0
’Halloran
J.A.:—The
respondent
Firestone
Tire
&
Rubber
Co.
of
Canada
Ltd.
is
incorporated
under
the
Dominion
Companies
Act
and
its
manufacturing
plant
is
situate
in
Hamilton,
Ontario.
The
sale
of
its
products
in
the
British
Columbia
area
is
conducted
through
Mackenzie,
White
&
Dunsmuir
Ltd.,
Vancouver,
under
a
‘‘
Firestone
Distributors’
Warehouse
Contract.’’
The
respondent’s
liability
to
pay
income
tax
to
the
Province
of
British
Columbia
(for
the
purpose
of
this
appeal
at
any
rate)
depends
upon
whether
it
owns
the
"‘Firestoné‘‘
products
sold
in
this
Province
by
Mackenzie,
White
&
Dunsmuir
Ltd.
(hereafter
called
‘‘the
distributor’’).
That
is
determined
by
the
terms
of
the
contract
and
the*course
of
dealing
prescribed
thereby.
If
it
is
found
that
the
respondent
does
own
these
products,
then
the
distributor
emerges
inter
se
as
its
agent
in
their
sale
even
though
the
distributor
may
sell
them
as
an
apparent
principal.
In
that
event
the
respondent
must
be
held
liable,
for
then
the
only
sale
which
takes
place
occurs
in
this
Province
when
the
distributor
sells
to
the
trade.
It
is
common
ground
that
certain
“Firestone”
products,
such
as
accessories,
repair
material
and
repair
equipment
are
sold
the
distributor
in
Hamilton,
Ontario.
The
appellant
Commissioner
of
Provincial
Income
Tax
does
not
claim
income
tax
on
profits
of
the
respondent
derived
from
those
sales.
The
invoices
of
such
sales
disclose
the
order
to
buy
is
accepted
by
the
respondent
in
Hamilton;
the
invoices
also
disclose
that
the
goods
are
forwarded
to
Vancouver
on
condition
that
the
[distributor]
pay
for
them
on
the
20th
of
the
following
month.
However,
those
sales
are
excluded
from
the
present
controversy,
which
concerns
only
‘‘Firestone’’
products
warehoused
by
the
dis-
tributor
in
Vancouver,
and
for
which
the
distributor
is
under
no
liability
to
pay
as
long
as
it
can
show
they
remain
in
its
warehouse.
The
distributor
carries
a
stock
of
‘‘Firestone’’
products
in
Vancouver
valued
at
approximately
$50,000.
Once
every
month
it
sends
the
respondent
a
‘‘monthly
inventory
and
sales
report’’
thereof
(ex.
7)
for
the
period
ending
the
20th
of
the
month.
It
is
important
to
note
this
report
sets
out
under
appropriate
column
headings—(1)
the
number
of
each
product
on
hand
at
the
beginning
of
that
monthly
period;
that
is
the
‘‘opening
inventory;”
(2)
the
number
of
each
product
received
from
the
respondent
during
that
monthly
period;
(8)
the
number
of
each
product
on
hand
at
the
end
of
that
monthly
period
;
that
is
the
“closing
inventory;’’
and
(4)
the
number
of
each
product
sold
by
the
distributor
during
that
monthly
period.
It
is
obvious
that
(4)
must
equal
the
difference
between
(3)
and
the
sum
of
(1)
and
(2).
On
receipt
of
this
‘‘monthly
inventory
and
sales
report,’’
the
respondent
sends
the
distributor
a
statement
(ex.
8)
of
the
amount
it
is
required
to
remit
in
respect
to
the
products
listed
in
(4)
supra;
that
is
to
say,
for
the
goods
sold
by
the
distributor
during
the
monthly
period
last
ended.
That
statement
shows
on
its
face
that
the
amount
there
set
forth
relates
to
the
proceeds
of
sales
made
by
the
distributor
during
the
last
monthly
period
as
disclosed
in
the
‘‘monthly
inventory
and
sales
report.
‘
‘
It
is
of
first
significance
to
observe
that
it
does
not
relate
to
sales
made
by
the
respondent
to
the
distributor.
It
seems
to
me
to
be
a
determining
point
in
this
case
that
the
amount
there
set
forth
does
not
relate
to
sales
from
the
respondent
to
the
distributor
during
that
period.
Examination
of
exs.
7
and
8
leaves
no
room
for
uncertainty
on
this
point.
Exhibit
8
dated
October
26th
reads:
“Sales
Sept.
21
to
Oct.
20
attached
_.
$20,490.66.
Quantities
O.K.
”
The
word
‘‘attached’’
in
the
quotation
refers
to
ex.
7
supra,
which
the
respondent
returns
to
the
distributor
attached
to
ex.
8,
after
having
filled
in
(in
ex.
7)
the
“price”
column
(5)
and
the
‘‘price
extension’’
column
(6).
If
the
amount
in
ex.
8
related
to
sales
from
the
respondent
to
the
distributor
it
would
check
with
the
price
extension
of
column
(2)
supra
in
ex.
7,
viz.,
the
number
of
products
received
from
the
respondent.
But
it
does
not
cheek
with
column
(2)
but
does
check
with
the
price
extension
of
column
(4)
supra
which
sets
out
the
distributor’s
sales
during
that
period.
It
is
conclusive
therefore
that
ex.
8
is
not
an
"‘invoice’’
of
sales
made
by
the
respondent
to
the
distributor.
The
fact
is,
the
respondent
does
not
at
any
time
bill
the
distributor
for
any
of
these
goods
at
all—as
it
would
if
it
were
in
truth
selling
goods
to
the
distributor,
and
as
it
does
in
the
case
of
the
sales
referred
to
at
the
outset;
with
which
we
are
not
now
concerned.
Exhibit
8
is
not
a
sales
invoice.
It
is
in
real
effect,
as
stated,
a
statement
from
the
respondent
of
the
amount
the
distributor
is
required
to
remit
in
respect
to
its
previous.
month’s
sales
to
the
trade,
after
the
fixed
commissions
have
been
adjusted.
It
is
manifest
from
the
nature
of
the
transaction
described
that
no
sale
or
agreement
to
sell
is
made
in
Hamilton
or
in
Vancouver,
or
at
all,
when
the
respondent
ships
the
goods
to
the
distributor.
It
is
also
apparent
that
the
distributor
does
not
buy
or
agree
to
buy
goods
from
the
respondent
at
any
time
after
they
are
shipped
to
it
or
received
by
it.
This
is
confirmed,
if
confirmation
is
required,
by
the
fact
that
Mackenzie,
White
&
Dunsmuir
Ltd.
neither
includes
such
goods
in
the
inventory
of
assets
shown
in
its
balance
sheet,
nor
discloses
any
liability
in
its
balance
sheet
in
respect
thereto
as
it
would
if
it
had
bought
or
agreed
to
buy
the
goods.
The
respondent
however
does
include
in
its
inventory
of
assets
disclosed.
in
its
balance
sheet
the
$50,000
worth
of
its
products
warehoused
with
the
distributor
in
Vancouver.
It
is
confirmed
further
by
this
extract
from
the
evidence:
"The
Court:
They
(the
distributors)
may
never
sell
them
(the
goods)
and
they
remain
the
Firestone
property.
Suppose
—without
reflecting
on
the
Mackenzie
White
Dunsmuir
Co-
pany
for
a
moment—suppose
it
went
into
bankruptcy,
the
Firestone
Company
would
take
those
goods,
they
would
not
be
entitled
to
rank
as
creditors.
They
could
simply
say
‘These
are
our
goods’
and
take
them.
Is
that
not
so,
Mr.
Dunsmuir?
“Mr.
Dunsmuir:
Yes.”
The
conclusion
reached
in
the
Court
below
that
the
warehoused
goods
were
sold
to
the
distributor
in
Hamilton
on
the
basis
of
deferred
payments,
with
respect,
cannot
be
supported,
if
the
unquestioned
facts
to
which
I
have
referred
are
given
the
weight
which
their
importance
and
relevancy
demands.
These
facts
of
course
are
in
harmony
with
the
agreement.
The
foregoing
analysis
of
exs.
7
and
8
definitely
excludes
any
sale
by
the
respondent
to
the
distributor
and
clearly
defines
the
working
out
in
practice
of
the
agency
relationship
which
the
agreement
demands.
The
agreement
correctly
describes
itself
as
a
"
"
distributor’s
warehouse
contract.
’
Nowhere
in
it
does
the
dis-
tributor
agree
to
buy
the
warehoused
goods.
If
a
sale
were
intended
in
a
commercial
agreement
of
this
character,
one
would
not
expect
that
intention
to
be
cleverly
disguised,
but
would
expect
to
find
it
expressed
in
apt
words.
It
follows
from
what
has
been
said
that
the
distributor
in
Vancouver
is
not
required
to
pay
for
the
goods
it
receives
from
the
respondent.
Its
obligation
under
the
agreement
is
to
account
for
them
in
the
monthly
inventory
report,
and
to
remit
the
proceeds
of
the
sales
thereof
it
has
made
during
the
last
monthly
period.
The
distributor
obviously
acts
as
an
agent
in
the
sale
of
the
respondent
‘s
goods,
as
it
is
clear
from
what
has
been
said
that
it
does.
not
itself
purchase
the*
goods
from
the
respondent
at
any
time.
The
goods
are
sent
to
the
distributor
in
Vancouver
where
it
holds
them
for
the
respondent.
When
the
distributor
can
sell
them
it
does
so,
and
remits
the
proceeds
to
the
respondent
monthly,
less
the
remuneration
agreed
on.
This
sale
of
respondent’s
goods
by
the
distributor
is
the
only
sale
which
takes
place
and
obviously
it
takes
place
in
Vancouver.
It
is
true
the
respondent
fixes
the
prices
at
which
the
distributor
may
sell
to
the
trade,
and
also
fixes
the
portion
of
the
price
which
the
distributor
shall
remit
when
the
latter
has
sold
the
goods.
But
in
this
case
that
is
a
convenient
way
in
which
to
fix
the
distributor’s
commission
as
an
agent.
Agents
usually
receive
a
commission
on
sales,
but
the
form
in
which
the
commission
is
payable
may
vary
with
the
class
of
the
business
and
the
exigencies
arising
thereout.
One
of
the
exigencies
of
the
tire
business
is
the
maintenance
of
a
uniform
price
to
the
trade
in
all
parts
of
Canada.
It
requires
the
respondent
to
fix
the
uniform
price,
and
to
take
measures
all
over
Canada
to
see
that
it
is
not
departed
from.
Once
the
respondent
fixes
the
price
at
which
the
distributor
shall
sell,
it
matters
not
whether
the
latter’s
remuneration
is
fixed
in
terms
of
a
percentage
or
as
1S
done
here
in
terms
of
a
portion
of
the
price
the
agent
shall
remit.
It
goes
without
saying
that
if
the
respondent
is
to
maintain
and
increase
the
market
for
its
products
in
Vancouver,
it
is
forced
to
keep
a
substantial
stock
in
Vancouver
to
fill
the
demands
of
that
market.
For
example,
it
would
not
be
practicable
for
the
distributor
to
take
an
order
for
a
tire
and
send
that
order
to
the
respondent
in
Hamilton
to
be
filled.
The
respondent
could
have
its
own
warehouse
in
Vancouver
stocked
with
goods
and
keep
a
branch
office
there.
But
the
business
apparently
does
not
warrant
it.
Again
the
respondent
could
have
a
distributor
in
Vancouver
which
would
purchase
all
the
“Firestone”
products
it
kept
in
stock.
A
distributor
of
this
description
would
likely
buy
the
products
in
Hamilton
and
agree
to
pay
for
them
on
the
20th
of
the
following
month,
as
is
done
now
in
the
case
of
accessories,
repair
equipment
and
repair
material
referred
to
at
the
outset.
But
that
policy
was
inexpedient,
for
the
distributor
would
then
have
to
invest
a
substantial
sum
in
‘‘Firestone”
products.
In
that
regard
the
responsible
officer
of
the
distributor
said:
‘We
neither
had
the
money
nor
the
desire
to
invest
as
much
as
was
called
for
on
the
basis
of
a
shipment
purchased.
‘
‘
In
the
result
the
respondent
employed
a
responsible
distributor
to
warehouse
its
goods
in
Vancouver,
and
which
for
a
stipulated.
remuneration
would
sell
its
goods
as
effectually
in
its
interest
as
if
the
respondent
had
its
own
branch
office
and
warehouse
in
Vancouver.
It
is
true
this
distributor
sells
the
goods
in
its
own
name
as
if
it
owned
them.
But
that
does
not
destroy
the
agency
relation,
for
as
Channel
J
(Divisional
Court)
said
in
Watson
v.
Sandie
c
Hull
as
reported
in
[1898]
1
Q.B.
326
at
p.
331
:
“It
is
quite
consistent
with
goods
being
treated
as
the
property
of
the
agent
as
between
the
agent
and
the
purchaser
that,
as
between
the
agent
and
the
foreign
principal,
the
goods
should
be
in
fact
the
goods
of
the
principal.”
In
the
report
of
this
decision
in
67
L.J.Q.B.
319,
Channell
J.,
is
thus
quoted
at
p.
321
:
‘‘The
truth
here
is
that
Squire
&
Co.
are
really
principals,
because
the
contracts
(with
the
trade)
are
made
by
a
person
(Sandie
&
Hull)
who
is,
in
fact,
their
agent,
although
he
contracts
in
his
own
name.’’
What
has
just
been
said
explains
paragraph
10
of
the
schedule
attached
to
the
contract.
It
reads:
“10.
The
distributor
has
the
exclusive
right
to
sell
‘Firestone’
products
to
dealers
in
the
territory
specified,
but
this
contract
is
not
to
be
construed
as
constituting
the
distributor
the
agent
of
the
Company
for
any
purpose.”
That
requires
the
distributor
to
sell
“Firestone”
products
to
dealers
in
its
own
name,
and
debars
it
from
contracting
or
representing
itself
as
an
agent
of
the
respondent
in
such
sales.
But
it
does
not
affect
the
real
relation
between
the
respondent
and
the
distributor
inter
se,
which
is
that
as
between
them,
the
sales
to
the
trade
are
made
by
a
person
[sic]
which
is
in
fact
the
respondent’s
agent,
although
it
sells
in
its
own
name.
The
learned
Judge
appealed
from
excluded
agency
on
the
ground
the
distributor’s
liability
to
pay
arose
when
the
goods
“disappeared”
from
the
inventory.
He
reasoned
that
this
“disappearance”
might
result
from
fire,
theft
or
other
occurrences
not
connected
with
a
sale
by
the
distributor;
and
that
the
distributor’s
obligation
to
pay
might
therefore
arise
even
though
it
had
not
sold
the
goods.
But
with
respect
that
is
entirely
consistent
with
agency.
For
an
agent
who
has
goods
of
his
principal
for
sale
must
account
or
pay
for
them,
whether
he
sells
them
or
loses
them.
It
is
his
duty
to
sell
them
or
return
them.
Supplementing
what
has
been
already
said
the
agreement
as
a
whole
points
convincingly
to
the
conclusion
that
the
distributor
holds
the
goods
for
sale
on
behalf
of
the
respondent
and
that
at
no
time
does
it
purchase
the
goods
itself.
The
provision
for
the
respondent’s
lien
in
para.
4
stipulates
the
property
shall
remain
in
the
respondent
"‘so
long
as
the
same
or
any
part
thereof
shall
remain
in
the
said
warehoused
stock
and
shall
not
have
been
bona
fide
sold
or
otherwise
disposed
of
to
dealers
or
consumers
.
.
.
.”
By
para.
5
the
distributor
may
"
‘
resell
in
the
usual
and
ordinary
course
of
his
business,
but
not
otherwise,
any
of
the
Firestone
products
delivered
or
to
be
delivered
by
the
Company.”
.
.
.
.”
It
is
evident
that
the
word
‘‘re-sell’’
in
para.
5
and
in
one
or
two
other
places
in
the
contract
really
means
"
"
sell.
’
Read
as
“‘re-sell’’
it
implies
a
previous
sale
to
the
distributor;
but
that
is
excluded
by
the
language
of
paras.
4
and
5
just
quoted,
in
addition
to
other
cogent
reasons
already
stated.
If
the
distributor
had
already
bought
the
goods,
it
could
of
course
sell
them
at
will,
and
it
would
not
require
the
respondent’s
permission
given
in
para.
5
to
‘‘re-sell
in
the
usual
and
ordinary
course
of
his
business.
John
Deere
Plow
Co.
v.
Agnew,
10
D.L.R.
576,
was
much
relied
on
to
support
the
judgment
appealed
from.
That
case
turned
upon
the
right
of
an
unlicensed
extra-provincial
company
to
sue
in
this
Province,
if
it
was
‘‘carrying
on
business”
in
the
Province.
The
right
to
sue
is
not
involved
here,
nor
may
the
appellant’s
claim
to
the
payment
of
income
tax
be
determined
by
a
decision
as
to
whether
the
respondent
is
‘‘carrying
on
business”
in
the
Province
within
the
meaning
of
the
Companies
Act
provisions
considered
in
the
John
Deere
Plow
case.
By
s.
3(1)
(a)
of
the
Income
Tax
Act,
R.S.B.C.
1936,
c.
280,
‘‘the
income
earned
within
the
Province
of
persons
not
resident
in
the
Province
shall
be
liable
to
taxation.”
By
s.
2
of
the
same
Act
‘‘person’’
includes
‘‘corporations,
agents,
and
trustees;”
and
‘‘income’’
includes
“All
income,
revenue
.
.
.
or
profits
arising,
received,
gained,
acquired,
or
accrued
due
from
.
.
.
any
venture,
business,
or
profession
of
any
kind
whatsoever.
’’
In
my
view
‘‘profits
from
any
venture’’
within
the
Province
may
be
quite
a
different
thing
from
profits
from
“carrying
on
business’’
in
the
Province;
the
more
so
if
the
latter
statutory
phrase
should
be
restricted
as
it
was
in
the
John
Deere
Plow
case
(vide
the
concluding
paragraph
of
the
judgment
of
Duff
J.
(as
he
then
was)
at
p.
585)
to
a
company
which
“.
.
.
had
a
fixed
place
of
business
at
which
it
carried
on
some
part
of
its
own
business
within
the
province.”
Furthermore
if
the
point
were
necessary
to
decide
in
this
appeal,
I
should
hesitate
to
hold
that
liability
for
Provincial
Income
Tax
upon
"‘profits
from
any
venture’’
must
depend
upon
whether
the
"‘venture’’
is
an
‘‘exercise
of
trade’’
as
that
phrase
may
be
interpreted
in
decisions
based
on
other
statutes.
But
there
is
another
essential
distinction
between
the
John
Deere
Plow
case
and
the
one
now
under
review.
In
the
former
case
Agnew
bought
all
the
goods
he
received
from
the
John
Deere
Plow
Co.
Under
his
agreement
(p.
584)
he
had
to
‘‘settle
by
cash
and
notes’’
for
the
goods
on
the
first
of
the
month
following
each
shipment.
That
is
exactly
the
case
here
in
respect
to
the
accessories,
repair
material
and
equipment
for
which
the
distributor
agreed
to
pay
on
the
20th
of
the
month
following
shipment.
But
as
stated
at
the
outset
hereof,
the
claim
of
appellant
Commissioner
of
Income
Tax
is
not
concerned
with
these
admitted
sales
to
the
distributor.
But
that
is
not
the
case
in
respect
to
the
goods
to
which
this
appeal
applies,
for
unlike
the
distributor
in
the
present
case,
Agnew
had
agreed
to
buy
all
the
goods
which
he
had
on
hand.
That
the
John
Deere
Plow
contract
was
a
contract
of
sale
and
not
a
‘‘distributor’s
warehouse
contract’’
(as
the
respondent’s
contract
in
this
case
is
truly
described
on
its
face)
is
further
evidenced
by
the
provision
(p.
584)
therein
that
in
the
event
of
Agnew’s
default
in
payment
on
the
first
of
the
month
following
shipment
all
monies
owing
by
him
became
payable
at
once
and
the
John
Deere
Plow
Co.
was
authorized
to
sell
all
the
goods
to
which
the
agreement
related,
and
after
crediting
Agnew
therewith
could
hold
him
liable
for
any
deficiency.
These
provisions
are
consistent
only
with
a
sale
of
the
goods
when
shipped.
It
was
on
these
facts
that
Duff
J.
(as
he
then
was)
said
at
p.
584
:
"
"
It
is,
in
my
Judgment,
an
agreement
relating
to
the
sale
and
purchasing
of
goods
embodying
elaborate
provisions
for
the
protection
of
the
sellers.’’
The
respondent’s
contract
under
review
cannot
be
so
described.
It
is
a
distributor’s
warehouse
contract,
as
it
says
it
is,
giving
the
distributor
the
‘‘right
to
sell”
(para.
1)
goods
which
it
has
agreed
‘‘to
receive
and
warehouse’’
(para.
3).
Nowhere
does
the
distributor
agree
to
buy
the
goods;
but
it
does
agree
in
para.
3"to
vigorously
push
sales’’
and
"‘to
sell
to
commercial
accounts
.
.
.
,’’
indicating
its
true
role
as
an
agent
selling
respondent’s
goods.
The
distributor
did
not
buy
or
agree
to
buy
the
goods.
If
the
distributor
decided
to
terminate
the
agreement
under
para.
14
thereof,
it
could
return
the
whole
of
the
Firestone
Warehouse
goods
to
the
respondent.
The
respondent
could
not
then
compel
the
distributor
to
pay
for
them.
Needless
to
say,
that
would
not
be
so,
if
the
distributor
had
bought
or
agreed
to
buy
the
goods
as
happened
in
the
John
Deere
Plow
case,
and
in
Lamb
&
Sons
v.
Goring
Brick
Co.
(1932),
101
L.J.K.B.
214
(Court
of
Appeal).
In
the
latter
case
as
here
the
plaintiffs
were
appointed
sole
selling
agents
of
the
defendants.
But
the
plaintiffs
had
also
agreed
(p.
218)
which
is
not
the
case
here,
to
pay
the
defendants
‘‘for
all
goods
supplied
by
the
end
of
the
month
following
delivery.”
For
these
reasons,
with
respect,
I
would
allow
the
appeal.
Email this Content