Supreme Court of Canada
Great West Saddlery Co v. The King / John Deere Plow Co. v. The King / A MacDonald Co. v. Harmer, (1919) 59 S.C.R. 19
Date: 1919-05-06
The Great West Saddlery Company (Defendant) Appellant;
and
His Majesty The King (Plaintiff) Respondent.
The John Deere Plow Company (Defendant) Appellant;
and
His Majesty The King (Plaintiff) Respondent.
The A. Macdonald Company (Defendant) Appellant;
and
Daniel Whitfield Harmer (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 SUPREME COURT OF SASKATCHEWAN.
Constitutional law—Statute—"Companies Act," R.S. Sask, [1915] c. 14, ss. 23 and 25—Licence to do business in province—Dominion companies.
Secs. 23 and 25 of the Saskatchewan "Companies Act" requiring all companies, as a condition for doing business in the province, to be registered and take out an annual licence are intra vires of the legislature and apply to, and may be enforced against, a company incorporated by the Parliament of Canada to do business throughout the Dominion. John Deere Plow Co. v. Wharton ([1915] A.C. 330; 18 D.L.R. 353), distinguished.
Judgment of the Supreme Court of Saskatchewan, Harmer v. A. Macdonald Co. (10 Sask. L.R. 231, 33 D.L.R. 363), affirmed.
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APPEAL from a decision of the Supreme Court of Saskatchewan, affirming the judgment at the trial in favour of the plaintiff. The effect of this judgment was to affirm the convictions against the appellant companies in the other two cases.
The Great West Saddlery Company and the John Deere Plow Company were convicted by a police magistrate of Regina of violating the provisions of secs. 23, 24 and 25 of the "Companies Act" of Saskatchewan and on a case stated to the Supreme Court the convictions were affirmed. In the Harmer Case an action was brought to restrain the company from carrying on business without being registered or licensed under these provisions.
Secs. 23, 24 and 25 of the Act read as follows:—
"23. Any company, whether incorporated under the provisions of this Act or otherwise, having gain for its object or part of its object and carrying on business in Saskatchewan, shall be registered under this Act.
(2) Any unregistered company carrying on business, and any company, firm, broker or other person carrying on business as a representative, or on behalf of such unregistered company, shall be liable, on summary conviction, to a penalty not exceeding $50 for every day on which such business is carried on in contravention of this section, and proof of compliance with the provisions of this section shall be at all times upon the accused.
(3) The taking of orders by travellers for goods, wares or merchandise to be subsequently imported into Saskatchewan to fill such orders, or the buying or selling of such goods, wares or merchandise by correspondence, if the company has no resident agent or representative and no warehouse, office or place of business in Saskatchewan, shall not be deemed to be carrying on business within the meaning of this Act.
24. Any company may become registered in Saskatchewan for any lawful purpose on compliance with the provisions of this Act and on payment to the Registrar of the fees prescribed in the regulations:
Provided that the Registrar may in the case of all companies (other than those incorporated by or under the authority of an Act of the Parliament of Canada) or proposed companies refer the application to the Lieutenant-Governor-in-Council who may refuse registration at his discretion, and in the case of refusal such company or proposed company shall not be registered.
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25. Every company may, upon complying with the provisions of this Act and the regulations, receive a license from the Registrar to carry on its business and exercise its powers in Saskatchewan.
(2) Such license shall expire on the thirty-first day of December in the year for which it is issued, but shall be renewable annually upon payment of the prescribed fees.
(3) A company receiving a license from the Registrar may, subject to the provisions of its charter, Act or other instrument creating it, carry on its business to the same extent as if it had been incorporated under this Act.
(4) There shall be paid to His Majesty, for the public use of Saskatchewan, for every license under this Act, such fees as may be prescribed by the Lieutenant-Governor-in-Council.
(5) Every company which carries on business in Saskatchewan without a license, and every president, vice-president, director and secretary or secretary-treasurer of such company, shall be respectively guilty of an offence and liable on summary conviction to a penalty not exceeding $25 for every day the default continues.
The decision of the Supreme Court of Saskatchewan as to whether or not these provisions were intra vires was asked by the stated case and appeal and given in favour of their validity.
Wenegast, for the appellant, submitted that the provisions could not be distinguished from those in the "Companies Act" of British Columbia held in John Deere Plow Co. v. Wharton, to be ultra vires.
Chrysler K.C. for the respondent the Government of Saskatchewan. The legislature has eliminated from the "Companies Act" the provisions held ultra vires in John Deere Plow Co. v. Wharton.
The present legislation is authorised by sec. 92 of the "British North America Act, 1867"; Bank of Toronto v. Lambe; Brewers and Malsters Assoc. v. Attorney-General of Ontario; and does not infringe the powers given the Dominion Parliament by sec. 91; In re Insurance Act, 1910; In re Companies;
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Lionel Davis for the respondent Harmer referred to Citizens Ins. Co. v. Parsons; Colonial Building and Investment Assoc. v. Attorney-General of Quebec; and Attorney-General of Manitoba v. Manitoba License Holders Assoc..
C. C. Robinson for the Dominion of Canada. The Wharton Case laid down general principles as to the rights and powers of federal companies; In re Companies; and the legislation in question does not accord therewith.
A provincial company can enter another province only by comity but a federal company does so of right. See Bonanza Creek Gold Mining Co. v. The King; and its right cannot be interfered with by provincial legislation. In re Insurance Act, 1910.
Nesbitt K.C. and Barton for the Ontario Government also contended that the legislation is intra vires.
Wenegast, for the appellant.
Chrysler K.C. for the respondent.
Lionel Davis for the respondent.
The Chief Justice.—These three actions which were brought to test the constitutional validity of certain sections of the "Companies Act" of Saskatchewan, R.S.S. 1915, ch. 14, requiring all companies, provincial and foreign, to register in the province and to take out an annual licence and pay an annual fee before carrying on business therein and providing that every company carrying on business in Saskatchewan without such licence should be guilty of an offence and be liable on summary conviction to a penalty not exceeding $50 for every day the default continued, came before us in one consolidated appeal and were argued together.
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The trial judge in the court of first instance upheld the validity of the impeached sections, and the Court of Appeal in that province, consisting of five judges, unanimously confirmed the judgment of the trial judge.
The sections in question, the validity of which is impeached, were enacted by the legislature of that province after the decision of the Judicial Committee in the case of John Deere Plow Co. v. Wharton, and were, no doubt, enacted in an honest attempt to comply with the principles which in that case it was declared should control provincial legislation with respect to companies chartered by the Dominion of Canada. The objectionable features of the previously existing legislation of the Saskatchewan Legislature, somewhat similar to those sections of the British Columbia Legislature which in the Wharton Case had been held ultra vires, were eliminated and the present provisions introduced in lieu of them.
Whether the legislature has been successful or not in avoiding the constitutional perils of enactments which may be said to some extent to control and regulate the business activities in the province of Dominion companies is the question now before us. It depends altogether upon the construction given to the reasons for judgment of the Judicial Committee in the Wharton Case, before referred to. I have read and re-read this judgment several times and studied it most carefully. As a result, I cannot conclude that the legislature in this instance has exceeded its powers in enacting legislation requiring all companies, local and foreign, including Dominion, to register and pay an annual fee Nor do I think the section imposing a penalty upon a Dominion company for every day it
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carries on business in the province without having paid the annual fee is ultra vires or other than a reasonable sanction to the requirement of the payment of the annual tax or fee imposed.
I reach this conclusion not without grave doubt whether the section requiring the company to take out a licence to carry on business in a province is not objectionable and ultra vires. In the result, however, I have concluded that the Saskatchewan "Companies Act" as amended and now before us, while in form to some extent objectionable as seeming to require a provincial licence to enable a Dominion company to carry on its business in the province may nevertheless be so construed as to be held to be merely a taxing Act, levying an annual tax or fee, alike on local companies as on extra-provincial companies, including Dominion ones. Its form may be, and I think is, objectionable and unfortunate, but its essence and substance merely require the payment of an annual fee or tax with a provision that the company shall not carry on its business in the province until the annual fee is paid subject to a penalty for every day it so transgresses.
The requirement of payment of such a tax is not objectionable and is expressly referred to in the Wharton Case, by the Judicial Committee as permissible legislation by the province while the penalty for non-payment of the fee may be looked upon as a non-objectionable sanction for the recovery of the tax.
I do not think the requirement of a licence to enable the company to carry on its business is intra vires, but I would in this case treat it as negligible and inapplicable to Dominion companies, and if the tax was paid more in the nature of a receipt for its payment than as a licence to carry on business, I do not think the company,
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after payment of the tax, would be liable to the penalty prescribed if it declined to accept the licence and continued to carry on its business. The legislature has no power to require the acceptance of a licence from it to enable a Dominion company to carry on its business in the province. It might require registration, it might impose an annual tax, it might possibly enact the penalty clause as a sanction for the recovery of the tax, but it could not compel the company to accept a licence from it to enable it to carry on its business. The company derived its power to do that throughout the Dominion from the Dominion which gave it its charter and while the legislature could not prohibit or control the exercise of these powers it nevertheless could, in my judgment, exact the payment of an annual tax from the Dominion company in common with other foreign companies and local companies which itself created and chartered and could probably enforce the payment of such tax by the imposition of a penalty. I reach this latter conclusion, as I have said, with difficulty and doubt. It is to be regretted that the legislation should take the form it did, but looking at its essence and construing it as I do, I will not hold it to be ultra vires.
Of course, the legislation requiring a licence and prescribing a penalty or penalties for not taking one out before carrying on business may take an objectionable form. In the case before us I think, on my construction of the statute, it, while objectionable in form, is not so in essence. The license required, the fee payable and the penalty prescribed apply equally to local and foreign companies, which include Dominion, and it cannot be successfully argued that the fees are excessive or that they are other than such fees as may reasonably be imposed as direct taxation
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for the purpose of revenue within the province. Bank of Toronto v. Lambe.
Nor can it be said that such fees and the penalties imposed on the company for carrying on its business without their payment are really calculated to affect the status or powers of a Dominion company. The penalties prescribed are only a means of recovering the annual fees. Once those fees are paid these penalties could not be exacted.
I may add that I have not reached my conclusion as to the licence without doubt and hesitation in view of the reasons for the decision in the Wharton Case, and as these appeals avowedly seek to obtain a judicial construction of the judgment of the Privy Council in that case it would have been better from every standpoint, in my opinion, if they had been taken direct to the fountain head which could best explain the exact meaning and effect of the principles it laid down, and so avoid the delays and costs of totally unnecessary appeals to this court.
I would, in view of the reasons given above, dismiss these appeals with costs.
Idington J.—These appeals were by consent reargued together, and they ought to be decided upon the same single neat point of law whether or not a local legislature can tax an incorporated business company deriving its incorporation from the Dominion Parliament.
All the other issues attempted in argument to be dragged into the case seem entirely irrelevant. If the tax is paid the other issues become of no consequence for the purposes of the disposition of the litigation respectively involved in each case.
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The issuing of any more interrogatories on merely abstract points of law by the Dominion Government to this court for purposes of information or of testing the limits of the powers of local legislatures in regard to some supposed assertion or possible assertion of power, seems for the present to have reached the bounds of its toleration, yet that does not seem to have exhausted the resources of ingenuity on the part of others for we are invited to answer in some of these cases questions needless to answer if the power of taxation in question exists.
The Legislature of Saskatchewan, having due and proper regard to the fate which rightly befell some extremely unjustifiable British Columbia legislation in the case of John Deere Plow Co. v. Wharton, decided to conform, so far as it could, to the decision in that case; repealed its old statutes bearing upon the like questions (of which some are not involved herein) and enacted a new "Companies Act" wherein it incorporated a provision for registration and licensing of all corporate business companies and subjected all, whether of local organization under the Act, or of Dominion or of foreign origin, to an initiative and annual license fee of the same graduated scale fixing the amount to be paid in proportion to capital. It clearly did this by way of taxation which the appellants seek to escape.
I know of no reason why they should not be subjected thereto or why the place of origin should be a ground for freeing them from the common burden all should bear in support of the government of the province—where they choose to carry on business—and seek the protection it gives.
Nor do I see any imperative reason for confining
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the exercise of the taxing power to some statute earmarked as a taxing Act.
The questions of choice of subjects for taxation and equality of burden to be borne thereby, and best modes of enforcing payment thereof, have never yet been scientifically settled in a way satisfactory to those who have paid the greatest attention to such questions.
What we have primarily to deal with is the single issue of whether the annual tax for the non-payment of which one of these companies has been penalized, falls within what is referred to in the "British North America Act" as "direct taxation."
It seems to fall well within the decisions in the cases of Bank of Toronto v. Lambe, and the Brewers & Malsters Association v. Attorney-General of Ontario, as being direct taxation.
Indeed no question was raised in argument founded upon any doubt as to this tax being direct taxation.
In the graduated scale as a basis for its application I cannot distinguish it from the former and in the licensing fee as a mode of its imposition it seems to fall within the latter case.
I cannot, where the power seems so clear, entertain, as a valid argument, in answer to the judgment in the two first named cases enforcing the penalties, the objection that there are provisions in the Act claimed to be ultra vires.
These collateral contentions seem wholly irrelevant to the single issue before us, so far at least as concern the respective judgments for penalties.
Their introduction seems but an attempt to becloud the real issue which is a very narrow one.
As to the Harmer Case, though not differentiated in the argument from the other two, it occurred to me
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that possibly the introduction of some of these alleged objections was not so far fetched.
In that we have to consider the basis upon which a shareholder is proceeding against his company for relief.
I am, however, of the opinion that there is quite enough in the plaintiff shareholder's complaint, when confined to the question of improperly incurring penalties by refusing to pay the tax and all implied therein, to maintain the action and the resultant judgment, without considering the other excuses for not doing so or contentions set up by either party.
It seems to me the same observations are applicable to the appeal in the Manitoba case.
I observe, however, that there is a slight difference between the language used in the final clause of the case stated in the Harmer Case, and that used in the final clause of the case submitted to the Manitoba courts. I shall revert to this in closing what I have to say.
I agree entirely with the reasons assigned by the late learned Chief Justice of Manitoba, and substantially with all advanced by Mr. Justice Cameron in support of the judgment of the Court of Appea from Manitoba in the Davidson Case.
In deference to the argument presented herein, I desire to point out that, in my opinion, a corporation, by whomsoever or whatsoever power created, has no greater right in any province than a private individual enjoying full rights of citizenship and not personally disqualified in any way, going there to do business and in many respects has less, unless expressly given same by virtue of some legislative authority endowed with power to do so as, for example, in the cases of banks or railway companies.
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If created by the Dominion authority its capacity must fall within what an exercise of the so-called residuary powers of the Dominion may create, unless in the cases specifically provided for either expressly or impliedly in the enumerated powers of the "British North America Act" conferred on the Dominion.
The Great West Saddlery Company in question in no way falls within any of the latter. There is, therefore, no reason for relying upon any such implication as may arise in favour of the corporation created to execute the purposes of any of the said enumerated powers.
It was suggested in argument that the judgment of the Judicial Committee of the Privy Council in the Wharton Case, had said the Dominion "Companies Act" rested upon item No. 2 of the said enumerated powers. I do not so read it. And after the numerous futile attempts theretofore made, before said court, to make that item relative to "Trade and Commerce" subservient to the enlargement of the powers of the Dominion in relation to conferring extraordinary powers upon ordinary trading companies, I submit respectfully, that any such expression if to be read as suggested, must be treated as obiter dicta.
It was in no way necessary for the decision of the single neat point decided in the Wharton Case.
Moreover, we have, since that case, the expression, of opinion by it in the insurance case, Attorney-General for Canada v. Attorney-General of Alberta, which seems to deny the power to rest any licence thereon to carry on any "particular trade."
The pith of the said expression of opinion is contained in the following extract:—
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There was a good deal in the "Ontario Liquor License Act," and the powers of regulation which it entrusted to local authorities in the province, which seems to cover part of the field of legislation recognized as belonging to the Dominion in Russell v. The Queen. But in Hodge v. The Queen, the Judicial Committee had no difficulty in coming to the conclusion that the local licensing system which the Ontario statute sought to set up was within provincial powers. It was only the converse of this proposition to hold, as was done subsequently by this Board, though without giving reasons, that the Dominion licensing statute, known as the "McCarthy Act," which sought to establish a local licensing system for the liquor traffic throughout Canada, was beyond the powers conferred on the Dominion Parliament by s. 91. Their Lordships think that as the result of these decisions it must now be taken that the authority to legislate for the regulation of trade and commerce does not extend to the regulation by a licensing system of a particular trade in which Canadians would otherwise be free to engage in the provinces.
This express declaration of the court above relevant to the non-existence of the power claimed for the Dominion so far as rested upon the enumerated item of "Trade and Commerce" seems to be conclusive against the contention of appellant, for it is only by virtue of something alleged to rest upon said item the mysterious right is asserted.
If the Dominion cannot assert the power claimed for it by way of an express licence, much less can it do so by mere incorporation giving specified rights to certain parties to trade in a corporate capacity.
The legal entity must submit to the same laws properly enacted by and within the powers of a provincial legislature as the private individual.
The power to impose a tax and enforce its collection by means of prohibition to trade until it has been paid and its payment evidenced by a licence has been asserted and upheld especially in relation to the manufacture and sale of liquor in so very many ways that one is surprised to hear the argument now put forward that the doing so is to be treated as an improper
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assertion of power and a denial of anything more than it means.
Though the testing of the power has been more in evidence before the courts in relation to the liquor traffic than any other, the successful assertion of the power has been asserted in manifold ways by provincial legislation ever since Confederation.
Much of that has been asserted through the powers given the municipalities, which again rests upon item No. 9 of sec. 92 of the "British North America Act," as to the licensing power as a means of raising revenue.
The taxation of transient traders by municipalities —a very old form of tax—and sometimes of the travelling circus would be an illusory thing if the collection was not enforced by prohibition of carrying on the business of him so liable.
I only present these casual illustrations as a test of the possible need of the power to prohibit the carrying on of business until the tax may have been paid, in order to render it effective, of which no reasonable person, speaking of its possible exercise in relation to such cases, would be likely to deny. A judicial creation of a mere theoretical power to tax without any potentiality of its enforcement is apparently the high aim of the appellants.
But so long as the decision in Citizens Ins. Co. v. Parsons, and all involved therein stands as good law the power of the provincial legislatures over contracts will remain what it was always intended to be.
There would not seem to be in principle any difference in the quality of the power invoked whether exercised in relation to such transients or others presenting greater promise of permanency.
Yet the transient trader or the circus man might
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easily become incorporated and often is in fact. Are we to say incorporation by virtue of the Dominion legislation inherently carries with it a greater sanctity than any other?
We do know from the record herein that the "John Deere Plow Company, Limited," one of the appellants herein, became so incorporated on the application of four gentlemen of Moline, in the State of Illinois, one of the United States of America, and a dealer in Winnipeg.
Why should such a legal entity be entitled to claim, merely because so created by virtue of Dominion legislation, professing only so to create, and not pretending thereby to confer greater rights to trade anywhere in Canada, than any mere private individual citizen of Canada possesses, that it has such superior rights?
The questions submitted are not necessary for the determination of the single issue which the pleading presents in either the Harmer Case from Saskatchewan or the Davidson Case from Manitoba.
Each plaintiff is entitled to succeed by reason of the company attacked defying the law of the province in question and thereby becoming liable to penalties and possibly more serious consequences.
I am strongly impressed with a suspicion begotten of circumstances coming under my observation in these proceedings and the needless frame of the questions submitted that these actions are collusive and used as a means of interrogating this court in a way it should not submit to at the mere whim of any private individuals desiring to know how far their companies can go.
Long ago, in the Province of Ontario, provision was made by legislation for the settlement of contentions between that province and the Dominion, or it and other provinces. And likewise provision was made for
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the court having jurisdiction at the suit of either the Attorney-General for Canada or the Attorney-General for Ontario to entertain an action for a declaration as to the validity of any statute or any provision therein, and the "Constitutional Questions Act" of Ontario had existed from an earlier period.
The existence of such legislation, as well as similar legislation by the Dominion, seems to indicate, to put it mildly, a doubt as to the propriety of private individuals attempting what is attempted by some part of what is before us herein.
I think the appeal should be dismissed with costs to each of the respondents in the case wherein he is concerned.
Anglin J —The impeached provisions of the "Companies Act" of Saskatchewan (R.S.S. 1915 ch. 14) are, in my opinion, clearly distinguishable from those of the British Columbia statute held to be ultra vires in John Deere Plow Co. v. Wharton. The important differences are so fully and so satisfactorily pointed out and discussed in the judgments of Elwood and Newlands JJ. in the Saskatchewan courts, and in the opinions prepared by my brothers Brodeur and Mignault, which I have had the advantage of perusing, that I cannot do better than adopt the reasons given by them for concurring in the dismissal of these appeals.
Brodeur J.—The three appellant companies are incorporated under the authority of the "Companies Act" of Canada (R.S.C. ch. 79) and are empowered to carry on their business throughout the Dominion of Canada.
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By the provisions of secs. 23 and 25 of the Saskatchewan "Companies Act" any company carrying on business in the province must register and take out a licence. As the appellant companies have not registered and have not taken out the prescribed licence, they have been prosecuted. They claim that those provisions of the provincial statute are ultra vires and they rely on the decision of the Privy Council in the case of John Deere Plow Co. v. Wharton, to sustain their contention.
The John Deere Plow Case had reference to the operation 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 Company had applied for a licence and its application had been rejected. 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, as far as the federal companies were concerned.
When the John Deere Plow decision was rendered, the Saskatchewan legislation contained provisions similar to those of British Columbia, and the Saskatchewan Legislature, at its next session, repealed the objectionable provisions and the companies legislation is now contained in the ch. 14 of the statutes of 1915. The provisions as to registration and licensing, which were applicable formerly to foreign and Dominion companies, are now of general application to all companies, whether they are incorporated by the province
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itself or by the Dominion or other provincial authorities or foreign states.
The statute simply provides that all companies, whether local or not, would be equally taxed by means of licence, and the statute also provides that they should all be registered.
The failure of those companies to take a licence or to register renders them liable to a penalty.
There is nothing in the statute which prevents them from carrying out their corporate powers to make contracts and to sue under those contracts, but they are simply required to observe the general registration provisions and take a licence for purposes of taxation.
The object of the registration provision is to keep the public informed as to the status of those companies. They are bound to hand over to the registrar a return shewing the amount of the share capital, the quantity subscribed and paid up, the names of the directors and some other useful information which the public may need to do business with those companies (section 34). 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 fees which the company have to pay for their registration look to me as being very reasonable and could hardly cover the expenses which the establishment of the registrar's office would entail.
The unauthorised and fictitious companies will then be prevented from deceiving the public, since any one may obtain from the registrar the information as to any bonâ fide company and may ascertain the powers and standing of such company in the same manner as
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if the company had obtained its charter under 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 one? 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.
That provision concerning registration is a law of general application enacted under the powers conferred by section 92, and there is nothing in it which may deprive a federal company of its status and powers.
The obligation for a federal company to take out a licence from and pay a tax to the provincial authorities is also a law of general application; it and the companies incorporated locally have to pay for it just as well as the companies incorporated outside the province
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.
That same principle was affirmed by the Privy Council in the Brewers & Malsters Case, where the Ontario "Liquor License Act," which provided that no person should sell any liquors for consumption in the province without having first obtained a licence was held to be valid.
The judgment of the inferior courts in the present
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cases, which decided that secs. 23 and 25 of the Saskatchewan "Companies Act" were valid and intra vires, are well founded.
The appeal should be dismissed.
Mignault J.—These three appeals were argued together and the question is as to the validity of secs. 23 and 25 of the "Companies Act" of Saskatchewan, ch. 14 of the statutes of 1915.
That Act was passed after the decision of the Privy Council in the case of John Deere Plow Co. v. Wharton, and the intention was, no doubt, to conform to the rules therein stated. Whether the legislature has done so is the question which has now to be decided.
In my opinion in the case of the Great West Saddlery Company, Limited v. Davidson I have stated the test, derived from the decision of the Privy Council in the John Deere Plow Company Case, according to which the validity of such legislation must be determined. This test is whether a Dominion company is compelled to obtain a licence and to be registered in a province as a condition of exercising its powers.
The material sections of the Saskatchewan statute, which essentially differs from the Manitoba "Companies Act" referred to in the other case, are secs. 23, 24, 25, 26, 27, 28 and 30, which are in the following terms.—
23. Any company, whether incorporated under the provisions of this Act or otherwise, having gain for its object or part of its object, and carrying on business in Saskatchewan, shall be registered under this Act.
(2) Any unregistered company carrying on business and any company, firm, broker or other person carrying on business as a representative or on behalf of such unregistered company, shall be liable, on summary conviction, to a penalty not exceeding $50 for every day on which such business is carried on in contravention of this section,
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and proof of compliance with the provisions of this section shall be at all times upon the accused.
(3) The taking of orders by travellers for goods, wares or merchandise to be subsequently imported into Saskatchewan to fill such orders or the buying or selling of such goods, wares or merchandise by correspondence, if the company has no resident agent or representative and no warehouse, office or place of business in Saskatchewan, shall not be deemed to be carrying on business within the meaning of this Act.
24. Any company may become registered in Saskatchewan for any lawful purpose on compliance with the provisions of this Act and on payment to the registrar of the fees prescribed in the regulations;
Provided that the registrar may in the case of all companies (other than those incorporated by or under the authority of an Act of the Parliament of Canada) or proposed companies refer the application to the Lieutenant-Governor-in-Council who may refuse registration at his discretion, and in the case of refusal such company or proposed company shall not be registered.
25. Every company may, upon complying with the provisions of this Act and the regulations, receive a license from the registrar to carry on its business and exercise its powers in Saskatchewan.
(2) Such license shall expire on the thirty-first day of December in the year for which it is issued, but shall be renewable annually upon payment of the prescribed fees.
(3) A company receiving a license from the registrar may, subject to the provisions of its charter, Act or other instrument creating it, carry on its business to the same extent as if it had been incorporated under this Act.
(4) There shall be paid to His Majesty, for the public use of Saskatchewan for every license under this Act, such fees as may be prescribed by the Lieutenant-Governor-in-Council.
(5) Every company which carries on business in Saskatchewan without a license, and every president, vice-president, director and secretary or secretary-treasurer of such company, shall be respectively guilty of an offence and liable on summary conviction to a penalty not exceeding $25.00 for every day the default continues.
26. Every incorporated company shall, before registration, file with the registrar a certified copy of its charter and by-laws and a statutory declaration of the president, vice-president, secretary, or manager, that it is still in existence, and legally authorized to transact business under its charter.
27. The Lieutenant-Governor-in-Council may prescribe and from time to time alter, such regulations as he may deem expedient for the registration of all companies, and may fix the fees and other payments to be made in connection with the administration of this Act, and such regulations shall have the same force and effect as if incorporated in and forming part of this Act.
(2) All regulations in connection with this Act shall be published in the Saskatchewan Gazette.
28. Every company not exclusively engaged in the business of banking, insurance, express, railways, telephones, telegraph, trust, loan,
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land, building, contracting, agencies, farming, ranching, employment, recreation, and such other business as may from time to time be determined by the Lieutenant-Governor-in-Council, shall not later than the first day of January in every year pay an annual fee prescribed by the regulations of the Lieutenant-Governor-in-Council.
30. Should the registrar not receive any fee prescribed by the regulations made by the Lieutenant-Governor-in-Council under this Act by the date such fee is due, he shall send to the company in default a registered letter notifying it of its liability and at the expiration of a period of one month, should such fee remain unpaid, he shall, without further notice, cause the name of the company to be struck off the register and publish the fact in the Saskatchewan Gazette;
Provided that the liability of every director or officer or member of the company shall continue and may be enforced as if the name of the company had not been struck off the register.
It is to be noted that these sections apply to all companies whether incorporated under the Saskatchewan statute or otherwise, and that the registrar does not appear to have the right to refuse registration to companies incorporated under the authority of an Act of the Parliament of Canada. There are no provisions, such as secs. 118 and 122 of the Manitoba "Companies Act," prohibiting a Dominion company from carrying on business in the province until it has obtained a licence, and denying it access to the courts to enforce contracts made by it while unlicensed
The real point, to my mind, is not whether the appellant companies were required to register and to obtain a licence but whether they were compelled to obtain registration and a licence as a condition of exercising their powers in the Province of Saskatchewan.
They were, no doubt, required to register and to secure a licence, and in default of registration they were subject to a penalty not exceeding $50 for every day on which they carried on business in contravention to section 23, and in the case of their failure to take a licence they were, under section 25, subject to a penalty for carrying on business in Saskatchewan without a
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licence not exceeding $25 for every day the default continued.
The form of expression in section 25 is not exactly the same as in section 23, but the effect of both sections is that if these companies carry on business in Saskatchewan without having registered or without having obtained a licence, they incur a separate penalty for each day they so carry on business.
Do these provisions amount to compelling these companies to register and obtain a licence as a condition of exercising their powers in Saskatchewan? As I have said, there is nothing here, as in the Manitoba Act, prohibiting an unlicensed Dominion company from carrying on business or depriving it of the power to sue on contracts made by it in pursuance of its business. But inasmuch as carrying on business without registration and without a licence is made an offence punishable by a fine, it is argued that this business is thereby made illegal so that no right to sue on a contract made under these circumstances would exist by law.
It is to be noted that in the John Deere Plow Co. Case, the British Columbia "Companies Act" under consideration contained a similar provision (section 167) to secs. 23 and 25 of the Saskatchewan statute, and the Judicial Committee, at page 337, after mentioning, among other provisions of the British Columbia statute, sec. 167, said:—
What their Lordships have to decide is whether it was competent to the province to legislate so as to interfere with the carrying on of the business in the province of a Dominion company under the circumstances stated.
And after discussing secs. 91 and 92 of the "British North America Act" they add:—
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It follows from these premises that these 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 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.
Their Lordships did not attempt to define a priori the full extent to which Dominion companies may be restrained in the exercise of their powers by provincial legislation, although they stated that a Dominion company could not refuse to obey the statutes of a province as to mortmain, or escape the payment of taxes, although these may assume the forms of requiring, as a method of raising a revenue, a licence to trade which affects a Dominion company in common with other companies. Somewhat tentatively they added that it might have been competent to the legislature to pass laws applying to companies without distinction, and requiring those that were not incorporated in the province to register for certain limited purposes, such as the furnishing of information.
The Saskatchewan statute applies to all companies whether incorporated in the province or otherwise. The registration required by section 23 does not per se, as I read the statute, furnish any information, but it is enacted by section 34 that, not later than the 1st March in each year after its registration, the company shall furnish certain particulars to the registrar. It is obvious, however, that the statute was drafted with the purpose of bringing it well within the rules laid down in the John Deere Plow Co. Case.
I now come back to the question which I stated above, whether sections 23 and 25 compel the appellant companies to register and obtain a licence as a condition of exercising their powers. My difficulty to answer
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this question in the affirmative is that, under the holding in the John Deere Plow Case, the province can for the purpose of raising a revenue, require a licence to trade which affects a Dominion company in common with other companies. If so, it can impose a penalty for failure to take out the licence ("British North America Act," sec. 92, sub-s. 15). Can this penalty be imposed for each day during which the company carries on business without taking out a licence? Inasmuch as the province can, for revenue purposes, require the taking out of a licence to trade, as decided in the John Deere Plow Case, it follows that it can impose a penalty for trading without such licence, and therefore for each day during which the unlicensed company carries on trade. This does not give to sections 23 and 25 of the Saskatchewan statute the effect of compelling the appellant companies to register and to obtain a licence as a condition of exercising their powers. These companies, with all other companies, are compelled to take out a licence to trade and to pay therefor the fees prescribed by the Lieutenant-Gover-nor-in-Council, and their liability to pay the penalty is not due to the fact that they are exercising their powers under their charters but that they are carrying on business without taking out a licence to trade.
The appellants complain that the basis of the registration fee is the nominal or authorized capital of the company without regard to the amount paid thereon or the amount employed in the province. This may be objectionable, but I cannot see how it can affect the question of jurisdiction.
I would, therefore, think that sections 23 and 25 of the Saskatchewan "Companies Act" are not ultra
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vires, and that the appeals of the appellant companies should be dismissed with costs.
Appeal dismissed with costs.
Solicitors for the appellants: Mackenzie, Brown, Thorn, McMorran, MacDonald, Bastedo & Jackson.
Solicitors for the respondent Harmer: Cross, Jonah, Hugg & Forbes.
Solicitor for the respondent The King: H. E. Sampson.
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