puis, pendant ce long espace de temps, la ville se développera, de nouvelles méthodes d'opérer un aqueduc, des améliorations, en un mot, seront découvertes, peut-on raisonnablement refuser aux parties le pouvoir de les adopter, toujours afin de mieux atteindre le but de la charte. Ce que la demanderesse a toujours demandé, ce fut le service d'un eau pure et saine pour les besoins de ses habitants, ce qu'elle a le droit d'avoir par la charte, et ce qu'elle n'a pu obtenir jusqu'à ce jour. Les conventions et les arrangements subséquents et leur violation de la part de l'intimée ne sont que des détails,. des exemples du refus ou défaut de la part de l'intimée de remplir l'obligation générale imposée par la charte de fournir l'eau. Je ne puis concevoir que l'on puisse rendre justice à la demanderesse sans lui permettre d'en faire la preuve. C'est tout ce qu'elle paraît avoir en vue. Elle ne demande pas la confiscation ou la destruction de l'aqueduc de la défenderesse; il restera. toujours sa propriété. Ce qu'elle demande c'est la
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déchéance de la franchise exclusive que lui confère non pas les dites conventions, mais le statut, 40 Vict.ch. 68, afin de lui permettre, ainsi qu'elle l'affirme dans sa déclaration, de construire elle-même un aqueduc municipal. Les parties les ont consenties simplement pour donner plus d'efficacité et de précision à ses dispositions. La demanderesse allègue que la défenderesse a abusé d'une manière grossière pendant un grand nombre d'années de tous les pouvoirs qu'elle lui a conférés et cela nonobstant plusieurs plaintes et protestations. Nous croyons qu'il est dans l'intérêt de la justice que l'enquête se fasse sur tous ces faits et conventions afin de mieux apprécier la conduite des parties.
L'appel doit en conséquence être accordé avec dépens devant cette cour et la cour d'appel, et la défense en droit partielle renvoyée avec dépens.
Davies J. (dissenting).—For the reasons given by Chief Justice Taschereau in the Court of King's Bench of Quebec, I am of opinion that the appeal should be dismissed.
Idington J.—The determination of this appeal must depend on whether or not the relationship created between the appellant and respondent's corporate predecessor, created by virtue of chapter 65 of the Consolidated Statutes of Canada, 1859, was of a contractual character, and so within the resolutive provision of article 1065 of the Civil Code of Quebec.
The method of incorporation provided by the said Act is that at least five persons shall set forth the purpose for which they desire incorporation; that is for the purpose of furnishing a supply of gas or water or
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both, for the village, town or city named, wherein it is proposed to operate, and upon the required declaration being filled up, with the details specified in the said Act, and acknowledged before the mayor or chief magistrate of the city, town or village named, he shall grant a certificate of these facts.
Thereupon the people so promoting petition the council of the said village, town or city to pass a bylaw, granting authority to them as a company, to lay down pipes for the conveyance of gas or water or both, under the streets, squares and other public places of such city, town or village.
When all these formalities, of which the requisite details appear in the first three sections of the Act, have been complied with, and the by-law has been passed and registered as required, the petitioners and all others joining them, as stock-holders forming the company thereby established, shall be a body corporate with the style and title mentioned in such declaration.
The whole purpose of this statute is that any town or city may avail itself of the means thus furnished, of obtaining wholly or in part by means of private enterprise, a supply of gas or water or both for the corporate municipality and its inhabitants.
It becomes the business of the municipal council on the presentation of such a petition to make the best bargain it can on behalf of those it represents. Sometimes the bargain takes on an express form of contract beyond what appears in the by-law. In other cases as here the mere passing of the by-law and the documentary material prescribed by the statute and upon which the by-law was passed are combined with the legal implications arising therefrom
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alone relied on to determine the respective rights of the parties concerned. The question is thus raised here of what is implied in this proceeding and this franchise-granting by-law.
It is quite clear that on the one side there is granted that which the municipal council had full power to grant or to withhold.
No power could interfere with the exercise of the council's will. It might have imposed such conditions as it saw fit.
It might have refused the prayer of the petitioners absolutely without its reason for so refusing being open to question by anybody but the constituent body electing the council.
What lies at the bottom of the proceeding if it is not that of a contractual character? The company undertakes that it will supply that which it is incorporated to supply, and that the duty which has by the grant and acceptance thereof been cast upon the company accepting such a grant shall be discharged. The obligation is only what the law implies, yet its nature is contractual for it is expressly founded upon the mutual consent of the parties and nothing else.
In effect the municipal council exchanges the uses of its streets and squares, and right to open the same, in return for the implied promise to give the needed supply of gas or water as the case may be.
Is there not in this transaction the very essence of reciprocal obligation of a contractual character?
On the part of the village, town or city there is an obligation that for the agreed period, up to fifty years or less, as may be agreed upon, the franchise given shall be enjoyed.
If that be not so then the council could repeal its
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by-law at any moment it saw fit, as it is usually implied by law that the power to enact a by-law carries with it the right to repeal, unless in such case as this, that there is an implied obligation that once passed it shall stand unrepealed, so long as the conditions on which it was passed are observed. On the other hand there are implied obligations that the corporations thus created and enfranchised shall observe and discharge the functions for which it was created.
I admit that there may be, by virtue of its creation, obligations resting upon a corporate creation without being of such a contractual character as seems necessary to bring them within the operation of article 1065.
It may also be that in English law, apart from special legislation, there is no effectual remedy either in such a case, or in such a case as this of a contractual nature, save by such means as will imply action or assent to action by the attorney-general.
But article 1065 of the Civil Code is a provision that seems to me to render the interference of the attorney-general unnecessary, if we find the relationship in question contractual.
It is with an eye to the application of this article 1065 C.C. that I have dwelt upon the nature of the legal relations arising out of such a petition and such a by-law thereupon and the acceptance of the concession thereby given the respondents' predecessor in title.
We must seek for the solution determining whether or not the relation in question is of a contractual character in the application of the general principles of law.
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There is no Quebec or Ontario decision on this statute as to the nature of the relationship created by the incorporation.
Probably the question of the legal quality of the relationship arising between an incorporating power and the corporation it creates and the corporators has never been so exhaustively examined elsewhere as in the case of the Trustees of Dartmough College v. Woodward, in the Supreme Court of the United States.
There it was found that there was a contract existing as the result of incorporation.
The college had been incorporated in the days when what became later the State of New Hampshire belonged to the British Crown and the attempted interference of that state occurred long after that state had become subject to the constitution of the United States and was thereby prohibited from enacting any "law impairing the obligation of contract."
Chief Justice Marshall in his judgment says, at page 643:
This is plainly a contract to which the donors, the trustees and the Crown (to whose rights and obligations New Hampshire succeeds) were the original parties.
The decision is not a binding authority upon us, but the opinion thus expressed is that of one whose authority is of the highest and his opinion in this regard has stood the strain for nearly ninety years.
It has been accepted generally and acted upon in the cases cited to us of other American authorities as a correct exposition of the law on the subject.
If, even without going so far as that opinion goes,
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we look at the substance of what necessarily takes place under the consolidated statute, ch. 65, and already referred to, we find much less difficulty than arose in that case in holding that the relationship created between the appellant and the company in question was of a contractual character.
Then in 1874, during and pursuant to such relationship and statute, a bargain was made between the corporate company and the appellants for a service of supply of water.
This for reasons not quite clear and of no concern here was followed by 40 Vict. ch. 68, which substituted one Louis Molleur, the younger, as proprietor of all the property privileges and franchises of the company and charged him with all its obligations.
See section 1 of that Act which is as follows:
1. Louis Molleur the younger, of the Town of St. John's, in the District of Iberville and Province of Quebec, is and shall be the sole proprietor in his own name of the waterworks of St. John's, in place and stead of the Waterworks Company of St. John's, and he is substituted to the said company as proprietor of all the property, and charged with all the obligations and responsibilities of the said company.
The only addition Molleur got to this company's franchise was that it became exclusive instead of subject to competition.
Instead of being freed, as a result of this exclusive right, from the obligations of the company the more obvious I should say would be the legal implication of and for his continuing bound.
The obligation always existed to supply water.
That was the consideration for the franchise. When that supply ceased there arose the liability to have the contract I have found dissolved, and as a consequence the franchise declared forfeit.
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It was not every slip or accident that might give rise to such a result. It was as against the wilful and persistent disregard of the proper observation of its obligations to the power that created it that this right of rescission existed in law for the protection of the municipal corporation and those it represented during the existence of the company and the same remedy was the appropriate one that bound Molleur upon assuming the company's obligations.
An additional right was furnished by section 3, as against Molleur, who became substituted for the company, but apparently confined so far as that section operated, to a forfeiture only of the exclusive privilege created by this Act.
I think this was a wise precaution, though perhaps not necessary. Its existence in no way limited the original rights of those concerned when and if the charter became forfeited, to have it so judicially declared under article 1065 C.C.
It is not the contracts or breaches of contracts the respondent or his predecessor may have undertaken, but the breaches of such contracts as all or either may have entered into by virtue of this franchise and pursuant to duties arising thereunder, or refusal to make and observe reasonable contracts, that might work a forfeiture of the franchise transferred to respondent's predecessors always subject, however, to forfeiture.
Each and every one of such broken contracts are good ground of complaint under this original compact on which the respondents' rights rest. In violating any such contract the company or its successor or successors violated the obligations they were under and persistence therein caused it to fall within the
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meaning and range of this original power of forfeiture.
Even if, as alleged, the appellant had given notice of an abandonment of any such special contract, if it should turn out that the abandonment arose from a persistent course of misconduct on Molleur's or respondents' part, setting the appellant and its legal rights and demands at defiance, such abandonment could not be set up as an excuse for such a course of conduct on his part or relieve him from the possible forfeiture this misconduct had wrought.
The appellant could not be expected to go on forever paying for nothing. The termination of payments and consequent rescission of that contract did not obliterate the rights to forfeit that had accrued by reason of such default.
The same is true in regard to the wilful violation of contracts it was his duty under the franchise to have entered into with any of the inhabitants whom the appellant represents.
The respondents question such right or duty of representation.
At a very early stage (1854) in the history of municipal institutions of such a type as is now common in Canada the right of a municipal corporation through its council to represent the people residing within the municipality in relation to public property and public rights and especially rights of the inhabitants acquired by and through the action of the corporation was challenged in the case of Town of Guelph v. The Canada Co.. It was there decided that the question of the dedication to the public of a public
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square having been accepted by the public could be raised by a suit of the corporation claiming so to represent the public within the municipality.
The learned Chancellor Blake, who so held, supported his judgment by a reference to American authority rested on an English case. There can be no doubt that wherever the municipal legislation empowers the establishment of waterworks by the municipal council and also empowers such a means of doing it as chapter 65 of the Consolidated Statutes of Canada, 1859, affords, that the public interests are properly represented by the municipal corporation having such a matter as water supply or other service confided to its charge, in all that may be necessary to be done for the protection of the property of the corporate body and generally speaking of the inhabitants concerned.
It does not follow that for purposes of recovering private damages it can do so.
Nor does it follow that the individual inhabitants can assert a right of action for damages suffered by reason of the failure of one contracting with the city to furnish hydrants, etc., to discharge his duty in that regard. See Cunningham v. Furniss.
I do not desire to say more as to that subject as these pleadings shew an action is now pending at the suit of an inhabitant and I have neither investigated the subject nor formed an opinion upon the law as it stands in Quebec.
I merely desire to point out some of the difficulties that may exist in recovering damages and thus render it more necessary to assert the right to rescission if it exist.
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The result in Johnston v. Consumers' Gas Co. of Toronto, and consequent need of Ontario legislation, as in 63 Vict. ch. 35, would be impossible in Quebec if my view of the relationship between the two corporations being of a contractual nature be correct, for the case falls then within article 1065 of the Civil Code.
The need and purpose of the further contract was merely to define specifically the mode agreed upon for the company discharging its main duty towards the municipality or the inhabitants respectively; that is to supply water.
In default of such specification having been agreed upon the extent of the obligation inherent in the original contract would be measured by what under all the circumstances would be found reasonable.
The condition of things might be such that the extent to which that would reach might be very limited indeed.
For example, it could not be supposed that the original obligation would extend beyond what the authorized corporate capital of the company reasonably applied could produce.
If, however, the company formed such a contract as it did, in 1874, then the measure so adopted should define the binding limits unless and until conditions changed.
There is set forth quite enough in relation to that contract alone as well as many other material allegations all of which the demurrer admits to entitle the plaintiff to the judgment prayed for, and I see no good purpose to be served in face of such admission
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by postponing for evidence to be taken. Doing so only adds to expense and unjustifiable delay.
I think, on the whole, that the appeal should be allowed with costs.
Maclennan and Duff JJ. agreed with Girouard
Appeal allowed with costs.
Solicitors for the appellants: Bisaillon, Chasse & Brossard.
Solicitors for the respondents: Roy, Roy & St. Cyr.
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