DUMOULIN,
J.:—This
is
an
appeal
from
the
decision
of
the
Tax
Appeal
Board,
given
on
November
5,
1958,
allowing
the
appeal
of
the
respondent
from
the
assessment
of
tax
for
the
year
1951
of
Massawippi
Valley
Railway
Company,
of
the
City
of
Montreal,
in
the
Province
of
Quebec.
Before
attempting
to
review
this
appeal,
it
is
appropriate
to
point
out
that
two
others
were
heard
jointly
with
the
instant
one,
the
questions
at
stake
in
all
three
cases
raising,
practically,
analogous
problems
of
law.
Consequently,
the
decision
herein
reached
should
also
apply
in
the
matters
of
:
M.N.R.
v.
Ontario
and
Quebec
Railway
Co.,
number
152826,
and
M.N.R.
v.
Quebec
Central
Railway
Co.,
number
152827,
of
the
records
of
this
Court.
The
disputed
amount
is
$22,388
(including
penalty),
exacted
from
respondent
in
a
notice
of
re-assessment,
dated
February
29,
1954,
whereby
the
company’s
income
tax
return,
for
1951,
declared
at
Nil”,
was
revised
and
set
by
appellant
at
$48,000.
No
factual
complexities
whatever
arise
;
the
entire
issue
hinges
upon
the
conflicting
opinions
entertained
by
litigants
regarding
the
proper
legal
connotation
of
uncontested
facts.
We
must
now
retrace
the
path
of
time
back
to
December
27,
1871,
when
a
long
since
forgotten
railroad,
the
Massawippi
Valley
Railway
Company,
then
running
from
the
Quebec
Eastern
Townships
to
points
in
the
bordering
State
of
Vermont,
U.S.A.,
pursuant
to
statutory
privileges
conferred
in
1862
by
29
Viet.,
c.
61
(Section
15,
inter
alia),
leased
the
total
operation
and
control
of
its
line
and
properties,
for
a
period
of
999
years,
to
an
American
competitor,
the
Connecticut
and
Passumpsic
Rivers
Railroad
Company
(cf.
Ex.
A-1).
Henceforward,
to
all
intents
material,
Massawippi
Valley
Railway
was
to
fade
into
the
unsubstantiality
of
a
mere
corporative
designation.
Some
fifteen
years
after,
on
June
1,
1887
(cf.
Ex.
A-2),
the
rights
thus
demised,
in
1871,
were
passed
on
by
the
initial
lessees
to
Boston
and
Lowell
Railroad
Corporation,
which,
in
turn,
assigned
them
to
the
Boston
and
Maine
Railroad,
on
December
18,
1892.
Next,
fifty-nine
years
later,
on
November
7,
1946
(Ex.
A-3),
the
latter
railroad
entered
into
a
similar
agreement
with
the
Canadian
Pacific
Railway,
rounded
by
an
assignment
on
the
part
of
Passumpsic
and
Connecticut
Rivers
Ry.
to
the
C.P.R.
(for
short)
of
its
interest
in
the
unexpired
residue
of
the
lease,
or
824
years.
Reverting
to
the
original
indenture,
Ex.
A-1,
of
December
27,
1871,
I
will
reproduce
hereunder
the
gist
of
its
provisions
affording
relevancy
in
this
litigation.
The
Massawippi
Valley
Railway,
then
:
“.
.
.
by
these
presents
do
demise
and
lease
for
the
said
period
or
term
of
nine
hundred
and
ninety
years
.
.
.
The
said
road
or
Railway
and
Branch
Line
or
Spur
of
the
said
Company
of
the
first
part
[i.e.,
Massawippi
Ry.]
with
all
its
franchise,
rights
&
privileges
secured
by
Law,
and
for
that
purpose
do
hereby
transfer,
convey
and
set
over
to
the
Company
of
the
second
part
accepting
as
aforesaid
all
the
real
and
personal
Estate,
Depots
and
Stations,
houses
and
other
Structures,
its
road
bed
and
rights
of
way,
gravel
pits
and
every
other
right
or
thing
pertaining
to
said
Railway
&
Spur,
and
the
operating
and
working
of
the
same,
and
all
privileges
and
franchises
which
the
Company
of
the
first
part
now
have
or
may
hereafter
have
under
the
Laws
of
Canada
and
of
the
Province
of
Quebec.”’
Monetary
stipulations,
under
the
guise
of
rental,
safeguarded
the
respective
interests
of
the
Massawippi
Railway’s
bondholders
and
shareholders
providing,
furthermore,
for
the
redemption
of
its
maturing
bonds;
these
clauses
read
thus:
“SECONDLY:
That
the
Company
of
the
second
part
[1.e.,
in
1871,
the
Connecticut
and
Passumpsic
Rivers
Railroad
Co.]
shall
and
will
and
they
do
hereby
stipulate,
covenant
and
agree
and
bind
and
oblige
themselves
in
consideration
of
the
foregoing
premises
to
pay
to
the
Holders
of
the
Bonds
now
issued
by
the
Company
of
the
first
part,
the
sum
of
Twenty
four
thousand
Dollars
annually
.
.
.
by
semi
annual
instalments
.
.
.
THIRDLY:
The
Company
of
the
second
part
shall
and
will
and
they
do
hereby
further
stipulate
&
agree
and
obligate
themselves
to
set
aside
and
pay
to
the
holders
of
the
capital
Stock
now
issued
by
the
said
Company
of
the
first
part
[Massawippi
Ry.
for
short]
amounting
to
the
sum
of
four
hundred
thousand
Dollars,
equal
dividends
per
Share
as
shall
be
paid
to
the
Holders
of
the
Preferred
Stock
of
the
Company
of
the
second
part
[viz.
Connecticut
and
Passumpsie
Ry.].
AND
FOURTHLY
AND
LASTLY
:
That
the
Company
of
the
second
part
shall
and
will
and
they
do
hereby
agree
and
bind
and
obligate
themselves
to
provide
for
the
redemption
of
the
Bonds
aforesaid
at
their
maturity
and
shall
have
and
receive
as
a
compensation
therefor
the
unissued
balance
of
the
capital
Stock
of
the
Company
of
the
first
part
being
a
sum
in
stock
equal
at
par
value
to
the
Bonds
that
shall
be
paid
or
redeemed
and
thereafter
the
said
Company
of
the
second
part
did
and
do
hereby
bind
and
oblige
themselves
to
set
aside
and
pay
to
the
said
Holders
of
the
capital
stock
amounting
to
the
sum
of
Four
hundred
thousand
Dollars
issued
for
the
redemption
of
the
said
Bonds,
the
same
rate
of
dividend
as
aforesaid.”
Had
the
Massawippi
Railway
resolved
to
sell
its
line
and
assets
outright,
these
terms
and
conditions
could
quite
fittingly
have
served
that
end.
In
the
cognate
affairs
of
the
M.N.R.
v.
Ontario
and
Quebec,
and
Quebec
Central
Railways,
the
basic
indentures
are,
respectively,
A-5
of
January
1884,
and
A-9,
dated
October
2,
1912.
The
duration
of
the
so-called
‘‘lease’’
in
the
Ontario-Quebec
Ry.
and
C.P.R.
deal
is
stated
as
‘‘in
perpetuity’’,
and
fixed
at
999
years
in
the
agreement
with
Quebec
Central
Ry.
(A-9).
Other
factors
substantially
compare
with
those
previously
cited,
save
that
a
sum
of
$121,000
is,
by
appellant’s
computation,
alleged
to
be
Ontario
and
Quebec
Railway’s
income
for
taxation
year
1951,
and
$161,900
that
of
the
Quebec
Central
Ry.
during
the
same
period.
I
seldom,
if
ever,
recite
copious
passages
of
the
pleadings,
but
presently
I
deem
advisable
to
depart
somewhat
from
such
a
practice,
since
the
salient
points
in
dispute,
pro
and
con,
are
adequately
set
out
in
paragraphs
7
of
the
Notice
of
Appeal,
8
and
13
of
the
Reply.
Section
7
submits
that:
“7.
.
.
.
the
amount
of
$48,000.00
paid
during
the
taxation
year
1951
by
the
Canadian
Pacific
Railway
Company
to
the
holders
of
the
common
stock
of
the
Respondent,
being
the
rental
payable
by
that
company
under
the
indenture
of
1871,
between
Respondent
and
Connecticut
and
Passumpsic
Rivers
Railroad
Company,
whose
rights
were
in
due
course
assigned
on
November
7th,
1946,
to
Canadian
Pacific
Railway
Company,
which
amount
was
so
paid
to
the
said
holders
of
the
common
stock
of
the
Respondent
because
of
the
direction
contained
in
the
said
indenture,
constitutes
a
payment
or
transfer
of
money
made
to
the
said
stockholders
pursuant
to
the
direction
of
or
with
the
concurrence
of
the
Respondent
for
the
benefit
of
the
Respondent
or
as
a
benefit
that
the
Respondent
desires
to
have
conferred
on
the
said
stockholders
and
to
the
full
extent
of
the
said
amount
of
$48,000.00
would
have
been
Respondent’s
income
if
the
said
payment
or
transfer
had
been
made
to
it
and,
consequently,
the
said
amount
of
$48,000.00
constitutes
income
of
the
Respondent
for
the
said
taxation
year
1951
under
the
provisions
of
Subsection
(1)
of
Section
16
of
The
1948
Income
Tax
Act.’’
This
attack
upon
the
as
yet
unchallenged
status
quo
ante
of
respondent
or,
more
precisely,
of
its
bondholders
and
shareholders,
is
squarely
met,
first
in
paragraph
8
of
the
Reply:
“8.
Pursuant
to
said
agreement
dated
December
27th,
1871,
and
said
assignment
and
the
fulfillment
of
the
conditions
thereof,
the
assets
and
enterprise
of
Respondent
became
vested
in
Canadian
Pacific
Railway
Company
for
the
duration
of
the
said
period
of
nine
hundred
and
ninety-nine
years,
and
the
only
rights
which
the
holders
from
time
to
time
of
the
capital
stock
of
Respondent
have
during
the
said
period
of
nine
hundred
and
ninety-nine
years
are
to
receive
payment
of
the
said
amounts
from
Canadian
Pacific
Railway
Company
and,
if
necessary,
to
enforce
payment
thereof
by
Canadian
Pacific
Railway
Company;”
Paragraph
13
mentions
the
legal
tenets
in
whose
light
the
transaction
at
bar
should
be
envisaged.
“13.
By
the
said
agreement
dated
December
27th,
1871,
which
agreement
is
governed
by
the
laws
of
the
Province
of
Quebec,
and
in
particular,
by
the
provisions
of
the
Civil
Code
of
Lower
Canada,
and
the
said
assignment
to
Canadian
Pacific
Railway
Company,
the
acceptance
of
the
obligation
by
Canadian
Pacific
Railway
Company
and
by
the
stockholders
of
Respondent
that
Canadian
Pacific
Railway
Company
should
pay
the
said
amounts
directly
to
the
holders
of
the
capital
stock
of
Respondent
rendered
Canadian
Pacific
Railway
Company
directly
liable
to
said
capital
stockholders
and
there
was
no
obligation
to
make
payments
to
Respondent,
nor
had
Respondent
any
right
to
such
payments.
Respondent,
in
consequence,
had
no
income
for
the
year
1951,
nor
had
Respondent
the
right
to
any
income.”
Though
no
doubt
subsists
as
to
the
relevancy
of
the
laws
of
Quebec
in
the
matter,
formal
admissions
to
this
effect,
duly
signed
by
both
parties
and
in
each
appeal,
are
appended
to
the
pleadings
ex
majore
cautela.
It
would
therefore
appear
that
the
covenants
of
1871
(A-l),
1884
(A-5)
and
1912
(A-9)
should
be
subjected
to
an
initial
test,
that
of
the
Civil
Code,
in
order
to
establish
their
specific
and
technical
entity,
before
being
weighed
in
the
balance
of
our
fiscal
statute.
On
this
score
also
the
viewpoints
of
the
contestants
are
at
complete
variance,
the
appellant
holding
that
these
agreements
are
nothing
more
than
“simple
indication
of
payment”
in
line
with
article
1174
of
the
Civil
Code,
whilst
respondent
contends
they
constitute
so
many
instances
of
‘‘Stipulations
for
third
parties’’
according
to
article
1029.
A
preliminary
observation
is
that
each
of
those
three
covenants
falls
in
the
class
of
sui
generis
contracts,
known
to
the
civil
law
doctrine
and
jurisprudence
under
the
French
appellation
of
‘‘contrats
innomés”,
innominate
contracts.
Such
undertakings,
albeit
nameless,
possess
a
full
measure
of
validity
insofar
as
they
do
not
contravene
the
laws
of
public
order
and
good
morals.
They
are
construed
conformably
to
their
own
terms
and
conditions.
The
spirit
of
the
civil
law
regulating
lease
or
hire
of
things,
and
quite
likely
the
letter
itself,
seemingly
require
a
specified
duration
(article
1601),
not
exceeding
ninety-nine
(99)
years
(article
568
concerning
emphyteusis,
a
special
class
of
lease).
This
element,
if
originally
lacking,
was
excused
in
the
instant
cases
by
two
Acts
of
Parliament,
viz.
(1862),
25
Vict.,
c.
61,
s.
15
;
(1884),
47
Vict.,
c.
54,
s.
2;
and
an
Act
of
the
Quebec
Legislature
(1912),
2
Geo.
V,
s.
1.
And
now,
resuming
the
main
trend
of
argument,
do
these
indentures
give
rise
legally
to
the
effects
and
consequences
inherent
to
a
“simple
indication
of
payment’’
or,
rather,
to
those
of
a
“stipulation
on
behalf
of
third
parties’’?
Article
1174
of
the
Civil
Code
enacts
that:
“1174.
The
simple
indication
by
the
debtor
of
a
person
who
is
to
pay
in
his
place,
or
the
simple
indication
by
the
creditor
of
a
person
who
is
to
receive
in
his
place,
or
the
transfer
of
a
debt
with
or
without
the
acceptance
of
the
debtor,
does
not
effect
novation.”
If
any
common
sense
or
strictly
legal
significance
attaches,
as
it
does,
to
the
twice
mentioned
expression
“simple
indication”,
then,
assuredly,
the
intricate,
lengthy,
documents
evidencing
the
transactions,
the
Acts
of
Parliament
and
of
a
Provincial
Legislature
deemed
necessary
to
their
validity,
and
the
far
reaching
extent
of
the
deals,
sweep
away
even
the
vaguest
notion
of
simplicity.
Nor
is
it
‘‘a
transfer
of
a
debt”
for
the
decisive
reason
that
as
those
instruments
were
executed
no
debt
existed
between
the
railroad
and
their
stockholders,
and,
at
all
events,
we
would
be
confronted
here
with
much
more
than
‘‘the
transfer
of
a
debt’’.
Therefore,
this
interpretation
cannot
be
entertained.
On
the
other
hand,
article
1029
provides
as
follows:
“1029.
A
party
in
like
manner
may
stipulate
for
the
benefit
of
a
third
person,
when
such
is
the
condition
of
a
contract
which
he
makes
for
himself,
or
of
a
gift
which
he
makes
to
another;
and
he
who
makes
the
stipulation
cannot
revoke
it,
if
the
third
person
have
signified
his
assent
to
it’’
[italics
are
mine].
This
section,
save
for
one
word:
“contrat”
in
the
Quebec
Civil
Code
text,
‘‘stipulation’’
in
the
Code
of
France,
is,
to
all
intents,
a
verbatim
reproduction
of
article
1121
of
the
French
Code
Civil,
which
Quebec
jurists
still
designate
by
its
historical
surname
of
Code
Napoléon
and
it
reads:
“Art.
1121.
On
peut
pareillement
stipuler
au
profit
d’un
tiers,
lorsque
telle
est
la
condition
d’une
stipulation
que
l’on
fait
pour
soi-même
ou
d’une
donation
que
l’on
fait
à
un
autre.
Celui
qui
a
fait
cette
stipulation
ne
peut
la
révoquer,
si
le
tiers
a
déclaré
vouloir
en
profiter.”
Since
complete
indentity
exists
between
the
progenitor
text
and
its
offspring,
it
will
be
useful
to
consult
French
jurisprudence
and
to
notice
it
unquestionably
holds
that
the
“stipulant”
(actually
the
respondent)
is
relieved
of
juridical
responsibility
so
soon
as
the
third
party,
“le
tiers”,
has
assented
for
his
part.
Henceforth,
in
the
eyes
of
the
law
in
conspectu
legis
the
two
sole
contracting
parties
remain
the
“promettant”
(originally
the
Connecticut
and
Passumpsic
Rivers
Ry.
Co.)
and,
as
stated,
the
accepting
third
party’’,
bondholders
and
shareholders.
A
most
frequent
instance
of
such
transactions
is
to
be
found
in
the
realm
of
insurance,
especially
life
insurance,
about
which,
so
far
back
as
1888,
the
‘‘Chambre
civile
de
la
Cour
de
Cassation”,
the
French
tribunal
of
last
resort,
wrote
that
(D.P.
88,
part
1,
77,
193)
:
“Le
bénéficiaire
acquiert
contre
l’assureur
un
droit
propre
et
direct,
qui
ne
fait
à
aucun
moment
partie
du
patrimoine
du
stipulant
.
.
.
Et
qui
n’est
donc
pas
rapportable
à
sa
succession”
IThe
sentence
just
preceding
is
a
commentary
added
by
Mr.
Crépon,
a
jurist
of
the
last
century].
Planiol
and
Ripert,
in
their
exhaustive
treatise
of
‘‘
Droit
Civil”
(1930
ed.
Traité
Pratique
de
Droit
Civil
Français,
tome
VI,
N°
362),
under
the
caption
of
“Rapports
juridiques
nés
de
la
stipulation
pour
autrui”
and
the
subtitle
of
‘‘
Acquisition
du
bénéfice
de
la
stipulation”,
profess
that:
“362.
C’est
le
but
et
l’effet
essentiels
de
la
stipulation.
Pour
réaliser
cette
acquisition
conformément
à
l’intention
du
stipulant
qui
normalement
est
d’en
procurer
au
tiers
le
bénéfice
à
l’exclusion
de
tous
autres,
on
a
été
amené
à
dire
que
le
tiers
a
contre
le
promettant
un
droit
direct
et
personnel
[italics
correspond
to
underlining
in
the
text]
remontant
au
jour
du
contrat.
’
’
The
1952
(2nd)
edition
of
this
authoritative
work
drops
the
above
passage,
simply
to
dilate
more
discursively
on
this
topic
and
to
a
like
effect.
Textual
similitude
and
ensuing
parity
of
motives
prompted
the
Quebec
Courts,
as
also
the
Supreme
Court
of
Canada,
to
decide
similarly.
In
1908,
the
late
Mr.
Justice
Cimon
(ad
hoc)
speaking
for
the
majority
in
re:
Baron
v.
Lemieux
(1908),
17
K.B.
177,
heard
before
the
Court
of
King’s
Bench,
quoting
Defrénois
(1887,
Traité
pratique
du
Contrat
d’assurance
sur
la
vie),
said
:
“N°
318.
Mais
une
fois
que
la
stipulation
a
été
acceptée
par
le
bénéficiaire,
elle
devient
irrévocable.
L’assuré
ne
peut
plus
disposer
du
bénéfice,
et
le
montant
de
l’assurance
est
définitivement
acquis
au
bénéficiaire.
Cette
acceptation
rétroagit
au
jour
même
du
contrat,
et
par
conséquent,
le
bénéfice
est
considéré
comme
n’ayant
jamais
fait
partie
du
patrimoine
de
l’assuré.”
I
feel
in
duty
bound
to
add
that
Defrénois,
a
Notary
by
profession,
never
achieved
real
eminence
as
a
commentator;
yet,
in
this
instance,
the
Quebec
Appeal
Court
was
satisfied
he
felicitously
expressed
the
purpose
of
the
law.
Finally,
the
Supreme
Court
of
Canada
conferred
its
high
approval
on
this
interpretation
in
unambiguous
words.
Rinfret,
J.,
as
he
then
was,
giving
judgment
for
the
Court
in
Halle
v.
Canadian
Indemnity
Co.,
[1937]
S.C.R.
368,
377,
wrote:
“And
in
civil
law
a
valid
stipulation
in
favour
of
a
third
person
creates
a
contract
between
the
third
person
and
the
person
who
has
agreed
to
be
bound
by
the
contract.
It
establishes
a
vinculum
juris
between
the
latter
and
the
third
person.
Speaking
particularly
of
the
present
case,
the
policy
confers
an
independent
right
upon
the
third
person
who
is
insured
under
it.”
Mr.
Justice
Rinfret
then
proceeds
to
cite
from
Planiol
and
Ripert
the
reference
inserted
some
lines
above.
It
would
be
idle,
I
believe,
to
labour
this
point
at
greater
length.
The
three
contractual
agreements
of
1871,
1884
and
1912,
admittedly
subject-matter
of
Quebec’s
civil
laws,
are
suitably
analyzed
by
attributing
to
each
the
genus
of
“innominate
contract”
and
the
species
of
a
‘‘stipulation
for
third
parties’’,
with
necessarily,
all
correlative
effects.
I
readily
accede
to
respondent’s
submission,
on
page
9
of
its
“Notes
and
Authorities’’
that:
“The
proper
interpretation
of
the
agreements
under
study
pursuant
to
Article
1029
of
the
Civil
Code
is,
.
.
.
sufficient
in
itself
to
defeat
the
claims
of
Appellant.’’
Unsuccessful
in
its
counter
submission
that
the
transactions
do
not
overstep
the
narrow
bonds
of
“simple
indications
of
payments
(Civil
Code,
article
1174),
the
appellant
next
relied
upon
the
applicability
of
Sections
16(1),
(2)
and
23,
hereunder,
of
The
1948
Income
Tax
Act:
“16.
(1)
A
payment
or
transfer
of
money,
rights
or
things
made
pursuant
to
the
direction
of,
or
with
the
concurrence
of,
a
taxpayer
to
some
other
person
for
the
benefit
of
the
taxpayer
or
as
a
benefit
that
the
taxpayer
desired
to
have
conferred
on
the
other
person,
shall
be
included
in
computing
the
taxpayer’s
income
to
the
extent
that
it
would
be
if
the
payment
or
transfer
had
been
made
to
him.’’
I
omit
subsection
(2),
marginally
labelled
undistributed
payments
or
profits’’
which,
clearly
enough,
does
not
apply.
23.
Where
a
taxpayer
has,
at
any
time
before
the
end
of
a
taxation
year
(whether
before
or
after
the
commencement
of
this
Act),
transferred
or
assigned
to
a
person
with
whom
he
was
not
dealing
at
arm’s
length
the
right
to
an
amount
that
would,
if
the
right
thereto
had
not
been
so
transferred
or
assigned,
be
included
in
computing
his
income
for
the
taxation
year
because
the
amount
would
have
been
received
or
receivable
by
him
in
or
in
respect
of
the
year,
the
amount
shall
be
included
in
computing
the
taxpayer’s
income
for
the
taxation
year
unless
the
income
is
from
property
and
the
taxpayer
has
also
transferred
or
assigned
the
property.”
I
will,
to
begin
with,
comment
briefly
on
the
latter
section.
The
learned
counsel
for
appellant
insisted
on
the
bracketed
passage
‘‘whether
before
or
after
the
commencement
of
this
Act’’,
stretching
its
implication
and
fiscal
reach
back
to
1871,
1884
and
1912,
or
from
five
(1912)
to
46
(1871)
years
before
income
taxation
was
ever
thought
of
(1917)
in
Canada,
and
717
before
the
Statute
of
1948.
The
basic
principles
of
British
and
Canadian
legislation
regulating
rigorously,
even
frowningly,
retrospective
enactments
are
so
well
known
that
one
concise
affirmative
would
savour
more
of
retrospective
confiscation
than
retrospective
taxation.
Other
discrepancies
preclude,
in
my
opinion
at
least,
the
suitability
of
Section
23
to
this
set
of
facts,
for
instance:
(a)
A
dealing
at
arm’s
length
did
occur,
once
and
for
all,
between
the
respondent
companies
and
their
co-contrac-
tors:
Connecticut
and
Passumpsic
Rivers
Railroad,
and
Canadian
Pacific
Railway.
(b)
Merely
for
discussion’s
sake,
assuming
that
Section
23
could
obtain,
then
any
amount
the
company
had
44
transferred
or
assigned
.
.
.
shall
be
included
in
computing
the
taxpayer’s
income
for
the
taxation
year
unless
the
income
is
from
property
and
the
taxpayer
has
also
transferred
or
assigned
the
property’’.
Now,
‘‘taxation
year”,
in
the
language
of
Section
127(2)
(a)
‘‘is
a
fiscal
period”,
itself
defined
in
Section
127(1)
(q)
as
meaning
44
.
.
.
the
period
for
which
the
accounts
of
the
business
of
the
taxpayer
have
been
ordinarily
made
up
and
accepted,
for
purposes
of
assessment
under
this
Act
.
.
.”
(italics
not
in
text).
I
am
incapable
of
conjecturing
a
legal
approach
to
the
problem
of
accounts
of
business
‘‘made
up
and
accepted
for
purposes
of
assessment
under
this
Act”
.
.
of
1948,
in
the
years
1871,
1884,
1912,
save
through
the
instrumentality
of
the
corresponding
covenants.
Even
so,
any
amount
supposedly
transferred
or
assigned
would
become
assessable,
according
to
the
directions
of
Section
23,
for
‘‘taxation
years’’
in
periods
when
no
taxation
of
the
kind
existed.
The
notes
devoted
to
article
1029
of
the
Civil
Code,
from
which
section
the
transactions
herein,
performed
and
perfected
prior
to
the
supervening
of
income
tax,
derive
their
legal
identity,
inferentially
prevent
a
recourse
to
Sections
16(1)
and
23
of
the
Act.
I
am
in
sufficient
accord
with
the
résumé
given
by
respondent
on
pages
8
and
9
of
its
Memorandum:
44
(a)
that
the
agreements
are
governed
by
Article
1029
of
the
Civil
Code;
(b)
that
the
payments
by
C.P.R.
or
rights
to
payments
never
entered
the
patrimony
of
Respondents;
(c)
that
there
was
no
payment
or
transfer
of
any
money
or
right
by
Respondents
to
their
shareholders
;
(d)
that
Respondents
conferred
no
benefit
because
the
amounts
paid
or
rights
thereto
were
never
part
of
their
patrimony,
and
were
never
theirs
to
confer.
[This
conclusion,
I
repeat,
technically
results
from
a
fiction
of
law,
particularizing
article
1029]:
(e)
that
consequently
neither
Section
16(1)
nor
Section
23
of
the
Income
Tax
Act
[1948]
applies
in
the
circumstances.”
Another
appropriate
outline
of
the
circumstancial
and
legal
factors
surrounding
this
unusual
suit
appears
in
volume
21
of
the
Canada
Tax
Appeal
Board
Cases
(1958-59),
21
Tax
A.B.C.
1
at
page
10,
penned
by
Mr.
Fordham,
Q.C.,
the
learned
member
of
the
Tax
Appeal
Board
who
first
heard
the
case;
I
quote:
‘,..
Taxing
statutes
are
to
be
strictly
construed
and
unless
a
taxpayer
comes
squarely
within
their
four
corners,
he
cannot
properly
be
held
liable.
Whatever
the
appellant
did
in
respect
of
these
requirements,
first
made
statutory
in
1948,
must
have
occurred
in
or
about
December,
1871.
Since
then,
the
appellant
has
been
powerless,
as
regards
exercising
any
control
in
the
matter,
and
unable
to
alter
in
any
way
what
has
long
been
a
fait
accompli.
What
occurred
in
1871?
It
was
remarked
earlier
herein,
that
there
was
a
once-and-for-all
agreement
executed
in
that
year
whereunder
the
appellant
ceased
to
be
any
more
than
an
inactive
corporate
entity
and
the
various
stockholders
became
the
payees
as
long
as
they
continued
to
hold
the
appellant’s
stock.
This
arrangement
may
have
been
convenient
for
the
appellant,
but
was
of
no
benefit
to
it,
or
to
the
stockholders.
There
was
then
no
income
tax
legislation
in
force
and
if
the
payments
had
been
made
to
the
appellant
first,
no
tax
would
have
been
exigible
and
the
stockholders
would
still
have
received
as
much
money,
in
the
form
of
dividends,
as
if
the
payments
had
gone
to
a
trustee
for
them,
direct.
It
could
be
said
that,
at
some
time
after
1948,
the
arrangement
became
beneficial
to
the
stockholders
in
that
the
payments
continued
to
reach
them
without
first
being
taxed
in
the
appellant’s
hands.
But
this
situation
was
not,
and
could
not
be,
foreseen
by
the
appellant
in
1871
.
.
.’’
I
concur
in
this
exposition
of
fact
and
law.
Extraordinary
legislation
indeed,
of
the
most
encompassing
pointedness
could
alone
achieve
the
dubious
feat
of
superimposing
the
fiscal
clock
of
1948
on
the
musty
hour-glass
of
1871.
For
the
reasons
stated,
the
decision
appealed
from
is
affirmed
and
the
instant
appeal
dismissed
with
taxable
costs
against
the
appellant.
Judgment
accordingly.
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