Province of Ontario v. Dominion of Canada, (1909) 42 SCR 1

Supreme Court of Canada

Province of Ontario v. Dominion of Canada, (1909) 42 S.C.R. 1

Date: 1909-02-12

The Province of Ontario (Respondent) Appellant:

and

The Dominion of Canada (Claimant) Respondent.

1908: December 1-3; 1909: February 12.

Present: Girouard, Davies, Idington, Maclennan and Duff JJ.

ON APPEAL FROM THE EXCHEQUER COURT OF CANADA.

Constitutional law—Indian lands—Extinguishment of Indian title—Payment by Dominion—Liability of Province—Exchequer Court Act, 5. 32—Dispute between Dominion and Province.

Where a dispute between the Dominion and a Province of Canada, or between two Provinces comes before the Exchequer Court as provided by sec. 32 of R.S.C. [1906] ch. 140, it should be decided on a rule or principle of law and not merely on what the judge of the court considers fair and just between the parties.

In 1873 a treaty was entered into between the Government of Canada and the Salteaux tribe of Ojibeway Indians inhabiting land acquired by the former from the Hudson Bay Co. By said treaty the Salteaux agreed to surrender to the government all their

[Page 2]

right, title and interest in and to said lands and the government agreed to provide reserves, maintain schools and prohibit the sale of liquor therein and allow the Indians to hunt and fish, to make a present of $12 for each man, woman and child in the bands and pay each Indian $5 per year and salaries and clothing to each chief and sub-chief; also to furnish farming implements and stock to those cultivating land. At the time the treaty was made the boundary between Ontario and Manitoba had not been defined. When it was finally determined, in 1884, it was found that 30,500 square miles of the territory affected by it was in Ontario and in 1903 the Dominion Government brought before the Exchequer Court a claim to be reimbursed for a proportionate part of the outlay incurred in extinguishing the Indian title. The Province disputed liability and, by counterclaim, asked for an account of the revenues received by the Dominion while administering the lands in the Province under a provisional agreement pending the adjustment of the boundary.

Held, reversing the judgment of the Exchequer Court (10 Ex. C.R. 445) Girouard and Davies JJ. dissenting, that the Province was not liable; that the treaty was not made for the benefit of Ontario, but in pursuance of the general policy of the Dominion in dealing with Indians and with a view to the maintenance of peace, order and good government in the territory affected; and that no rule or principle of law made the Province responsible for expenses incurred in carrying out an agreement with the Indians to which it was not a party and for which it gave no mandate.

APPEAL and CROSS-APPEAL from the judgment of the Exchequer Court of Canada[1] condemning the Province of Ontario to pay a portion of the amount claimed by the Dominion as having been expended for the benefit of the province.

In 1873 the Dominion Government made a treaty with the Salteaux tribe of' Ojibeway Indians by which the latter surrendered all their rights and privileges in land covering the area from the watershed of Lake Superior to the North-West Angle of the Lake of the Woods and from the American border to the height of land from which the streams flow towards Hudson Bay, containing about 55,000 square miles. The payments

[Page 3]

to be made for such surrender and the obligations to be performed by the Dominion are stated in the above head-note.

At the time this treaty was made the boundary between the Provinces of Ontario and Manitoba had not been defined and the lands were administered by the Dominion and Ontario jointly pending such definition.

In 1878 the position of the boundary was referred to arbitration and finally determined in 1884, when it was found that some 30,000 square miles of the territory surrendered by said treaty was in Ontario. The Dominion eventually took proceedings in the Exchequer Court to recover from the province its proportionate share of the sums expended in carrying out the treaty.

The judgment of the Exchequer Court as published in the report[2], holds the province liable to re-pay the Dominion the amounts necessarily expended in extinguishing the Indian title to the lands in question and the question as to which of the sums claimed were so expended was reserved for further hearing. On Dec. 4th, 1907, judgment on the further hearing was given and formally entered as follows:

"Wednesday the 4th day of December, 1907.

"The further consideration of the questions involved in this action reserved by the judgment of this court of the 18th day of March, 1907, having come on for hearing at Ottawa on the 3rd and 4th days of December in the year of our Lord, 1907, before this court, in the presence of counsel for the respondent as well as the claimant, upon hearing the evidence and what was. alleged by counsel aforesaid.

[Page 4]

"1. This court doth order and adjudge that the Dominion do recover from Ontario three hundred and five, four hundred and ninety-thirds (305-493) of all the following expenditures made by the Dominion to or on behalf of the Indians:—

"(a) All expenditures made by the Dominion to the Indians in payment of annuities under the treaty in the pleadings mentioned at the rate of five dollars per annum for each Indian person from the date of the treaty to the date hereof.

"(b) All expenditures made by the Dominion for ammunition and twine for nets for the use of the Indians as provided by the said treaty, not however exceeding in the whole one thousand five hundred dollars per annum.

"(c) All expenses reasonably incurred by the Dominion for provisions and presents supplied to the Indians at the treaty negotiations, but not to exceed in the whole the sum of twenty-one thousand two hundred and ninety-six dollars and ninety-six cents, claimed in Schedule "B" of the statement of claim of the Dominion herein.

"(d) In respect of the payments made by the Dominion for or on account of the present of twelve dollars per head stipulated by the treaty to be paid to each man, woman and child of the bands of Indians represented at the treaty and claimed under the first item of Schedule "A" in the said statement of claim, the sum of five dollars per head.

"2. This court doth further order and adjudge that the action of the Dominion with respect to all classes of claims in the schedules of the said statement of claim, other than those in respect of which the Dominion has hereinbefore been adjudged to be entitled to recover, be dismissed, without prejudice, however,

[Page 5]

to the right of the Dominion to claim against Ontario by way of set-off to the counterclaim of Ontario the expenditures made for the surveys of reserves for farming lands and the other reserves for the Indians agreed for under the treaty, as part of the expense properly incurred by the Dominion in the administration of the disputed territory pursuant to the conventional boundary agreement between the Dominion and Ontario, of the 26th day of June, 1874.

"3. This court doth further order and adjudge that it be referred to the registrar of this court to inquire into and take an account of all sums expended by the Dominion in respect of the several classes of expenditure as to which the Dominion has hereinbefore been adjudged to be entitled to recover and report thereon to this court.

"4. This court doth further order and adjudge that it be referred to the registrar of this court to inquire into and take an account of all revenues collected by the Dominion under the said conventional boundary agreement, and also of all disbursements and expenditures duly made in the administration by the Dominion of the territory falling to be administered by the Dominion under the said agreement, and report thereon to this court.

"5. And this court doth reserve further directions until after the said registrar shall have made his report.

"6. This court doth make no order with respect to the question of costs in this action.

"(Sgd.) L. A. Audette, Registrar."

The province appealed to the Supreme Court of Canada from both judgments and the Dominion cross-appealed for the amounts disallowed.

[Page 6]

Sir AEmilius Irving K.C., G. F. Shepley K.C., C. H. Ritchie K.C. and H. S. White, appeared for the appellant, the Province of Ontario.

E. L. Newcombe K.C., Deputy Minister of Justice, and W. D. Hogg K.C., appeared for the Dominion of Canada, respondent.

Ritchie K.C. opens for the appellant and deals first with the history of the proceedings in the Exchequer Court and with the general features of the Indian treaty. He then proceeds to argue that there was no liability on the part of the province to indemnify the Dominion Government for the financial burdens imposed by carrying out the treaty and goes on: The paramount object of the Dominion Government in entering into that treaty was not to extinguish the Indian title in favour of Ontario, but to enable the Dominion Government to carry out certain obligations into which it had theretofore entered. Under the "British North America Act" to the Dominion was assigned the obligation to maintain peace, order and good government throughout Canada. In addition to that, the care of the Indians and all responsibility in connection with the Indians was assigned to them; so that there were two obligations thrust upon them, the principal one being the maintenance of peace, order and good government throughout Canada. In 1870 the rebellion occurred and it was necessary to construct a route over which the troops might pass and they were most anxious to complete what was then known and is now known as the "Dawson Route." The rebellion cost Canada a very large amount of money to quell, and in 1872 and 1873, spreading over these

[Page 7]

years from the time of the Riel Rebellion, there was a sense of uneasiness among all the Indians; they were disaffected more or less and there was also present to the Dominion Government the fear of another uprising among the Indians and they were, therefore, most anxious to do everything possible in order to effectually extinguish any ill-feeling that might exist on the part of these Indians.

Idington J.—Is there anywhere in the legislation affecting that point or anything in the practice that has prevailed upon it, to shew that the Dominion would have a claim over against any particular province that derived some direct benefit from its steps, whatever they were?

Mr. Ritchie: Nothing whatever, my lord. The liability was cast upon the Dominion and it is a national question. It was cast upon the Dominion, as the Dominion, representing all the provinces. It was something that the Dominion and the Dominion alone was liable for. If they had not made this treaty and another rebellion had occurred, an uprising of these same Indians, it would have cost, no doubt, ten times the amount of money that they are paying under this treaty to have quelled that rebellion and restored peace and order and that obligation rested on the Dominion under the express provisions of the "British North America Act." So that it was not Ontario they were looking after; it was not the extinguishment of the Indian title so that Ontario might get a benefit; but they had the particular paramount object to which I have referred, as also other objects of a Dominion character, a national character, which they were obliged to carry out and in order to carry these out it was necessary for them to secure

[Page 8]

a passage through the territory occupied by these Indians, and to see that people passing over this line were not molested; it was also necessary for them to endeavour, as far as possible to obtain the good will of the chiefs of these tribes so as to get them to undertake thab they would do all in their power to preserve peace and good will and to prevent subjects of Her Majesty crossing this territory, from being molested. That is shewn by the treaty itself. When you look at the last clause of the treaty, see what it is that they get from the Indians. The undertaking they get from the Indians is an undertaking that enures to the benefit of the Dominion and the Dominion alone. All the obligations undertaken by these Indians were obligations which it was necessary that the Dominion, in the national interests, should secure. After pointing out the presents they were giving, what they were to do in the way of maintenance of schools and so on, they take from the Indians the covenants which are the consideration for what they are giving. "And the undersigned chiefs on their own behalf and on behalf of all other Indians inhabiting the tracts within ceded, do hereby solemnly promise and engage to strictly observe this treaty, and also to conduct and behave themselves as good and loyal subjects of Her Majesty the Queen. They promise and engage that they will in all respects obey and abide by the law; that they will maintain peace and good order between each other and also between themselves and other tribes of Indians, and between themselves and others of Her Majesty's subjects, whether Indians or whites, now inhabiting or hereafter to inhabit any part of the said ceded tract, and that they will not molest the person or property of any inhabitant of such ceded tract, or the property of Her Majesty the Queen, or interfere

[Page 9]

with or trouble any person passing or travel ling through the said tract or any part thereof, and that they will aid and assist the officers of Her Majesty in bringing to justice and punishment, any Indians offending against the stipulations of this treaty, or infringing the laws in force in the country so ceded." These are the covenants and promises of the Indians.

Davies J.—Are these considerations any different from the considerations which enter into the negotiation of all Indian treaties?

Mr. Ritchie: I am not able to say how that is. Probably similar stipulations have been put in other treaties. All I am emphasizing is that these are stipulations which enure to the benefit of the Dominion, to whom was assigned the obligation of maintaining peace, order and good government. Then, as I pointed out to your lordships, if a rebellion had broken out the cost of quelling that would rest upon the Dominion and be paid out of the Dominion Exchequer and no portion could be charged up against any of the provinces.

Then, after referring to the conventional boundary agreement and the surrender by the Hudson Bay Co. of their interest in these lands counsel proceeds as follows on the question of the obligation of the Dominion to build the Canadian Pacific Railway.

There is an Imperial order in council of 16th May, 1871, that after the 20th of July, 1871, British Columbia shall become part of the Dominion.

Clause 11 of that Imperial order in council is that the government of the Dominion undertake to secure the commencement simultaneously within two years of the date of the Union, the construction of

[Page 10]

a railway from the Pacific to the Rocky Mountains and from the east to the Rocky Mountains, and to complete that within ten years. The documents put in here shew that that is one of the objects they had in view. The documents shew, by the reports of those who were through there that the whole of this territory was not as valuable as 100 acres on the Red River.

Then there is a report of those who were negotiating, and at that time your lordships will bear in mind that they were negotiating for a right of way simply, and the report is that they can acquire the whole title of the Indians, giving them reserves anywhere, the whole title just as easily as they can get the right of way. In other words, they could get the whole title just as easily as they could get the easement. Now, there is a letter from the Lieutenant-Governor to the Dominion of the 7th April, 1871. He says, "practically you may count on having to deal with 1,000 savages in any treaty you make for a right of passage. Mr. Pither seems to think they would give up their rights to the whole country for much the same price they would ask for the right of way. If so, it would be useless to confine the purchase to a mere easement, though, after all, with the exception of the strip on Rainy River, they have no land worth owning." Up to that time they were negotiating for the passage of a right of way for an easement and they were negotiating for that easement in fulfilment of the obligations they had incurred in connection with this surrender and in connection with their obligations with British Columbia. Now then, what I say is that these are the reasons which operated upon the mind of the Dominion in endeavouring to negotiate

[Page 11]

the treaty at that time. Ontario, who owned the land, was not anxious to negotiate at that time. They had no idea of extinguishing the Indian title. They might not have done it for many years afterwards. They might have effected the surrender or extinguishment of that title on very much more advantageous terms than those obtained by the Dominion, and what right, I ask, has the Dominion to come in and simply say because for objects of their own in order to enable them to fulfil obligations they have entered into apart altogether from Ontario: We will negotiate this treaty on our own terms; true, we know you have claimed the land, but we will ignore that fact and we will go on and acquire that title, and if we find afterwards we get nothing by it we will turn around and ask you to bear the burden simply because you get the benefit of the extinguishment of the title?

Duff J.—Would Ontario have had power without the concurrence of the Dominion to make any arrangement to extinguish the title?

Mr. Ritchie: Perhaps not unless they could get it under the Proclamation of 1763, which did allow them to make arrangements with any one representing the government. Of course Ontario would represent one branch of the government and under that proclamation probably any arrangement entered into between Ontario and the Indians would be valid and binding as an extinguishment of the Indian title, unless it was contended that inasmuch as the "British North America Act" assigned to the Dominion the exclusive right to deal with Indian affairs, that that to some extent overrode the terms of the proclamation and would require Ontario to obtain the assent of the Dominion to any agreement that might be entered into.

[Page 12]

However that may be, I suppose there is no doubt that we could not go in there and deal with the Indians apart from getting an extinguishment of their title in any shape or form. In connection with that, as to settlement and opening up of the land, it was just as much in the interest of the Dominion, I submit, to have that opened up as Ontario. At all events to a very great extent, because when opened up for settlement, settlers were coming in from time to time and the revenues of the Dominion would be increased; the customs and excise duties would be increased. There was an interest that the Dominion might very reasonably be supposed to have in view, because the greater the settlement the greater the amount of revenue they are likely to obtain.

Now let us consider the question on the admitted facts that the Dominion knew of the claim of Ontario to these lands; then without asking the assent of Ontario, having no mandate from Ontario and knowing, as I say, that Ontario was claiming the land as its own, the Dominion goes on and makes a treaty with the Indians, it being clear that there were many natives that would induce them to make this treaty, peculiar to the Dominion itself, and it turns out afterwards that the title they sought to acquire and which they thought might be a valid title, availed them nothing; can they turn around as a matter of law or equity and say to Ontario—who claimed these lands, who did not authorize the Dominion in any way to negotiate in respect of this territory—and say, because you have received some benefit you must assume the whole burden?

In other words, simply because two people are claiming to own a particular piece of property, why

[Page 13]

should one arrogate to himself the right to say, I know you are claiming, but I don't think your claim is good, I will ignore you and I will make a bargain off my own bat, so to speak, I will make my own bargain, I won't consult you, I will pay whatever I please and if it turns out that I get nothing by that bargain then I saddle you with the burden I have created. I submit that to permit any doctrine of that kind to get abroad would be subversive of all the interests in connection with property. If a bargain is made under these circumstances, surely the man makes the bargain at his own peril; knowing that another person is claiming to own this particular property, he enters into some contract and under that he benefits this particular individual who owns the property; I submit there is no principal of law or equity upon which he is entitled to recover. On that point take the case, for instance, of co-tenants, tenants in common of property, where one co-tenant goes on and makes improvements on the property owned by both, which necessarily benefits the other. It has been held by the Court of Appeal in England, that if he does that without the assent of the other he cannot claim any contribution, although the other undoubtedly receiver a benefit. That I submit is a stronger case than the present one.

The most recent case I have been able to find is directly in point and I will just read the head note. The principle is laid down in this way: "There is no principle of law which requires a person to contribute to an outlay merely because he has derived a material benefit from it." That is a decision of the House of Lords; I shall not take up your lordships' time in reading the case, but the cases are all collected there. That is Ruabon Steamship Co. v. London Assurance

[Page 14]

Co.[3]. That is the statement of law laid down by the Lord Chancellor. That was a case where, during a voyage covered by a policy of marine insurance, the vessel was injured and put in dry dock; the loss had to fall upon the underwriters alone and could not be apportioned between them and the owners.

The learned counsel then analyzes at some length the judgment of the Exchequer Court, which is the subject of the appeal.

Shepley K.C. follows for the appellant; My lords, there are two or three observations which have fallen from the Bench during the argument of my learned friend as to which before dealing at all with the principal questions involved in the appeal, I desire to say a word or two. Perhaps the most important subject is that suggested by his lordship, Mr. Justice Duff, which, if I appreciate the point, was this: Assuming that the Indian right in these lands was a burden on the interests of the province within the meaning of the "British North America Act," and assuming further, that there was residing in some sovereign power, say the Imperial or Dominion, the right to deal with that interest, is there not implied a corresponding obligation on the part of Ontario to indemnify that sovereign power in whatever shape that Indian interest may be transmitted? Have I appreciated what your lordship said?

Duff J.—May I carry it a little further, to indicate the idea in my mind at the time? Whether Ontario came under the implied obligation to assume the burden of extinguishing the title, whenever the Dominion

[Page 15]

in the exercise of its powers should think it desirable to extinguish it.

Mr. Shepley: That is putting the question in another form.

Idington J.—The way it struck my mind at the time was the possibly analogous case of a person who, having a trust to discharge and incurring some expense incidentally to the discharge of that trust, has to be indemnified.

Mr. Shepley: Out of the trust estate.

Idington J.—That is the point. Where is the trust estate here?

Mr. Shepley: That is one of the answers I was going to attempt to make. But it seems to me there are two or three considerations that ought to be dwelt on briefly in this aspect of the case. In the first place the Crown—whether the Crown represented by the sovereign at home or the Crown represented by the Dominion—the Crown by the very terms of the "British North America Act," vested all the rights that the Crown had in these lands in Ontario. And as a Crown claim no such claim as this can possibly be maintained. It must be maintained, if at all, because the interest of the Indians, subject to which Ontario took the lands, has been transmuted in the claim to the Dominion and is recognizable as the interest of Ontario because it represents some form of the Indian interest. The first answer to that seems to me that by the decision of the Privy Council in the St. Catharines Milling Case[4] there never was any transmutation or transfer of that interest to the Crown or anybody else. There was the bare extinguishment of it and nothing more. Perhaps your lordships will let me dwell a

[Page 16]

little upon a passage in the judgment in the Privy Council at the top of page 60. Lord Watson said: "By the treaty of 1873 the Indian inhabitants ceded and released the territory in dispute, in order that it might be opened up for settlement, immigration and such other purpose as to Her Majesty might seem fit, to the Government of the Dominion of Canada,' for the Queen and her successors for ever. 'It was argued that a cession in these terms was in effect a conveyance to the Dominion Government of the whole rights of the Indians, with consent of the Crown." What is that but a statement that the argument was that the Indian right had been transmuted into something else in the hands of the Crown? "That is not the natural import of the language of the treaty, which purports to be from beginning to end a transaction between the Indians and the Crown; and the surrender is in substance made to the Crown. Even if its language had been more favourable to the argument of the Dominion upon this point, it is abundantly clear that the Commissioners who represented Her Majesty, whilst they had full authority to accept a surrender to the Crown, had neither authority nor power to take away from Ontario the interest which had been assigned to that province by the Imperial statute of 1867." It occurred to us that that afforded a complete answer to your lordship's question; that it was not possible in the negotiation of this treaty for the Crown to set up anything arising out of these negotiations, or out of this treaty, by way of claim against the Province of Ontario. Then there is another consideration which I think your lordships have not clearly appreciated. It seems to us that the Dominion had put it out of its power to raise any such question as this by an issue

[Page 17]

which has been made and which is upon this record. In presenting the documents, my learned friend Mr. Hogg put in an agreement between the two Governments made on the 16th of April, 1894. It recites the treaty and it recites that by the treaty certain reserves were to be selected and laid aside for the benefit of the Indians; the Indians were, amongst other things, to have the right to pursue their avocations of hunting and fishing throughout the tract surrendered, subject to such regulation as might be made by the Government and saving such tracts as might be taken up for settlement and so on. Then it recites that the two boundaries of Ontario have since been ascertained and declared to include part of the territory surrendered by the treaty and other territory north of the height of land with respect to which the Indians are understood to make a claim as being occupants thereof according to their mode of occupying and as not having yet surrendered their claim thereto or their interest therein. "And whereas before the true boundaries had been declared as aforesaid, the Government of Canada had selected and set aside certain reserves for the Indians in intended pursuance of the said treaty and the said Government of Ontario was no party to the selection and has not yet concurred therein." Then it is stated that it is deemed desirable for the two Governments to come to a friendly understanding and it is therefore agreed between the two Governments as follows, "with respect to the tracts to be from time to time taken up for settlement, mining, lumbering or other purposes, and to the regulations required in that behalf, as in the said treaty mentioned, it is hereby conceded and declared that, as the Crown lands in the surrendered

[Page 18]

tract have been decided to belong to the Province of Ontario or to Her Majesty in right of the said province, the rights of hunting and fishing by the Indians

throughout the tract surrendered, not including the reserves to be made thereunder, do not continue with reference to any tracts which have been made, or from time to time may be required or taken up for settlement, mining, lumbering or other purposes by the Government of Ontario or persons duly authorized by the said Government of Ontario; and that the concurrence of the Province of Ontario is required in the selection of the said reserves." There is a declaration that in order to effectively deal with the question of reserves and therefore to effectively deal with any interest Ontario has in these lands or had in these lands, the consent of Ontario was necessary. That brings me to the second answer to your lordship's question, and that is, it is perhaps for this purpose necessary to admit—perhaps not at all undesirable to admit—that the Dominion had the sole treaty making power, that that power did not reside with Ontario; but inasmuch as the making of such a treaty involved the dealing with the property of Ontario, the consent and concurrence of Ontario would be necessary in the making of any such treaty.

The learned counsel then deals with the questions of the conventional boundary, the surrender of Rupert's Land by the Hudson Bay Co. and the acquirement of the whole territory instead of enough only for the right of way of the Canadian Pacific Railway because the land was of so little value. He then criticizes the judgment of the Exchequer Court reading from pages 482-5 of the report in 10 Ex. C.R. and proceeds.

[Page 19]

Here your lordships are called upon to administer the lex loci, because it is a contract with regard to lands in the Province of Ontario, and it is a law of Ontario that the Court of Exchequer and your lordships must administer in disposing of these questions. Then after referring to the statutes which the Dominion and the Province of Ontario passed and which enabled this controversy to be brought into the Court of Exchequer, his lordship says: "I agree with Mr. Shepley that the mere fact that there is a controversy does not give the court authority to decide against the province simply because it should think that as a matter of good conscience and honourable dealing the province, having derived the benefit from the treaty, should relieve the Dominion from a proportionate part of the burden arising therefrom; that it is not simply a question of what the court might think to be fair in the premises without regard to the principles of law applicable to the case."

So his lordship disclaimed any intention or right to adjudicate upon the grounds of conscience merely.

"At the same time," he said, "as Mr. Newcombe pointed out the question arises between governments, each of which within its own sphere exercises the authority of one and the same Crown. For that reason one cannot expect the analogies of the law as applied between subject and subject to be perfect or in every way adequate to the just determination of the case." I do not know just what his lordship means by that, but I think it answers itself in the subsequent part of the case because he comes to the conclusion that for the purposes of this controversy the Dominion and the province are upon the same footing as two subjects. Then after that he deals with the question of what was

[Page 20]

the result of the treaty. At pages 489-90 he says: "There is no question as to its validity. In the St. Catharines Milling and Lumber Company v. The Queen[5], Lord Watson stated that they had full authority to accept a surrender to the Crown; but that they had no authority or power to take away from Ontario the interest which had been assigned to that province by the Imperial Statute of 1867. There can, I think, be no doubt of that authority to bind the Crown to make the payments stipulated for in the treaty. The case cited shews that the lands thereby surrendered were, or might fall, within the true construction of the words of section 91 (24) of the Act of 1867, 'lands reserved for the Indians,' p. 59." With that I venture respectfully to find fault. I think the whole course of that decision is absolutely contrary to any such idea as that. With the exception of the strong dissenting judgment of Mr. Justice Strong, in this court, I think every court that pronounced upon it declared that these lands were not, in any sense, lands reserved for Indians, in any sense in which those words were used in the statute. And I think the Privy Council agreed with that.

"The difficulty is that in one aspect of the matter they were, although it was not known at the time, dealing with the public lands belonging to the Province of Ontario, and removing a burden therefrom. It is argued for the Dominion that Ontario must be taken to have acquiesced in what the Dominion authorities did in negotiating this treaty, and that the province is bound by such acquiescence. I am not able to accede to that contention or to rest my judgment on that ground." So that that is excluded. He says:

[Page 21]

"The most that can be said on that branch of the case is, it seems to me, that while on the one hand the Government of Canada holding, in good faith, but erroneously as it turned out, the view that all the lands to be surrendered belonged to the Dominion, did not consult the Government of Ontario in respect of the negotiations with the Indians for the surrender of their title in such lands; on the other hand the Government of the province did not raise any objection to the matter so proceeding and did not prefer any request to be represented in the negotiation of the treaty."

I do not think it was shewn—I speak subject to correction, because there is a great deal of correspondence here—but I do not think it can be suggested on this correspondence that Ontario was made aware that negotiations were going on. I daresay individuals, perhaps those concerned in advising the Lieutenant-Governor, read in the press from time to time things that were going on, but that there was any official communication of any kind between the two Governments does not, I venture to think, appear anywhere.

Then comes the question which really lies at the root of this controversy. "Now, with regard to the contention that inasmuch as a part of the benefit arising from the surrender of the lands mentioned in the treaty accrues to Ontario that province should relieve the Dominion from a proportionate part of the obligations thereby created, it appears to me that that consideration is not, of itself, sufficient to make the province liable." He accedes to the argument of Ontario on that point, that you cannot create a liability merely because a burden has been removed or a benefit conferred. He says: "If the province had had any option in the matter, if it had been open to it to accept or decline

[Page 22]

such benefit, and it had accepted it, then the province would have been liable for its bare proportion. But that is not the case. The burden of the Indian title was removed from these lands before it was determined whether any part of them was within the province or not. When it was decided that a large proportion of such lands was within the Province of Ontario, there was nothing the province could do but accept the lands and administer them free from such burden."

Then he refers to the Ruabon Case[6] and he says the principle which that case lays down, "is, I think, as clearly applicable to the transaction of the Dominion and Provincial Governments as it is to those which occur between individuals."

So far your lordships will see that everything he has said is in favour of the contentions which we are making. Then he says: "If the Parliament of Canada should appropriate and the Government of Canada should extend public moneys of the Dominion for Dominion purposes, with the result that a province was benefited, and there was no agreement with the province or request from it, then it would be clear that the province was under no obligation to contribute to such expenditure or to indemnify the Dominion against any part thereof." That is at page 491. That is as strong a statement as anything that can possibly fall from us in the course of this argument. "Equally it seems clear that if the Parliament of Canada should appropriate and the Government of Canada should expend the public moneys of the Dominion for a provincial purpose for the benefit of a province, there being no agreement with the province or

[Page 23]

request from it, no obligation would arise on the part of the province to contribute towards such expenditure or to reimburse the Dominion for any part thereof."

He carries it a step farther. He is assuming here that the Dominion had, with the intention of benefiting the province and, therefore, of carrying out some provincial purpose or some provincial object, expended moneys, there would be no right to contribution or indemnity against the province without the previous acquiescence of the province. "The principle would apply as well to expenditures made by a province, with the result that the Dominion as a whole was benefited. In all such cases the appropriation and expenditure would be voluntary and no obligation to contribute would arise."

Then comes the principle upon which he has decided this case and that I venture to criticize, respectfully but strongly. He says: "The present case appears to me to differ from those stated in some material respects. At the time when the treaty was negotiated the boundaries of the province were unsettled and uncertain." That is common ground, of course. "The lands described in the treaty formed part of the territory that the Hudson's Bay Company had claimed and had surrendered to the Crown. The surrender embraced all lands belonging to the company or claimed by it. That, of course, did not affect Ontario's title to such part of the lands claimed by the company as were actually within the province. But on the admission of Rupert's Land and the North-Western Territory into the Union, the Government of Canada acquired the right to administer all. the lands that the company had the right to administer. And with respect

[Page 24]

to that portion of the territory which the company had claimed, but which was in fact within the Province of Ontario, the Dominion Government occupied a position analogous to that of a bonà fide possessor or purchaser of lands of which the actual title was in another person."

I have always been unable to understand why the Hudson's Bay surrender was adopted as the basis of this judgment. Every word that is said with regard to the Hudson Bay surrender is equally applicable to the Indian surrender. The Dominion did not acquire any title by either, but by either or both it thought that it got some title. I do not know why the Hudson's Bay Company surrender was the one picked out rather than the Indian surrender. Either would have answered the purpose which the Hudson's Bay Company surrender is made to do in this judgment. What he says is, it is true the Hudson's Bay could not give you any title, it is true you did not get any title but you got into the position of a bonà fide possessor or purchaser of Ontario lands. By virtue of what? The transfer or the surrender of those lands by the Hudson's Bay Company to you. Then what follows? "The question of the extinguishment of the Indian title in these lands could not, with prudence, be deferred until such boundaries were determined." It could not, of course, having regard to the national objects to be served by the treaty. It could with reference to the provincial objects. As Mr. Justice Burbidge himself has said, the lands were not then wanted for settlement or any other purpose and the surrender was not obtained because of that; the surrender was obtained because it served the national purposes to which reference has been made.” It was necessary to the peace,

[Page 25]

order and good government of the country that the question should be settled at the earliest possible time. The Dominion authorities held the view that the lands belonged to the Dominion, and that they had a right to administer the same. In this they were in a large measure mistaken, but no doubt the view was held in good faith. They proceeded with the negotiations for the treaty without consulting the province. The latter, although it claimed the lands to be surrendered, or the greater part thereof, raised no objection, and did not ask to be represented in such negotiations. The case bears some analogy to one in which a person, in consequence of unskilful survey, or in the belief that the land is his own, makes improvements on lands that are not his own. In such a case the statutes of the old Province of Canada made, and those of the Province of Ontario make, provision to protect him from loss in respect of such improvements or to give him a lien therefor."

Idington J.—If it existed in law already, why was there a necessity for this statute?

Mr. Shepley: That seems to me an entirely pertinent question. If there ever could have been a right at law, if there ever was, why were these statutes passed? The creation of any lien or right of that kind required a statute, but you cannot find in our law, in the law of Ontario or the law of England any such right apart from the statute.

Then, my lords, how does Mr. Justice Burbidge conclude? At page 495 after referring to what is laid down in Beaty v. Shaw[7], he says: "It appears, therefore, that if the question in issue were to be determined by analogy to the law of Ontario applicable to

[Page 26]

individuals, the province could not maintain its counterclaim for the moneys which the Dominion collected as revenue from the disputed territory, without submitting to the enforcement of the equity existing in favour of the Dominion in respect of the charges incurred in extinguishing the burden of the Indian title; but that it is, to say the least, extremely doubtful if this equity could be enforced in an action by the Dominion against the province."

Let me pause there for a moment. My learned friend has already pointed out to your lordships how utterly foreign to this controversy is the question arising on the counterclaim. By the conventional boundary agreement the Dominion and the province mutually undertook with each other in the event of the boundary award determining or the boundary dispute resulting in shewing that the territory which had been administered did not belong to the person administering, to account for all the revenues they had derived from the territory during the course of that administration. It was just as simple as that, and our counterclaim says to the Dominion, in the course of our administration under the conventional boundary agreement, of the territory which that agreement assigned to your administration and management, you derived certain revenue and you undertook under that agreement to account, that is, if we turned out to be the owners of the land and entitled to those revenues, to account to us accordingly. That is our counterclaim. What has that to do with the Indian title or any question resting upon contract? If we brought an action against the Dominion upon a promissory note, could the Dominion say, your coming into court against us on that promissory note gives us an opportunity

[Page 27]

of setting up every equitable claim and having you refused relief unless you agree to it? Now that is what this case has been decided upon. That is the point which has been taken by Mr. Justice Burbidge and upon which the case has been decided.

Then, my lords, he goes on to deal with what is no doubt at the bottom of all this litigation. In the course of the delivering of the judgment in the St. Catharines Milling Case[8], Lord Watson used this language, and I will read the whole of two sentences here rather than confine myself to the one which is the foundation of this claim. "Seeing that the benefit of the surrender accrues to her, Ontario must, of course, relieve the Crown, and the Dominion, of all obligations involving the payment of money which were undertaken by Her Majesty, and which are said to have been in part fulfilled by the Dominion. There may be other questions behind, with respect to the right to determine to what extent, and at what periods, the disputed territory, over which the Indians still exercised their avocations of hunting and fishing, is to be taken up for settlement or other purposes, but none of these questions are raised for decision in the present suit."

Idington J.—Is there any track of that having been argued?

Mr. Shepley: I will tell your lordships how that is. I was reading from page 60 of the report. In order to determine the weight to be given to that, let us see what the St. Catharines litigation was about, what the issues in it were, and what place in the adjudication of those issues this obligation had. As I told your lordships, the Dominion, notwithstanding the adverse

[Page 28]

result of the boundary dispute, claiming to have acquired the paramount title to that of Ontario by virtue of the alleged transfer of the Indian title under this treaty, issued a license to cut timber to the St. Catharines Milling Company in territory which was within that in question. The Attorney-General of Ontario brought an action in the courts of Ontario against the licensee, alleging that the licensee was trespassing upon Crown lands belonging to Ontario and obtained an injunction restraining that trespass. The Dominion was no party to that at all and the sole question for adjudication there was whether or not the St. Catharines Milling Company, the licensees, setting up as it did the license of the Dominion, justified the acts of trespass. That is, in other words, whether the licensee had acquired a right to cut that timber as against the rights that Ontario had by virtue of the license issued by the Dominion. That was the sole question. I will give your lordships a reference to the case in its various stages. Your lordships will find it first in 10 Ontario, at page 196. That is the decision of the Chancellor, a very lengthy decision and your lordships are very familiar with it no doubt. I only refer to it because I want to shew just what the Chancellor had in his mind with regard to the very question which Lord Watson afterwards expressed himself upon. At page 235 of the report he says: "In the present case, my judgment is, that the extinction of title procured by and for the Dominion enures to the benefit of the province as constitutional proprietor by title paramount, and that it is not possible to preserve that title or transfer it in such wise as to oust the vested right of the province to this as part of the public domain of Ontario.

[Page 29]

"Whatever equities—I use this word for want of a more suitable one—may exist between the two governments in regard to the consideration given and to be given to the tribes, that is a matter not agitated on this record."

That case went to the Court of Appeal and came to this court and then to the Privy Council and up to that time the Dominion had not been a party to the controversy at all. Of course it goes without saying that none of the evidence which is on the present record before your lordships was before either the Chancellor or either of the appellate courts. There was not a word of the evidence which Mr. Justice Burbidge heard or which is before your lordships to-day with regard to the circumstances under which the treaty was negotiated. The whole question was: Did the treaty confer upon the Dominion such a title as was paramount to that of Ontario, and by reason of that paramount title was the license of the alleged trespasser a license which authorized him to do what he did and which effectively answered the claim of the Province of Ontario for an injunction?

Then what happened in the Privy Council is this and it is stated in the judgment. I will take the statement from the judgment. At pages 52 and 53 Lord Watson says: "Although the present case relates exclusively to the right of the Government of Canada to dispose of the timber in question to the appellant company, yet its decision necessarily involves the determination of the larger question between that government and the Province of Ontario with respect to the legal consequences of the treaty of 1873. In these circumstances, Her Majesty, by the same order which gave the appellants leave to bring the judgment

[Page 30]

of the court below under the review of this Board, was pleased to direct that the Government of the Dominion of Canada should be at liberty to intervene in this appeal, or to argue the same upon, a special case, raising the legal question in dispute. The Dominion Government elected to take the first of these courses and their lordships have had the advantage of hearing from their counsel an able and exhaustive argument in support of their claim to that part of the ceded territory which lies within the provincial boundaries of Ontario." They appeared upon that intervention; they intervened in the St. Catharines Milling Company Case[9] on that appeal and they argued that the St. Catharines Milling Company ought to succeed in that appeal; that is, that the St. Catharines Milling Company's license gave a valid right to cut the timber as against any right on the part of Ontario. The whole question was argued there and that is the whole question raised upon that record, and in the result the order that was made simply dismissed the licensees' appeal and no more. It made no declaration between the Dominion and the province. Your lordships have upon this record the formal judgment before you. All that the formal order of the Privy Council did was to dismiss the licenseholder's appeal. The whole thing done was to dismiss the appeal.

Duff J.-—Is there anything to shew, Mr. Shepley, that this statement of Lord Watson's was the result of any concession or confession made on behalf of the province?

Mr. Shepley: We thought we had here a copy of the shorthand notes of the argument; unfortunately we have not, but it can be found and given to your lordships,

[Page 31]

or a reference to the sessional papers in which it will be found. I can tell your lordships from recollection—because of course we studied that matter very carefully—from time to time spasmodic attempts during the argument were made to introduce that discussion and, in the St. Catharines Milling Co. Case[10], invariably the court said, "We have nothing to do with that, that does not arise in this appeal; it has not to do with any question as to whether or not Ontario ought to bear any portion of the burden." That was during the argument. Then to say, my lords, in these circumstances, that the Privy Council has gone out of its way, without any evidence before it whatever and in a case where the question was not raised, to determine our rights, rights between the Dominion and the province, was going much farther than it was possible to go. No doubt that dictum is the foundation of this litigation and your lordships will find, I think, that the right of the Dominion in this statement of claim is in the words of the dictum. We say it cannot be binding between the parties in this controversy; that was not a controversy between the Dominion and the province and there was no estoppel.

Davies J.—What was the controversy? There must have been some or they would not have been allowed to intervene.

Mr. Shepley: Whether or not the right of Ontario against the licenseholder should be sustained. There was nothing before the Privy Council to indicate the circumstances under which the Dominion Government had extinguished the title, whether it had done that for the benefit of Ontario or for reasons such as are shewn to your lordships to-day. They could not have

[Page 32]

known whether Ontario acquiesced or was consulted or not.

My learned friends have found a good deal of comfort in the civil law, the law of negotiorum gestor, but that is not our law. Apart from that, there was no mandate, no commission from Ontario to the Dominion to go and extinguish this title on behalf of Ontario and no ratification.

Duff J.—Except such mandate as the "British North America Act" would give the Dominion. Though that is going back to the same thing. Mr. Shepley: Yes, my lord, perhaps that is coming back to the same point again. I have tried to shew how any mandate from the "British North America Act" can only be construed as a mandate to deal with the lands of Ontario with the concurrence of Ontario. You cannot go adversely to Ontario and deal with Ontario's rights. What Mr. Justice Burbidge says with regard to that statement, at page 496, is—and I find it very difficult to understand exactly what he means by it—"So far as the questions in this case relate to the extent to which the province is liable to contribute to the expenses incurred by the Crown in fulfilment of the obligations created by the treaty this case, no doubt, differs materially from the St. Catharines Milling and Lumber Company's Case"[11]. That is what we say. We say the two cases raise entirely different issues. Then he goes on to say:-"But with respect to the principal question at issue, namely, whether the province is liable to contribute anything, this case presents, I think, no new fact or aspect," I confess I am utterly unable to understand that. First he says that to the extent to which the province is

[Page 33]

liable to contribute there is a new case, but with respect to the question of whether it is liable to contribute anything there is no new factor. I should have thought that neither of these issues was before the Privy Council. Then he says: "The province's main defence here is that it was not a party to the treaty." That is not our main defence. Your lordships have heard elaborated, at perhaps too great length, what we think our defences are, but your lordships have not, I am sure, got the idea that our main defence is that we were not a party to the treaty. That is one of our comments upon the situation, of course.

Then he says: "By the order which gave the appellants leave to bring the judgment of that court under review, Her Majesty was pleased to direct that the Government of the Dominion should be at liberty to intervene in the appeal or to argue the same upon a special case, raising the legal question in dispute. The Dominion Government elected to take the first of these courses, with the result that between the Dominion and the province there was no formal judgment on the questions at issue between them." Well, the question at issue between them was the question at issue between the province and the license-holder. There was no other question. You could not extend the record by mere intervention on the license-holder's appeal. The record could not be expanded by the intervention of the Dominion. Then he says further: "In the St. Catharines Milling and Lumber Company's Case[12] the Province of Ontario stood in the position of a plaintiff; and as between the province and the Dominion the views of their lordships as to the province's liability to indemnify the Dominion

[Page 34]

may, I think, with fairness, be taken as a part or condition of the judgment of the province, although such views found no place in the formal judgment pronounced." That again I am unable to understand. The judgment was a judgment dismissing the license-holder's appeal. I do not know whether Mr. Justice Burbidge means that they would have allowed the appeal if they had not imposed this condition upon Ontario. There is no indication of any such view in anything that I have been able to find in the record.

One other question I propose to trouble your lordships with and that is the question which has already been quite fully covered, perhaps, by my learned friend Mr. Ritchie, namely, whether or not upon the hypothesis of this judgment it was essential that the relative part played by the various considerations moving the Dominion to this treaty should have been played. In other words, in 1873, that all the elements entering into the negotiation of the treaty, which Mr. Justice Burbidge speaks of, the obligation imposed by the "British North America Act," the obligation imposed by the Hudson Bay Company's surrender, the obligation imposed by the terms made with British Columbia when British Columbia came into the Union and the surrender of the title to this barren piece of territory as it was supposed to be., that these considerations upon the theory of this judgment entered into the treaty. Then why is the Dominion to recover against Ontario any more than a measured proportion having regard to the respective values of these different considerations? Mr. Justice Burbidge acceded to that in the principal judgment; he said it was difficult of ascertainment, but further evidence might be given. Further evidence was given, but not upon that

[Page 35]

point. The thing is incapable of measurement, that is why. The Dominion made no attempt to produce any evidence upon that subject. We venture to think that it is inherently incapable of measurement; that you cannot say at this time—that indeed at any time you could not have said—this great project the trans-continental road, the Canadian Pacific Railway Company, this great territory, Rupert's Land, that we want to open up and want a road to, the pacification of the Indians, the acquisition of the title to the few barren rocks that they have got here, you cannot put those together, you never could have put them together and said, so much for this and so much for that and so much for the other. The thing is unthinkable, that you can sit down and make a sum in arithmetic of propositions such as these. If that is so, how can the Dominion hope to recover anything here?

Davies J.—Does the extinguishment of the Indian title depend at all upon the value of the land? I suppose there would be some evidence of general dealing.

Mr. Shepley: That is a point that I had almost overlooked. It is said by Mr. Justice Burbidge that we know pretty generally what other treaties have cost; but we do not know what was the value of the lands those treaties covered, nor do we know the value of the lands covered by this treaty. You cannot compare the price paid for a farm in a county away north with the value of a farm situated along the River St. Lawr ence. You must have some evidence. Supposing the fact to be—I do not say it is at all, but it is fair to test the question that way—that the whole of the 30,000 square miles of land which Ontario got the Indian title extinguished in, supposing the whole value of that was nothing whatever, that it was all

[Page 36]

rocks like the north shore of Lake Superior without of any valuable mineral, this judgment must have proceeded upon precisely the same principle and Ontario would have had to pay for land which she never would have opened up for settlement; she would have had to pay because the Dominion extinguished this title not for the purpose of getting the land at all, but for the purpose of the construction of these great national works.

Newcombe K.C. opens for the respondent. After referring to the material parts of the treaty and to the conventional boundary agreement the learned counsel combats the argument that the land surrendered was of no value, contending that the grounds on which it was based were not sufficient and then proceeds as follows.

Before going further with the question in difference here, let us consider what was the state of the title at Confederation and what sort of an asset did the Indians have in this territory. That has been pretty clearly defined by the numerous cases which have been before the courts and before the Judicial Committee, I think. The judgment of Chief Justice Strong in the St. Catharines Milling Co. Case[13], which was a dissenting judgment, is nevertheless a very instructive judgment with regard to the nature of the Indian title and it is the judgment, of all the judgments which were pronounced in the St. Catharines Milling Co. Case which came nearest to accord with that of the Judicial Committee. I mean to say, he took the view that the title was in the Dominion but, so far as considerations of Indian title, the quality of the Indian title, the

[Page 37]

nature of the Indian reserves and considerations of that sort are concerned, which are more or less material here, the view of the learned Chief Justice coincided entirely with that later expressed by Lord Watson in appeal.

Now it seems to have been supposed in the Ontario courts that the Indian title was nothing except such as might be recognized as a matter of grace; that they had no legal right; that they might be recognized or not, as the authorities determined. But that is not the case, as shewn by Chief Justice Strong. His judgment is a long one and I do not propose to refer to it at length.

Now, in the judgment in the St. Catharines Milling Co. Case[14], at pages 58 to 60, it is said: "The Crown has all along had a present proprietary estate in the land, upon which the Indian title was a mere burden. The ceded territory was at the time of the Union land vested in the Crown, subject to an interest other than that of the province in the same within the meaning of section 109, and must now belong to Ontario in terms of that clause unless its rights have been taken away by some provision of the Act of 1867 other than those already noticed." That is to say at Confederation this territory, in so far as it ultimately turned out to be within the boundaries of Ontario, was by force of the "Confederation Act" vested in Ontario subject to an interest other than that of Ontario therein. That is the Indian interest. Now that is further explained in Attorney-General of Canada v. Attorney-General of Ontario[15], known as the Robinson Treaties Case, and there Lord Watson said, at pages 210 to 211, that the expression in section

[Page 38]

109, "an interest other than that of the province in the same appeared to their lordships to denote some kind of right or interest in a third party independent of and capable of being vindicated in competition with the beneficial interest of the province." Therefore, previous to this surrender, from the time of Confederation down to the time of the surrender the Indians had an interest in the land other than that of the province and an interest capable of being vindicated in competition with the beneficial interest of the province. So that, my lords, they had a title, as I submit, of occupation and possession; a title which made it legally impossible for the province to administer the lands, to make grants and administer the lands in the way in which they have administered them since the surrender was made.

Your lordships will see, too, by the proclamation of 1763, which is the evidence of the Indian title here, that the Government was prohibited from dealing with these lands, from making grants, or doing anything with them pending the cession of the Indian title. The proclamation declares that "no governor or commander-in-chief of any of the new colonies of Quebec, East Florida or West Florida do presume on any pretence to grant warrants of survey or pass any patents for lands beyond the boundaries of their respective governments, or until our further pleasure is known, upon lands which, not having been ceded or purchased as aforesaid are reserved to the Indians or any of them. It is further declared to be our royal will to reserve under our sovereignty and protection all the lands not included within the limits of our said three governments or within the limits of the lands granted to the Hudson Bay Company." Therefore I

[Page 39]

submit that the Indians had title inconsistent with the right of Ontario to do any of the things with this land which she immediately proceeded to do after this treaty was made.

Counsel then quotes at length from the speech of the Lieutenant-Governor on opening the legislature of Ontario, in January, 1874, in which he speaks of the boundary question and refers to these lands as "the important territory in dispute," and to a report from Mr. Laird to the governor in council dated June 2nd, 1874, quoting from it as follows:

"That as the Indian title of a considerable part of the territory in dispute had not then been extinguished, it was thought desirable to postpone the negotiations for a conventional arrangement, under which the territory might be opened for sale or settlement, until a treaty was concluded with the Indians."

That is very strong evidence, my lords, as to what was taking place. The project was the settlement and administration of this territory. There was the mineral wealth, the timber and the settlers going in and contention and strife to be avoided, and there was the question of the boundary to be settled. Negotiations had been begun and then, according to this report, by mutual consent between Ontario and the Dominion it had been conceded as expedient that those negotiations should be postponed pending the surrender of the Indian title, which, of course, the Dominion undertook to bring about as speedily as possible.

Then he says: "That barrier being now removed, the undersigned has the honour to recommend that as some considerable time must yet elapse before the boundaries of Ontario can be finally adjusted, it is desirable in the meantime to agree upon conventional

[Page 40]

boundaries, otherwise the development of that import- ant portion of Canada lying between Lake Superior and Lake of the Woods will be seriously retarded, as applications to take up lands in that section are being constantly made, and the inability to obtain recognition of claims from either the Government at Ottawa or Toronto is impeding the settlement of the country." Then there is a recommendation of the appointment of Commissioners and this report is communicated to Ontario under order in council printed on the following page and then there is a memorandum of supplementary agreement, the conventional agree- ment, where it is mentioned that Ontario acted on the suggestion of the Privy Council by appointing a Commissioner. They acted on the suggestion set out in this report of Mr. Laird. There is no question by Ontario that that does not represent the state of the facts as they existed.

There can be no doubt, it seems to me, that this project was mainly in aid of the settlement of the country. What sort of a position would it have been in? My learned friend says: "Oh, they wanted to build a railway through there; they wanted to build a railway and they might just as well take a release of the whole thing." Suppose they had stipulated with the Indians, as they might have stipulated with them, to get the surrender of the right of way of the Canadian Pacific Railway and gone through there with that and left the whole thing. How much less, I would like to know, would Ontario have had to pay if she waited and got a surrender from the Indians afterwards, after the settlers began to come in and the railway to go through there?

Then, after referring to a letter from the Under

[Page 41]

Secretary of State to the Lieutenant-Governor of Ontario, dated July 15th, 1874, respecting the selection of Indian reserves under the treaty and asking for a schedule or plan of the mineral lands in the territory surrendered and the reply thereto on July 31st enclosing such plan he proceeds:

Now we pass from that to the statutory agreement, to the Dominion statute of which the agreement is a schedule. The statute I do not think is set out in the case, but the agreement is. The Dominion statute simply contained one section, that it shall be lawful for the Governor in Council, if he shall see fit, to enter into an agreement with the Government of Ontario, according to the schedule to this Act, and such agreement when entered into and every matter and thing therein shall be as binding on the Dominion of Canada as if set forth by statute. The Ontario Act I have not got, but presumably it is to the same affect.

Now this agreement is with respect to what we call the special reserves. Your lordships are aware that under the treaty by the first provision, the first covenant on behalf of the Crown, the Crown was to lay aside reserves for farming lands, due respect being had to lands at present cultivated by the Indians. "Also to lay aside and reserve for the benefit of the said Indians, to be administered and dealt with for them by Her Majesty's Government of the Dominion of Canada, in such a manner as shall seem best, other reserves of land in the said territory hereby ceded, which said reserves shall be selected and set aside where it shall be deemed most convenient and advantageous for each band of Indians." Then the Dominion proceeded to lay aside these reserves. You see the effect of the treaty or surrender as ultimately held by the

[Page 42]

Judicial Committee, was to vest the whole title in Ontario. The Indians did not reserve or except their special reserves; they surrendered their original Indian title, the title which existed under the proclamation; they surrendered the whole thing to the Crown and it enured to the benefit of Ontario. Therefore Ontario held the whole freed from their interests. The Indians reserved nothing, but they took a covenant from the Crown that the Dominion would give them special reserves. The Dominion did so without any special acquiescence by Ontario. I have shewn your lordships that there was some reference to the subject because they did not want to give them the mineral lands, but without Ontario becoming bound the Dominion laid aside these reserves, and then questions arose, Ontario claiming that we had set them aside out of their Crown lands in which the Indians had no interest, we had taken their Crown lands and made reserves of them. They said we had no right to do that. That was ultimately conceded, but the Indians had been put on these reserves and were occupying them in fact, and the situation had been dealt with and it was dealt with by this agreement. Now this agreement recites the treaty. "Whereas by articles of a treaty made on the 3rd of October, 1873, between Her Most Gracious Majesty the Queen, by Her Commissioners, the Honourable Alexander Morris, Lieutenant-Governor of Manitoba and the North-West Territories," and soon, "the Ojibeway Indians, inhabitants of the country within the limits thereinafter defined and described by their chiefs chosen and named as thereinafter mentioned, of the other part, which said treaty is usually known as the North-West Angle Treaty No. 3, the Salteaux tribe of the Ojibeway Indians and all other Indians inhabiting the country therein defined and

[Page 43]

described surrendered to Her Majesty all their rights, titles and privileges whatsoever to the lands therein defined and described on certain terms and considerations therein mentioned.'' Now that was the recital they made of it in 1894, and it is a correct recital. It states the effect of the treaty precisely, in a solemn agreement ratified by the statutes of both Governments; and it says what is apparent on the face of the instrument, that they did surrender these to Her Majesty on certain terms and considerations therein mentioned. That is, they gave up their title to the Crown and the Crown in consideration of that gave them certain covenants, and I am going to refer to that again. One of those covenants is as much a consideration for this transfer as another. There is no method of separating them. Then it goes on with further recitals and the last one is: "Whereas it is deemed desirable for the Dominion of Canada and the Province of Ontario to come to a friendly and just understanding in respect of the said matters, and the Governor-General of Canada in Council and the Lieutenant-Governor of Ontario in Council have given authority for the execution on their behalf respectively, pursuant to the said statutes of an agreement in terms of these presents." It is therefore agreed as follows: "With respect to the tracts to be from time to time taken up for settlement, mining, lumbering, or other purposes, and to the regulations required in that behalf, as in the said treaty mentioned, it is hereby conceded and declared that, as the Crown lands in the surrendered tract have been decided to belong to the Province of Ontario or to Her Majesty in right of the said province, the rights of hunting and fishing by the Indians throughout the tract surrendered, not including

[Page 44]

the reserves to be made thereunder do not continue with reference to any tracts which have been, or from time to time may be required or taken up for settlement, mining, lumbering or other purposes by the Government of Ontario or persons duly authorized by the said Government of Ontario; and that the concurrence of the Province of Ontario is required in the selection of the said reserves."

There Ontario is saying that inasmuch as this treaty has been made, these lands have become provincial Crown lands and the Indian rights have been extinguished.

Now, by lords, there is the other agreement made with regard to these reserves. That is the agreement between Mr. Blake and myself made in London. "Agreement between counsel on behalf of the Dominion and Ontario, intervening parties upon the appeal to the Judicial Committee of the Privy Council in Ontario Mining Co. v. Seybold et al.[16].

"As to all treaty Indian reserves in Ontario (including those in the territory covered by the North-West Angle Treaty) which are or shall be duly established pursuant to the statutory agreement of 1894, and which have been or shall be duly surrendered by the Indians, to sell or lease for their benefit, Ontario agrees to confirm the titles heretofore made by the Dominion and that the Dominion shall have full power and authority to sell or lease and convey title in fee simple or for any less estate.

"The Dominion agrees to hold the proceeds of such lands when or so far as they have been converted into money upon the extinction of the Indian interest

[Page 45]

therein subject to such rights of Ontario thereto as may exist by law.

"As to the reserves in the territory covered by the North-West Angle Treaty which may be duly established as aforesaid, Ontario agrees that the precious metals shall be considered to form part of the reserves, and may be disposed of by the Dominion for the benefit of the Indians to the same extent and subject to the same undertaking as to the proceeds as heretofore agreed with regard to the lands in such reserves.

"The question as to whether other reserves in Ontario include the precious metals to depend upon the instruments and circumstances and law affecting each case respectively.

"Nothing is hereby conceded by either party with regard to the constitutional or legal rights of the Dominion or Ontario, as to the sale or title to Indian reserves or precious metals, or as to any of the contentions submitted by the cases of either Government herein, but it is intended that as a matter of policy and convenience the reserves may be administered as hereinbefore agreed."

This agreement was made and acted upon and it settled the differences existing between Ontario and the Dominion in that case, so that while it was argued by the parties it was not argued by the Dominion.

Duff J.—I see that presents a point that did not occur to me before. You put it, but I did not appreciate it. The making of these reserves under the treaty involved giving the Indians an interest in the land which even after the St. Catharines Milling Co. Case[17] might have been contended at all events to be a

[Page 46]

greater interest than they had before the treaty, than the original interest.

Mr. Newcombe: Yes, my lord.

Duff J.—And that would necessarily involve Ontario?

Mr. Newcombe: Yes. I may be in conflict with some decisions, but not in conflict with any decision of the Judicial Committee—doubtless in conflict with the Chancellor of Ontario, at all events—but I submit that with regard to those special reserves which are set aside for the Indians uniformly upon the surrender of their original title in the large areas over which they claimed it, in those special reserves which are set aside, the Indians acquire a larger interest, a different interest from the interest which can be conveyed by surrender to the Crown for sale.

Duff J.—That is a disputed point.

Mr. Newcombe: I admit it is a disputed point, but the reasons in favour of that proposition appeal very clear to me. What happened in the Seybold Case was this: One of these special reserves, "38B" which had been laid off for the Indians by the Dominion without any reference to Ontario and out of the Ontario Crown lands, was found to contain mineral and it was deemed desirable that it should be sold and converted into money so that the Indians might have greater enjoyment of their property. It was surrendered under the terms of the "Indian Act" to the Dominion and sold to this mining company who thereupon took up the mining, and Ontario made a grant, I think, of the same property. The question arose as to whether the Ontario patent was to prevail or whether the Dominion patent was to prevail. It was held or assumed that this was a good reserve. It was assumed by the courts

[Page 47]

below, at all events by the Chancellor, and I think by this court too; it was not decided that it was a good reserve, but it was disposed of on the assumption that it was a good reserve. And it was said that when the Indians surrendered that to the Dominion for sale that a patent could only be made by Ontario and therefore the Dominion patent was no good, and the Ontario patent was good. Of course that was a serious question and upon that and upon the denial of Ontario that the Indians were to have the metal in these properties the Dominion intervened and proposed to argue that question in the Judicial Committee, but the settlement was made and the Committee decided what, of course, was the turning point of the case, that there was no reserve there, that Ontario had to acquiesce in the reserve, that the reserve never was laid off, and the point upon which the Chancellor had decided the case had never arisen.

Now, in dealing with this case and what I have to say in the following part of my argument, it must not be forgotten that it is not like an ordinary case between individuals. There is only one Crown and really only one party to the case; while we speak of Ontario and Quebec and the Dominion and so on, they are not separate and independent governments like the governments of the United States.

Each represents the same Crown in respect of separate departments of the same government. As illustrating that to some extent I want to refer to a case, Williams v. Howarth[18]. That was a case where the Government of New South Wales, I think it was, sent a force of soldiers to the war in South Africa, and they had contracted with these soldiers to pay them

[Page 48]

certain rates per day during the period of their enlistment. When these men reached South Africa they fell under Imperial command and Imperial regulations and they got certain allowances, certain pay from the Imperial Government for their services there. I do not remember what the amounts were, but we will suppose that the Government of New South Wales was to pay them ten shillings a day and they got four shillings from the Imperial Government. They went back, having served out the enlistment and one of these men brought his action claiming his ten shillings a day. They said, you have received four shillings a day from the Imperial Government and we only owe you six, and that was the question before the court. The courts in the colony held that there were two separate transactions altogether, that the Government of New South Wales had contracted with this man to pay him so much. But when it went to the Judicial Committee, the Committee held that this was all a transaction on behalf of the Crown, that there was one Crown, not a Crown for New South Wales and another for the Empire and that the man was entitled to what he had contracted for with the Crown, and he had got so much and he was entitled to the balance. The decision, doubtless, would have been different if it had been the case of an allied power, if it had been some foreign government. But here was a matter of the same Crown.

That illustrates the point that I make as to the indivisibility of the Crown. In these circumstances the Dominion claims that Ontario, who received the benefit of the treaty, shall assume and discharge the burdens of the treaty and this seems to be, I submit, a proposition founded in common honesty and justice.

[Page 49]

But we do not have to rely on that solely because the right has been affirmed both in the Judicial Committee and in this court. I remember in arguing this case below I quoted an observation from a very eminent judge that seems to me to apply to this case better than it does to most cases, perhaps. He said that the business of a judge was to find a legal reason consistent with the conclusions of common sense. If your lordships approach this case with the idea of finding a legal reason which will give effect to the common sense idea, to the view which would ordinarily be taken by the man in the street, I do not think there would be any difficulty about the result to which your lordships would come; because there was this very valuable territory with an encumbrance upon it which stands in the way of Ontario's enjoyment, removed at the expense of the Dominion by the payment of a comparatively very reasonable amount, Ontario entering in and taking the benefit and denying the obligation to make compensation.

Now let me refer to the words of Lord Watson in the St. Catharines Milling Co. Case[19] . "Seeing that the benefit of the surrender accrues to her, Ontario must, of course, relieve the Crown and the Dominion of all obligations involving the payment of money which were undertaken by Her Majesty, and which are said to have been in part fulfilled by the Dominion Government."

Girouard J.—Is that a dictum?

Mr. Newcombe: No, my lord, we say not.

Idington J.—How do you shew that it is not?

Mr. Newcombe: Will your lordship allow me to refer to the judgment of this court upon that point in

[Page 50]

the Robinson Treaty Case[20]. That was the case of a treaty made in 1850, a case of a treaty very much the same as this, made between the Indians and the old Province of Canada, whereby the Indians surrendered a territory situate wholly in the Province of Ontario and there were annuities and continuing benefits to the Indians under that treaty which had to be discharged after Confederation. The Dominion became pledged to do that by reason of the "British North America Act." This was an obligation of the old Province of Canada which was cast upon the Dominion, but inasmuch as these payments constituted part of the excess debt over the amount limited by the "British North America Act," there was an express statutory obligation by Ontario and Quebec jointly to indemnify the Dominion. Now in this case the Dominion based its claim upon the St. Catharines Milling Co, Case[21], that is this very judgment of Lord Watson wherein he said, "seeing that Ontario receives the benefit she must bear the burden." The Dominion said that seeing Ontario got the benefit of the Robinson Treaty made in 1850, because the whole property fell to her afterwards at the division, at Confederation, she got the territory discharged from the Indian claim, and seeing that that property fell to Ontario she must bear the burden and, therefore, the Dominion was entitled to indemnity solely from Ontario and the claim was made against Ontario. The arbitrators held that Ontario was responsible. That was reversed in this court and the Privy Council upheld this court. Because of no reason other than the "British North America Act" had come in in the meantime and converted

[Page 51]

this into a statutory obligation, it had put this obligation upon the new government of the Dominion and it provided that Ontario and Quebec, conjointly, should indemnify; therefore the proceeding had to be taken against Ontario and Quebec who, of course, had to indemnify conjointly, although Quebec, as far as that individual transaction was concerned, had no benefit whatever from the surrender. That was the action and it was argued in this court upon the authority of the St. Catharines Milling Co. Case[22]. In the judgment of the court Chief Justice, Sir Henry Strong, says: "An argument against the Province of Ontario is attempted to be deduced from the decision of the Privy Council in the case of the St. Catharines Milling Company v. The Queen22. In that case there was an Indian surrender to the Crown, represented by the Dominion Government, made in 1873, subsequent to Confederation. The Privy Council held that this surrender enured to the benefit of the Province of Ontario, and so holding it also decided that Ontario was bound to pay the consideration for which the Indians ceded their rights in the lands. I see no analogy between that case and the present. In the case before us no one doubts that the Province of Canada, which acquired the lands, was originally bound to pay the consideration. In the case before the Privy Council the question was, as it were, between two departments of the government of the Crown and the most obvious principles of justice required that the government which got the lands should pay for them. Here the lands were originally acquired by the Province of Canada, which was to pay for them, and the present question

[Page 52]

only arises on a severance of that government into two separate provinces and a consequential partition of its assets and liabilities." In the case before the Privy Council the words are, "as between two departments of the government of the Crown" and "the most obvious principles of justice require." Now, my lords, there is no place here for the authorities which my learned friend quotes, that you cannot recover a payment made on behalf of a man unless it is made by his request. That is a general principle of the common law. The principle of the civil law is the other way. You can recover if a man gets a benefit. As between individuals you may say there are certainly exceptions in the common law to which I am going to refer. But you may say the general rule is to that effect and the general rule of the civil law is the other way. But here you have got a question between two departments of the same government and it is a question to be worked out according to the justice of the case.

Is this case going to be decided differently from what it would have been if the area had been in Quebec? Take the case of a restrictive building covenant and the division of the property afterwards, the one man getting a release. There is, perhaps, not so much difference, except in measuring the value of it. This question I submit is really one under the "British North America Act."

What we are doing here is to determine a controversy. Section 140 of the "Exchequer Court Act" founds the jurisdiction of this court. A statute passed by each giving the jurisdiction.

Idington J.—On what ground are we to proceed under that Act?

Mr. Newcombe: You are to proceed, my lord, to

[Page 53]

give effect to the principle that has been laid down heretofore by the Committee and by this court; to have regard to the "British North America Act" and the constitutional situation and the fact that there are two departments of the same government, with a controversy and you are to try to determine that controversy according to justice.

That being so the release or surrender having been brought about by the act of the Indians, concurred in and authorized by the Dominion, as it must have been, and upon considerations involving the payment of money which the Dominion undertook to execute, the lands were relieved of the Indian title for the benefit of the province, as the Judicial Committee has determined.

The liability of the province may rest upon either one or other of two views and I will put them both to your lordships. That is, it may rest upon some other views, some of the views which have been discussed, or it may rest upon the view which the learned judge has taken, although I am not going to argue that; I leave that with your lordships as to how far it may commend itself to your lordships' judgment. But this treaty I submit, may have operated to vest the title in Ontario and impose an obligation upon Ontario by virtue of the constitutional agency of the Dominion, in view of the peculiar circumstances of the case.

Either that or, the Dominion not being an agent in any sense, it made a contract which could only operate for the benefit of the province. And this contract being only capable of operation for the benefit of the province became operative when the province came in and took the benefit of it, and, therefore, as a direct party became subject to the burden. Now these are

[Page 54]

the two views on either one of which the obligation may rest. I will deal with the first situation first.

Now, I submit that there is no constitutional anomaly or impropriety or anything which might not be fairly expected as the result of the perusal of a constitutional measure like the "British North America Act," in supposing that whether Ontario was a party to the surrender or not and irrespective of the measure of benefit, whatever that might be, derived by Ontario in the discharge of these lands from the Indian title, the payment of the consideration for the surrender should fall upon Ontario as the department of the King's Government in aid of whose title the surrender had been made. That is a no more extraordinary result I submit than that which took place in the case of Williams v. Howarth[23], about the soldier. What is the nature of the trust or interest other than that of the province in these lands arising out of the Indian title? The interest is in the Indians and the control and management of the lands and property is with the Superintendent-General of Indian affairs. That is, it is with the Dominion Government. The first legislation after Confederation with relation to Indians is the Act providing for the organization of the Department of State, 31 Vict. ch. 42, sec. 5. Section 5 says that the Secretary of State shall be the Superintendent-General of Indian Affairs and as such have the control and management of the lands and property of the Indians in Canada. Then by section 8 of the same Act it is provided that no release or surrender of lands reserved for the use of the Indians shall be binding except assented to by the chiefs in the presence of the Secretary of State or a

[Page 55]

person authorized by him and accepted by the Governor-General. That is to say, in the presence of an officer authorized by the government and who must be accepted by the government. Now there can be no doubt as to the legislative authority of the Dominion to pass these Acts, they being given the exclusive legislative authority over these lands which are reserved for Indians. That is, lands reserved for Indians within the meaning of that expression as used in the "British North America Act," as determined by the Judicial Committee in the St. Catharines Case[24]. That had been a matter of debate. It was held otherwise by all the courts here, before that was determined. So that was the legislative position. Then section 10 of the same Act provided that no release or surrender of any such lands to any party other than the Crown shall be valid. That was in 31 Vict. Then in 1873 the Act was passed, assented to on the 3rd of May, 1873, establishing the Department of the Interior. Chapter 4, section 3, provides that the Minister of the Interior shall be the Superintendent-General of Indian Affairs and shall, as such, have the control and management of the lands and property of the Indians in Canada. The general purpose of that Act so far as the Indians were concerned was to transfer the administration from the State Department to the Interior Department. That was the legislation as it stood at the time this treaty was made and, of course, the whole thing is continued in the "Indian Act" at present. The present statute is chapter 81, R.S.C. 1906. Therefore in view of that legislation I say it was not competent to Ontario to make a treaty with the Indians or to obtain any transfer

[Page 56]

or surrender from the Indians. Neither has the Provincial Government the right to require the Dominion upon any terms to obtain a surrender or refrain from obtaining a surrender. The whole administration is exclusively in the hands of the Dominion Government.

Now, is it not possible to provide by the use of the legislative power that the Indians shall enjoy in some other form the interest which they have in their lands and can it not be provided that they shall have that in money rather than in lands even if the province is unwilling.? Does not that follow? Wherein rests the jurisdiction, for instance, with regard to Indian lands similar to that which the Imperial Parliament exercises in passing a "Settled Lands Act," as to tenancies? A tenant for life, a settled estate and a remainderman, the tenant for life has his interest in the land which he can only enjoy as land until the legislature comes in, as it does, and says he can sell it and convey the whole interest and he enjoys the value of that estate in money. Is it not competent for the Dominion to do that with regard to the Indian title?

We find the obligation to recoup the Dominion in the general intention of the Act. The Indians were scattered all over the country, from one end to the other, in various provinces. The same band very often inhabited different parts of the same province. It was necessary no doubt that there should be a uniform policy in dealing with them and that they should be under one legislative power and one executive power. At the same time they owned their property, if we may call it so, their territories, under various provincial governments. The only way to work it out was to put the whole thing, so far as legislative and executive

[Page 57]

power is concerned, in the hands of the Dominion Government. That being so, why should not the province on the extinguishment of the title, within whose lands the area happened to be, bear the burden of the extinguishment of the title? Is it not fair and reasonable? Is it not that which you ought to read into this constitutional Act as the apparent intention.

Now, the other view simply involves this, that it takes two parties to make a contract. It takes two parties to make a treaty. The province had the beneficial interest in the lands subject to the Indian title. The Indian title could not be transferred or assigned, but while it existed and was recognized by the law it was only capable of being extinguished; that is as it-were, transferred to the province, so as to merge in the paramount title. Now the Dominion had no interest in the lands and no interest in the transaction at all, except as the guardian of the Indians for the purpose of seeing that their interests were safeguarded in any surrender that might be made. Consequently, if Ontario desired to have this surrender made, she could go to the Dominion and ask the Dominion to negotiate, or stand by while she negotiated with the Indians for a treaty whereby the surrender would be made, the Indians surrendering through the Dominion and Ontario accepting. Now that might have been done; they might have done it in that way and I am not so sure that they did not do it in that way. If Ontario had gone to the Dominion, and said, we want to open up this territory but we cannot touch it because of the Indian title and we want you to go to work and get the Indian title surrendered, and then they had gone, the three parties together, the Indians and Ontario being the contracting parties, the Dominion present as the guardian and trustee of

[Page 58]

the Indians as it were, and a contract had been made just as was made in this case between the Indians on the one side and the Crown on the other, the obligation of the covenants to pay and provide which are in this treaty would unquestionably have fallen on Ontario.

Then it was said that in the circumstances here Ontario was not a party. The Dominion made a contract with the Indians that nobody had anything to do with except Ontario. It made a contract in the name of the Crown. The Crown is the name that stands for Ontario just as much as it stands for the Dominion. It took an assignment to the Crown of property, which could not operate except in favour of the Crown, represented by Ontario, and it assumed in the name of the Crown a number of obligations in consideration of that transfer. That transfer was taken, communicated to Ontario, and what does Ontario do? Does she say, it is unreasonable, we don't want this, we had no part in this? No, she said, that is just the thing we wanted, we wanted to go in there, it is ours, it belongs to us, and she took advantage of it, made her grants, sold her timber, made her mining leases, and has administered the property from that day to this. I put it first, that it is a matter that rested wholly with the Dominion; that is the way I argued it first, and that the Dominion could negotiate the treaty independently, as it must, make its terms and provisions and stipulations and take the surrender which then operates for the benefit of the province, and the consequence of that is that the province has to bear the burden. That is the one view of it. The other view of it is that the province cannot be bound without

[Page 59]

its consent and then you have the contract made which operates when the province consents, and here there is no doubt that both antecedently and subsequently the province was anxious to assume the administration. It has been designated a principle of universal application that where a contract has been entered into by one man as agent for another, the person on whose behalf it has been made cannot take the benefit of it without bearing the burden; the contract must be performed in its integrity. Accordingly where a person adopts a contract which was made on his behalf, but without his authority, he must adopt it altogether, he cannot ratify that part which is beneficial to himself and reject the remainder, he must take the benefit to be derived from the transaction, cum onere.

Then so far as the question of area is concerned, this is exactly what happened; the judge puts a paragraph in his judgment in this way: "Now it is to be observed that whatever moneys have been expended under this treaty by the Dominion Government have been expended in respect of the Indians inhabiting a tract of land part of which only is within the Province of Ontario, and it is suggested by Mr. Newcombe for the Dominion that the province should contribute to such expenditure in the proportion that the area of the surrendered territory within the province, bears to the whole area surrendered by the treaty. There is no other suggestion on that branch of the case, and I do not see that any fairer or better rule could be adopted." No one could pretend to say that an acre of this land or the whole of it within Ontario is proportionately of any greater or less value than that without. There is an area of 55,000 square

[Page 60]

miles purchased, presumably each square mile of the same value; and one-third of that goes to the Dominion and two-thirds to Ontario. It is to be paid for proportionately.

That is all I wanted to say about the area, because my learned friend referred to it. Then the other question is equally simple, I think.

I refer to the terms of the treaty again. The Indians having surrendered this territory to the Crown, Her Majesty undertakes and agrees for, I think, nine different things. In the first place to lay aside these special reserves. Secondly, with a view to shew the satisfaction of Her Majesty with the behaviour and good conduct of her Indians, she hereby, through her Commissioners, makes them a present of $12. Thirdly, to maintain schools for instruction. Fourthly, to suppress the liquor traffic. Fifthly, to distribute and pay annuities of $5 per head, yearly. Then to expend the sum of $1,500 per year for the purchase of ammunition and twine. Then to furnish agricultural implements; and an annual salary of $25 to the chiefs. Now that is all done in consideration, so far as the basis of the treaty is concerned, of the surrender of these lands. Now, my lords, I say you cannot go outside of that and imagine other considerations. All these things are referable to the surrender. None of them would have been undertaken as and when they were or at all if it had not been for the surrender. The only asset the Indians had was their interest in the land. That was the occasion and the only occasion for going there and bargaining with them. The best evidence in the record, to which I have referred, shews that the object was to let the settlers in and to get rid of this title. In other words that the transaction

[Page 61]

was what it professes to be upon the face of it, a transaction whereby they, on the one part, parted with an asset which they had in consideration of certain obligations which the Crown undertook. Now, my learned friend wants to make the tail wag the dog, because he reads this last covenant here; the undersigned chiefs solemnly promise to be good and loyal subjects, to obey the treaty and observe the law and all that sort of thing. That is what he says is the principal consideration, but what is the fact; that form is the usual form; if they had printed forms of treaties that would be printed in every one of them. It is a common form of covenant which they put in, because it is a good enough thing, no doubt, to impress upon these Indians that they ought to obey the law, but does any one suppose if they had had no title to surrender that we would have gone up there and paid a lot of money to them to take a covenant from them to keep the peace?

Here is a treaty made in 1871. This is a book that is in evidence called the Indian Treaties and Surrenders. On page 293 is a treaty with another tribe of Indians altogether, with the very same term in it. Word for word the same. "Do hereby solemnly promise and engage to strictly observe the treaty and behave themselves as good and loyal subjects."

Here is one in 1781, the 21st year of George III. Here is another treaty that I open to off-hand. It says that the undersigned chiefs do hereby bind and pledge themselves and their people to observe this treaty and maintain perpetual peace between themselves and Her Majesty's white subjects and not interfere with the property or molest the persons of Her Majesty's white subjects.

[Page 62]

Is it a question of dividing the consideration? What does my learned friend's argument involve? Does it involve more than this, that the time this surrender was taken was an inexpedient time, that it was taken too soon. The present position is, we have got so far in the argument that we are considering now what is Ontario to pay. Ontario is to pay the consideration of this treaty. The consideration I mean of the surrender. There was only one thing surrendered, only one thing dealt with so far as the Indians were concerned, and that is their title to this real estate. That is what passed. On the face of the treaty, as I have said, all the covenants we enter into are relative to that.

Whatever the motive was that actuated the Dominion, that had nothing to do with the Indians; the Indian was selling that for the best he could. Now they may say, you bought that too soon. I say we are the judges of the time when it was to be bought. But to say we paid any more for it because we wanted to build a railway or settle Hudson Bay claims or anything of that sort, that is not so on this evidence and your lordships, I submit, cannot find it.

Hogg K.C. follows. Your lordships are now seized, I think, not only, of the facts of this case, but also of the principles which underlie our claim and contention. My observations will be directed more to the cross appeal, taking it for granted that my learned friend, my leader, in his able argument has placed the matter so completely before you that it will not be necessary for me to take up time.

The cross appeal arises in this way. It has been explained to your lordships that first there was a

[Page 63]

trial before the judge of the Exchequer Court, and the question that was then debated and decided was the question of general liability; whether there was a liability at all or not; whether Ontario was liable under the treaty. What his lordship found was this: "This court doth declare that the Province of Ontario is, in respect of the obligation incurred by the Dominion under the North-West Angle Treaty, No. 3, which involved the payment of money, liable to pay to the Dominion all sums paid by the Dominion which are referable to the extinguishment of the Indian title in the lands described in the said treaty in the proportion that the area of such land within the Province of Ontario bears to the whole area covered by the treaty," which we have discussed. Then followed a further consideration of the question of the classes of items under the treaty for which Ontario should be held liable, and what might be called a continuation of the trial took place. Evidence was taken upon the different items mentioned in the treaty itself, that is the different classes of expenditures which were undertaken by the Dominion, and upon that continuation of the trial, or as it was called, the further consideration of these questions, his lordship gave a judgment and by that judgment he decided as follows: that there was to be 305-493rds of specified expenditures made by the Dominion to or on behalf of the Indians, paid by Ontario. That direction has reference to the territorial area. In other words there was 49,500 square miles found by the evidence instead of 55,000 as it was generally stated, of which 30,500 miles were within Ontario. Then he says, these are the expenditures which the province should be liable to repay the Dominion (see p. 4). The judgment proceeds:

[Page 64]

"(d) In respect of the payments made by the Dominion for or on account of the present of $12 per head stipulated by the treaty to be paid to each man, woman and child of the bands of Indians represented at the treaty and claimed under the first item of Schedule A in the said statement of claim the sum of $5 per head."

Now we say that to the extent that he has allowed in favour of the Dominion, his judgment is right, but what we complain of is that he overlooked the instructions in the treaty and endeavoured to appropriate certain amounts which he said Ontario should be liable for and other amounts for which the Dominion should be liable itself, and he put it upon two grounds. One was that in any case where it had been the policy of the government of the Dominion or the policy of the Province of Canada to make allowances to the Indians as a matter of policy, in those cases Ontario should not be asked to pay.

Then the other ground that he places that judgment upon is that to the extent to which the payment of any of these amounts came within the proper administration of the Department of Indian Affairs, the province should not be liable. Now, of course, upon both of these his lordship was to some extent naturally and necessarily speculating. There was not evidence to support these exceptions which he made.

Take the question of schools. He excluded that, all expenditure for schools.

I say that upon the evidence there were no schools in this territory prior to 1873. There was nothing in the way of schools till this treaty was made, and then there were treaty schools or schools that were asked for by the Indians under the treaty.

[Page 65]

Then again, while it is a fact that there were schools for Indians in other parts of the country, and while the government were allowing the Indians to have schools in other parts of the country, in the Province of Quebec and in other provinces, these were schools which were built and maintained out of funds which belonged to the Indians themselves. In other words, for many years, the Province of Canada and the Dominion were accepting surrenders from the Indians of parts of their reserves and selling for the benefit of the Indians and at Confederation a very large fund, a fund amounting to about two million dollars, had come into existence.

Idington J.—As a result of sales of lands?

Mr. Hogg: Yes, as the result of sales of reserves; where the Indians did not require so big a reserve they gave up part of it and asked the government to sell. These were treated as Indian trust funds. This was a revenue-bearing fund—that is, the government were allowing interest upon it, and out of this revenue schools were maintained. While that was part of the policy of the government to allow the Indians to have schools, the Indians were having the schools and maintaining them out of their own money. So that it was not until we have this treaty, and I think one or two prior to it—the one of 71 my learned friend referred to—it was not until this treaty that the government agreed as part of the consideration for the surrender of the title to maintain schools when they were requested by the Indians. We say then that while it may have been a policy to educate the Indians and to guard their funds and to use their funds for the purpose of civilizing them, still that did not take away or make less the fact that the maintenance of

[Page 66]

schools under the treaty was a consideration for the extinguishment of the Indian title and whatever sum was expended in that way was, I submit, a payment which must be made by Ontario.

My learned friends on the other side have said that the question of twine, and fishing lines and so on should not have been allowed by his lordship. Well, I simply say that that is one of the considerations and that it should be allowed and that his lordship was right in that.

Then he has excluded the supply of cattle and the farming implements and all the things that were necessary to help the Indians to become farmers and civilized. Now these were expressly given by the treaty. It was one of the considerations, part of the general consideration for the extinguishment of the title. There is no good ground that I have ever been able to see why he should allow the twine and fishing tackle and exclude the cattle and implements of trade to make them civilized. It is said these things were given to them as a matter of policy and that, therefore, the judge was right in excluding them, but all the evidence really is that occasionally, for the purpose of relieving extreme distress, it was better to give them a gun and a pound of shot and some powder to carry on and make a living than to give them money. But here we have a case where the government are giving them cattle, tools and so on for the purpose of civilizing them and making them good citizens, and I can see no distinction between giving them $ 5 a head which has been allowed and which seems to have been assented to all round, $5 a head as an annuity, and giving cattle and implements of trade.

Then just a word with reference to the surveys.

[Page 67]

I think I have finished now with reference to the classes of items that his lordship has excluded from his consideration. Now, my learned friends have stated in advance in answer to the cross appeal, that the amount for surveys should never have been allowed by his lordship. His lordship put it in this way. Following the making of the treaty they immediately, or very shortly afterwards, within the next year, I think, commenced to lay out the reserves, and they had communications, as my learned friend has read, of the necessity of these reserves being laid out and a map was sent shewing the areas in which mineral land occurred, which were to be excluded and, if possible, not taken into the reserves. They then went on and made these surveys; that is they went on to expend money in carrying out the objects of the treaty, and his lordship in the court below allowed these surveys.

There were surveys of two kinds, for the purpose of opening up the country for settlement and surveys consequent upon the making of the treaty; that is the laying out of certain reserves for the Indians. Now what his lordship said was this; that it is true there is an agreement that these reserves are to be consented to later on, but to the extent that you have made surveys for both purposes, these are a proper expenditure by the Dominion under the treaty, and outside of the treaty if you like; these are proper expenditures and it is only fair and right and the proper way to deal with that is to set it off against the counterclaim of the province. He does not allow it as one of the items which is chargeable against Ontario by the treaty, but he says it is a proper charge against Ontario's counterclaim and when

[Page 68]

you come to take your accounts the referee will take that into consideration.

Mr. Newcombe: My lord, I have my learned friend's permission, if your lordships will allow me to refer to one treaty which I intended to quote yesterday and which I omitted. It was on the point I made that this territory is vested in Ontario subject to an interest other than that of the province; that that interest constitutes a burden on the land which has to be discharged some time or another and whenever it is discharged that the obligation falls upon Ontario to pay the consideration for the discharge. That is under the "British North America Act." The fact that Ontario cannot herself bring about the discharge or that perhaps she has no voice in it or of the fixing of the consideration does not affect that situation. Section 109 I had referred to which provides that all lands, mines, minerals and realties belonging to the several provinces of Canada, Nova Scotia and New Brunswick at the Union, and all sums then due, shall belong to the several provinces in which they are situate, subject to any trusts subsisting in respect thereof and to any interest other than that of the province in the same. Now that section fell to be construed in the Robinson Treaties Case[25], which I cited yesterday and I referred to what Lord Watson said at pages 210 and 211 of that case (1). In addition to what I read yesterday—I may read it again to make it clear—these words are from the judgment: "The expressions 'subject to any trusts existing in respect thereof,’ and 'subject to any interest other than that of the province,' appear to their lordships to be intended to

[Page 69]

refer to different classes of right. Their lordships are not prepared to hold that the word 'trust' was meant by the legislature to be strictly limited to such proper trusts as a court of equity would under-take to administer; but, in their opinion, it must at least have been intended to signify the existence of a contractual or legal duty, incumbent upon the holder of the beneficial estate or its proceeds, to make payment, out of one or other of these, of the debt due to the creditor. * * On the other hand, 'an interest other than that of the province in the same,' appears to them to denote some right or interest in a third party, independent of and capable of being vindicated in competition with the beneficial interest of the old province. Their lordships have been unable to discover any reasonable grounds for holding that, by the terms of the treaties, any independent interest of that kind was conferred upon the Indian communities; and, in the argument addressed to them for the appellants, the claim against Ontario was chiefly, if not wholly, based upon the provisions of section 109 with respect to trusts." That is pages 210 and 211. Now then during the argument in amplification of that and shewing what I think follows from the judgment, Lord Watson said this, and this is what I intended to read yesterday. Your lordships will find this, I may say, reported in Lefroy on Legislative Power in Canada, page 612 in the note, what I am going to read. The case is reported, but this is an observation made during the argument and your lordships will have to refer to Lefroy for that at page 612. "If the Crown right was subject to a burden upon the land, the interest is to pass to the province under that burden. There was to be no change in the position of the Crown." There was no change in the position of the Crown, neither

[Page 70]

was there any change in the position of the Indians, at Confederation. "I think the whole effect of this clause is to appropriate to the Province of Ontario all the interest in lands within that province as vested in the Crown, subject to all the conditions under which they were vested in the Crown." * * "The policy of these sections of the Act, 109 and 112 and 111 and 142, when read together, appears to me to be generally this beyond all dispute. * * The intention obviously was to provide with regard to all those debts and liabilities of the old Province of Canada, which were simply debts and liabilities charged generally upon the revenues of the provinces, the creditors were to be paid by the Dominion, and to a certain extent, in excess of a particular sum, the Dominion was to be recouped by the two new provinces in the proportions which might be determined under the provisions of section 142. On the other hand to this extent it is made plain—at least I hold it to be made very plain under section 109 —that any debt or liability which was made a proper charge upon any property or assets passing to the province under section 109, was to remain that charge, and was not to be satisfied by the Dominion Government under section 111."

Mr. Hogg: I said, my lords, that the judge of the Exchequer Court dealt with the expenditure on surveys by giving the Dominion the right to set-off the amount against the counterclaim of Ontario. That was the judgment of his lordship in the court below. Now we complain that that is one of the items which constitute part of the consideration referable to the extinguishment of the Indian title.

I have only now a reference to one other item and that is this present of $12 which was made to the Indians at the time the treaty was made.

[Page 71]

No treaty could be made without giving them some present. In all these treaties you will find that they got some amount of money as a present for their good behaviour.

For several years efforts were being made to get a treaty; in '71 and '72 Commissioners were sent and they could not arrive at an agreement, and it appears they had grievances more because they had been trespassed upon, because their rights had been invaded and infringed, and it was true that for the purpose of the Dawson route some timber had been taken, I think to build a boat on one of the lakes and for other purposes of that kind.

Davies J.—The point is that the only way to settle that was to extinguish the right there quoad the land over which the road ran, or to extinguish the whole matter. Ontario had no interest in having it extinguished over a mere 50 foot road, therefore it had to be extinguished over the whole land or not at all. Your point is how far we are bound to hold all of these considerations mentioned in the treaty are necessarily attributable to the extinguishment.

Mr. Hogg: Yes, my lord, and his lordship below, as I say, divided them and we cannot see why that should have been done.

Ritchie K.C. in reply: From what has been developed on the argument I think it may be said to be reasonably clear now that the whole Dominion case is based on the dictum of Lord Watson in the St. Catharines Milling Co. Case[26]. That that is a mere dictum and no part of the judgment and not necessary

[Page 72]

for the determination of the issues involved is, I think, abundantly clear.

Having regard to the record in that case, no evidence could have been adduced such as has been adduced here to shew the moving consideration, to shew the state of affairs as between the Dominion and the province. What could the Privy Council have known in 1888, when that case was before them, of what the state of affairs was in Canada in 1873? We know now here, that there was a fear of an uprising, and these were all these other considerations to which my learned friend Mr. Shepley has alluded, the contract with British Columbia, the contract with the Hudson Bay Company and all these other factors that have been adduced in evidence here. None of these were before the learned law lords.

I submit that expression was not at all necessary for the determination of the issues involved in that suit, and if that question had been in any way agitated on the record and if the Province of Canada had been represented there, all these considerations that are now presented to your lordships would have been presented to the Judicial Committee. I can say no more on that subject.

Then I propose to refer briefly to the conventional boundary agreement of 1874, and I desire to point-out to your lordships that by that agreement what was stipulated for was that when the true boundary was ascertained the whole of the moneys received by the Dominion in respect of the particular portion that was found to be within Ontario should be paid over to the Province of Ontario. It was manifestly not intended at that time to put forward any claim on behalf of the Dominion in respect of the obligations assumed

[Page 73]

under the treaty. If there had been any such idea we would have found, no doubt, in this conventional boundary agreement a provision for deduction of such sums as Ontario might be liable for to the Dominion arising in any way out of the obligations assumed by the Dominion under that treaty.

In 1874 there was no stipulation in the agreement as to the liability of Ontario arising out of any obligation under the treaty. Then I pass on from that to the agreement of 16th April, 1894, some twenty years after the conventional boundary agreement, and some six years after the decision in the St. Catharines Milling Co. Case.[27].

Now let us see what the provisions of that agreement are. I say the Dominion itself must have regarded that as a mere dictum or at all events they felt that they had no claim against Ontario, as 1 submit is evidenced by this agreement of 1894. They must have known of that dictum at that time, or at least of that statement, whether dictum or not, but what do we find them doing? We find this agreement entered into on the 15th of April in which they recite the treaty itself. Reference is made to the treaty; "and whereas by the said treaty out of the lands so surrendered reserves were to be selected and laid aside for the benefit of the said Indians, and the said Indians were, amongst other things hereinafter provided, to have the right of hunting and fishing" and so on, throughout the tract. "And whereas the true boundaries of Ontario have since been ascertained"—I am just giving the skeleton, not reading the clauses in full—"and whereas certain reserves have been laid out in intended pursuance of the said treaty and the

[Page 74]

said Government of Ontario was no party to the selection and has not yet concurred therein." "And whereas it is deemed desirable for the Dominion of Canada and the Province of Ontario to come to a friendly and just understanding in respect of the said matters" and so on. "Therefore it is hereby agreed between the two governments, with respect to the tracts to be from time to time taken up for settlement, mining, lumbering or other purposes and to the regulations required in that behalf, as in the said treaty mentioned, it is hereby conceded and declared that, as the Crown lands in the surrendered tract have been decided to belong to the Province of Ontario or to Her Majesty in right of the said province, the rights of hunting and fishing by the Indians throughout the tract surrendered, not including the reserves to be made thereunder, do not continue with reference to any tracts which have been, or from time to time may be required or taken up for settlement, mining, lumbering or other purposes by the Government of Ontario."

Then it is agreed that the concurrence of the Province of Ontario is required in the selection of the said reserves. Manifestly Ontario was taking objection to the treaty and simply said, these are our lands, you have no right to agree to reserve to the Indians any right of hunting or fishing over our territory; you have no right to select reserves there without our concurrence. These are .the two matters affecting the property itself; Ontario objected and the Government of the Dominion acceded to it, and not only that, but they expressly entered into this agreement.

Then, my lord, we have clause 6: "That any future

[Page 75]

treaties with the Indians in respect of territory in Ontario to which they have not before the passing of the said statutes surrendered their claim aforesaid, shall be deemed to require the concurrence of the Government of Ontario.'' There Ontario was manifestly asserting its right to this territory freed from any burden placed upon it by the Dominion of Canada under that particular treaty and we find the Dominion assenting to the position taken by Ontario, presumably for this reason, that the question arose, could they select these reserves without paying for them? They could not, of course, without legislation. But could they legislate so as to expropriate these lands for the purpose of reserves for these Indians without making just compensation for them? Presumably that was one of the matters that they were considering and they wished to get Ontario's acquiescence in the selection of these reserves, the Dominion not being required to pay Ontario anything for it.

Now we would naturally expect in reciting this treaty, if these large sums of money were due by Ontario to the Dominion in respect of the obligations entered into by the Dominion under that treaty, to find that matter dealt with by that agreement or dealt with at that time; but all these years have elapsed and from 1873 until 1903, the time the action is commenced, so far as I know, no formal demand has ever been made for this money. No pretence that the province is liable in any way to the Dominion in respect to the obligations assumed by the Dominion under that treaty. Now then, if, as a matter of fact, it is conceded, that they had no right to enter into' an obligation as to hunting and fishing, no right to enter into an agreement to select and give reserves so as to

[Page 76]

bind Ontario, does it not follow from that that they had no right to enter into any obligations at all that would bind Ontario without Ontario's consent? I submit that the moment you concede that you must concede the rest, that without the consent of Ontario you have no right to impose a burden upon Ontario with respect to obligations entered into by the Dominion. The agreement, your lordships will observe, was not entered into until the 16th of April, 1894. The agreement is set out in full in the statute 54 & 55 Vict. ch. 5, the Dominion statute of 1891.

"It shall be lawful for the Governor in Council, if he shall see fit, to enter into an agreement with the Governor of Ontario in accordance with the terms of the draft contained in the schedule to this Act, together with any additional stipulations which may be agreed to between the two governments and such agreement shall be as binding on the Dominion of Canada as if the same were specified and set forth in an Act of this Parliament and the Governor in Council is hereby authorized to carry out the provisions of the agreement." I need not press my argument any further. I say the moment it is conceded that they had no right to bind Ontario in connection with the agreement as to hunting or fishing or in connection with their obligation to set aside special reserves, the moment that is conceded I say it follows that they had no right to bind Ontario by any of the other obligations which appear in that treaty.

Now in that connection I refer to Ontario Mining Co. v. Seybold[28], commencing at page 73, the judgment of the court as delivered by Lord Davey.

[Page 77]

I refer particularly to pages 79 and 80 and to 82 and 83. Lord Davey says: "In delivering the judgment of the Board, Lord Watson observed that in construing the enactments of the 'British North America Act, 1867,' 'it must always be kept in view that where-ever public land with its incidents is described as 'the property of or as 'belonging to' the Dominion or a province, these expressions merely import that the right to its beneficial use or its proceeds has been appropriated to the Dominion or the province, as the case may be, and is subject to the control of its legislature, the land itself being vested in the Crown." The reference there is to the St. Catharines Milling Co. Case[29]. Then Lord Davey says: "Their lordships think that it should be added that the right of disposing of the land can only be exercised by the Crown under the advice of the Ministers of the Dominion or province, as the case may be, to which the beneficial use of the land or its proceeds has been appropriated, and by an instrument under the seal of the Dominion or the province." Then on page 80, speaking of this same surrender: "This surrender was made in accordance with the provisions of the 'Dominion Act,' known as the 'Indian Act, 1880.' But it was not suggested that this Act purports, either expressly or by implication, to authorize the Dominion Government to dispose of the public lands of Ontario without the consent of the Provincial Government. No question as to its being within the legislative jurisdiction of the Dominion therefore arises." Then he says, dealing with the St. Catharines Milling Co. Case29 again: "By section 91 of the 'British North America Act, 1867,' the Parliament of Canada has exclusive legislative

[Page 78]

authority over 'Indians and lands reserved for the Indians.' But this did not vest in the government of the Dominion any proprietary rights in such lands or any power by such legislation to appropriate land which, by the surrender of the Indian title had become the free public lands of the province as an Indian reserve, in infringement of the proprietary rights of the province. Their lordships repeat for the purpose of the present argument what was said by Lord Herschell in delivering the judgment of this Board in the Provincial Fisheries Case[30], as to the broad distinction between proprietary rights and legislative jurisdiction. Let it be assumed that the government of the province, taking advantage of the surrender of 1873"—that is the very surrender that is before your lordships—"came at least under an honourable engagement to fulfil the terms on the faith of which the surrender was made, and therefore to concur with the Dominion Government in appropriating certain undefined portions of the surrendered lands as Indian reserves." There he puts it as an honourable engagement; no suggestion that it is based upon any legal or equitable liability, but an honourable engagement. Then he says: "The result, however, is that the choice and location of the lands to be so appropriated could only be effectively made by the joint action of the two governments."

"It is unnecessary to say more on this point, for, as between the two governments, the question has been set at rest by an agreement incorporated in two identical Acts of the Parliament of Canada (54 & 55 Vict. ch. 5), and the Legislature of Ontario (54 Vict. ch. 3), and subsequently signed (April

[Page 79]

16th, 1894), by the proper officers of the two governments. In this statutory agreement it is recited that since the treaty of 1873 the true boundaries of Ontario have been ascertained and declared to include part of the territory surrendered by the treaty and that, before the true boundaries had been ascertained, the Government of Canada had selected and set aside certain reserves for the Indians in intended pursuance of the treaty, and that the Government of Ontario was no party to the selection, and had not concurred therein; and it is agreed by article 1 (amongst other things), that the concurrence of the Province of Ontario is required in the selection. By subsequent articles provision is made, 'in order to avoid dissatisfaction or discontent among the Indians/ for full inquiry being made by the Government of Ontario as to the reserves, and in case of dissatisfaction by the last named government with any of the reserves already selected or in case of the selection of other reserves, for the appointment of a joint commission to settle and determine all questions relating thereto."

There your lordships will see the view that was taken. They certainly did not take the view that the question of legal liability had been settled by Lord Watson in the St. Catharines Milling Co. Case[31]. He says: "Assuming that they came under an honourable engagement," not putting it under the question of liability at all, that honourable obligation was to be fulfilled because this agreement had been entered into and was validated by the Dominion and the province respectively.

Now my learned friend Mr. Newcombe relied upon

[Page 80]

the recitals in this treaty as to what was the true consideration. I point out to your lordships that Ontario is a stranger to it; Ontario is no party to it, and what is there to prevent a stranger to a treaty or a contract who is sought to be made liable in respect to some of the obligations contained in it, from shewing what the true consideration was, or that there were considerations other than those specifically entered in the treaty. Of course if he had been a party to it that would be an entirely different thing. But here the Dominion is seeking to make us liable in respect of these obligations and claiming that the only consideration was the surrender of this title. Surely it is open to us to shew that that, if it was a consideration, was only a very small part of the true consideration.

My learned friend also says that the Dominion had no interest except that of their wards, the Indians. I point out that they had a very much greater interest than that. The recital is that they wished to open up this particular tract for the purpose of settlement. That, of course, is quite true, they wished to open that up. But no one at that time ever thought that this land was land fitted for settlement in the ordinary way. What they wanted to do was to settle with the Indians so as to open a right of way to the fertile prairies of the west, in which the Dominion was interested. Moreover, they had an interest, as we now know, to the extent of about one-third of this surrendered territory, and they had the Dominion interest at large of opening up the Dominion for settlement and of increasing the population. The Dominion has as much interest in that as Ontario has.

Now my learned friend referred to the "Indian Act of 1868" and claimed that Ontario could not,

[Page 81]

under any circumstances, have entered into any arrangement with the Indians for a treaty, and he relied upon section 8 of chapter 42 of the Act of 1868, that no release or surrender of land reserved for the use of the Indians or any tribe should be valid or binding except on the specified conditions the assent of the Dominion officials being required. I merely refer to it now to point out to your lordships that it only extends to a surrender of lands reserved for the use of Indians. These lands were not reserved for the use of the Indians within the provisions of that Act at all. By that was intended reserves set apart such as the Dominion undertook to set apart in this particular tract. Not lands over which the Indians had a right to roam, but lands specially set apart for the Indians and which became their property.

Duff J.—Mr. Newcombe rather put it, or at least his argument proceeded, on the assumption that lands reserved for Indians, reserved for the use of the Indians in the statute, would have the same scope as the similar words in the "British North America Act" which the Privy Council held applied to the whole of this tract by reason of the proclamation of 1763. Is there anything whatever in the statute there that would restrict the use of the words?

Mr. Ritchie: No, my lord, I do not think there is.

Duff J.—Why do you say these were not lands reserved then under that statute?

Mr. Ritchie: I had forgotten the construction placed upon the words in the "British North America Act." I do not know, I will ask my learned friend to look and see if there is anything. It struck me that lands reserved for Indians would naturally mean

[Page 82]

that, but if that is the decision under the "British North America Act" my argument goes for nothing.

No surrender of lands reserved for the use of the Indians shall be binding. I will have a search made to see if it is limited. Of course if it is not limited, I have to bow to the decision in construing similar words in the "British North America Act."

Now we have dealt with this case so far upon narrow grounds. I take the broad general ground now that under no circumstances, in no manner, shape or form could they impose the burden, the obligation which the Dominion incurred under this treaty, up on any province. Suppose, for instance, that the Dominion should, as a matter of national policy decide to agree with the Indians to- have one large Indian reservation in either the Northwest Territory or the Maritime Provinces or any other part of Canada; should agree to supply them with ammunition and twine and establish schools, enact laws and enforce them for the suppression of the liquor traffic, could it be contended that each province would have to contribute to the obligation assumed by the Dominion in proportion to the number of Indians in that particular province? I submit that under the "British North America Act" wherever there is a subject assigned to the Dominion to deal with and incur money obligations, in every case these money obligations were to be discharged and intended to be discharged out of the Dominion treasury. Now, amongst the special subjects assigned was Indians and lands reserved for Indians. That was one of the subjects specially assigned and in respect of which there was to be uniform législation by the Dominion affecting these different bands of Indians and their

[Page 83]

lands, and I say it was contemplated that these expenditures, just in the same way as all expenditures for railways, canals, ferries, improvements to harbours, all these were to be paid out of the Dominion treasury. The scheme of Confederation never contemplated any such thing as a local improvement plan. It was never intended that each province should be assessed for the cost of a Dominion object in proportion to the benefit derived by it. Suppose that in the Maritime Provinces they expended a million dollars on the seashore for improvements. Could it be said that the whole of that should fall upon the Maritime Provinces? It is something that comes within the federal jurisdiction; they and they alone are authorized to legislate in respect of it. And I submit that it was contemplated under the "British North America Act" that all these expenditures that were to be made by the Dominion in furtherance of Dominion national policy were to be paid out of the Dominion treasury, and there is not to be found within the four corners of the "British North America Act" that any of these were to be assessed back on the provinces under what might be called a local improvement system.

Now we have presented to your lordships many reasons why this treaty should have been entered into and entered into at that particular time. The Dominion regarded the making of that treaty as one coming within their jurisdiction and as one coming within the scope of national authority. We find that they went on and made this treaty without ever consulting Ontario. Is not that the best evidence that they were not contemplating benefiting Ontario by the making of this treaty?

[Page 84]

They had no right to consider what the effect might be on Ontario, on any one province, whether a benefit or a burden. Their sole consideration was to legislate in the best interest of the Indians and their lands. They had the exclusive authority and when, without consulting any one of the provinces, they make this bargain, is it not manifest that they were making it under the jurisdiction conferred upon them by the "British North America Act?" The care of the Indians was assigned to them, they were charged with the maintenance of peace, order and good government throughout the provinces, we have the fact that there had been a rebellion and there was disaffection among the Indians. We have the additional fact that there was a highway to be built to connect the Province of Ontario with Manitoba and so on, a transcontinental railway to be built and in addition to that the further obligation which they had to discharge under their contract with the Hudson's Bay Company. I say that all these were considerations within the sphere of the Dominion Government and that the Dominion Government in pursuance of its powers and for these national objects entered into that treaty, and having entered into that treaty for these purposes, for the purpose of preserving the peace, order and good government of Canada, that they cannot assess against Ontario, Manitoba or any province any portion of the cost, but it must all come out of the Dominion treasury. It might be said that we get the benefit because these Indians who were roaming over our territory are removed to some locality far distant and will trouble us no more; they are taken off our lands. In order to accomplish that, the Dominion says we want all these Indians put in one place and

[Page 85]

they select land for that in Manitoba. And suppose they were not obliged to give compensation, could Manitoba come back and say to Ontario, this land has been taken by the Dominion in pursuance of its powers under the "British North America Act" as a reserve for Indians; all the Indians in your territory have been removed, the Indians from Nova Scotia and Quebec have been removed there and we ask you and Nova Scotia and Quebec to contribute to the value of this land in proportion to the benefit you have derived by the removal of the number of Indians within your territory? I submit the case upon that broad ground alone and that is the view the Dominion has taken until 1893, and it was only after that that they ever dreamed of making this claim as against the Province of Ontario. I submit upon that broad general ground that nothing can be assessed as against this province and that the decision of this court may rest upon, as Ï submit, that broad ground, without going into all the arguments that have been advanced in connection Avith the burden and benefit and so on, all based, as I submit, upon what I conceive to be a mere dictum of Lord Watson's in the St. Catharines Milling Co. Case[32].

It is said that this is a benefit. The Canadian Pacific Railway going through Ontario was a very great benefit. It might just as reasonably be asked that Ontario should bear a portion of the cost of the construction of that railway having regard to the benefits derived under it. The same way as to any Dominion expenditure in respect of matters coming under Dominion control. The Dominion must first determine whether in the national interest a certain thing should be done, and having determined that in

[Page 86]

the national interest a certain thing shall be done, the cost of doing that must be paid wholly out of the Dominion treasury and cannot be apportioned upon the different provinces.

Then with reference to the cross-appeal. My learned friend has referred to schools and stated that there were no schools, of course, in this district—I apprehend that is quite correct—prior to the making of this treaty. But I point out that there was an Indian fund, something like, as my learned friend says, $2,000,000 at the time of Confederation, which was afterwards increased, and out of this, irrespective of whether Indians were treaty or non-treaty, schools were established at places where the government saw fit to establish them.

This was a general fund that the Province of Canada took over from the Imperial Government and that fund at Confederation, as you will see by the evidence of Mr. Scott, went to the Dominion and was not confined, as I submit, to the establishment of schools for Indians in any particular province.

My learned friend will admit that these were appropriations. They say, under this particular treaty they made an agreement to establish schools and instead of paying it out of this general fund as they otherwise would have had to do, they say, we won't take it out of this general fund, but we will go to Parliament and ask for an appropriation and that appropriation was charged against these particular treaties, but these expenditures within the boundaries of the reserves created were all under appropriations by Parliament and did not come out of the Indian fund.

Let us see what the legislation was with regard to that long prior to this treaty in 1873.

[Page 87]

In 1860, the Legislature of the Province of Canada enacted that "the Governor in Council may direct how and in what manner and for whom the moneys arising from sales of Indian lands and the property held or to be held in trust for the Indians shall be invested from time to time and how the payments to which the Indians may be entitled may be made." I am reading, my lords, from the Act of 1860, ch. 151, sec. 8. They may do all these things and may from time to time pay out these moneys for repair of roads passing through such land and by way of contribution to schools frequented by Indians. That is, they were allowed to contribute to the support of these schools. That is followed up in 1868, ch. 42, sec. 11. This is after Confederation and it is carried in in the same terms.

That is all I have to say, my lords, on the question of schools.

Now one of the claims made there is for expenditure in connection with the enforcement of the liquor law; that is preventing the sale of liquor to Indians.

On that I refer your lordships to the Act of 1860, ch. 38, sec. 2, and the Act of 1868, ch. 42, sec. 9. These are laws for the suppression of the liquor traffic among the Indians. I shall not take up time more than giving references. I merely point to that to shew that long prior to the making of the treaty it was the policy of the Crown to enforce these laws and that, no doubt, would be done under the head of peace, order and good government.

Then my learned friend referred to farming implements and seeds. All I say on that point is to call your lordships' attention to the language of the treaty itself. "To be given once for all for the encouragement of the practice of agriculture among the Indians." The treaty itself, on its face, shews why that

[Page 88]

was done, for the encouragement of the practice of agriculture among the Indians. Surely that was something coming within the purview of the Indian authority and not referable at all to a benefit to the Dominion.

Then as to surveys. His lordship Mr. Justice Idington has referred to the fact that we have not yet concurred in them and they have not been set aside, and if there is any liability this action is premature in this respect. There were two classes of surveys; there were what are called block surveys, and surveys of the Indian reserves. As to the surveys of the Indian reserves, if there is any liability the action is premature. As to the block surveys, these were made in respect of Dominion property, the Dominion expecting the lands would belong to them, and their base lines were put in so as to connect the system with Manitoba and the West, instead of being designed to benefit Ontario in any shape or form. The evidence of Mr. Kirkpatrick shews that with some trifling exceptions they were absolutely useless to the province so that the province did not receive any benefit with respect to these.

Girouard J. (dissenting).—I agree with the opinion expressed by Mr. Justice Davies.

Davies J. (dissenting).—The two main questions to be determined upon this appeal are, first, the liability of the Province of Ontario to repay to the Dominion certain expenditures made by the latter under the treaty obligations assumed by it where it made the treaty with the Salteaux tribe of the Ojibeway Indians in October, 1873, known as the North-West Angle Treaty, No. 3, for the extinguishment of

[Page 89]

the Indian title in the lands covered by the treaty; and secondly, whether if such liability does exist at all it extends to all of such expenditure incurred under the obligations of the treaty or to only part, and if part only, which part?

The learned judge of the Exchequer Court, the late Mr. Justice Burbidge, before whom the case was heard held that the liability of the province did exist, but limited that liability in his judgment to such expenditure as in his opinion could fairly be attributable to the extinguishment of the Indian title to the lands described in the treaty, and rejected the claim beyond that on the ground that it was expenditure incurred not simply in extinguishing the Indian title, but as part of the general policy of the Government of the Dominion in their administration of Indian affairs.

From this judgment so far as it imposes a liability upon it the Province of Ontario appeals and the Dominion cross-appeals against that portion of the judgment which rejects part of their claim.

The tract of land in which, under the treaty, the Indians surrendered their title covers the area from the watershed of Lake Superior to the North-West Angle of the Lake of the Woods and from the American border line to the height of land from which the streams flow towards Hudson Bay, and was proved at the trial to contain about forty-nine thousand three hundred (49,300) square miles.

Of this great area it was subsequently found when the boundaries of Ontario and Manitoba were finally adjusted that 30,500 square miles only were part of Ontario.

In 1873, however, when the treaty was made the

[Page 90]

westerly boundary of Ontario had not been determined, and this boundary was not definitely established until the Imperial order in council of 11th August, 1884, was passed.

The liability of the Province of Ontario was limited by the judgment to the expenditure made by the Dominion and which was found to be referable to the extinguishment of the Indian title in the treaty lands and in the proportion that the area of such lands within Ontario bore to the whole area covered by the treaty. If liability existed at all that seemed to be the only and proper way to adjust it.

After the treaty was entered into the Dominion commenced and continued to carry out its provisions and to pay the annuities and make the other expenditures mentioned therein and which on the face of the treaty formed the consideration to the Indians for the extinguishment of their title and the release of their claims.

In view of the fact that in consequence of the confirmation of the arbitrators' award with respect to its boundaries the benefit of the surrender of the Indian title to the lands, within those boundaries accrued to Ontario, the Dominion contends that the province must be held liable for such a proportion of the amounts paid by it under and for the purposes of the treaty as the area of land within its boundaries relieved from the burden of the Indian title bore to the whole area released in and by the treaty.

At the time of the making of the treaty the Dominion no doubt entertained the view that no part of these lands were within the boundaries of Ontario, but that the whole of the tract covered by the treaty belonged to the Dominion, and as a fact no notice of their intention

[Page 91]

to enter into the treaty was given to Ontario, though it was contended that the province knew in-formally of such intention, and of the making of the treaty.

The Dominion subsequently adopted the position that by virtue of the surrender of the Indian title the beneficial ownership of the treaty lands had become vested in it; and this question and contention was litigated at great length in the courts until it was finally disposed of by the Judicial Committee of the Privy Council in favour of the Province of Ontario: The Queen v. St. Catharines Milling and Lumber Co.[33].

In the present action Ontario in its defence denied all liability alleging that the treaty was made without the privity of or any mandate from the province. It set up that the interests of the province were in no way involved in the considerations which induced the Dominion to undertake the negotiation of the treaty, and specified the laying out of highways and the building of railways to connect eastern and western Canada, and the relation of the Indians towards the Dominion as its wards or pupils as forming some of such inducing considerations.

It also set up as a reason underlying the treaty and in which Ontario was not concerned a condition contained in the surrender of its lands and rights by the Hudson's Bay Company to the Dominion made in pursuance of the Imperial Act, 31 & 32 Vict. ch. 105, by which condition the Dominion was bound to extinguish the Indian claims to the lands surrendered by the company, but as the Dominion was the only authority that could negotiate a treaty extinguishing the

[Page 92]

Indian rights, and as those rights had to be extinguished by treaty before the lands could be settled, I have not been able to see how this condition can affect the relative rights of the parties to this suit.

The proposition of law upon which Ontario relies for its exemption from liability for any of the expenditures incurred by the Dominion under the treaty in question is that no expenditure made for his own purposes by one will entitle him to contribution or indemnity from another because that other receives a material benefit from the expenditure, and in support of this the case of Ruabon Steamship Co. v. London Assurance Co.[34], and other cases cited in their factum were relied upon.

The Dominion does not in support of its claim controvert this proposition or any of the decisions referred to, simply denying their application to the facts and litigants of this case.

That claim, as I understand it, is based upon the relative rights, obligations and duties given to and imposed upon the Dominion and the provinces respectively by the "British North America Act, 1867," and upon the liabilities which may arise from one to the other from the discharge of those obligations and duties of government.

By section 91(24) the exclusive power to legislate with respect to "Indians and lands reserved for the Indians" was given to the Dominion, and in the St. Catharines Milling Co. Case[35] above referred to, these words were held by the Judicial Committee to be broad and comprehensive enough

to include all lands reserved upon any terms or conditions for Indian occupation. It appeared to their lordships to be the plain

[Page 93]

policy of the Act that in order to ensure uniformity of administration all such lands and Indian affairs generally should be under the legislative control of one central authority.

The Dominion Parliament by its legislation of 1868, 31 Vict. ch. 42, prescribed the manner in which the Indian title to lands might be surrendered up or ceded. I take it that after this exercise of legislative power, the Dominion and the Dominion alone could act so as to extinguish the Indian title to any lands within the Dominion. As to the argument as I understand it put forward by the Province of Ontario that the Dominion could only act in this matter, so far as the lands within that province was concerned, when they were requested to do so by the province, and that if they did so act without such mandate or request and extinguished the Indian title to such lands their action could not impose any obligation or liability upon the province, I am not able to accept it.

The right and duty of determining when and the terms on which such title ought to be extinguished rests with the Dominion and with it alone. Considerations arising out of and affecting the peace, order and good government of Canada and other considerations affecting the best interests of the Indians may well have entered into the minds of that government when determining the times and seasons at which it was desirable or necessary to make such a treaty as the one made in the case before us.

It probably would act in all cases where the interests and rights of the province and the Dominion were concerned as a matter of policy in unison and conjunction with the Provincial Government interested, but the mandate or authority of that government to proceed would certainly not be necessary to the validity

[Page 94]

of the treaty, nor it seems to me would the Dominion Government, entering into such treaty without the express mandate or request of the province, cease to be its constitutional agent for the purpose. As such constitutional agent, authorized by the law and having alike the power and the duty of entering into a treaty, I am unable to see why it could not in that way, when extinguishing the Indian title, impose upon the province for whose benefit it was extinguished a liability commensurate with the consideration agreed to be given to the Indians for the cession of their rights. In the case before us there was, of course, no mandate from the province to the Dominion to enter into the treaty, nor was the province consulted in the matter. No one knew at the time whether the lands formed part of the Province of Ontario or of Manitoba, or of the North-West Territory. The Dominion authorities believed them to form part of the North-West Territories, and no doubt entered into the treaty under that belief. The Province of Ontario did not know exactly where its western boundary line was. But everything was done bonà fide and it was not till years afterwards when the boundary award was made and confirmed that the lands were found to form part of the territory of Ontario.

The fact that the Dominion Government after the treaty was made wrongfully claimed that the cession from the Indians of these treaty lands vested them in the Crown for its beneficial use and not for that of the province has, it appears to me, little or nothing to do with the question before us.

As far as I am concerned I am of the opinion that this court should feel itself bound by the clear and definite pronouncement made on the point now before

[Page 95]

us by the Judicial. Committee in the case of the St. Catharines Milling Co.[36], and I am not prepared to accede to the argument that such pronouncement was nothing more than a mere dictum of Lord Watson's which we should ignore as not correctly expressing the law on the subject.

That case as originally instituted and carried on in the courts of Canada was brought in the name of the Queen on the information of the Attorney-General of Ontario to test the validity of a license to cut timber granted by the Dominion Government to the St. Catharines Milling Co. on the treaty lands in question. The Dominion, as I have said, claimed that the legal effect of the extinguishment of the Indian title had been to transmit to it the entire beneficial interest in the lands as then vested in the Crown. The province claimed such entire beneficial interest had been transmitted to it. When the case reached the Judicial Committee on appeal that Board directed that the Dominion should be at liberty to intervene in the appeal or to argue the same upon a special case raising the legal question in dispute. The Dominion Government elected to intervene and the case was most elaborately argued.

The Judicial Committee decided that the conflicting claims to the ceded territory maintained by the Dominion and the Province of Ontario were wholly dependent upon the provisions of the "British North America Act, 1867." After reviewing such of the sections of that Act as appeared to their lordships pertinent to the question in dispute and setting out section 108 in full, their lordships went on to say, p. 57:

[Page 96]

The enactments of section 109 are in the opinion of their lordships sufficient to give to each province subject to the administration and control of its own legislature the entire beneficial interest of the Crown in all lands within its boundaries which at the time of the union were vested in the Crown with the exception of such lands as the Dominion acquired right to under section 108 or might assume for the purposes specified in section 117. Its legal effect is to exclude from the duties and revenues appropriated to the Dominion all the ordinary territorial revenues of the Crown arising within the provinces.

And further, on page 58, they say:

Had its Indian inhabitants been the owners in fee simple of the territory which they surrendered by the treaty of 1873, Attorney-General of Ontario v. Mercer [37] might have been an authority for holding that the Province of Ontario could derive no benefit from the cession, in respect that the land was not vested in the Crown at the time of the union. But that was not the character of the Indian interest. The Crown has had all along a present proprietary estate in the land, upon which the Indian title was a mere burden. The ceded territory was, at the time of the union, land vested in the Crown, subject to "an interest other than that of the province in the same," within the meaning of section 109; and must now belong to Ontario in terms of that clause, unless its rights have been taken away by some provision of the Act of 1867 other than those already noticed.

Having decided that the lands in question became, within the meaning of section 109, on the extinguishment of the Indian title the property of Ontario in terms of that clause and giving their reasons for not assenting to the argument ior the Dominion founded on section 91(24), their lordships go on, at page 60 of the report, to state their opinion of the effect of the extinguishment of the Indian title so far as the liability of the province was concerned for the considerations which the Dominion Government had paid or agreed to pay for that extinguishment in the following terms:

Seeing that the benefit of the surrender now accrues to her Ontario must of course relieve the Crown and the Dominion of all

[Page 97]

obligations involving the payment of money which were undertaken by Her Majesty and which are said to have been in part fulfilled by the Dominion Government.

I do not look upon this as merely a dictum. It did not form part of the formal judgment, it is true. That was not absolutely necessary as between the parties to the original suit. But it was a clear and distinct pronouncement as between the two governments then before the court on the general question they were debating to the effect that neither of their contentions were unreservedly accepted, but that while the lands belonged to Ontario in terms of section 109 they did so subject to the obligation that the province should refund to the Dominion the considerations paid by the latter for the removal of the Indian title burden on these lands which they held to be within the terms of the section 109, "an interest other than that of the province in the same."

For me this clear and unambiguous expression of judicial opinion on the question what as between the two governments was the nature of the interest acquired by the province is sufficient. I feel that it is my duty, so far as this controversy before us is concerned, to give effect to that opinion. I feel the less doubt upon the point from the very strong expression of opinion given by Chief Justice Strong in the Robinson Treaty case[38], at page 505, as to the meaning and effect of the above statement of their opinion by the Judicial Committee. He there says:

An argument against the Province of Ontario is attempted to be deduced from the decision of the Privy Council in the case of the St. Catharines Milling Company v. The Queen[39]. In that case there was an Indian surrender to the Crown, represented by the Dominion Government made in 1873, subsequent to Confederation. The Privy

[Page 98]

Council held that this surrender inured to the benefit of the Province of Ontario, and so holding it also decided that Ontario was bound to pay the consideration for which the Indians ceded their rights in the lands. I see no analogy between that case and the present» In the case before us no one doubts that the Province of Canada, which acquired the lands, was originally bound to pay the consideration. In the case before the Privy Council the question was, as it were, between two departments of the government of the Crown and the most obvious principles of justice required that the government which got the lands should pay for them. Here the lands were originally acquired by the Province of Canada, which was to pay for them, and the present question only arises on a severance of that government into two separate provinces and a consequential partition of its assets and liabilities.

So far, therefore, as the main question before us is concerned I would dismiss the appeal and confirm the judgment of the Exchequer Court.

With respect to the subordinate, but important question as to the extent of the liability of the province for these treaty obligations undertaken by the Dominion Government, I find it difficult to accept the reasoning by which the learned judge supports all of his conclusions.

The treaty expresses upon its face the considerations which the Indians were to receive in return for the extinguishment of their title. Some few of these considerations may be found to be in excess of those which in former years were accustomed to be given in analogous cases, and one or two of them may perhaps be held to be simply a declaration of the general policy of the government in their administration of Indian affairs. Some others may be new and additional for which precedents may not be found. But while I can gather from the evidence much to convince me that the Dominion Government was moved to enter into this treaty at the time it did by public considerations affecting alike the interests of the Indians as those of the Dominion and its peace, order

[Page 99]

and good government, I am not able to say that I have any evidence on which I could determine that any of the considerations appearing on the face of the treaty, with the possible exception of the three subjects of expenditure for schools, agriculture and the liquor traffic, were agreed to or given for any other purpose than that of extinguishing the Indian title.

The facts that the government desired for broad public reasons to see highways and roadways running from east to west through the ceded territory as early as might be so as to enable the fertile prairies of the North-West Territories to be settled by way of Canadian territory instead of through a foreign country, or that they had entered into obligations with the Province of British Columbia for the construction of a transcontinental railway and desired to remove all possible impediments to the fulfilment, when the time came, of their obligation are not grounds, even if proved, which would justify me in assuming that greater obligations were incurred for the extinguishment of the Indian title than otherwise would have been. They merely indicate a condition of things which in the opinion of the Government made a treaty desirable and probably would determine them to forward its being entered into earlier than in the absence of such conditions it might have been. Nor can I draw any inference from the last clause of the treaty wherein the Indians agree "to" obey and abide by the law and to maintain peace and good order between each other and also between themselves and other tribes" and other people, and not molest person or property in the ceded district or interfere with any person passing or travelling through it, etc., from which I would be justified in concluding

[Page 100]

that the considerations of the treaty had been agreed to for other purposes than those of extinguishing the Indian title. Such a clause appears to have been common to many, if not all, treaties with the Indians made by Canada.

I think it is not unfair to hold that while many public considerations may hare existed at the particular season when the treaty was made for entering into it and may have had the effect of anticipating the time when such a treaty might otherwise have been made, none of them can be determined to have been the things or objects or purposes for which the considerations of the treaty were agreed to be paid.

And so on like reasoning I am not able to support the reduction of the $12 made as a present to each man, woman and child of the bands represented at the time the treaty was entered into down to $5.

Nor am I able to agree to the judge's refusal to allow the expenditures made for the salaries of the chiefs and for a triennial distribution of clothing to them. I think all these things should be allowed.

With regard to the expenditure for schools, the suppression of the liquor traffic and the encouragement of agriculture, I am inclined to think the learned judge's disallowance of all these items might be justified on the grounds stated by him. They were really intended when put in the treaty more as a declaration of the general policy of the government on these questions than as considerations referable to the extinguishment of the title and were, as the judge says, legitimate objects of administration.

I would therefore allow the cross appeal in part as above stated, and dismiss the main appeal with costs.

[Page 101]

Idington J.—We should, I think, first consider the nature of the jurisdiction given by section 32 of the "Exchequer Court Act" in assigning to that court the power to determine "controversies" arising between the Dominion and a province that has acceded thereto.

The language is comprehensive enough to cover claims founded on some principles of honour, generosity or supposed natural justice, but no one in argument ventured to say the court was given any right to proceed upon any such ground. It seemed conceded that we must find a basis for the claim either in a contractual or (bearing in mind that the controversy is the Crown against the Crown for both parties act in the name of the Crown) quasi-contractual relation between the parties hereto or on some ground of legal equity.

This is supplemented in the respondent's factum by an argument resting upon quasi-contracts of the civil law respecting which a long list of authorities is cited. But on argument that law and these authorities did not seem to be pressed.

Let us bear all this in mind when measuring the claims in question.

The appellant's counsel in opening had challenged the applicability of any law but that of Ontario, and pointed out that the contest arose out of dealings relative to land in Ontario and what was done in regard thereto; and might have added that the seat of each government concerned was and is in Ontario. Save a' casual allusion to the authorities on civil law or French law as set forth in the factum of the respondent I heard no serious attempt to confute this claim for the law prevailing in Ontario as that proper to be observed herein.

[Page 102]

As to the civil law, invaluable as it often is to afford light upon the origin of what is found in much of the Civil Code of Quebec and the exceptional cases arising in that province, left unprovided for by that Code, it is no disparagement of the civil law to say that it is not of much direct service when we come to consider questions arising upon the "British North America Act," or upon legislation of the Dominion which usually applies uniformly to all the provinces; and of still less value is it when we have, as here, to consider the legislation of another province than Quebec.

The civil law is the ultimate origin of much that concerns property and civil rights in Quebec, but when these subject matters were relegated by the "British North America Act" to the respective jurisdictions of the provinces there was no longer need for its consideration as having any binding or operative effect in relation to the formation of the Government of the Dominion as a whole or its relation to its several parts or anything springing therefrom.

Moreover, such lessons as may be derived therefrom do not furnish to my mind much encouragement for the respondent here when due regard is had to the facts presented to us. Not only is that law inapplicable for the reason I point out, but that law does not furnish any basis upon which to rest a claim in favour of one acting, not for another, or as representing another, or instead of another, but for itself solely, in direct hostility to that other, discards that other when and where present and in defiance of the other's claim proceeds to expend accordingly; not in ignorance of fact or want of opportunity to know the law and the fact.

[Page 103]

I think we therefore must assume that the law in force in Ontario is to govern the rights between the parties hereto, so far as we are given any authority to pass upon them.

I might add that having regard to the possible technical difficulty arising from each power representing or being represented by the same Crown when we come to work out the statutes assigning this jurisdiction and seek for the law applicable, we may well assume and hold it to have been designed by each enacting power to treat each actor, Dominion and province, as a separate and independent legal entity, capable of legal relations notwithstanding the technical difficulty that I allude to, which would be swept away by thus interpreting the said statutes.

The claim in the case made by the Dominion (which by the way rests on transactions had seven years before these statutes) is to be re-paid moneys disbursed in procuring and in observing the terms of a treaty made on the 3rd of October, 1873, with Indians and known as the North-West Angle Treaty No. 3. How did this treaty come about? A brief historical reply to this question ought to go far to solve the question of liability raised here.

The negotiations leading up to the treaty spread over three years and kept pace, as it were, with some of the events to be referred to.

A line of policy begotten of prudence, humanity and justice adopted by the British Crown to be observed in all future dealings with the Indians in respect of such rights as they might suppose themselves to possess was outlined in the Royal Proclamation of 1763 erecting, after the Treaty of Paris in that year, amongst others, a separate government for Quebec, ceded by that treaty to the British Crown.

[Page 104]

That policy adhered to thenceforward, by those responsible for the honour of the Crown led to many treaties whereby Indians agreed to surrender such rights as they were supposed to have in areas respectively specified in such treaties.

In these surrendering treaties there generally were reserves provided for. Indians making such surrenders to enter into or be confined to for purposes of residence.

The history of this mode of dealing is very fully outlined in the judgment of the learned Chancellor Boyd in the case of The Queen v. The St. Catharines Milling Co.[40].

The North-West Angle Treaty No. 3 made by the Dominion is of that class.

Important as it was at all times to secure the continuation of the policy I have referred to the Confederation of the provinces, in 1867, rendered it doubly so because it was anticipated then that Rupert's Land and the North-West Territory, a land of vast extent and Imperial possibilities, yet roamed over by Indians, would soon become part of the Dominion.

Provision was made in section 149 of the "British North America Act" for such event.

It was thus well known then, that instead of the Indian problem being likely soon to diminish in importance or the burthens incident to it become less, the contrary was almost certain to be the case and hence as a matter of the greatest importance for the welfare of Canada as a whole the subject was assigned to the Dominion by section 91, sub-section 24, of the "British North America Act," which is as follows:

Indians and lands reserved for the Indians.

[Page 105]

In the first session of the first Parliament of the Dominion the Senate and Commons of Canada adopted an address to Her late Majesty praying that she would be graciously pleased by and with the advice of Her Most Honourable Privy Council under the section 146 I have already referred to of the "British North America Act," to unite Rupert's Land and the North-West Territory with the Dominion and to grant to the Parliament of Canada authority to legislate for their future welfare and good government, and assuring Her Majesty of the willingness of the Parliament of Canada to assume the duties and obligations of government and legislation as regarded those territories.

In that address a special paragraph relative to the Indians was inserted as follows:

And furthermore, that, upon the transference of the territories in question to the Canadian Government, the claims of the Indian tribes to compensation for lands required for purposes of settlement will be considered and settled in conformity with the equitable principles which have uniformly governed the British Crown in its dealings with the aborigines.

In pursuance of this address and the agreement of the Dominion with the Hudson Bay Company, arrived at with the concurrence of the British Government, for the surrender of those territories to Her Majesty, upon the understanding that upon their transfer to the Dominion the latter should pay the company £300,000, and also of an Act of the Imperial Parliament assented to on the 31st of July, 1868, they were transferred by an order in council on the 23rd June, 1870, to come into force on the then ensuing 15th of July.

It was supposed by many concerned in these proceedings that these territories extended over a very

[Page 106]

large part if not all of those lands now in the Province of Ontario and in part respect of which the treaty now in question was arrived at.

The Province of Manitoba was created out of part of the new acquisition of territory. A rebellion broke out there. It becomes necessary to send troops through a long stretch of wilderness forming part of the land in question on which only Indians dwelt or over which they roamed. Many of those who had risen in rebellion were partly of Indian blood. It was thus brought home to those who had to deal with such a situation that the sooner these Indians roaming over the lands looked upon by them as their land and across which the troops had been transported were settled with the better for Canada.

Prior to this rising the negotiations pursuant to section 146 of the "British North America Act," for British Columbia becoming a Province of Canada, had so taken shape that the terms of that project were practically settled. British Columbia thus became part of Canada from first of July, 1871. The terms of this acquisition imposed upon the Dominion the obligation to build within a few years the Canadian Pacific Railway which of necessity must pass through the same territory I have already referred to as having to be crossed fey the troops.

Contemporaneously with the progress of these events leading to these annexations to the Dominion a waggon road, known as the Dawson route, was built by the Dominion, through parts of the same territory to aid in travel to the North-West.

In the course of doing so, as well as of the transportation of troops, timber was cut and incidentally the land used as of right, and the Indians complained

[Page 107]

of these invasions of their territory and the incidental cutting of what they claimed was their timber.

The items allowed them, by the treaty, to soothe their wounded feelings in respect of these last mentioned grievances, form part of the claims now in question.

The chief items, however, are for the price paid for the extinction of what for want of a better term is spoken of as the Indian title, and of which in the case of The St. Catharines Milling Co. v. The Queen[41], at p. 54, Lord Watson said that

the tenure of the Indians was a personal and usufructary right dependent upon the good will of the Sovereign.

The extinction of this Indian title, shadowy as it was, no doubt was a most substantial advantage to Ontario.

But what was there in that which of necessity would give to any one extinguishing it the legal right to be re-paid the money expended in bringing its extinction about?

The extinction of the Hudson's Bay Company's title was directly and indirectly of tenfold more importance to Ontario.

The removal of that shadow from Ontario's title paved the way for the removal of the other.

If benefits derived from acts of, and money expended by, government were to be held, without more, a legal basis for directing re-payment to the government of money or part of money expended, a share of the £300,000 paid the Hudson Bay Co. might as well be held due. Then where would the matter end? Where should the line be drawn?

[Page 108]

It is not pretended that there was anything said or done on behalf of Ontario that induced the Government of the Dominion to move in the matter of negotiating the Indian treaty; nor is it pretended that there was any actionable legal obligation resting on the Dominion towards Ontario to discharge this burthen; nor can it be maintained that, in the largest sense which a trust can have in law such as indicated by Lord Selborne in Kinloch v. Secretary of State for India[42], at pp. 625 and 626, in truth a trust existed out of which or the execution of it or something incident to such execution of it, there could arise a legal or equitable claim to be repaid by any one money expended as the moneys in question were expended; nor can it be claimed now, even if there was some reason for claiming so before the decision of the St. Catharines Milling Co. v. The Queen[43], that the Indian title passed to the Dominion; nor can it be as put in an argument I may not have properly grasped, that, as the land thus freed has been from time to time occupied by Ontario as the Indians receded in consequence of being compensated, Ontario has become under some legal obligation as a result thereof; nor can it be that the Dominion erred through ignorance of any of the facts that bore on the matter in any way, upon discovery of which by any imaginable circuity of actions for which this may be taken as a substitute it could recover for money paid by mistake.

I confess I seem to myself chasing shadows for the utmost pressure could not induce any one in argument to put the claim on any legal principle of law or equity that is usually recognizable. I have tried to reduce what was said as possibly falling within any of

[Page 109]

these possible or impossible grounds. In light of the details of the history of which I have given only an outline, the agency theory put forward, I respectfully submit, seems altogether without foundation in law or fact.

So far from acting as an agent or as representing another, not only was the Dominion by virtue of its obligations to British Columbia and by other reasons of interest and duty which I will advert to later on, impelled to settle with the Indians, but was also so careful to exclude any such notion that it purposely awaited, as the report of the Minister of the Interior shews, its entering into contractual relations with Ontario on the very subject of these lands pending the negotiations of the treaty until after it had been finally agreed to.

The boundary between Ontario and Rupert's Land and the North-West Territory had never been well defined. The Hudson Bay Company's claims covered nearly, if not the entire, land that became the subject of this North-West Angle Treaty, No. 3.

As things turned out Rupert's Land and the North-West Territory covered, according to the judgment appealed from, about two-fifths and Ontario three-fifths of that land.

The matter of fixing this boundary of Ontario was ultimately referred, by the parties hereto, to arbitration and determined by an award made on the 3rd of August, 1878.

The negotiations leading to this result were begun in July, 1871, and continued for some years before the arbitrators were appointed.

On the 26th July, 1874, the parties hereto entered into an agreement for the establishment of a conventional

[Page 110]

boundary pending the ultimate result of the determination of the true boundary and for the issuing of patents for lands on either side of this conventional boundary; those to the east and south thereof to be issued by the Government of Ontario, and those to the west and north thereof to be issued by the Dominion Government, and that when the true boundaries had been definitely adjusted each government should confirm such patents as had been issued by the other and should also account for the proceeds of such lands as the true boundaries when determined might shew to belong of right to the other.

But why if it ever had been supposed that in any event any such claims as those now set up could be conceivable were they not provided for when the parties concerned were dealing with what was the actual corrollary of the very transactions which had so recently given rise to such claims, if at all possible?

And above all why should such a claim be recovered in a judgment founded, as that appealed from appears to be, on the assertion of the rights this very agreement gives rise to? The one was deliberately adopted and we are left to infer the other was either not supposed to exist or almost as deliberately abandoned.

If ever such a claim as now set up had arisen in law it existed then, and if a court had existed to try it and this action could conceivably have been brought then I venture to think the considerations I have adverted to would have furnished a complete answer thereto.

It may be interesting to follow its later history.

It is alleged Ontario entered into possession and therefore must pay.

[Page 111]

It always had been in possession. Its civil laws and administration of justice reigned over it all. The administration of criminal justice so far as needed devolved upon that province. Its inhabitants hunted and fished there as well as the Indians, and when the cloud was removed the duty devolved, as of course, on its government to facilitate the land's development. It is alleged the land had turned out rich in minerals and timber. Is the obligation one turning upon the nature of the soil? Or would it not exist if timber and gold had not been found there, but only a vast barren waste?

Nor did the province come to the court seeking aid as against the Dominion or any one else to recover possession of the lands in question. The province did nothing but discharge those duties of government of which settling, selling, leasing or improving lands are in new countries such expensive, but common, incidents. It is not the case of an individual who could refrain from acting or accepting. The duty which arose, the only duty the province owed the Dominion, was to do all these things when given a chance.

We have not, therefore, any ground upon which to say that in seeking equity it must do equity.

Indeed, the province has not yet got any actual, but only in a limited legal sense, possession of much of the land over which the Indian roams in his hunting and fishing as he had done before. His reserves, of a more limited character, are not yet finally selected. If, contrary to my impressions, any contract could be implied as suggested in the argument I have already referred to, from the Dominion doing something and the province entering into and accepting that, it has not yet been completed, for the contract

[Page 112]

of 1894, hereinafter referred to, defines how that is to be done, and it appears it is not yet done.

But we are told the liability has been already passed upon by the judgment of the Privy Council in a dictum found in the case of The St. Catharines Milling Co. v. The Queen[44].

It seems to me there are two answers to this: One that it is mere dictum; and the other that the parties concerned by their action I am about to refer to so recognized it and proceeded to agree upon such an entirely different view of it from that now pressed by one of them that it is hardly open to the respondent to rely much on such a contention.

Let us appreciate the true value of that dictum for our present purpose by considering what happened.

The boundary award, after confirmation by the Privy Council to which it was submitted, was confirmed by the parties hereto under such circumstances as I need not state in detail, but finally so in 1883.

In that year the Dominion Government issued a license to the St. Catharines Milling Co. to cut timber on the land found by this award to have been part of the Province of Ontario and also forming part of the land over which the Indian title had been extinguished by the said Treaty No. 3.

Ontario claimed the land in question fell within section 109 of the "British North America Act," and hence was the absolute property of that province and began in the name of the Crown a suit against the Milling Co. to restrain its cutting of timber there.

The Milling Co. asserted that by virtue of the surrender of the Indian title (to the Dominion as the

[Page 113]

claim was put) the Dominion was the absolute owner of the timber.

This suit already referred to was tried in 1885 by the learned Chancellor of Ontario and decided in favour of Ontario's contention.

The respondent was not a party to that suit. But when the case had passed through its various stages of trial, appeal to the Court of Appeal for Ontario, and an appeal to this court, with the result that each court maintained the contention of the present appellant in its claim that the timber belonged not to the present respondent, but to the appellant, it was carried by way of appeal to the Judicial Committee of the Privy Council.

When the case reached there the now respondent, for the first time, asked leave to intervene, and the result of such application was that counsel for the present respondent were heard.

No change took place in the record raising new issues. The issue raised here was not and could not appear on that record.

We are told that sometime during the argument the counsel thus representing present respondent attempted unsuccessfully to introduce the question of the right of the Dominion to be recouped what it paid to the Indians to procure the extinction of the Indian title.

It appears from the judgment already referred to that counsel also set up the entirely different claim that the Indian title had been acquired by the Dominion, and hence possessed the property in the timber in question. In the closing part of the judgment of Lord Watson the following sentences occur:

[Page 114]

Seeing that the benefit of the surrender accrues to her, Ontario must of course relieve the Crown, and the Dominion, of all obligations involving the payment of money which were undertaken by Her Majesty, and which are said to have been in part fulfilled by the Dominion Government. There may be other questions behind, with respect to the right to determine to what extent, and at what periods, the disputed territory, over which the Indians still exercise their avocations of hunting and fishing, is to be taken up for settlement or other purposes, but none of these questions are raised for decision in the present suit.

This has been pressed strongly upon us as an authoritative exposition of the law if not an absolute decision of the actual point raised in this case.

On such a case as and so presented can we accept as binding the dictum I have quoted from the judgment of Lord Watson?

It does not seem to me we can escape by that easy means the responsibility resting upon us.

The case as presented to us was not before the Judicial Committee; the arguments now presented were not possible for full presentation there, and the limitations that bind our jurisdiction were not and could not be, so far as I can see, present to the mind of that court.

If it had been intended by the court to have it held as binding I would have expected in the later case of The Ontario Mining Co. v. Seybold[45], to have found direct language to the effect that such had been the declared result or at all events was then the opinion of the court. The language used falls far short of any such thing;

I infer that on this latter occasion the court neither felt bound by the dictum nor quite sure that it contained that exposition of the law which it would expect to be observed by us as matter of course.

[Page 115]

With great respect I venture to submit that the expression in the first sentence of the dictum "must, of course, relieve the Crown, and the Dominion'' does not indicate (if I am permitted to draw an inference from the habitual accuracy of the writer) that consideration had been had to the peculiarity that it was as the representative of the Crown that Ontario had succeeded.

It indicates clearly enough, I submit, that the peculiar limits of our jurisdiction to decide between two (shall I say departments of government or branches of sovereignty), of which each represented the Crown, had not been fully and finally considered, much less the definite, character of the obligation, if any.

I conclude that we have a duty to discharge and are not relieved by this dictum, which must be held obiter, yet received with that respect due to the first impressions of such high authority, and given due consideration.

Following the decision in that case and the dictum now rested upon came an agreement entered into on the 16th of April, 1894, between the parties hereto, not hastily, not as part of routine work of departments of the Government, when attention had not been drawn to the full import of the step taken, but as the deliberate result of each government and of Parliament and legislature having given due consideration thereto.

This agreement on its face purports to be in pursuance of the Statute of Canada passed in the 54th and 55th years of Her Majesty's reign, chaptered 5, and the Statute of Ontario passed in the 54th year of Her Majesty's reign, chaptered 3.

[Page 116]

It is provided by the first operative clause of it that as the Crown lands in the surrendered territory have been decided to belong to Ontario or Her Majesty in right of said province, the Indian rights of hunting and fishing, throughout the tract surrendered, not including the reserves to be made thereunder, do not continue so far as regards lands required for settlement, lumbering, mining and other purposes, by the Government of Ontario, "and that the concurrence of the Province of Ontario is required in the selection of the said reserves."

The 6th paragraph is as follows:

That any future treaties with the Indiana in respect of territory in Ontario to which they have not before the passing of the said statutes surrendered their claim aforesaid, shall be deemed to require the concurrence of the Government of Ontario.

Not a word appears in this agreement in regard to these claims now made, though, if due to-day they had been for great part, if not the most part, then due for twenty-one years. One might have expected them if weak originally, to have attained their majority and full strength and to speak then or forever be silent when an abandonment so complete and utter of all old contentions was about to be thus deliberately made.

The dictum now relied upon had then been standing before all concerned for about six years, with the rights of the parties fully cleared up. But nothing is done for nearly eight years more.

Then when the case of Ontario Mining Co. v. Seybold[46] was pending before the Judicial Committee of the Privy Council and the Dominion was represented by counsel, besides those representing the parties, the

[Page 117]

dictum, I have no doubt, was pressed and evoked the reply I have already referred to.

Six months after we have these claims now in question presented for the first time and action brought.

Leaving out of view one thing to which I will advert later on, what would be said of such a claim if presented by one private individual as against another at such a length of time from its origin and with such a history of opportunities to put it forward yet kept in abeyance?

The probable answer to this question may be left to meet and cover the rather vague, but wide and persistent, demands for a kind of justice that does not fall within the narrow limits of the law.

I think we must, to appreciate the legal nature of this claim, have regard above all else to the terms of the "British North America Act" and understand the obligations arising thereunder and resting upon each actor and their relations to each other, and especially so in regard to these matters antecedent to the origin of the claim.

The case as it presents itself to my mind is that the Dominion was assigned by the "British North America Act," sec. 91, sub-sec. 24, quoted above, the high, honourable, and onerous duties' of the guardians of the many races of Indians then within or that might at any future time fall within the borders of Canada; that these duties were to be discharged as occasion called for, having in mind always the peace, order and good government of Canada and, as part and parcel thereof and not the least factor in promoting all implied therein, the due observance of those duties towards the Indians, which the policy of the British Crown had rendered of paramount importance;

[Page 118]

that the discharging, in a statesmanlike way, when the several occasions I have recited called for, these high duties of national importance they were discharged all the better by being freed from the trammels of being confined within the narrow views that the provincial range of vision might have restricted action to, if the needs and wishes of a single province were to be considered, or even the dominant factor used as a guide, perhaps to the detriment of national interests; and that there arose on the part of Ontario no contractual or equitable obligation enforceable in a suit at law to make good any moneys expended in the way claimed. Nay, more, I am unable to see how short of an express understanding there ever could have arisen from the discharge by the Dominion of its responsibilities under sub-section 24 any such legal liability on the part of any province.

I think the appeal should be allowed, the cross-appeal be dismissed and the judgment for appellant on its counterclaim stand.

Maclennan J.—I concur in the opinion stated by Mr. Justice Duff.

Duff J.—The "Exchequer Court Act" confers upon that court jurisdiction to decide a controversy such as this. It says nothing about the rule to be applied in reaching a decision; but it is not to be supposed that (acting as a court) that court is to proceed only upon such views as the judge of the court may have concerning what (in the circumstances presented to him) it would be fair and just and proper that one or the other party to the controversy should do. I think that in providing for the determination

[Page 119]

of controversies the Act speaks of controversies about rights; pre-supposing some rule or principle according to which such rights can be ascertained; which rule or principle could, it should seem, be no other than the appropriate rule or principle of law. I think we should not presume that the Exchequer Court has been authorized to make a rule of law for the purpose of determining such a dispute; or to apply to such a controversy a rule or principle prevailing in one locality when, according to accepted principles, it should be determined upon the law of another locality. This view of the functions of the court under the Act does not so circumscribe those functions as greatly to re- strict the beneficial operation of the statute. Whatever the right of the Dominion in such a case as the present it is difficult to see how the province could (apart from the statute and without its consent given in the particular case) be brought before any court to answer the Dominion's claim. The statute referred to and the correlative statute of the province once for all give a legal sanction to such proceedings, and provide a tribunal (where none existed) by which, at the instance of either of them, their reciprocal rights and obligations touching any dispute may be ascertained and authoritatively declared.

The claim which is made in this action is that Ontario shall be declared to be liable to indemnify the Dominion in respect of the money payments assumed by the Dominion on behalf of the Crown under the treaty in question. In the view I take of the case it will not be necessary to distinguish the different undertakings. I think the claim fails in toto.

The learned trial judge, who has in part sustained the Dominion contention bases the liability upon this

[Page 120]

reasoning. He says it is a settled principle of law of England that where a person having the legal title to land and believing himself to be the true owner, makes improvements at his own expense, the equitable owner suing for possession and mesne profits in a court of equity may be compelled to make, as against his claim for mesne profits, an allowance for the cost of the improvements so made. That principle, he thinks (by reason of the counterclaim of the Dominion) comes into operation here.

Assuming this principle applicable in the circumstances, I am unable to follow the learned judge in the reasoning by which it is made the basis of his judgment. The receipts for which the Dominion is asked to account amount, roughly speaking, to something like $150,000. The judgment imposes upon Ontario a liability which, as regards past payments, is much greater than this sum and consequentially establishes an obligation extending to payments which may be spread over an indefinite period in future. That is a form of relief far beyond any mere allowance by way of set-off and is an extension of the principle invoked for which with great respect I can see no warrant.

But the rule has, I think, no sort of application to this case.

Admittedly the benefit of the treaty expenditures in part accrued to the Dominion. Admittedly, at the time they were made, the Dominion had full notice of Ontario's claim to the territory. In this state of facts the agreement on which the counterclaim is based was made that is to say, after the obligation to make the expenditures had under the treaty been incurred, and while the claim of Ontario to the territory was being actively asserted; and that agreement

[Page 121]

is silent upon the treaty obligations. With full knowledge of the equity, so called, which is now set up the Dominion undertook by an unqualified undertaking to account to Ontario for the sums now claimed by that province. Observe now that for our present purpose ex hypothesi the claims asserted by the Dominion were of such a character that in respect of them, independently of the alleged right of set-off, no liability rested upon Ontario. I cannot then imagine anything more repugnant to equity than to say in these circumstances, to the province: This agreement of yours cannot be enforced until you have satisfied claims of the Dominion (otherwise unenforceable) which were fully known to the Dominion at the time the agreement was made, but were not asserted until twenty years afterwards. The parties agreed irrespective of the alleged equities that in the contingency which occurred the payments should be made. The court is asked to declare that the Dominion is not liable to make these payments except upon the terms of satisfying those self-same unenforceable equities. If this, the true meaning of the parties had been put in words as I have put it, the true effect of the contention I am dealing with would at once appear, viz., that the court is asked, in order to give effect to these claims, to reform the bargain between the parties.

On the argument Mr. Newcombe supported the judgment upon other grounds.

First, he broadly asserts the right of the Dominion upon the principle (recognized in the civil law and applied by Story J. in Bright v. Boyd[47]) under which a bonâ fide possessor of real estate believing himself to be the true owner is entitled as against the

[Page 122]

owner seeking to recover possession to be repaid the sums paid by him in discharging an encumbrance.

The principle thus broadly stated has, as the learned judge says, no place in English law or in the law of Ontario except in the qualified sense of certain statutes which have no application here. It cannot, therefore, I think, be applied to this case because such a claim would plainly be governed by the lex situs.

But, assuming the principle to be applicable, consider briefly in the light of the evidence the circumstances which led to the treaty. The learned judge thus recounts them:

The question of obtaining the surrender of the Indian title in the lands described in the North-West Angle Treaty No. 3, was in 1870, when Rupert's Land and the North-Western Territory were admitted to the union, a very urgent and pressing one, not because such lands were at that time required or deemed to be desirable or available for settlement, but because it was necessary for the good government of the country to open up and maintain through such lands a line or way of communication between the eastern and settled portions of Canada and the great and fertile western territory that was added to the Dominion. At that time a line of communication, known as the Dawson Route, was being opened up through such lands. During the summer of that year it became necessary to send through this territory a military force to maintain the Queen's authority, and establish order in the country about the Red River. Early in the year the Government of Canada had sent an agent to Fort Frances "to keep up a friendly intercourse" with the chiefs and Indians who assembled there, and to "disabuse their minds of any idle reports they might hear as to the views and intentions of the Government of Canada in reference to them." In May the government sent Mr. Simpson to the same place to secure from the Salteaux Indians a right-of-way for the troops and to prevent any interruption of surveying parties during the summer. The demands that the Indians made were considered so excessive that Mr. Simpson did not come to any agreement with them. They, however, stated that it was not their intention to try and stop the troops from passing through their lands on their way to the Red River, but that if Mr. Dawson was to make roads through their country they expected to be paid for the right-of-way. In the next year another attempt was made to arrive at a settlement with these Indians. But on this occasion it was not a question of obtaining merely a right-of-way through their lands, but of acquiring a surrender of the Indian title therein so that such

[Page 123]

lands would be open for settlement; By a commission issued under the Great Seal of Canada, and bearing date the 27th of April, 1871, and in which it was recited that the Indian title in the lands therein mentioned had not been extinguished, and that such lands were required for settlement, Her late Majesty appointed Mr. Simpson, Mr. Dawson and Mr. Pither commissioners to make a treaty with the several bands of the Ojibeway tribe of Indians occupying and claiming the lands in that portion of her North-Western Territory lying and being between Lake Shebandowan and the North-West Angle of the Lake of the Woods. The commissioners, as appears from their report of the 11th day of July, 1871, entered into negotiations with the Indians and settled, as they thought, "all past claims" that the Indians had, but "various causes prevented them from entering into a formal and permanent arrangement" with the Indians at that time. On the 20th day of July, 1871, by an order in council passed on the 16th day of May in that year, British Columbia was admitted into the union. By the terms of the union the Government of Canada, among t)ther things, undertook to construct a railway "to connect the seaboard of British Columbia with the railway system of Canada." That involved the construction of a railway through the lands for the surrender of the Indian title in which the Government of Canada was in that year negotiating. It afforded another reason, if another were needed, for the early extinguishment of such title. It is put forward on behalf of Ontario that the conclusion of a treaty with these Indians was a prime necessity in the carrying out of the railway policy necessary to implement the agreement of the Dominion with the Province of British Columbia. That the construction of the Canadian Pacific Railway would in the course of time have made it necessary to extinguish the Indian title in these lands, or at least in so much thereof as was needed for a right-of-way through the same, cannot admit of doubt. But it is not at all clear that this matter was in 1871 pressing or urgent if anything were thought to turn upon that point. But it is, it seems to me, clear that for a number of reasons, either relating or deemed by the Government of Canada to relate, to the administration of the affairs of the Dominion, it was at the time necessary that the Indian title in these lands should be extinguished.

This latter the evidence clearly shews was only a means to an end. It was deemed advisable to provide a passage through this territory for immigrants into the newly acquired North-West. It was necessary if the obligations of the Dominion undertaken in the terms of union with British Columbia were to be fulfilled to arrange for the immediate commencement

[Page 124]

and prosecution of. the construction of a line of railway between Eastern Canada and that province. These were objects of Dominion policy affecting the Dominion as a whole. To attain these objects it was necessary to induce the Indians to abandon their pretensions to occupy the whole territory in question to the exclusion of whites and to settle on more limited reservations. Upon this necessity the Dominion acted, hence the treaty.

The traditional policy in Canada respecting the Indians themselves pointed in the same direction. That policy was that when the progress of advancing settlement brought with it danger of collision between white settlers and Indians still in a savage and pagan state, to induce, if possible, the Indians to settle on limited areas and by slow degrees to lead them into the ways of civilized life. The responsibility in respect of all these matters is by the "British North America Act" cast upon the Dominion; and it is quite clear, I think, that if in the judgment of the Dominion apart from the considerations of policy above mentioned the time had arrived when in the interests of the Indian as well as of the settlers and to secure tranquillity, this Course was to be taken—the evidence leaves no room for doubt that an essential condition of success would be that the rights the Indians believed they possessed in the larger area should be given up; and, that in order to procure the surrender of those rights something in the nature of compensation must have biêen promised, as always had been done in previous arrangements of the same character. The acquisition of the Indian title was not, I should think, in itself even in the slightest degree at that time an object of Dominion policy. Not until a date

[Page 125]

much later than the treaty does it appear to have occurred to anybody that the Dominion had acquired any territorial rights under the treaty. The surrender of the Indian interest was in truth a mere incident in a large policy looking to the settlement of that part of Canada lying between the Great Lakes and the Pacific, the prosecution of which necessarily required an arrangement with these Indians after the traditional practice.

In these circumstances, I cannot conceive on what principle a court of equity could proceed to adjust equitably as between the Dominion and the province the burden of the obligations undertaken by the former. It is a case very different from the simple case of the extinction by payment of a pecuniary charge; that there should be a right of indemnity in such a case is at least intelligible. Here we have a usufruct which, conceived as mere burden on the title, cannot be appraised; and we have the case of a petitioner who, to serve his own ends, to meet his own obligations, to protect his own interests, has been obliged to procure the surrender of the burden, and who, to procure that surrender, has, without consulting the owners, compounded for it in money on his own terms. Has a court of equity any rule or principle which will serve to effect a just distribution between the owner and the petitioner of the burden?

Or if we add, as we must to complete the parallel, that these ends, obligations and interests have no special relation to any interest in the land and that everything is done pending an active dispute with the true owner concerning the title and that the petitioner is not in possession—at all events has no better possession than the owner—can there really be any principle of justice upon which it can be averred that the

[Page 126]

whole of the burdens thus assumed by the petitioner must be borne by the true owner?

I think Mr. Newcombe's argument mainly rested, however, on his contention that in concluding the treaty and, therefore, in undertaking the obligations referred to the Dominion acted as the agent of Ontario. This contention was based on three grounds which are: 1st, the acquiescence of Ontario; 2nd, ratification by Ontario; and 3rd, a constitutional agency arising out of the powers and duties with which the Dominion is invested and burdened by the "British North America Act."

Of the first and second of the three grounds it is, I think, enough to say that the Dominion did not in concluding the treaty profess to act as the agent of Ontario and that the treaty having been concluded Ontario did nothing but accept what has been declared to be the legal result of it irrespective of any action or inaction on her part. In these circumstances it is difficult to see how in any sense germane to the question of the existence or non-existence of agency either acquiescence or ratification can be imputed to the province.

The third ground raises a question of the utmost general importance. It is a question which, I think, must be answered in a sense opposed to Mr. Newcombe's contention. It is, I think, true—as Mr. Newcombe argues—that the Dominion alone was competent to authorize the treaty in question. In that matter the Dominion, in other words, represented the authority of the Crown. But in what sense was the Dominion the agent of Ontario? I think the argument seems to come to this, that because the whole authority of the Crown in respect of the Indians and

[Page 127]

the Indian lands is committed to the Dominion, the Dominion may in the course of exercising that authority in the prosecution of Dominion policy conceived in the interest of the Dominion as a whole undertake on behalf of a province without its consent and thereby effectively bind the province to an obligation involving the payment of money. That is a far-reaching proposition, and one which I think cannot be maintained.

The Crown on the advice of the Legislature of a province (acting within the limits prescribed by the "British North America Act") may authorize the undertaking on behalf of the province of a financial or other obligation. I do not think the Act creates any other agency having authority to fasten upon a province as such any such obligation. The view advanced on behalf of the Dominion, as I have just indicated it, is, of course, the negation of this; but, as I conceive, that view is incompatible with the true view of the status of the provinces under the "British North America Act."

The status is thus explained by Lord Watson who, speaking on behalf of the Judicial Committee in The Liquidators of the Maritime Bank v. The Receiver General of New Brunswick[48], at pp. 441 and 442, said:

The object of the Act was neither to weld the provinces into one, nor to subordinate provincial governments to a central authority, but to create a federal government in which they should all be represented, entrusted with the exclusive administration of affairs in which they had a common interest, each province retaining its independence and autonomy. That object was accomplished by distributing, between the Dominion and the provinces, all powers executive and legislative, and all public property and revenues which had previously belonged to the provinces; so that the Dominion

[Page 128]

Government should be vested with such of these powers, property, and revenues as were necessary for the due performance of its constitutional functions, and that the remainder should be retained by the provinces for the purposes of provincial government * * *.

It is clear, therefore, that the provincial legislature of New Brunswick does not occupy the subordinate position which was ascribed to it in the argument of the appellants. It derives no authority from the Government of Canada, and its status is in no way analogous to that of a municipal institution which is an authority constituted for purposes of local administration. It possesses powers, not of administration merely, but of legislation, in the strictest sense of that word; and, within the limits assigned by section 92 of the Act of 1867, these powers are exclusive and supreme.

The independence of the provinces as regards their control of the property and revenues appropriated to them by the Act has been emphasized in a series of decisions; and it has been frequently pointed out that the parts of the Act in which property and revenues are declared to "belong to" or to be "the property of" the provinces import simply that the public property and revenues referred to while continuing to be vested in the Crown are made subject to the exclusive disposition of the provincial legislatures. Thus Lord Watson in St. Catharines Milling Co. v. The Queen[49], at p. 5.6:

In construing these enactments it must always he kept in view that, wherever public land with its incidents is described as "the property of" "or as "belonging to" the Dominion or a province, these expressions merely import that the right to its beneficial use, or to its proceeds, has been appropriated to the Dominion or to the province, as the case may be, and is subject to the control of its legislature, the land itself being vested in the Crown * * *.

And again at pp. 57 and 58:

The enactments of section 109 are, in the opinion of their lordships, sufficient to give to each province, subject to the administration and control of its own legislature, the entire beneficial interest of the Crown in all lands within its boundaries which at the time of the union were vested in the Crown, with the exception of

[Page 129]

such lands as the Dominion acquired right to under section 108, or might assume for the purposes specified in section 117. Its legal effect is to exclude from the "duties and revenues" appropriated to the Dominion, all the ordinary territorial revenues of the Crown arising within the provinces.

In Attorney-General of Ontario v. Mercer[50] Lord Selborne referring to the section just mentioned uses these words:

The general subject of the whole section is of a high political nature; it is the attribution of Royal territorial rights, for purposes of revenue and government to the provinces in which they are situate, or arise.

And in the Attorney-General of Canada v. Attorney-General of Ontario et al.[51] Lord Herschell delivering the judgment of the Judicial Committee after a full argument in which all the provinces participated, said, at pp. 709 and 710:

It must also be borne in mind that there is a broad distinction between proprietary rights and legislative jurisdiction. The fact that such jurisdiction in respect of a particular subject-matter is conferred on the Dominion Legislature, for example, affords no evidence that any proprietary rights with respect to it were transferred to the Dominion. There is no presumption that because legislative jurisdiction was vested in the Dominion Parliament proprietary rights were transferred to it. The Dominion of Canada was called into existence by the British North America Act, 1867. Whatever proprietary rights were at the time of the passing of that Act possessed by the provinces remain vested in them except such as are by any of its express enactments transferred to the Dominion of Canada.

And again at p. 713:

If, however, the legislature purports to confer upon others proprietary rights where it possesses none itself, that in their lordships' opinion is not an exercise of the legislative jurisdiction conferred by section 91. If the contrary were held, it would follow that the Dominion might practically transfer to itself property which has, by the British North America Act, been left to the provinces and not vested in it.

[Page 130]

I am unable to reconcile these views touching the constitutional position of the provinces and the measure of control conferred upon the provincial legislatures respecting the property and revenues vested in them with the contention that the grant to the Dominion of legislative power in respect of the subjects enumerated in section 91 implies the right in the exercise of that power to dispose, indirectly (without the consent of the provincial legislatures) of such properties and revenues by fastening upon the provinces without any such consent obligations of a financial character. This view, if accepted, would, I think, be simply destructive of what Lord Watson in the passage quoted above describes as "the independence and autonomy of the provinces."

It remains to consider the observation of Lord Watson in the course of the judgment delivered in The St. Catharines Milling Co. v. The Queen[52], and that of Strong C.J. in the Robinson Treaty Case[53]. The observation of Strong C.J. (being a dictum founded upon the observation of Lord Watson) will not require separate consideration.

The observation of Lord Watson forms, I think, no part of the decision of the Privy Council. The question which it touches upon was not raised upon the record nor discussed at the hearing or considered by the learned trial judge; it was neither raised nor considered before this court; it was not argued as one of the points in dispute before the Judicial Committee. The formal judgment of that tribunal does not mention it. These circumstances in themselves are, I think, sufficient to shew that it cannot be treated as a term of the judgment in favour

[Page 131]

of the province; and as the consideration of any equities between the province and the Dominion arising ont of the obligations assumed by the Dominion under the treaty was, obviously, not regarded by Lord Watson as in any way germane to the sole question decided (and the sole question litigated)—the legal title to the lands affected by the surrender—it should seem that the remark in question ought not to be regarded as indicating one of the grounds on which the decision proceeded.

It is, I suppose, needless to say that any observation of Lord Watson whether strictly authoritative or not (even a passing expression of opinion) is entitled to and would always receive the most careful and respectful consideration of this court; but when such an observation is addressed to an unargued question depending to some extent upon the consideration of facts and circumstances not brought to the attention of the court one cannot, I think, relieve one's self from one's responsibility by treating it as immediately decisive.

There are two reasons why, with great respect, I think the dictum in question should not govern our decision in this case. The first is based upon the circumstance I have just mentioned, viz., that the facts now before us were not all before the Privy Council in the St. Catharines Milling Go. Case[54], and even upon such as were before them there was no argument touching their bearing upon the point now in issue.

The second is that it is, I think, at least doubtful whether Lord Watson was in that observation intending to pass upon any question of legal right. The question of the legal right of the Dominion to indemnity

[Page 132]

from the province had not, as I have said, been litigated; and it was consequently still open to the Dominion to raise it in another proceeding. I do not think that in these circumstances Lord Watson could have intended to anticipate the action of the courts in respect of a question which they might be called upon to decide in an appropriate proceeding and commit the Judicial Committee to an opinion upon it in a proceeding in which that question had not been discussed. The preferable view of the import of the remark seems to be that upon the facts as they appeared as a matter of fair dealing Ontario would be expected to assume the obligations in question. In the view I have expressed concerning the functions of the Exchequer Court in deciding controversies such as this, such an opinion, even if one should not, upon a consideration of all the circumstances, differ from it, would not be conclusive of this appeal.

The appeal should be allowed and the action dismissed without costs.

Appeal allowed without costs.

Solicitor for the appellant: A. Emilius Iriving

Solicitor for the respondent: W. D. Hogg.