Canadian Pacific Ry. Co. v. Canadian National Ry. Co., [1934] SCR 305

Supreme Court of Canada

Canadian Pacific Ry. Co. v. Canadian National Ry. Co., [1934] S.C.R. 305

Date: 1934-03-06.

Canadian Pacific Railway Company Appellant;

and

Canadian National Railway Company Respondent.

1933: November 15; 1934: March 6.

ON APPEAL FROM THE BOARD OF RAILWAY COMMISSIONERS FOR CANADA

Railways—Agreement between Canadian Pacific Ry. Co. and Canadian National Ry. Co. of January 29, 1929 (schedule “C” to Northern Alberta Railways Act, c. 48 of Statutes of Canada, 1929)—Construction—Comparison of freight traffic for purpose of equal division between the parties to said agreement—Grain shipped from stations on Northern Alberta Railways for export—“Outbound freight traffic destined to competitive points on or beyond the lines of the parties” (article 7 of agreement).

Upon the agreement made between the Canadian Pacific Ry. Co. and the Canadian National Ry. Co. dated January 29, 1929, being schedule “C” to the Northern Alberta Railways Act, Statutes of Canada, 1929, c. 48, and upon the facts and circumstances existing with regard to traffic, rates and carriage, grain shipped from stations on the Northern Alberta Railways to Prince Rupert (reached by the Canadian National alone) or to Victoria (reached by the Canadian National by transporting loaded cars of grain on barges, but not so reached by the Canadian Pacific) for export, and exported from either of those ports (to, say, the United Kingdom), is “outbound freight traffic destined to competitive points on or beyond the lines of the parties” within the meaning of article 7 of said agreement, and is not to be excluded from the comparison of freight traffic for the purpose of the equal division to be made under said article 7. In the light of the objects of the agreement as ascertained from it as a whole, and the conditions the parties must necessarily have had in view, the words “competitive points on or beyond the lines of the parties” should not be construed as limited to points on the lines of the parties or their connecting rail carriers to which the parties are prepared to handle traffic offered at equal rates.

Judgment of the Board of Railway Commissioners for Canada, 41 Can. Ry. Cas. 214, reversed.

Crocket J. dissented.

APPEAL by the Canadian Pacific Railway Company (by leave of the Board of Railway Commissioners for Canada) from the judgment (Order No. 50139) of the Board of Railway Commissioners for Canada[1] declaring that Prince Rupert is not a competitive point within the meaning

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of clause 7 of the agreement dated January 29, 1929, between the Canadian Pacific Railway Company and the Canadian National Railway Company (which agreement is schedule “C” to the Northern Alberta Railways Act, ch. 48 of the Statutes of Canada, 1929), and that, until such time as the Canadian Pacific Railway Company files a, through tariff for export wheat to Victoria, the latter point is not competitive within the meaning of the said agreement.

The question of law upon which the Board granted leave to appeal, and to which the Board’s judgment was, in effect, an answer in the affirmative, was as follows:

Whether upon the agreement made between the Canadian National Railway Company and the Canadian Pacific Railway Company on the 29th day of January, 1929, and the facts and circumstances hereinafter set forth, grain shipped from stations on the Northern Alberta Railways to Prince Rupert or to Victoria for export, and exported from either of those ports to, say, the United Kingdom, is to be excluded from the comparison of freight traffic for the purpose of the equal division to be made under article 7 of the agreement as not being “outbound freight traffic destined to competitive points on or beyond the lines of the parties” as the expression is used in said article.

The agreement is schedule “C” to ch. 48 of the Statutes of Canada, 1929. Clauses 2, 6, 7 and 11 (as being especially important) of the agreement are set out in the judgment of Duff C.J. now reported.

The facts and circumstances are set out in the order of the Board granting leave to appeal as follows:

1. The Northern Alberta Railways comprise lines of railway situated in the northern part of the Province of Alberta, connecting with the Canadian Pacific Railway at Edmonton and with the Canadian National Railway at Edmonton and Morinville.

2. They are the property of the Northern Alberta Railways Company, the capital stock of which is held by the Canadian National Railway Company and the Canadian Pacific Railway Company, jointly acquired by them under the authority of and pursuant to chapter 48 of the Dominion Statutes of 1929, and the agreements which form schedules “A” and “C” to that Act * * *

3. The chief industry of northern Alberta is agriculture, and the principal traffic on the Northern Alberta Railways consists of grain shipped for export from Canada, which each of the railways, the Canadian National and the Canadian Pacific, has at all times been desirous of securing for transport over its lines from the Northern Alberta Railways to the seaboard.

4. The Pacific coast seaports from which grain is exported from Canada were and are Vancouver, New Westminster, Victoria and Prince Rupert, in the Province of British Columbia. Of these, Vancouver and New Westminster are reached by both the Canadian Pacific Railway and the Canadian National Railway, and Prince Rupert by the Canadian National alone.

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Victoria is reached by transporting the loaded cars of grain on barges from Port Mann on the Canadian National Railway near Vancouver, the distance thereto being 78 miles. The Canadian Pacific does not undertake the carriage of grain to Victoria by such a service. The bulk of the grain carried by each railway to these ports for export is taken to and exported from Vancouver.

5. The Canadian National’s line to Prince Rupert was originally part of the Grand Trunk Pacific Railway, and its line to Vancouver was originally part of the Canadian Northern Railway System. On September 2, 1925, coincidentally with the construction of the Government elevator at Prince Rupert, the Canadian National Railways issued a tariff of export grain rates from stations on its railway to Prince Rupert and these rates were the same as the export grain rates from the same stations to Vancouver (tariff No. W. 135-C, C.R.C. No. W. 357, Supplement No. 15). Under the same date export grain rates from points on the Alberta and Great Waterways Railway to Prince Rupert via the Canadian National Railways were also put into effect on a parity with similar rates via Canadian National Railways to Vancouver (A.G.W. No. 123, C.R.C. No. 105, Supplement No. 7). Upon the termination of the Alberta Government Agreement in 1926 the Canadian National published to Prince Rupert from points on the Edmonton, Dunvegan and British Columbia, Alberta and Great Waterways and Central Canada Railways, export rates on the Vancouver basis. (C.N. tariff No. W. 135-D, C.R.C. No. W. 432, Supplement No. 8). On October 12th, 1927, the Canadian National Railways published similar rates from points on the Pembina Valley Railway to both Vancouver and Prince Rupert, as shown in Supplement 1 to C.N. Rys. tariff W. 135-F, C.R.C. W. 546.

6. At the time of their acquisition in 1929 the Northern Alberta Railways were owned or controlled by the Government of Alberta; part of them, known as the Pembina Valley Railway, having been constructed by the Government, and the remainder, consisting of the railways of The Edmonton, Dunvegan and British Columbia Railway Company, the Central Canada Railway Company and the Alberta and Great Waterways Railway Company, having come into its hands through the insolvency of those companies.

7. From 1920 to 1926, as the result of the agreement set out in chapter 56 of the Statutes of Alberta, 1921, joint rates on grain shipped for export from stations on the Edmonton, Dunvegan and British Columbia and Central Canada Railways were established and maintained exclusively in connection with the Canadian Pacific Railway, and joint rates from stations on the Alberta and Great Waterways Railway Company in connection with both the Canadian Pacific and Canadian National companies. In 1926 the Government terminated the agreement and all joint tariffs in connection with the Canadian Pacific were cancelled, and from that time until the acquisition of the lines by the Northern Alberta Railways Company in 1929, under agreement dated November 11, 1926, * * * joint rates were maintained in connection with the Canadian National Railway Company exclusively.

8. Since 1929 joint rates on grain have been published by the Northern Alberta Railways Company and the Canadian Pacific Railway Company from stations of the former to Vancouver and New Westminster for export, and by the Northern Alberta Railways Company and the Canadian National Railway Company to Vancouver, New Westminster, Victoria and Prince Rupert for export (present C.N.R. Tariff No. W. 135-F, C.R.C.

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No. W-546 and supplements 36 and 42 thereto, and C.P.R. Tariff No. W-5769, C.R.C. No. W-2847 and supplements 37, 41 and 43 thereto). The rates in the foregoing tariffs from Canadian National and Canadian Pacific points to Vancouver were made under Order of the Board of Railway Commissioners No. 448 of August 26, 1927. The mileage from Edmonton to Vancouver via the Canadian National Railways is 765 miles, and via the Canadian Pacific is 836 miles. The mileage from Edmonton to Prince Rupert is 957 miles. In the calculation of the rates to Vancouver, the Canadian National mileage from Edmonton to Vancouver is taken by the Canadian Pacific as its mileage from Calgary to Vancouver. By reason of competition, the Canadian Pacific accepts for carriage via its line from Edmonton to Vancouver the same rate as the Canadian National receives for carriage via its shorter mileage. In order to place Prince Rupert on an equality with Vancouver, the Canadian National published the same rates to Prince Rupert as were effective over its own line to Vancouver, thus extending lower rates to Prince Rupert than required by General Order No. 448.

9. These rates, and the terms and conditions of rail carriage, are the same from any Northern Alberta Railways station to all these seaports whether routed via Canadian National Railway or Canadian Pacific Railway.

10. Export rates are lower than the domestic rates.

For example: The rates on grain and grain products, in carloads, from Grande Prairie on the Northern Alberta Railways to New Westminster and Vancouver via either the Canadian Pacific or the Canadian National, and to Victoria and Prince Rupert via the Canadian National, for export is 28 cents per one hundred pounds, while the domestic rate via either the Canadian Pacific or Canadian National is 52½ cents per one hundred pounds to New Westminster and Vancouver, 55½ cents per one hundred pounds to Victoria, and via the Canadian National to Prince Rupert 58 cents per one hundred pounds.

11. Ocean rates on grain are not uniform, but by force of competition tend to equality.

12. Grain shipped to any of the above mentioned ports for export is discharged by the railway into elevators at the said ports and there stored with grain of the same grade, and is no longer earmarked as grain of that shipment. When the shipper desires to export his grain an equivalent amount of grain of the same grade is subject to his order. The same practice is followed in all cases where grain is milled or stored in transit.

13. The port of Churchill on the Canadian National Railways is a port of export on the Atlantic coast to which grain from points on the Northern Alberta Railways may be carried under C.N. tariff No. W-485A, C.R.C. No. W. 757. Outbound freight traffic to Churchill for export is dealt with by the Northern Alberta Railways Company for the purposes of article 7 of the agreement as being in the same category as similar traffic to Prince Rupert and Victoria.

14. The question of law above stated came before the Board for determination upon the application of the Canadian National Railway Company. * * *

W. N. Tilley K.C. for the appellant.

I. C. Rand K.C. for the respondent.

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The judgment of Duff C.J. and Smith and Hughes JJ. was delivered by

Duff C.J.—The appellants, the Canadian Pacific Railway Company, obtained leave to appeal from the Board of Railway Commissioners on the following question of law:

Whether upon the agreement made between the Canadian National Railway Company and the Canadian Pacific Railway Company on the 29th day of January, 1929, and the facts and circumstances hereinafter set forth, grain shipped from stations on the Northern Alberta Railways to Prince Rupert or to Victoria for export, and exported from either of those ports to say the United Kingdom, is to be excluded from the comparison of freight traffic for the purpose of the equal division to be made under article 7 of the agreement as not being “outbound freight traffic destined to competitive points on or beyond the lines of the parties” as the expression is used in said article.

The articles of the agreement requiring strict examination are those numbered 2, 6, 7 and 11. We quote them literally:

2. Each of the parties hereto shall assume the payment of and be liable for one-half of the purchase price payable (with interest), and one-half of the obligations to be assumed by the purchasers under the said agreement, and shall be entitled to one-half of the benefits to be derived therefrom, it being the intention of the parties that the said agreement shall be for their equal benefit and advantage.

6. Neither party shall directly or indirectly solicit the routing of outbound competitive traffic over their respective lines.

7. The new company shall be required to route outbound freight traffic (including grain milled or stored in transit) originating on the lines of the new company and destined via Edmonton or Morinville to competitive points on or beyond the lines of the parties, in such a way that each of the parties shall receive on a revenue basis one-half the outbound freight traffic orgiinating and destined as aforesaid, including such freight traffic routed by the shipper as well as such freight traffic routed by the shipper. Comparisons on a revenue basis of the traffic so received by each of the parties shall be made monthly, and any inequality of division in any month shall be rectified in succeeding months. The foregoing provisions in respect to Freight Traffic shall apply also to outbound Express Traffic and Telegraph Traffic respectively, originating on the lines of the new company and destined to competitive points on or beyond the lines of the parties. For the purpose of the division of traffic in this paragraph provided for, Freight Traffic, Express Traffic and Telegraph Traffic shall be divided and dealt with separately.

11. The parties agree to co-operate with fairness and candour toward each other, and to give effect to this agreement in the most liberal and reasonable manner to the intent that each of them shall receive its full and equal share of the benefits of the joint undertaking, subject to the provisions of clause 4 hereof.

The question for decision is by no means free from difficulty, although the relevant considerations lie in a rather limited field. The Board answered the question in the

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negative. We think the pith of the reasons delivered by the learned Chief Commissioner is in the extracts now quoted:

The rates and conditions of carriage of grain shipped for export from points on the Northern Company to all three of the ports above referred to are identical. The question is, what did the parties mean by the use of the words “competitive points on or beyond the lines of the parties”? I have always understood “competitive points” in railway parlance to mean points in respect to which two or more lines compete for traffic. In other words, a point at which two or more railways have facilities and are prepared to handle traffic offered at equal rates. Reading the words in the ordinary way, I think there can be no doubt that “competitive points on or beyond the lines of the parties” means points on the lines of the parties or their connecting carriers, and have no reference to any point other than one on a railway.

* * *

The word “competitive” as used in the agreement must have reference to competition between railways. The parties were only interested in securing the carriage of grain to a port. What becomes of it afterwards did not in the least interest them. If the parties intended what Mr. Tilley now contends they did, they should have said so, and this is particularly true when one considers the meaning which both parties had, long prior to the agreement, given to the words “competitive traffic”.

In the Board’s General Order No. 252, re interswitching, it is set out that “nothing herein contained shall prevent the line carrier from absorbing the entire toll, or tolls, charged for interswitching competitive traffic, provided that the traffic and movements so treated are clearly defined in its tariffs.” Turning to the tariffs of the Canadian Pacific and Canadian National as in effect in both Eastern and Western Canada, covering rules and regulations governing interswitching charges, they are found to all contain the following definition of competitive traffic:—

“definition of competitive traffic

At point of Origin.—When the railway performing the switching service can handle the shipment in road-haul movement from the origin station at equal rate.

At Destination.—When the railway performing the switching service could have handled the shipment in road-haul movement into the destination station at equal rate.”

Another definition found in the tariff of the Canadian Pacific, Western Lines, having to do with absorption of cartage charges rather than the question of interswitching, concerning competitive carload traffic, reads:—

“Competitive traffic is defined as having both its origin and destination at points reached by other railroads, which may also be reached by the lines of this company or its connections.”

* * *

It will be seen then that the Canadian National prior to the making of the agreement had certain exclusive rights with regard to the carriage of traffic routed to Victoria or to Prince Rupert. If the contention of the Canadian Pacific is right the Canadian National deliberately abandoned these exclusive rights. I can find nothing in the agreement to justify such a position.

* * *

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I would give the words in the agreement the meaning which those words are ordinarily understood to convey among railway men, and hold that Prince Rupert is not a competitive point within the meaning of the agreement. I hold further that until such time as the Canadian Pacific files a through tariff for export wheat to Victoria, the latter point is not competitive within the meaning of the agreement.

The statement of facts and circumstances referred to in the question as stated by the Board and quoted above contains the following paragraph:

12. Grain shipped to any of the above mentioned ports for export is discharged by the railway into elevators at the said ports and there stored with grain of the same grade, and is no longer earmarked as grain of that shipment. When the shipper desires to export his grain an equivalent amount of grain of the same grade is subject to his order. The same practice is followed in all cases where grain is milled or stored in transit.

On behalf of the appellants it is contended that the Board has erred in ascribing too much weight to their meaning in “railway parlance,” to use the phrase of the learned Chief Commissioner, in interpreting certain phrases in the agreement. We have quoted rather fully from the reasons of the learned Chief Commissioner because we think it appears pretty clearly from these reasons that, in construing what he regards as the critical expressions of article 7, he considers himself governed by the common usage in speech and writing among “railway men” concerning matters of railway operation, such, for example, as interswitching arrangements and the incidence of cartage charges.

The learned Chief Commissioner says:

The word “competitive” as used in the agreement must have reference to competition between railways. The parties were only interested in securing the carriage of grain to a port. What becomes of it afterwards did not in the least interest them.

There can be no doubt that the traffic the parties had in view consisted almost entirely of grain and products of grain for export. The ultimate destination of the articles shipped was not the Pacific sea-board but places in Asia, Europe and America beyond the Pacific sea-board. The real question is whether or not the returns from the whole of this traffic, originating on the Northern Alberta Railway Company’s lines, carried by rail to the seaboard for export, were to be subjected to articles 6 and 7 of the agreement, or whether these articles were to be limited in their application to traffic destined to points which are competitive in the sense ascribed to the word by the learned Chief Commissioner.

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The parties had joined in a common enterprise with a view to sharing equally in its benefits and they declare their intention in very explicit words in article 11 to

give effect to this agreement in the most liberal and reasonable manner to the intent that each of them shall receive its full and equal share of the benefits of the joint undertaking * * *

We think article 11 lays down a principle which does not contemplate that the construction of the cardinal stipulations of the contract are to be controlled by the meaning attached by the usage of “railway men,” in “railway parlance,” to particular expressions when those expressions are employed exclusively with reference to the operation of railways. The words of the agreement are, of course, to be given their ordinary scope, but we think this article is intended as a direction that the objects of the agreement as ascertained from the instrument as a whole, together with the conditions the parties must necessarily have had in view, are to be factors of exceptional weight and importance in its interpretation. From this point of view, we find ourselves unable to concur with the view of the learned Chief Commissioner that the phrase “competitive points” in article 7 is to be read as limited to points “at which two or more railways have facilities and are prepared to handle traffic offered at equal rates.”

The learned Chief Commissioner observes:

The parties were only interested in securing the carriage of grain to a port. What becomes of it afterwards did not in the least interest them.

We do not agree that the ultimate destination of grain shipped to the seaboard did not “in the least interest” the railway companies. It is not disputed, as already observed, that in great part, such grain is export grain, and that this was the condition of things contemplated by the parties to the agreement. Nor is it disputed that, in point of practice, tariffs of export rates, on grain and grain products, from stations on the Northern Alberta Railways for export to Africa, Asia, Australia, Central America and Europe are published by the Canadian Pacific Railway Company (to Vancouver, North Vancouver and New Westminster) and by the Canadian National Railway Company (to Vancouver, North Vancouver, Victoria and Prince Rupert) for export to the same countries. The ultimate destination of the grain is to points reached by both railways, either directly, or through rail or inland or

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ocean water connections. Giving the words of the agreement their natural sense, it would seem to make no difference whether such ultimate destination is reached by land or water.

Nor do we think that the language of article 6 should be overlooked. “Competitive traffic” is, perhaps, not a very precise phrase; but it seems, clearly enough, to mean here traffic in respect of which the railways would be competing. In its natural meaning it would apply to the traffic in export grain. It is quite true, of course, that article 6 is not to be read as dominating the agreement. It must be read with article 7, but it does point to the conclusion that what the parties had in mind is competitive traffic in export grain. It is not seriously disputed that, but for the agreement, there would be competition between the railway companies in respect of all this traffic.

The appeal should be allowed with costs and the question submitted answered in the negative.

Lamont J.—This is an appeal from the decision of the Board of Railway Commissioners declaring that Victoria and Prince Rupert in British Columbia are not competitive points within the meaning of section 7 of an agreement, dated January 29th, 1929, between the Canadian Pacific Railway Company (hereinafter called the “Pacific”) and the Canadian National Railway Company (hereinafter called the “National”).

The question submitted to us by the Board and the relevant provisions of the agreement have been set out in the judgment of the Chief Justice and need not be repeated here.

Before attempting to interpret the language of section 7, which is the crucial section, it may not be inadvisable to see what were the relations which, prior to the agreement, existed between these two railway companies and the four railway companies which, as a result of the agreement, were merged into one company—the Northern Alberta Railway. These railways- were the Edmonton, Dun-vegan and British Columbia Railway, the Alberta and Great Waterways Railway, the Central Canada Railway and the Pembina Valley Railway, all of which were local railways running northerly from Edmonton to points in Northern Alberta. At the date of the agreement the Pembina was

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owned by the Alberta Government, and the other three had come under its control through insolvency of their respective companies. At Edmonton these railways connected with both the Pacific and the National which carried their traffic from Edmonton to the Pacific Coast. The principal traffic from these local railways was grain—chiefly wheat—which they brought down to Edmonton to be shipped to ocean ports for export from Canada. The National had three ports at which delivery of overseas traffic could be made to ocean-going vessels: Vancouver (including New Westminster), Prince Rupert and Victoria (the cars to this latter place being carried by barge from Port Mann), while the Pacific could make delivery only at Vancouver.

Both the Pacific and the National had been desirous of securing a monopoly of the carrying of this grain from Edmonton to tide water and, at different periods, prior to the date of the agreement, a monopoly of the traffic had been enjoyed by one or other of these railways to the exclusion of the other. As the carriage of grain from Edmonton to the Coast was profitable, each railway was desirous that the exclusive control should not fall into the hands of the other, so they agreed to combine and purchase the four local railways and form them into a single system to be called the Northern Alberta Railway. This they carried out by the agreement in question in which it was provided that a new company should be formed to take over and operate the four railways forming the Northern Alberta system (hereinafter referred to as the “Northern Alberta”). Each party was to provide one half of the purchase price and become responsible for one half the liabilities; and each party was entitled to appoint one half of the directors. The object of each of the parties in entering into this agreement was not the revenue which they hoped to derive from the operations of the Northern Alberta, for it is admitted in the respondent’s factum that “the operation of the lines had been carried on in deficit.” The consideration which appealed to both the Pacific and the National was the collateral benefit which their individual lines of railway would receive from carrying the grain gathered by the Northern Alberta and turned over to them for carriage to ocean ports. Therefore in the agreement the parties set out not only the terms and conditions on which they

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became partners in the Northern Alberta but also the principle in accordance with which they were to share in this collateral benefit. That principle was one of equality of benefit, it being declared that the intention was that the agreement should be “for their equal benefit and advantage” (s. 2). This equality of benefit and advantage was emphasized in section 11, which reads as follows:

11. The parties agree to co-operate with fairness and candour toward each other, and to give effect to this agreement in the most liberal and reasonable manner to the intent that each of them shall receive its full and equal share of the benefits of the joint undertaking, subject to the provisions of clause 4 hereof.

In addition the agreement provided that all officers and employees of the new company should be impartial between the Pacific and the National and that neither party should, directly or indirectly, solicit the routing of outbound competitive traffic over their respective lines. By section 7 the new company is required

to route outbound freight traffic (including grain milled or stored in transit) originating on [its] lines and destined via Edmonton or Morinville to competitive points on or beyond the lines of the parties, in such a way that each of the parties shall receive on a revenue basis one-half [of such traffic].

The question for determination is, what did the parties mean by “competitive points on or beyond the lines” of the railways?

The contention of the Pacific is that the word “destined” in section 7 means “intended for delivery not to the actual point to which the traffic is billed over the Pacific or National lines as it comes from the Northern Alberta, but to the ultimate destination which may be intended or contemplated by the person controlling its movements”; and that the words “competitive points” include points beyond the lines of the Pacific or the National and their rail connections, such as all foreign points which are accessible to shipping from ocean ports reached by either railway or their connecting rail carriers; for instance, grain having Liverpool as its ultimate destination could be carried by either the Pacific or the National to the Pacific Coast, and there forwarded by ocean-going vessels to Liverpool. Any of these ports to which it may have been brought by either railway and from which it is shipped to Liverpool, are, according to the interpretation placed upon the section by the Pacific, “competitive points on or beyond the line of the railway.”

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The contention of the National is that these words include and apply only to outbound traffic which, received from the Northern Alberta, is undertaken by the Pacific or the National to be carried to a point then named as its destination, and that such point must be one common to both lines or their connecting, rail carriers to which rates from shipping points by either the Pacific or the National, with or without connecting carriers, are equal.

The Board of Railway Commissioners held that “competitive points,” in railway parlance, meant “points in respect to which two or more lines compete for traffic.”

In his judgment the Chief Commissioner said:—

Reading the words in the ordinary way, I think there can be no doubt that “competitive points on or beyond the lines of the parties” means points on the lines of the parties or their connecting carriers, and have no reference to any point other than one on a railway.

This was his interpretation of the words used and he supported it by two other arguments.

The first was:

It will be seen then that the Canadian National prior to the making of the agreement had certain exclusive rights with regard to the carriage of traffic routed to Victoria or to Prince Rupert. If the contention of the Canadian Pacific is right the Canadian National deliberately abandoned these exclusive rights. I can find nothing in the agreement to justify such a position.

The second was as follows:

True, under the agreement the parties are to have equal benefits because they are taking equal shares in the new company, but equal benefits in what? Surely the benefits referred to are the benefits to be derived from the operation of the new company. * * *

Dealing with this latter argument first, I am of opinion that, if the language means, as I think it does, that the benefits which the Pacific was to receive were simply the dividends on its stock in the new company, the benefits were illusory, for, as I have already pointed out, the Northern Alberta was being operated at a loss. Further, if Prince Rupert and Victoria are held not to be competitive points within the meaning of section 7, the result will be that the Pacific and National, under the agreement, will share equally in the revenue derived from the carriage of outbound freight from Edmonton to Vancouver; but the National will have, in addition, the entire revenue from the grain carried to Prince Rupert and Victoria. This, in my opinion, is inconsistent with the equality of benefit in the joint undertaking provided for in section 11. It would also

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mean that the representatives of the Pacific, as business men, agreed to pay one half the purchase price of the joint undertaking and assume one half of its financial obligations; hold one half the shares in the company and divide the collateral advantage—which was the chief inducement to enter into the agreement—on a basis which would allow the National the lion’s share of the profit. That the representatives of the Pacific, or any other business corporation or person, would agree to that kind of arrangement seems to me highly improbable.

The Chief Commissioner stressed the argument that the National, prior to the making of the agreement, had certain exclusive rights with regard to the carriage of traffic routed to Prince Rupert and Victoria, and that they would be giving these up if the contention of the Pacific was right.

It was common knowledge at the date of the agreement that the railways that were taken over by the Northern Alberta—with the exception of the Pembina—were in an insolvent condition, and that the Pacific might purchase them.

If the Pacific had purchased them it would have had the exclusive control; and, undoubtedly, would have routed everything it possibly could over its own line to Vancouver. The same would have happened had these lines been purchased by the National. Therefore, so far as export traffic was concerned, neither railway would have had much to hope for if the railways comprising the Northern Alberta system became the property of the other. Furthermore, if the National did relinquish any exclusive right which it had with respect to grain routed to Prince Rupert and Victoria, might it not have considered that it was being compensated therefor, (1) by sharing on equal terms in the revenue from grain attracted to Vancouver over the Pacific by reason of its storage and shipping facilities, which it is well known are greatly superior to those of the National, and (2) by the Pacific’s relinquishment of its right to solicit the routing of grain over its line which is now routed by the Northern Alberta over the National to Prince Rupert and Victoria? It was to avoid the possibility of one of the parties to the agreement getting exclusive control over the local railways that the Pacific and the National agreed to share equally in the obligations and advantages

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which would accrue from taking over these lines. As equality of obligation and advantage is expressly declared in the agreement to be the intent of the parties, effect should be given to that intent in construing section 7, unless the adoption of that principle is inconsistent with the language there used.

The construction placed by the Board of Railway Commissioners on the words “competitive points on or beyond the lines of the parties,” namely, “points on the lines of the parties or their connecting carriers,” limits the application of the words “points beyond” to some point on a connecting railway. Now the only railways at the Pacific Coast which connect with either the Pacific or the National are railways running south to the United States. This was well known to the men who made and drafted the agreement. These men, however, also knew that the market for Alberta grain was not in the United States, but in Europe or the Orient; therefore, when they required the new company to route outbound freight destined to competitive points on or beyond the lines of the Pacific and the National, they must have had in contemplation the points to which the grain would be exported in order to find a market; and these certainly would not be points on a railway running to the United States. In my opinion no reasonable meaning can be given to the words “competitive points on or beyond the lines of the railway” which would give effect to what the parties had in contemplation as a business enterprise, other than the overseas points as contended by the Pacific. To give to the words the construction placed upon them by the Board of Railway Commissioners seems to me to nullify the very object which the parties intended to effect. Further, although that intention might have been put in language which would have obviated our present difficulty, yet I think the words used, taken in their ordinary sense, are not inconsistent with the intent of the parties, and are a sufficient expression of it. That construction of “competitive points” should, therefore, be adopted which gives effect to the intention of the parties, rather than the narrower meaning which has been adopted from the definitions of “competitive traffic” and “competitive rates” as given effect to in the decision of the Board.

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Crocket J. (dissenting).—The question of law submitted for decision on this appeal is whether upon the agreement, the material provisions of which are set forth in the judgment of the learned Chief Justice, and the facts and circumstances stated in the order of the Board of Railway Commissioners granting leave to appeal, grain shipped from stations on the Northern Alberta Railways to Prince Rupert or to Victoria for export and exported from either of those ports, say to the United Kingdom, is to be excluded from the comparison of freight traffic for the purpose of the equal division to be made under article 7 of the agreement as not being “outbound freight traffic destined to competitive points on or beyond the lines of the parties,” as the expression is used in that article.

As grain so shipped to either of the two named ports is admittedly outbound traffic shipped “to points on (or beyond) the lines of the parties” it will be seen at once that the whole question with which we are concerned is as to whether it is grain “destined to competitive points,” as that term is used in article 7 of the agreement, and that, if it is, the whole question is concluded. We have nothing to do in the latter event with its shipment to points “beyond the lines of the parties.”

The Railway Commission held that both ports named were not competitive points within the meaning of article 7, for the reason that Prince Rupert is reached and served only by the C.N.R. and that only the C.N.R. undertakes the carriage of export grain to Victoria, although both railways have terminal facilities there. In so deciding it is clear from the written opinion of the learned chairman that the Board construed the term “competitive points” in the sense in which it is ordinarily used with reference to the operation of railways, or, as he expressed it, in the sense which it is ordinarily understood to convey among railway men, i.e., points at which, as he particularly explained, “two or more railways have facilities and are prepared to handle traffic offered at equal rates.”

I have no doubt, and indeed it is not seriously disputed, that this is the ordinary signification of the term as it is used in connection with the operation of railways. The appellant, however, contends that this is not the sense, in which either the term “competitive points” or the words

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“destined to” immediately preceding it, is used in article 7, and this is really the crux of the controversy between the parties as it comes before us.

For my part I can see no reason why such words as “outbound freight traffic destined to competitive points on or beyond the lines of the parties” should be interpreted in any other sense than the ordinary, usual sense which they bear in the conduct and operation of railways. The whole agreement is on its face essentially a railway agreement, concluded between two railway companies as such, and one which deals entirely with railway administration and operation, railway traffic and railway revenue.

The contention that the critical words “destined to competitive points” are not used in article 7 in their usual railway operating sense is primarily based on the inclusion in the limitation clause of the words “or beyond.” It is argued that in the case of freight shipped to the seaboard for export these words must necessarily denote points beyond the seaboard, and that their inclusion in the phrase contemplates a through joint rail and ocean transit. This is, no doubt, a possible construction if we were dealing with the carriage of outbound freight billed for a through joint rail and ocean transit to a point in an overseas country, but this is not the question which the Railway Commission considered or the question which is now submitted to us for decision. The question we have to decide is, not whether freight so billed is to be excluded from the equalization comparison provided for, but whether upon this agreement “and the facts and circumstances set forth” in the order of the Board of Railway Commissioners granting leave to appeal,

grain shipped from stations on the Northern Alberta Railways to Prince Rupert or to Victoria for export, and exported from either of these ports to say the United Kingdom, is to be excluded * * * as not being “outbound freight traffic destined to competitive points on or beyond the lines of the parties” as the expression is used in said article (article 7).

There is not the slighest suggestion in the Board’s order that the grain is billed for a through joint rail and ocean transit to any particular point overseas or indeed to any country overseas. On the contrary the statement of facts shews that it is not. It states that

grain shipped to any of the above mentioned ports (Vancouver, New Westminster, Victoria and Prince Rupert, the two first named being points to which both railways carry grain over their own lines to their own

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terminals) for export is discharged by the railway into elevators at the said ports and there stored with grain of the same grade, and is no longer ear-marked as grain of that shipment. When the shipper desires to export his grain an equivalent amount of grain of the same grade is subject to his order. The same practice is followed in all cases where grain is milled or stored in transit.

It may be added that it is stated in the reply of the Northern Alberta Railways Co. that it is required to shew clearly on the waybills that the grain is for export and the name of the elevator in care of which the grain is shipped.

How grain thus shipped from stations on the Northern Alberta Railways to any of these ports, and discharged into the particular elevator in care of which it is shipped, and there stored to await an order of the owner when he desires to export it to the overseas market in which he has decided to sell it, for delivery into an ocean steamer for a separate ocean transit, with which the railway company as such has no concern, can be considered as not being “destined” to the particular port on the Pacific seaboard to which it is shipped, but “destined” to an unnamed point in an unnamed country, I confess I am completely at a loss to comprehend. The very suggestion of “a competitive point” beyond the seas in such an agreement demonstrates to me that the words “or beyond the lines of the parties” were never intended to cover an ocean transit with reference to which the railway undertakes no responsibility and with which it has as such nothing whatever to do.

Notwithstanding that the principal traffic of the Northern Alberta Railways consists of grain shipped to the seaboard for export, and this traffic must therefore have been the dominating consideration in the negotiation of the agreement, it is apparent that the parties had in contemplation outbound domestic freight traffic as well as export traffic and that article 7 was framed to embrace both. The limitation “destined to competitive points” must be held to apply to both classes in some sense. Is it to be supposed that it was intended to apply in one sense to one class and in an entirely different sense, or not to apply at all, to the other?

The only conceivable ground on which such a supposition can rest is that the word “on” refers exclusively to domestic shipments or shipments of freight not intended ultimately to be exported overseas, and the word “beyond” exclusively to shipments to the seaboard for export, and

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that a clear distinction between the two descriptions of outbound freight traffic is thus indicated by the words “on or beyond.” Such a construction obviously reads out the words “or beyond” in respect of all outbound freight traffic which is not intended for export, notwithstanding that there may be competitive, as distinguished from noncompetitive, points, either “on” the lines of the parties themselves, or “beyond” the lines of the parties on the lines of other connecting railways in Canada or the United States, to which such outbound freight traffic may be shipped. It also casts aside the word “on” in respect of all shipments of export freight to the seaboard, notwithstanding that such freight may be destined to points “on” the lines of the parties and indeed must be held to be so destined in a railway carrying sense unless it is billed to some named point overseas for a through, continuous joint rail and ocean transit. Moreover, it renders the words “competitive points” themselves entirely meaningless with reference to all such shipments of freight to the seaboard for export, for assuredly, where no overseas destination point is in any way indicated, it becomes quite impossible to apply the quoted words to an overseas point at all.

Apart from these considerations, the collocation of the words “on or beyond” in relation both to “outbound freight traffic destined to competitive points” and to “the lines of the parties” itself appears to me to entirely preclude such a construction as is contended for and to make it clear that the whole limitation was intended to apply to all outbound traffic in the same sense. Reading all these words together in the order in which they are placed, the whole purpose of the clause on its very face is to prescribe destination to competitive, as distinguished from non-competitive, points, as a condition of the inclusion of any outbound freight traffic, export or otherwise, in the revenue apportionment provided for in the article. The truth is that it is only when one endeavours to read the language of the clause in any other than its ordinary railway sense, that any difficulty whatever arises upon the construction of the article itself.

One suggestion is that all freight shipped to the seaboard for export is “competitive traffic” in the sense that it is entitled to “competitive rates,” and that what the parties

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meant was not “competitive points,” but “competitive traffic.” To give effect to this suggestion one must not only substitute for the term the parties have chosen to use another term of an equally well recognized and entirely different import in railway usage, but to re-cast the entire clause, and thus completely disregard its application to export traffic.

Another suggestion is that all ports on the seaboard are competitive ports, and that what the parties meant was, not “competitive points” in a railway carrying sense, but “competitive ports.” This suggestion pre-supposes that the limitation clause does not apply to export traffic at all, for manifestly all freight intended for export overseas must be shipped to ports on the seaboard, and if all ports are alike competitive, the limitation is entirely meaningless as regards shipments to the seaboard for export.

Indeed, the whole gist of the appellant’s contention is that the limitation does not apply at all to outbound traffic shipped to the seaboard for export. Yet neither the word “export” nor “seaboard” is mentioned anywhere in the text of article 7. One would naturally think, if such had been the intention, the parties would have said so instead of hitting upon a clause which on its face comprises both export and non-export outbound freight traffic alike. In my opinion, this clause must be read in the context in which it appears in article 7 in the sense in which the Board of Railway Commissioners has construed it, and constitutes a definite and specific limitation upon the outbound freight traffic intended to be included in the fifty-fifty apportionment provided for by that article in respect of such outbound freight traffic.

The object of the agreement as a whole must, of course, be ascertained, and I have no doubt, having regard to the provisions of articles 2 and 11, that the underlying intention was that, as far as practicable, the parties should share fully and equally in the benefits accruing from their joint acquisition and operation of the Northern Alberta Railways system, and that the joint undertaking should be conducted with fairness and candour between them. Once, however, it is seen that a definite and specific exception is made in clear and unambiguous language as regards a particular branch of traffic in an article obviously inserted for

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the purpose of dealing exclusively with that particular branch of traffic, the special article must be held to be the governing article in relation to the particular branch of traffic which it has thus singled out from all other branches. No other conclusion, it seems to me, is possible without entirely ignoring the special article, which surely must be considered in order to determine the object and intent of the agreement as a whole. That intent, I think, is clearly shown, viz: that both parties are to share equally in the benefits accruing from the joint undertaking in the manner above stated subject to the condition expressly provided in article 7 with regard to outbound freight traffic, that only the revenues accruing from such outbound traffic as is destined to competitive points on or beyond their own lines, is to be included in the equalizing revenue comparison. Articles 2 and 11 may both be read in perfect consistency with such an intent. They cannot over-ride or negative the plain, unequivocal words of article 7.

For these reasons I would affirm the decision of the Board of Railway Commissioners and dismiss the appeal with costs.

Appeal allowed with costs, and question submitted answered in the negative.

Solicitor for the appellant: W. E. Curie.

Solicitor for the respondent: I. C. Rand.