Supreme Court of Canada
Michigan Central Railroad Co. v. Wealleans, (1895) 24 S.C.R. 309
Date: 1895-03-11
The Michigan Central Railroad Company (Defendants) Appellants;
and
John Wealleans (Plaintiff) Respondent.
1894: October 25; 1895: March 11.
Present: Sir Henry Strong C.J., and Taschereau, Gwynne, Sedgewick and King JJ.
ON APPEAL FROM THE COURT OF APPEAL FOR ONTARIO.
Railway Co.—Agreement with foreign Co.—Lease of road for term of years—Transfer of corporate rights.
The Canada Southern Railway Co., by its charter and amendments thereto, has authority to enter into an agreement with any other railway company with respect to traffic arrangements or the use and working of the railway or any part thereof, and by the Dominion Railway Act of 1879 it is authorized to enter into traffic arrangements and agreements for the management and working of its railway with any other railway company, in Canada or elsewhere, for a period of twenty-one years.
Held, reversing the decision of the Court of Appeal, that authority to enter into an arrangement for the “use and working” or “management and working” of its road conferred upon the company a larger right than that of making a forwarding agreement or of conferring running powers; that the Co. could lawfully lease a portion of its road to a foreign company and transfer to the latter all its rights and privileges in respect to such portion, and the foreign company in such case would be protected from liability for injury to property occurring without negligence in its use of the road so leased, to the same extent as the Canada Southern Railway Co. is itself protected.
APPEAL from a decision of the Court of Appeal for Ontario, reversing the judgment of the Queen’s Bench Division in favour of the defendants.
The action was originally brought by Wealleans against the Canada Southern Railway Company and the Michigan Central Railroad Company to recover damages for the loss of property destroyed by fire from a locomotive of the Michigan Central when running over the Canada Southern’s road. The Michigan Central pleaded
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that it was using the line under an agreement made in 1882 with the other company and the action against the Canada Southern having been dismissed, it being admitted that the loss of plaintiff’s property was not due to negligence, the only question for the court was whether or not, under the laws in force in Ontario relating to railways, the Canada Southern could lawfully lease its road for a term of years to a foreign company.
The statutes affecting the case are set out in the judgment of Mr. Justice Sedgewick.
Saunders for the appellant. The Canada Southern Railway Co., by its charter is authorized to make traffic arrangements with any other company and it makes no difference that in this case it was with a foreign company. Canadian Pacific Railway Co. v. Western Union Telegraph Co. And the Railway Act of 1879 authorizes an agreement with a foreign company.
The more recent decisions of our courts are in favour of upholding agreements such as these. Bickford v. Grand Junction Railway Co.; Attorney General v. Great Eastern Railway Co.
Moss Q.C. for the respondent. A corporation cannot give to others the right to exercise its special powers and franchises. Richmond Waterworks Co. v. Vestry of Richmond; Hinckley v. Gildersleeve.
And see Mann v. Edinburgh Tramways Co.
THE CHIEF JUSTICE concurred in the judgment of Mr. Justice Sedgewick.
TASCHEREAU J.—I was of opinion at the argument that we should allow this appeal without reserving judgment, and I have not changed my views since
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But for the judgment of the Court of Appeal in his favour, I would have thought the respondent’s contentions utterly untenable. I need not say more than to adopt the cogent reasoning of Hagarty C.J. who dissented in the Court of Appeal.
GWYNNE J. concurred.
SEDGEWICK J.—This is an action brought by the plaintiff against the Canada Southern Railway Company and the Michigan Central Railroad Company for damages occasioned by the burning of his buildings caused by sparks from a locomotive of the latter company while operating the road.
The case was tried before Mr. Justice Street who dismissed the action against both companies upon the ground, which is now admitted, that no negligence on the part of either company was shown. Upon appeal to the Divisional Court (Armour C.J. and Falconbridge J.) the judgment of the trial judge was confirmed. Upon appeal to the Court of Appeal judgment was given ordering a new trial as against the Michigan Central Company, Chief Justice Hagarty dissenting.
The sole question to be determined upon this appeal is as to whether the defendant company is liable for the damage occasioned to the plaintiff by the fire in question, although that damage was wholly accidental, having been caused (it is admitted) by sparks from the defendant company’s engine, without negligence of any kind on the part of the defendants or their employees. In order to determine this question a careful examination must be made of the various statutes under which the Canada Southern Railway was built, and under which the Michigan Central Railroad Company professes to have authority to operate the line, for there can be no question that if the defendant company were at the time of the accident operating
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their locomotive at the place of the accident without statutory authority, then, upon the authority of Fletcher v. Rylands they are liable for any damage occasioned by their having brought the dangerous machine into the vicinity of the plaintiff’s lands. The construction of that portion of the Canada Southern Railway which runs through these lands was first authorized by an Act of the province of Ontario of 1868 (31 Vic. ch. 14) and by section 2 of that Act a large number of sections of the Act respecting railroads (chap. 66 of the Consolidated Acts of Canada, 1859), including the clauses of that Act respecting powers, became part of the Canada Southern Railway Company’s charter, then known as the Erie and Niagara Extension Railway Company. By a provincial Act 33 Vic. ch. 32 (1869) the company received its present name, and by another Act of 1872 the following further powers were conferred upon the company:
The Company may make arrangements for the conveyance or transit of traffic with any other railway company or companies, or with the International or any other railroad bridge, or tunnel company, and may enter into an agreement with such other company or companies with respect to the terms of such traffic arrangements, or with respect to all or any of the matters following, namely: The maintenance and management of the works of the companies respectively, or of any one or more of them or of any part thereof respectively; the use and working of the railway or bridge, or of any part thereof respectively and the conveyance of the traffic thereon; the fixing, collecting and apportionment of the tolls, rates, charges, receipts and revenues levied, taken or arising in respect of traffic; and the joint or separate ownership, maintenance, management and use of a station or other work or any part thereof respectively.
In 1874 the Parliament of Canada in pursuance of the provisions of the British North America Act, declared the Canada Southern Railway to be a work for the general advantage of Canada, and by that Act
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also declared the company to be a “body corporate and politic within the jurisdiction of Canada for all and every the purposes mentioned in, and with all and every the franchises, rights, powers, privileges and authorities by virtue of the provincial Acts,” and further that the company should in all matters occupy the same position, and stand in the same plight and condition in every respect, as the company incorporated under the provincial Acts.
In 1868 the Parliament of Canada substantially re-enacted the Railway Act in the Consolidated Statutes of old Canada, and at the time of the accident the general law in force throughout Canada respecting railways was embodied in the Consolidated Railway Act of 1879 (42 Vic. ch. 9) a portion of section 60 being as follows:
The directors of any railway company may at any time, and from time to time, make and enter into any agreement or arrangement with any other company, either in Canada, or elsewhere, for the regulation and interchange of traffic passing to and from their railways, and for the working of the traffic over the said railways respectively, or for either of those objects separately, and for the division and apportionment of tolls, rates and charges in respect of such traffic, and generally in relation to the management and working of the railways, or any of them, or any part thereof, and of any railway or railways in connection therewith, for any term not exceeding twenty-one years, and to provide, either by proxy or otherwise, for the appointment of a joint committee or committees for the better carrying into effect any such agreement or arrangement, with such powers and functions as may be considered necessary or expedient, subject to the consent of two-third of the stockholders, voting in person or by proxy.
this latter provision being a substantial re-enactment of a similar provision of the Dominion Railway Act of 1868.
Such was the state of legislation in force regarding the Canada Southern Railway on the 12th December, 1882, on which date an agreement was entered into between the defendant companies, namely, be-
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tween the Canada Southern Railway Company and the Michigan Central Railroad Company, by which the Canada Southern practically transferred to the Michigan Central for a term of twenty-one years the exclusive right to use and operate the former company’s line of railway, at that time extending from Niagara River to Detroit River, the object being to enable the Michigan Central Railroad to have under their management and control a continuous line of railway from the Eastern States on the Atlantic sea board to the city of Chicago, and to the North-western States; and from that time to the present the Michigan Central have continuously operated under the agreement in question the Canada Southern line, the latter company, however, maintaining its corporate existence and receiving at stated periods the consideration specified in the agreement for the transfer therein contained.
It may be at once admitted that a railway company cannot delegate its franchises except by the authority of a statute, and the question here is: Could the Canada Southern Railway Company under their charter and the general railway Acts incorporated therein, delegate to any other company the right which they possessed of exclusively using and operating their own railway for a period of twenty-one years? In the determination of this question reference, I think, must principally be had to the provincial Act of 1872, section 9, to which Act it seems to me sufficient consideration has not been given in the courts below. Now what does that clause say? The company may enter into an agreement with any other railway company with respect to traffic arrangements or with respect to the use and working of the railway or of any part thereof, and the conveyance of traffic thereon and the joint or separate ownership, maintenance, manage-
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ment and use of a station or other work, or any part thereof. In my view this provision gives a special power to the Canada Southern Railway Company to delegate to any other railway so much of its franchise as authorizes it to use and work its railway. It confers upon the company a much larger right than the right of making a forwarding agreement or an agreement for conferring running powers or having reference to the convenient or more economical working of the joint traffic. No company but a company having the exclusive operation of a road, such as the Canadian Pacific Railway Company has over its road, or the Grand Trunk Railway Company has over its road, can be said to be engaged in “the use and working” of a railway. That phrase is applicable only to the company possessing the road, not to a company having mere running or other rights over it. Besides, the clause would seem to infer that traffic arrangements in connection with the railway was one thing and the use and working of the railway was another thing, a larger and more general thing; and I take it that these words were inserted in this clause for the very purpose of enabling such an agreement to be entered into as the one in question. If then the Canada Southern Railway Company had a right to operate a line of railway at the place where the accident happened, it had a right to transfer to any other company a right to use and work the railway at that place and that company as a consequence would succeed to all the rights, privileges and immunities of the former company, one of these rights being the right to run a locomotive engine the motive power of which was steam, without negligence, over the line of railway there. There can, I think, in this case be no question as to the powers which the Michigan Central Railroad Company possesses under the authority of
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the legislature of the state of Michigan. The provincial statute must be read as if it had enacted that the Canada Southern Railway Company might enter into an agreement with the Michigan Central Railroad Company for the use and working of its line for a period of twenty‑one years. Whether as between the Michigan Central Railroad Company and its shareholders, the company would require authority from its own state legislature to take advantage of the privileges conferred upon it by the Ontario Legislature is a question which does not arise in the present case. The legislature has, in my opinion, given authority to the Michigan Central Railroad Company to operate the railroad in question, without negligence, and no British subject resident in Canada, who has in Canada been accidentally injured by such operation, can be permitted to say that such operation was illegal as not possessing statutory authority for its exercise. The judgment of the Court of Appeal proceeded mainly upon the ground that section 131 of the Dominion Railway Act, which likewise at the time of the accident was binding upon the defendant companies, was not wide enough in its terms to make legal the agreement of December, 1882, between the two companies; but it must be borne in mind that that clause was substantially the same as section 48 of the Dominion Railway Act of 1868, which Act, it must be presumed, was before the Ontario Legislature when it was passing the Act of 1872, and that inasmuch as the powers given in section 9 of the Ontario Act are apparently broader, having reference to traffic, tolls, running powers and management and working generally, it must be presumed that there was an intention on the part of the legislature to give the company larger powers than those specified in the Dominion Act. At the same time I am reluctantly compelled to disagree
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with the opinion of the majority of the Court of Appeal in their construction of this particular section of the Dominion Railway Act. In a country coterminous as Canada is for nearly three thousand miles with the United States, where it is necessary in the interest of both countries with a view to the interchange of commerce and the carrying on of traffic, that the lines of railway in the one country should be worked in conjunction with the lines of the other, public policy would seem to suggest that every facility should be given with a view to the cheap and rapid transit of merchandise from one part of the country to the other, and it was doubtless in that view that the Canadian Parliament expressly provided that Canadian railway companies might enter into agreement with foreign railway companies, or as the statute says, “any other company either in Canada or elsewhere.” The object of the legislature was to facilitate in every possible way the operation and working of railways generally throughout Canada, and to legalize the bringing in of foreign railways and the capital of foreign railway companies for that purpose. We are therefore required to give such a construction to the section in question as will best give effect to that policy provided we keep within the expressed intention of the legislature as manifested in the section itself. Now that section authorizes the directors of any railway company to make arrangements with any other company either in Canada or elsewhere in relation to the management and working of the railway for a period not exceeding twenty-one years. The words “management and working” are not so broad or all inclusive as the words “use and working” in the provincial Act. They are, however, in my judgment, sufficiently comprehensive to cover the agreement in question. If one company may by agreement hand over the management and working
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of its railway to another company, that, it seems to me, would enable that other company to secure the exclusive right to manage and work the railway. The agreement in question was one not broader than this in its character, and therefore within the statute, not beyond it.
To return, however, to the provincial statute it has been urged that under the provisions of section 92 of the British North America Act a local legislature could not authorize a provincial railway company to enter into an agreement with a United States railway company, the effect of which would be to connect the railway system of the United States or any of them with the Canadian railway system, with a view of providing for unity of management over a continuous line of railway running partly in one country and partly in the other. It is not necessary to determine this question here for whether the provincial Act of 1872 was ultra vires or not, all the powers therein purported to be conferred were conferred upon it by the Canadian Act of 1874, and thereby section 9 of the provincial Act in respect to the use and working of the railway was ratified and confirmed.
I am further of opinion that the plaintiff in this action cannot under the circumstances set up in support of his claim that the agreement under which the appellant company operated the railway was ultra vires. Clearly the appellant company were running the train in question by the leave and license of the Canada Southern Railway Company. It is admitted that the Canada Southern Railway Company had the statutory right to give running powers to the appellant company. It had the right to say to the appellant company that at certain times and subject to certain conditions you may run your trains over our railway. The Canada Southern Railway Company did say so to the
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appellant company, and it was by virtue of their saying so that the appellant company was there. I do not think that a stranger accidently injured, injured without any fault on the part of the appellant company, can be permitted to say to the appellant company: it is true I was accidently injured by your locomotive; it is true that your locomotive was there with the permission and by the authority of the Canada Southern Railway Company; it is true that the Canada Southern Railway Company had authority from the legislature to permit you to be there and to operate your locomotive there, but the agreement was too wide. The Canada Southern Railway Company gave you larger rights and more extended powers than the legislature authorized it to do, and therefore you must pay me. This position, I submit, a stranger cannot set up. I have not been able to find express authority upon this point, but upon the principle that the acts of the corporations in excess of their corporate powers can be attacked only by the corporation itself or by its shareholders, or by the Attorney General in the interests of the public, or by others specially interested, laid down in such cases as Stockport Dist. Waterworks Co. v. Mayor, &c., of Manchester, and Pudsey Coal Gas Co. v. Corporation of Bradford, the plaintiff cannot appeal in the present case to the doctrine of ultra vires. It is unnecessary for me to refer at length to the cases of Jones v. Festiniog Ry. Co.; Powell v. Fall; Hilliard v. Thurston; cited at the argument. In all of these cases the courts found that there was no statutory authority for the use of the instrument by which the injury was occasioned, but the principle laid down by Cockburn, C.J. in Vaughan v. Taff Vale Ry. Co. “when the legislature has
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sanctioned and authorized the use of a particular thing, and it is used for the purpose for which it was authorized, and every precaution has been observed to prevent injury, the sanction of the legislature carries with it this consequence, that if damage results from the use of such thing independently of negligence, the party using it is not responsible” was clearly recognized.
As already pointed out there was, in my view, statutory authority for the use of the locomotive in question at the time of the accident, and there being no negligent use of it the defendants are not liable.
I am of opinion that the appeal from the Court of Appeal should be allowed with costs here and in that court and that the judgment of the Queen’s Bench Divisional Court, and the judgment of the trial judge should be restored.
KING J. concurred.
Appeal allowed with costs.
Solicitors for appellants: Kingsmill, Saunders & Torrance.
Solicitors for respondent: Meredith, Cameron & Judd.
21 Ont. App. R. 297, sub Railway Co. nom. Wealleans v. Canada Southern
11 Ch. D. 449; 5 App. Cas. 473.
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