Supreme Court of Canada
Great West Saddlery Co v. Davidson, (1919) 59 S.C.R. 45
Date: 1919-05-06
The Great West Saddlery Company (Defendant). Appellant;
and
George Davidson (Plaintiff). Respondent.
1919: February. 4; 1919: May 6.
Present: Sir Louis Davies C.J. and Idington, Anglin, Brodeur and Mignault JJ.
ON APPEAL FROM THE COURT OF APPEAL FOR MANITOBA.
Constitutional law—Statute—Manitoba "Companies Act," R.S.M., [1913] c. 35—Licence to carry on business in Province—Dominion Companies.
The provisions of Part IV, Classes V and VI, of the Manitoba "Companies Act" (R.S.M., [1913] ch. 35) requiring companies incorporated by the Parliament of Canada to be registered and take out an annual licence as a condition of doing business in the province are intra vires of the legislature. John Deere Plow Co. v. Wharton ([1915] A.C. 330; 18 D.L.R. 353, distinguished, Davies C.J. and Mignault J. dissenting.
APPEAL from a decision of the Court of Appeal for Manitoba affirming the judgment at the trial in favour of the plaintiff.
This appeal raises the same question as that in the case immediately preceding.
The material provisions of the Manitoba "Companies Act," the validity of which is in question, are the following:—
106. In this part, except where the context requires otherwise; the expression "corporation'' means a company, institution or corporation created otherwise than by or under the authority of an Act of the Legislature of Manitoba.
108. Corporations of the classes mentioned in this section are required to take out a license under this part, viz.:
Class V—Corporations (other than those mentioned in section 107) created by or under the authority of an Act of the Parliament of Canada, and authorized to carry on business in Manitoba;
Class VI—Corporations not coming within any of the foregoing classes.
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118. No corporation coming within Class V or VI shall carry on within Manitoba any of its business unless and until a license under this part so to do has been granted to it, and unless such license is in force, and no company, firm, broker, agent or other person shall, as the representative or agent of or acting in any other capacity for any such corporation, carry on any of its business in Manitoba unless and until such corporation has received such license and unless such license is in force; provided that taking orders for or buying or selling goods, wares and merchandise by travellers or by correspondence, if the corporation has no resident agent or representative and no office or place of business in Manitoba, shall not be deemed a carrying on of business within the meaning of this part; provided also that the onus of proving that a corporation has no resident agent or representative and no office or place of business in Manitoba shall, in any prosecution for an offence against this section, rest upon the accused.
122. If any corporation coming within Class V or VI shall, contrary to the provisions of section 118, carry on in Manitoba any part of its business, such corporation shall incur a penalty of fifty dollars for every day upon which it so carries on business, and so long as it remains unlicensed under this part it shall not be capable of maintaining any action, suit or other proceeding in any Court in Manitoba in respect of any contract made in whole or in part within Manitoba in the course of or in connection with business carried on contrary to the provisions of said section 118; provided, however, that upon the granting or restoration of the license, or the removal of any suspension thereof, such action, suit or other proceeding may be maintained as if such license had been granted or restored, or such suspension had been removed, before the institution thereof.
123. If any company, firm, broker, agent or other person shall, contrary to the provisions of section 118, as the representative or agent of or acting in any other capacity for a corporation, carry on any of its business in Manitoba, such company, firm, broker, agent or other person shall incur a penalty of twenty dollars for every day upon which it, he or they so carry on such business.
119. No company, corporation or other institution not incorporated under the provisions of the statutes of this Province, shall be capable of acquiring, holding, mortgaging, alienating or otherwise disposing of or lending money on the security of any real estate within this Province, unless under license issued under any statute of this Province in that behalf.
(2) The foregoing provisions of this section 119 shall apply whether the said company, corporation or institution directly acquires, holds, mortgages, alienates, or otherwise disposes of, or lends money on the security of any real estate within the Province, or through any agent, personal or otherwise.
112. A corporation receiving a license under this part may, subject to the limitations and conditions of the license, and subject to the provisions of its own charter, Act of incorporation or other creating instrument acquire, hold, mortgage, alienate and otherwise dispose of
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real estate in Manitoba and any interest therein to the same extent and for the same purposes and subject to the same conditions and limitations as if such corporation had been incorporated under Part I of this Act, with power to carry on the business and exercise the powers embraced in the license.
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113. The powers of any corporation, licensed under the provisions of this part, with respect to acquiring and holding real estate, shall be limited in its license to such annual or actual value as may be deemed proper.
126. For a license to a corporation coming within Class V or VI, such corporation shall pay to His Majesty for the public uses of Manitoba such fees as may be fixed by the Lieutenant-Governor-in-Council, and no license shall be issued until the fee therefor is paid; provided that, with respect to a corporation carrying on outside of Manitoba an established business, when applying for a license under this part, the Lieutenant-Governor-in-Council may reduce the fee payable for such license to such sum as he may think just, having regard to the nature and importance of the business proposed to be carried on in Manitoba and the amount of capital proposed to be used therein. A corporation seeking a reduction under this section shall give to the Provincial Secretary such statements and information respecting its business and financial position as he may call for, and shall verify the same in such manner as he may require.
(2) There shall be paid to His Majesty for the public uses of Manitoba, upon transmitting to the Provincial Secretary the statement required by section 120, the fee of five dollars if the capital stock of the corporation does not exceed the sum of one hundred thousand dollars, and a fee of ten dollars if the capital stock of the corporation exceeds the said sum of one hundred thousand dollars, and until such fee has been paid such statement shall be deemed not to have been made and transmitted as required by said section.
109. A corporation coming within Class V shall, upon complying with the provisions of this part and the regulations made hereunder, receive a license to carry on its business and exercise its powers in Manitoba.
110. A corporation coming within Class VI may, upon complying with the provisions of this part and the regulations made hereunder, receive a license to carry on the whole or such parts of its business and exercise the whole or such parts of its powers in Manitoba as may be embraced in the license; subject, however, to such limitations and conditions as may be specified therein.
121. If a corporation receiving a license under this part makes default in observing or complying with the limitations and conditions of such license, or the provisions of the next preceding section, or the regulations respecting the appointment and continuance of a representative in Manitoba, the Lieutenant-Governor-in-Council may suspend or revoke such license in whole or in part, and may remove such suspension or cancel such revocation and restore such license.
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Notice of such suspension, revocation, removal or restoration shall be given by the Provincial Secretary in The Manitoba Gazette.
The trial court and Court of Appeal held these provisions intra vires.
Wenegast for the appellant
Lionel Davis for the respondent
Chrysler K.C. for the Saskatchewan Government.
C. C. Robinson for the Dominion of Canada.
Nesbitt K C. and Barton for the Province of Ontario.
The Chief Justice (dissenting) —This is an appeal from the judgment of the Court of Appeal for Manitoba which, on an equal division of opinion amongst the judges of that court, upheld the judgment of the trial judge affirming the constitutionality of those provisions of the Manitoba "Companies Act" which were in question in that case.
The case was one in effect asking the court to construe and apply to the sections in question of that Act the principles laid down by the Judicial Committee in the case of John Deere Plow Co. v. Wharton, which should govern and control provincial legislation with regard to Dominion companies.
Amongst those principles it was stated by their Lordships of the Judicial Committee that the
province cannot legislate so as to deprive a Dominion company of its status and powers.
Their Lordships went on, however, to state that this does not mean that the companies could exercise those powers in contravention of the laws of the province generally, but simply that the status and powers of the Dominion company as such cannot be destroyed by provincial legislation, and they held that it followed from those premises that the provisions of the Act of
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British Columbia there in question, compelling the Dominion company to obtain a provincial license or to be registered in the province as a condition of exercising its powers or of suing in the courts, are inoperative or these purposes
Applying these principles and this conclusion of their Lordships to the case of the sections of the Manitoba statute now before us, I cannot reach any other conclusion than that these sections are ultra vires.
I have, in my reasons for judgment in the case before us on the Saskatchewan "Companies Act," argued at the same time as this appeal was, stated shortly why I reached the conclusions that the sections there in question were not ultra vires of the legislature excepting one section requiring the company carrying on business within the province to take out a licence from the province to enable it to do so, and I there suggested that that one section might and should be construed as applicable only to foreign companies other than Dominion ones. In the case now before us, however, the legislation of Manitoba is entirely different from that of the Province of Saskatchewan, which latter legislation had been revised after the decision of the Judicial Committee in the Wharton Case, with the evident intention of complying with the principles laid down in that case.
It seems to be clear from the decision of the Judicial Committee in the Wharton Case, that while to some extent a provincial legislature may regulate and tax the activities within the province of a Dominion company, it cannot for any purpose prohibit or restrict its entry into the province or its carrying on business there.
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The primary question then with respect to this Manitoba legislation is whether the provisions of Part IV of its "Companies Act," purporting to confer upon such companies when a provincial licence has been obtained, and while it is in force, power to carry on business in Manitoba, exercise their powers, enforce their legal rights in the courts on contracts or otherwise and hold land necessary for their business and until the licence has been granted or after it has ceased to be in force to prohibit them from doing any and all of these things, are ultra vires of the provincial legislature.
In my opinion, such legislation, if upheld, would directly deprive the company of its status and powers conferred upon it by its Dominion charter and is clearly contrary to the principles laid down by the Judicial Committee in the Wharton Case as those which should control and prohibit provincial legislation with regard to Dominion companies.
The provisions of Part IV of the "Companies Act" of Manitoba are, it is true, not identical with those of the British Columbia Act condemned by the Wharton decision, but with the exception of section 18 of the Act of British Columbia empowering the registrar to refuse a licence under certain circumstances to a Dominion company, they are substantially the same.
I agree with the contention of Mr. Robinson, counsel for the Dominion Government, that the decision in the Wharton Case, did not rest upon section 18 or upon the fact that under it the registrar had refused a licence to the appellant. The Lord Chancellor, at page 338 of the report of that case, states the question for determination by their Lordships to be whether legislation prohibiting unlicensed companies from suing in the province and penalizing
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the carrying on of their business there and prohibiting the licensing of a company with the same name as one already in the province was valid legislation. At page 341 he answers his questions as follows:—
It follows from these premises that the provisions of the "Companies Act" of British Columbia which are relied on in the present case as compelling the appellant company to obtain a provincial license of that kind about which the controversy has arisen, or to be registered in the province as a condition of exercising its powers or of suing in the courts, are inoperative for these purposes.
The passage in the judgment at page 343, where their Lordships indicate what legislation would have been competent to the province, shews clearly that the whole of the legislation there in question and not merely section 18 of the British Columbia statute was decided to be beyond the provincial powers.
For these reasons and for those stated by Mr. Justice Perdue in the Court of Appeal, with which I fully agree, I am of opinion that this appeal should be allowed with costs and the questions with respect to the validity of the sections of the Manitoba Act answered as indicated by Mr. Justice Perdue.
Idington J.—(See page 26 ante.)
Anglin J.—Not, I confess, without some hesitation I have reached the conclusion that this appeal should be dismissed. A vital difference, in my opinion, between the Manitoba Act now under consideration and the British Columbia statute dealt with in John Deere Plow Co. v. Wharton, lies in the absence from the former of any provision similar to section 18 of the British Columbia Act (sec. 6, ch. 3, stats. of 1912), which enabled the registrar to refuse a licence to any Dominion company whose name resembled that of an existing company, society, or firm carrying on business,
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or calculated to deceive, or otherwise, in his opinion, objectionable. The refusal to grant a licence under this provision was the ground of complaint in the Wharton Case. The Manitoba Act, on the other hand, by section 109, expressly provides that the right of a Dominion company—which, in this respect, differs from any other extra provincial company (section 110) —shall be absolute.
I cannot but think that the condemnation in the Wharton Case, of several sections of the British Columbia Act prohibiting an unlicensed Dominion company from carrying on business, denying to it the aid of the provincial courts, etc., depended largely, if not entirely, on the fact that the obtaining of a licence by such a company was not made an absolute right under the statute but rested in the discretion of the registrar. These sections were not condemned by the Judicial Committee without qualification, but only "in their present form" (p. 343). It was the discretion which section 18 purported to vest in the registrar that, if valid, would amount to an interference
with the carrying on of the business in the province of a Dominion company
(p. 337)—that would enable that provincial official
to deprive a Dominion company of its status and powers.
Short of such interference or deprivation, the right of the province to subject Dominion companies, in common with others, to taxation and to registration for purposes pertaining to the administration of justice or to civil rights in the province, such as the holding of property and the making of contracts, is fully recognized by their Lordships (pp. 341 and 343) and the exercise of such control may take the form of requiring the Dominion company, like others, to take a licence
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to trade from the province. The power to exact compliance with legislation of that character implies the right to enforce it by appending appropriate sanctions. So long as the Dominion company, by paying the tax imposed or by making the entry required, has the absolute right to obtain the provincial licence its status as a company is unimpaired and the exercise of its powers and functions is not unduly fettered.
Of course a province may not, under the guise of taxation, or of the exercise of any of its powers under section 92 of the "British North America Act," in substance and reality require a Dominion company to re-incorporate or otherwise to acquire from it anything in the nature of status, capacity or powers. The "pith and substance" of the legislation must be taken into account. But I agree with the views expressed by Meredith C.J.O. in Currie v. Harris Lithographing Co., at pages 490-1, as to what should be the attitude of the court in approaching the consideration of this phase of the case Dealing with them in the spirit indicated by the learned Chief Justice I incline to accept the view of Mr. Justice Cameron that the concluding words of section 111 of the Manitoba statute,
such limitations and conditions as may be specified in the license,
which would otherwise be a source of embarrassment, should be held to relate only to the other "foreign" companies falling under section 110, which contains corresponding terms, and not to Dominion companies excluded from the application of section 110 and specially provided for by section 109, which entitles them to be licensed without qualifications.
Approaching the Manitoba statute with a view of upholding it, if by fair consideration of them the
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impeached provisions can be brought within the provincial legislative powers—I think they may be regarded as an exercise of the powers of direct taxation and in regard to the administration of justice and the control of civil rights conferred on the provincial legislatures by section 92 of the "British North America Act" and as not involving such an interference with status, capacity or powers of Dominion companies as would bring them within the condemnation of the Judicial Committee in the Wharton Case.
Brodeur J.—The appellant company is incorporated under the authority of the "Companies Act" of Canada (R.S.C. ch. 79) and is empowered to carry on its business throughout the Dominion of Canada and with its head office in Winnipeg, in the Province of Manitoba.
By the provisions of the "Companies Act" of Manitoba (R.S.M. ch. 35, secs. 106 to 130) which deal with extra provincial corporations, a licence has to be applied for by all those corporations to the provincial authorities; the licence will have to be obtained before these corporations can carry on business in the province and they will not be authorized to acquire and hold real estate in the province, except to the amount and the value mentioned in the licence.
The appellant company not having applied for such a licence, the respondent, Davidson, one of its shareholders, has instituted an action to force the company to take such a licence and the Attorney-General of Manitoba has intervened in support of that action and to maintain the validity of those provisions which were attacked by the appellant company. It is claimed by the latter that the decision of the Privy Council in the
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case of John Deere Plow Co. v Wharton, sustains their contention.
The John Deere Plow Co. Case, has reference to the construction of the "Companies Act" of British Columbia, which empowered the provincial authorities to refuse to a federal company the right to carry on business on the ground that there was another company of the same name upon the local register. The evidence shewed that the John Deere Plow Co had applied for a licence and that its application had been refused.
Such legislation and action affected the status of the company itself, though it had been incorporated by the Dominion authorities; and the Privy Council decided (1), that the legislation was ultra vires of a provincial legislature.
There is between the British Columbia legislation and the Manitoba legislation a vast difference. While the British Columbia legislation gave the provincial authorities the power to refuse the licence (sec. 18 B.C. statutes) the Manitoba statute declared on the contrary (sections 108-109), the corporations created under the authority of the Parliament of Canada and authorized by their Act of incorporation to carry on business in Manitoba are entitled to receive a licence to carry on their business.
What is the nature of that licence?
It is a method of taxation by which to secure a revenue for the purposes of the province. All the companies, whether incorporated by the local legislature, or by the Dominion Legislature, by any foreign state or any other provincial authority, are bound to pay the same licence in proportion to their capital.
The object of this legislation is also to keep the
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public informed as to the status of those companies. They have to file a certified copy of their charter; they are authorized to transact business under their charter; they must have in the province an agent to accept service of process in all suits, except in the case when the head office of the company is in the province, and to publish at their expense in the Official Gazette and in a newspaper the fact that they are duly authorized to carry on business in the province.
It is of the utmost importance for a person who contracts with a corporation to know the legal status of the latter and to see whether the contract contemplated is within the powers granted to the company by its Act of Incorporation or its letters patent.
The unauthorized and fictitious companies will then be prevented from deceiving the public since any one may obtain from the Provincial Secretary information as to any bonâ fide company and may ascertain the powers and standing of such company in the same manner as if the company had been incorporated by the provincial authority. Perhaps that knowledge could be procured in applying to the Dominion authorities, but who is going to inform the person desirous of procuring that information that the company is a federal company? It might be a foreign or provincial company. Besides, the distances in our country are so great that each province should have in its capital the necessary data as to the existence, the status and the capacity of any company.
The obligation for a federal company to take out a licence under the Manitoba statute is a law of general application. The companies incorporated locally have to pay just as well as the companies incorporated outside of the province.
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In the case of Bank of Toronto v. Lambe, that question has been decided. It was there held that though the banks are incorporated by the Dominion Parliament, they may be bound to contribute to the public objects of the provinces where they carry on business.
It is contended by the appellant that its status as a federal company is affected because the law provides that before carrying on business it is bound to take a licence.
There is a distinction to be made when it is said that a company will not trade in a district and that a company, if it does so, must have a licence.
That question came up in the case before the Privy Council in 1897, of the Brewers & Malsters v. Attorney General. It was the case of a Dominion company incorporated by a Dominion charter and authorized by a Dominion licence to manufacture liquor in all the provinces of the Dominion. The Ontario Legislature passed an Act declaring that before a person could sell liquor in Ontario he would have to take a licence from the provincial authorities. That legislation was held valid.
I am unable to distinguish this case from that decided by the Privy Council.
It is contended also that the legislation is ultra vires, because there is a restriction as to the powers of this federal company to hold real estate in the province.
That contention is disposed of by the judgment of the Privy Council in the case of Colonial Building Assoc. v. Attorney-General of Quebec.
In the John Deere Plow Co. Case, so much relied upon by the appellant, the noble lord who delivered the judgment said on that point:—
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Thus notwithstanding that a Dominion company has capacity to hold land, it cannot refuse to obey the statutes of the province as to mortmain (Colonial Building & Investment Association v. Attorney-General of Quebec) , or escape the payment even though these may assume the form of requiring as the method of raising a revenue, a licence to trade which affects a Dominion company in common with other companies (Bank of Toronto v. Lambe) .
That expression of views disposes, in my opinion, of the contentions of the appellant company. Its appeal fails and it should be dismissed with costs.
Mignault J. (dissenting)—I so fully agree with the reasons for judgment of Mr. Justice Perdue; of the Court of Appeal of Manitoba, that it does not seem necessary to state at any length why I am in favour of allowing this appeal.
In expressing my opinion I shall strictly confine myself to the concrete case which is before this court and avoid stating general rules governing, in matters of company legislation, the jurisdiction of the Dominion Parliament or of the provincial legislatures, the more so as the Judicial Committee of the Privy Council has formulated, in the case of the John Deere Plow Co. v. Wharton, a plain rule whereby the present controversy can be decided.
The test of the validity of the Manitoba statute can therefore be stated, in the language of their Lordships in the John Deere Plow Co. Case, at page 341, as follows:—
It is enough for present purposes to say that the province cannot legislate so as to deprive a Dominion company of its status and powers. This does not mean that these powers can be exercised in contravention of the laws of the province restricting the rights of the public in the province generally. What it does mean is that the status and powers of the Dominion company as such cannot be destroyed by provincial legislation * * *
It follows from these premises that these provisions of the "Companies Act" of British Columbia which are relied on in the present case
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as compelling the appellant company to obtain a provincial licence of the kind about which the controversy has arisen, or to be registered in the province as a condition of exercising its powers or of suing in the courts, are inoperative for these purposes. The question is not one of enactment of laws affecting the general public in the province and relating to civil rights, or taxation, or the administration of justice. It is in reality whether the province can interfere with the status and corporate capacity of a Dominion company in so far as that status and capacity carry with it powers conferred by the Parliament of Canada to carry on business in every part of the Dominion. Their Lordships are of the opinion that this question must be answered in the negative.
Applying this test to the legislation in question, which was adopted before the John Deere Plow Co. Case was decided there can be no doubt that it cannot be sustained. I am here satisfied to adopt the statement of the purport and effect of this legislation made by Mr. Justice Perdue:—
In the "Manitoba Companies Act," Part IV, the expression "corporation" means a company, institution or corporation created otherwise than by or under an Act of the Legislature of Manitoba (section 106). Corporations created by or under the authority of an Act of the Parliament of Canada and authorized to carry on business in Manitoba, referred to as Class V, are required to take out a licence (section 108). To this there are certain exceptions, but these do not include the defendant. Class VI includes corporations not coming within the preceding five classes. A corporation coming within the class to which the defendant belongs shall, upon complying with the provisions, of Part IV and the regulations made thereunder and paying the fee required, receive a licence to carry on its business and exercise its powers in Manitoba (section 109). A corporation coming within the class to which the defendant belongs or within Class VI "may upon complying with the provisions of this part (Part IV) and the regulations made hereunder, receive a licence to carry on the whole or such parts of its business and exercise the whole of such parts of its powers in Manitoba as may be embraced in the licence; subject, however, to such limitations and conditions as may be specified therein." See section III. A corporation receiving a licence may, subject to the limitations and conditions of the licence and of its own charter, acquire, hold and dispose of real estate in Manitoba (section 112); but it shall not be capable of acquiring or disposing of real estate unless it has been licensed (section 119). No corporation coming within the class which includes defendant shall carry on any of its business in Manitoba
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unless a licence has been granted to it and is in force, and no agent of the corporation may carry on its business in Manitoba until a licence has been obtained; exception is made in regard to buying or selling by travellers or correspondence where the corporation has no resident agent or place of business in Manitoba (section 118). If such a corporation carries on business in Manitoba without a licence it shall incur a penalty of $50.00 a day and, so long as it remains unlicensed, it shall not be capable of maintaining any action, suit or proceeding in any court in Manitoba in respect of any contract made in whole or in part in Manitoba (section 122). If its agent carries on any of the business of such a corporation in Manitoba while it is unlicensed he shall be liable to a penalty (section 123).
This legislation, no doubt, differs in degree from the British Columbia statute, the validity of which was questioned in the John Deere Plow Co. Case, but it clearly fails when the jurisdiction of the Manitoba Legislature is measured by the test laid down in that case. This statute compels the appellant company to obtain a licence and to be registered as a condition of exercising its powers and of suing in the courts. This the legislature could not do.
It has been contended that this is a taxation measure and as such was one which it was competent for the legislature to enact. It is further urged that the province has exclusive mortmain jurisdiction and that, therefore, it is for it alone to determine the conditions under which a Dominion corporation can acquire and hold property.
I think the answer is obvious. Granting the jurisdiction of the province in these matters the province cannot, in my opinion, so exercise this jurisdiction as to deprive a Dominion company of its status or powers. In other words, it cannot, in imposing taxation, prevent the company from exercising its powers until it has paid the taxes imposed. Nor can it, as was done by this statute, deprive the company of its power and capacity to acquire, hold and dispose of real estate in
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Manitoba, or to carry on its business, unless and until a provincial licence is obtained.
To decide otherwise and to sustain the validity of such a statute would in effect restrict the power of the Dominion Parliament to the creation of the company and the enumeration of its powers, but the company would find itself paralyzed and its powers would be inoperative so long as it had not complied with the requirements exacted by the province. I cannot think that the Judicial Committee ever contemplated, in the John Deere Plow Co. Case, that this could be done.
I would allow the appeal and answer the first four questions in the negative and the fifth question in the same manner as Mr. Justice Perdue. The respondent's action and the interventions of the Attorneys-General of Ontario and Manitoba should be dismissed.
Appeal dismissed with costs.
Solicitor for the appellant: A. E. Bowles.
Solicitor for the respondent: J. B. Hugg.
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