Supreme Court of Canada
The King v. Cotton, [1911] S.C.R. 469
Date: 1912-02-20
His Majesty The
King Ex Rel. The Attorney-General of Quebec (Defendant)
Appellant;
and
Charles S. Cotton
and Others (Plaintiffs) Respondents.
1911: October 25, 26; 1912: February 20.
Present: Sir Charles Fitzpatrick C.J. and
Davies, Idington, Duff, Anglin and Brodeur JJ.
ON APPEAL FROM THE COURT OF KING'S BENCH,
APPEAL SIDE, PROVINCE OF
QUEBEC.
Constitutional law—Construction of
statute—B.N.A. Act, 1867, s. 92, s.-s. 2—R.S.Q. 1888, s. 1191(5), 1191(c);
(Que.) 57 V. c. 16, 5. 2; 6 Edw. VII. c. 11, s. l-Legislative
jurisdiction—"Direct taxation within the province" — Succession
duty—Extra-territorial movables—Decedent domiciled in province.
The legislative authority of a province in
the matter of taxation conferred by sub-section 2 of section 92 of the
"British North America Act, 1867," which authorizes the levying of
"direct •taxation within the province," extends to the imposition of
duties upon the transmission of movables having a local situs outside
the provincial boundaries which form part of the succession of a decedent
domiciled within the province. Woodruff v. The Attorney-General for Ontario (1908),
A.C. 508, distinguished. Judgment appealed from (Q.R. 20 K.B. 164) reversed,
Davies and Anglin JJ. dissenting.
At the time of the death of C.L.C., 11th
April, 1902, the statutes in force in the Province of Quebec relating to
succession duties provided that "all transmissions, owing to death, of the
property in, usufruct or enjoyment of movable and immovable property in the
province shall be liable to the following taxes calculated upon the value of
the property transmitted, after deducting debts and charges existing at the
time of the death, etc." Subsequently, by 6 Edw. VII. ch. 11, a clause was
added (sec. 1191(c)), as follows: "The word 'property' within the meaning
of this section shall include all property, whether movable or immovable,
actually situate or owing within the province,
[Page 470]
whether the deceased at the time of his death
had his domicile within or without the province, or whether the debt is payable
within or without the province, or whether the transmission takes place within
or without the province, and all movables, wherever situate, of persons having
their domicile (or residing), in the Province of Quebec at the time of their
death," which was in force at the time of the death of H. H. C, 26th December, 1906. Succession duties
were levied, in respect of both estates upon the whole value of the property
devolving including, in each case, movable property locally situated in the United States of America. The action was to
recover back those portions of the duties paid in respect of the value of the
movables situated outside the limits of the Province of
Quebec.
Held, reversing
the judgment appealed from (Q.R. 20 K.B. 164), Davies and Anglin JJ.
dissenting, that the movable property situated outside -the limits of Quebec forming part of the succession of H. H. C. was subject to the duty so imposed.
On an equal division of opinion among the
judges, of the Supreme Court of Canada the judgment appealed from stood
affirmed in so far as it held that the movable property situated outside the
limits of Quebec forming part
of the estate of C. L. C. was not
liable to such taxation.
APPEALS from the judgment of the Court of
King's Bench, appeal side,
affirming, with a variation, the judgment of the Superior Court, District of
Quebec, by which the respondents' petition of right was maintained.
The respondents, by their petition of right,
claimed the refund of succession duties paid by them and exacted by the
Government of Quebec in virtue of the statutes of the Province of Quebec in respect of duties exigible on the transmission of
property in consequence of the death of the owner. The amount demanded was
$31,492.02, of which $10,545.55 had been paid in respect of part of the
succession of the late Charlotte L. Cotton, and the remainder in respect of
part of the succession of the late Henry H. Cotton, her husband; the claim was
made on the ground that
[Page 471]
these portions of the estates consisted of
personal property which was locally situate in the State of Massachusetts, one
of the United States of America, and, consequently, not subject to the
imposition of succession duty by the provincial legislature.
The Superior Court maintained the petition of
right as to the whole of the amount demanded, with interest from the date of
the institution of the action. On appeal to the Court of King's Bench this
judgment was affirmed, in effect, by the judgment now appealed from, which
merely modified the judgment of the Superior Court by deducting
therefrom the amount of $393, and ordering that each party should bear its own
costs. The ground on which the deduction was made was that the Superior Court,
for the purpose of ascertaining on what amount the tax was payable, should have
deducted a proportionate amount of the debts due by the deceased owners of the
property in question from that part of the property which was locally situate in
the United States of America, instead of deducting the entire indebtedness from
that part of the estates locally situate in the Province of Quebec.
On the present appeal the respondents gave
notice of cross-appeal from the judgment of the Court of King's Bench, in so
far as it varied the judgment of the Superior Court, on the grounds that, if
the only property subject to duty was that locally situate in the Province of
Quebec, the amount of the debts should be deducted only from the property so
liable to taxation; that, if it were otherwise, the value of the property
situate outside that province would be affected and lessened in value, and
that, as their claims had been sustained in the Court of King's
[Page 472]
Bench, notwithstanding the reduction in the
amount of the judgment, the costs on the appeal to that court should have been
allowed to them.
The questions in issue on this appeal are
stated in the judgments now reported.
Aimé Geoffrion K.C.
for the appellant.
T. Chase-Casgrain K.C. for respondents.
The Chief
Justice.—The question for the opinion of the court in
this case is: If a person domiciled in the Province of Québec
dies leaving movable property such as bonds and
debentures "locally situate" in Boston, Massachusetts, one of the
United States of America, can that part of the estate be considered or taken
into account in calculating the amount of the duty to be levied on the
transmission of his estate under the succession duty law of that province? For
the meaning of the term "locally situate" see Dicey, Conflict of Laws
(2 ed.), p. 309; Hanson, Death
Duties (6 ed.), pp. 108-109; and
notes of my brother Anglin.
There are in fact two estates in connection with
which this question arises here: that of Mrs. Cotton and that of her husband, H. H. Cotton; and the action is to recover from
the Government the amounts paid as succession duty on both estates through
error of law, as is alleged. Each of the cases presents a different state of
facts for consideration, and the statutes relied on by the Crown as applicable
to the two successions are not in terms identical.
Dealing first with the succession of Mrs.
Cotton, it appears that she died in Boston, on the 11th of April, 1902, having
made her will there on the 17th
[Page 473]
of April, 1900, disposing of a fairly large
estate in bonds and debentures, the bulk of which was, at the time of her
death, locally situate in Boston. In the interval between the making of the will and her death, the
deceased's husband bought a house, at Cowansville, in the Province of Quebec,
where he was born, and he had actually taken up his residence there, although
some of the winter months were spent in Boston. After his wife's death, the husband
continued to reside at Cowansville, to which place he brought her body for
interment, and there he died. I accept the finding of the courts below that
Mrs. Cotton was, at the time of her death, domiciled in the Province of Quebec
and that her estate devolved under the law of that domicile, but, in my
opinion, the statute imposing the duty levied by the Crown does not extend to
that portion of her estate which was locally situate beyond the limits of the
province. The statute reads:—
All transmissions, owing to death, of the
property in usufruct or enjoyment of movable and immovable property in the
province, shall be liable to the following taxes, calculated upon the value of
the property transmitted, after deducting debts and charges existing at the
time of the death.
Taken in their strict and literal meaning the
words "movable and immovable property in the province" relate primà
facie to property locally situate within the limits of the province and, as
my brother Anglin says, that such was the intention of the legislature is made
superabundantly clear by reference to the French version of the statute where
the words used are
toute transmission par
décès, etc., de biens mobiliers ou immobiliers situés
dans la province, etc.
If these words "situés
dans la province" had been omitted and the
language of the French law (art. 4,
[Page 474]
L. 22, Frim. An. VII.) from which the Quebec Act
is taken adhered to, then all the French authors say that by
application of the maxim mobilia sequuntur personam the meaning of the
word "movable" might be enlarged so as to include all personal estate
where-ever it might be; but if effect is to be given to the language of the
legislature, the result must be to say that by inserting the qualifying words
"in the province" after the words "movable and immovable
property" it was intended to exclude the application of that maxim and
limit the impost to such movable property as, at the date of the death, would
be found within the jurisdiction. The question on this branch of the case is
not as to the power, but as to the intention of the legislature. Acts imposing death
duties, like all other taxing statutes, must be construed strictly and in
favour of the subject. Hanson's Death Duties ( 6 ed. ), p. 78. I do not
overlook the fact that in the declaration to be furnished the collector of
provincial revenue the description and real value of all the property
transmitted, whether movable or immovable and wherever situate, is to be
supplied to that official; but no inference is deducible from this obligation
which would extend the meaning to be given the section imposing the tax.
Dealing now with the estate of the husband, who
died on December 26th, 1906, at
Cowansville, in the Province of
Quebec, having, by his will made there in notarial form, instituted the
respondents his testamentary executors. A large amount of bonds and debentures
physically situate in the United States formed part of that estate at its devolution. In the interval
between the death of the wife and that of the husband, the law of Quebec was amended so as to subject
[Page 475]
to succession duty all movable property
transmitted
wherever situate, of persons having their
domicile (or residing) in the Province of Quebec at the time of their death.
Mr. Justice White speaking for the court in Knowlton
v. Moore, at p.
56, after making a careful review of the law concerning death duties in ancient
and modern times, says:—
Tax laws of this nature in all countries
rest, in their essence upon the principle that death is the generating source
from which the particular taxing power takes its being and that it is the power
to transmit or the transmission from the dead to the living on which such taxes
are immediately rested;
and Fuzier Herman, vo. "Successions,"
No. 1899, says:—
Il suit de là que le droit
de succession est dû chaque fois qu'il y a mutation, c'est-à-dire dessaisissement par
mort, sans qu'il y aît à se préoccuper du titre en vertu duquel l'hérédité est
dévolue. C'est donc le décès qui est le fait générateur du droit proportionnel.
De même que, en droit civil (art. 718), les successions s'ouvrent par la mort, de même, en droit fiscal, c'est
le décès qui, en opérant la mutation des biens, donne ouverture à la créance du
Trésor. Ainsi que l'exprime un arrêt de la cour de cassation, l'impôt de
mutation par décès "a le caractère d'une dette naissant avec l'ouverture
de la succession et inhérente dès ce moment à tous les biens qui la
composent."
In France, and the Quebec
statute is an adaptation of the law of that country, it is universally accepted
that the power to transmit or the transmission or receipt of property by death
is the subject levied upon by all death duties. Fuzier Herman, vo. "Successions,"
No. 2028. The duty is not levied upon individual items of property which
together make up the estate, but upon the transmission or devolution of the
succession. The civil law of Quebec, in the light of
[Page 476]
which this statute must be read, is based upon
the
old Roman legal theory of universal
succession or succession as a unit by means of which, the legal personality of
the deceased passed over to his heir.
Article 596 of the Civil. Code says that
succession means "the universality of the things transmitted" and
that universality devolves at the domicile of the deceased (art. 600 C.C.). By
the law of that domicile, the title under which the heirs receive the estate,
the movable property of the deceased, wherever situate, is governed. In such a
case the maxim of mobilia ossibus inhcerunt finds its application, as my
brother Duff clearly demonstrates in his notes, to which I would venture to add
two authorities taken from the French law. In a note to Dalloz, 1897,1,139, M.
Sarrut says:
En vertu de la fiction
mobilia ossibus inhœrent l'universalité juridique d'une succession mobilière est censée
adhérente à la personne du défunt; or le défunt était, en droit., au lieu de son domicile légal.
Pothier, Introduction générale, vol. 1, p. 7, No. 24.
Les choses qui n'ont aucune situation sont les
meubles corporels, les créances mobilières, les rentes constituées, autres que
celles dont il a été ci-dessus parlé, quand même elles auraient- un assignat
sur quelque héritage: car cet assignat n'est qu'un accessoire. Toutes ces
choses, qui n'ont aucune situation, suivent la personne à qui elles
appartiennent, et sont par conséquent régies par la loi ou coutume qui régit
cette personne, c'est-à-dire, par
celle du lieu de son domicile.
To sum up briefly, I am of opinion that the
right or title to the bonds and debentures situate in Boston passed on his
death from the deceased to his heirs in the Province of Quebec by virtue of the
law of that province and all the movable property transmitted by that title is
subject to the duty which the legislation which creates the title chooses to
attach as a condition of the transmission on those who
[Page 477]
claim title by virtue of our law. Halsbury, vol.
13, p. 273, No. 373.
Let me test the soundness of this construction
of the law by reference to section 6 of the Act we are now considering. That
section is in these words:
No transfer of the properties of any estate
or succession shall be valid, nor shall any title vest in any person, if the
taxes payable under this section have not been paid, and no executor, trustee,
administrator, curator, heir or legatee shall consent to any transfers or
payments of legacies, unless the said duties have been paid.
Payment of the duty is a condition of the
transfer and no title is vested until it is paid. If the executors or legatees
sought to enforce their title to the bonds in Boston, it would be a good answer to their claim that not having paid the
succession duty they had no title to the bonds. In which case, where would the
title to that portion of the deceased's estate vest? If, therefore, the heirs
must invoke the Quebec Act as their title, the condition subject to which that
Act transmits the property to them — payment of legacy duties —must be
fulfilled. It is unnecessary to say that, in my opinion, this case is clearly
distinguishable from the case of Woodruff v. Attorney-General for
Ontario. There
is no question here of an attempt to tax property situate beyond the
jurisdiction; the Quebec
statute merely fixes the conditions subject to which it gives a good title to
the property of the deceased. In a word, the tax is imposed as a condition of
the devolution, a condition subject to which the heirs take title. The amount
of the tax is fixed by reference to the aggregate value of the property and the
degree of relationship of the successors to the deceased; but there is nothing
in the law which prevents
[Page 478]
a government from taxing its own subjects as in
this case on the basis of their foreign possessions. I would allow the main
appeal as to the estate of H. H. Cotton.
As to the cross-appeals, the necessary result
will be their dismissal, because that is the conclusion to which the opinions
of the three members of the court who would allow the main appeal in the case
of Mrs. Cotton would necessarily lead and it, therefore, becomes unnecessary
for me to express any opinion on the merits of these cross-appeals.
The conclusion, therefore, to which I have come
is that as to the estate of Mrs. Cotton the appeal should be dismissed and that
it should be allowed as to the estate of Mr. H. H. Cotton.
As to costs, the costs of the Superior Court
should be paid by the Crown; the costs in appeal and here should be paid by the
estate of Cotton, as also the costs on the cross-appeals.
Davies J. (dissenting).—In the case of Woodruff et al. v. Attorney-General for Ontario, the Judicial Committee held that there was
no sound distinction in point of law between the two transactions or
assignments of property in question in that case. As said in their judgment:—
They were both concerned with movable
property locally situate outside the province and the delivery under which the
transferees took title was equally in both cases made in the State of New York.
Had the judgment stopped there it would seem
reasonably clear that the grounds of their Lordships' decision that the Ontario succession duties were not
[Page 479]
recoverable in that case, were the local situation
of the property outside the province, coupled with a delivery of the property under which the transferees took title also
in the State of New York. Under
these facts and circumstances they did not agree with the Court of Appeal for
Ontario which held that the assignment of 1902 fell within the Ontario Act
imposing succession duties because it was, as that court held, a transfer of
property made in contemplation of death to take effect only on and after the
death of the transferor. As I understand the judgment of the Privy Council, up
to this point, it did not matter whether the assignment so made was or was not
made in contemplation of death and only to take effect on and after death.
These facts, as found by the Court of Appeal, were immaterial in their judgment
because, as they go on to say,' "the pith of the matter" was the
limitation in Canada's "Constitutional Act" of the powers of taxation
given to the local legislatures, which limitation they said made
any attempt to levy a tax on property
locally situate outside the province beyond their competence.
This broad general statement it will be seen
takes no account of the fact that such property may have been transferred
abroad by the testator or intestate in his lifetime in contemplation of death
and so as to avoid the succession duties. Such a factor as the transfer of the
property abroad, which is given prominence to in the preceding part of the
judgment, has no room in this part, where the Judicial Committee is apparently
pointedly stating their opinion of the limitation placed upon the powers of the
local legislatures in the grant to them of the power of "direct taxation
within the province." The fact of there having been an assignment
[Page 480]
of such property made abroad by the deceased in
his lifetime in contemplation of death is in this statement of the limited
character of the powers conferred on the local legislatures absolutely ignored
as irrelevant, and the general proposition laid down that
any attempt to levy a tax on property
locally situate outside the province is beyond their jurisdiction,
that is, the jurisdiction of the local
legislatures.
But the Judicial Committee do not stop there. If
they had it might be contended that the language of their judgment, though
broad and general enough to cover other cases, must be construed as applicable
only to such facts as they were in that case dealing with, namely, where
movable property was
locally situate outside the province and
the delivery under which the transferees took title was also made outside the
province.
The latter words, however, of their judgment
seem to render it impossible to attach such a limited meaning to the judgment,
because they go on to deal with the arguments advanced by Sir Robert Finlay for
the Attorney-General of Ontario.
His argument, as reported, was to the effect that the legislation was intra
vires the legislature because the tax was not a tax on property but one on
the devolution or succession, that it was imposed on persons beneficially
entitled by virtue of the will of the deceased or by virtue of the testamentary
transfers made by him in his lifetime to take effect at his death. That these
per-sons taxed were resident in the province and were directly liable for the
duty.
Dealing with this argument the single remark the
Judicial Committee make is:—
[Page 481]
Directly or indirectly, the contention of
the Attorney-General involves the very thing which the legislature had
forbidden to the province, taxation of property not within the province.
Such a remark would be pointless if they had
held the transaction of 1902 to have been a bonà fide absolute
assignment and not to have been of the character contended for by Sir Robert
Finlay and found by the judgment in appeal before their Lordships, namely, one
made in contemplation of death and only to take effect on and after death. The
latter construction of the transfer had to be reached, otherwise there was no
ground for discussion as to the property being taxable under the Act. The
limitation upon the powers of the provincial legislatures to levy direct
taxation within the province, rendered it unnecessary for their Lordships, as
they said,
to discuss the effect of the various
sub-sections of section 4 of the "Succession Duty Act," on which so
much stress had been laid in the argument before them.
It is, therefore, evident to me that the
judgment of the Privy Council in this case of Woodruff v. Attorney-General
for Ontario is of a
wider and broader application than contended for by the appellant in this
appeal, and that it is conclusive upon us in the appeal now before us. The
distinction attempted to be made by Mr. Dorion, at the first hearings between
the two statutes of Quebec and Ontario levying these succession duties, namely,
that the former expressly makes the taxation payable upon the transmission of
the property, while the latter places it upon the property itself, is not a
substantial distinction. In my judgment, under both statutes, the tax is one
not on the property, but on its
[Page 482]
devolution or succession. (See Lovitt v. Attorney-General for Nova Scotia) But no such, distinction can be successfully invoked to take this
appeal out of the binding effect of the judgment of the Privy Council in Woodruff
v. Attorney-General for Ontario.
That judgment was not based upon the mode in which the Legislature of Ontario
attempted to levy the succession duties there in, dispute, but upon the denial
of the existence of any constitutional power in the legislature either directly
or indirectly to impose such duties upon property not within the province. The
head-note of the case correctly sums up what it really did decide, namely,
that,
it is ultra vires the legislature of
the province to tax property not within the province; Held, accordingly,
that the "Succession Duty Act" (R.S.C. 1897, ch. 24) does not include
within its scope movable properties locally situate outside the Province of
Ontario which it was alleged that the testator, a domiciled inhabitant
of the province has transferred in his lifetime with intent that the transfers
should only take effect after his death.
If I am right in my construction of this Woodruff
decision, it is binding in this appeal, as the foreign bonds, stocks and
other securities owned at her death by Mrs. Cotton, and at his death by Henry
H. Cotton, and upon which, or the transmission of which, it was contended by
the Crown in right of the Province of Quebec succession duties were payable
under the provincial statute, were, at the times of the respective deaths of
Mrs. Cotton and Henry H. Cotton, situate in Boston, Massachusetts, and not in
the Province of Quebec, and had never been, so far as the record shews,
physically situate in that province.
The appeal should, therefore, be dismissed.
[Page 483]
As regards the cross-appeal, I think this should
be allowed. The Court of King's Bench modified the judgment of the Superior
Court by deducting the debts of the estate from all the assets and not from the
assets in the province only. I think the Superior Court was right in holding
that the debts owing by the estate in the province should be deducted from the
assets in the province only. In estimating the amount upon which succession
duties should be paid, the executor or the courts have nothing to do with
assets outside of the province which were beyond their jurisdiction, and which
it is ultra vires of the legislature to tax. The statute says, section
1191(6), that these succession duties are to be calculated
upon the value of the property transmitted
after deducting debts and charges existing at the time of the death.
What the legislature was dealing with and all
that it had power to deal with was the property within the province—just as the
reference to debts had to do exclusively with debts due in the province. If I
am correct in my construction of Woodruff's Case in holding that property "locally
situate outside of the province" was not liable to the succession duties,
then it must, I think, be held that the words "property transmitted"
in section 1191 (6) had no reference to property outside of the province, but
had exclusive reference to the property within the province which, and which
alone, the legislature in the matter of these duties had power to deal with.
I would, therefore, allow the cross-appeal and
restore the judgment of the Superior Court.
As regards costs, the respondent should be
allowed
[Page 484]
costs in all the courts and costs upon his
cross-appeal in this court. The judgment in the court of appeal not allowing him
costs in that court was based upon the assumption, wrongful to my mind, that
the judgment of the Superior Court should be substantially modified. As I think
the Court of King's Bench wrong upon that point, I would allow the respondent
his costs of the appeal in that court as well as in this court, and also his costs
in the cross-appeal.
Idington J.—The issue raised herein is of very great importance. It involves
the question of the interpretation and construction of the "British North
America Act, 1867," section 92, sub-section 2, assigning to the exclusive
power of the provincial legislatures
direct taxation within the province in
order to the raising of a revenue for provincial purposes;
and of the interpretation and construction of an
Act of the Quebec Legislature professedly acting within said power enacting that
all transmissions, owing to death, of the
property in, or the usufruct or enjoyment of, movable and immovable property in
the province, shall be liable to the following taxes, calculated upon the value
of the property transmitted, after deducting debts and charges existing at the
time of the death:
or and as it now stands amended in 6 Edw. VII.
ch. 11 (1906) (of Quebec).
The first question thus raised is whether or not
this enactment is a competent exercise .of the power given by the preceding
enactment.
Before passing to the solution of this question,
I wish to consider and dispose of the suggestions made by counsel for the
respondent relative to the bearing
[Page 485]
of the amending section 1191(c) and three or
four following sections of said Quebec statute.
The contention set up is that these several
later sections shew that it is not the transmission of property that is taxed,
but the property itself.
Inasmuch as section 1191(c) of the Quebec Act is
a declaration of the meaning of the word "property" where it occurs
in the Quebec Act above referred to and quoted from, I am unable to see how it
can affect the question at all if the act of transmission within the province
is the subject of taxation and a proper basis therefor. And still less can the
following sections thereof affect the question raised here, for it is frankly
admitted by counsel that none of the property now in question here is of any of
the kinds covered by these later sections.
Of course it may be a fair argument that finding
these sections in the Act taxing the transmission of property, stated in the
terms they respectively are stated, it is in truth a taxation of property that
is involved. Whatever weight may be given thereto it seems to me impossible to
reach such express language as quoted above as imposing taxation on anything
but the transmission.
The case of Lambe v. Manuel seems conclusive upon that point. In
the language of Lord Macnagh-ten therein, page 72,
the taxes are imposed by those Acts — this
being one — on movable property are imposed only on property which the
successor claims under and by virtue of Quebec law.
Another argument to support this contention, of
property being the subject of the tax was made for
[Page 486]
appellant is this that immediately after
transmission or granting of probate the personal representative is to be
recouped in a specified way varying according to the distinction or character
of each legacy. It seems to me this argument is more plausible than sound.
It is the first transmission that is in question
and not the later transmission taking effect abroad as the result thereof.
I infer from the evidence adduced that it was
erroneously supposed to be contended that the later transmission was had in
view by the statute.
Neither the requirements of the rules of
corporate bodies in which stock may have been held by deceased, nor those of a
foreign state relative to the enforcing of claims therein are what is meant by
the transmission named in the statute. It is that transmission, and only that,
which vests any right, whatever it may be, in him getting by force of the law
of Quebec, title to the property of deceased, that is meant by the use of the
word in this statute. The purview of the Act shews that, if any doubt could
otherwise exist.
I, with deference, doubt what Mr, Geoffrion
seemed to concede resting upon the decision of Mr. Justice Pagnuelo in In re
Denoon. The
words of the Act are strong and the legislature competent to change the old law
or keep its operative effect in suspense.
In another point of view the argument is met by
the case of Bank of Toronto v. Lambe, where an analogous argument was
put up.
The tax there had to be determined by the
paid-up
[Page 487]
capital of the bank and the
number of offices or places of business it had in the province.
There, as here, the questions of direct or
indirect taxation, the power over banks as such resting with the Dominion, and
their rights to carry on business independently of provincial authority, and a
foreign head office owning and controlling everything, were all relied upon.
The tax was held to be direct and the mode of
fixing it was but the measure to be applied for ascertaining what the tax
should be.
Here the tax is measured by the amount of
property to be transmitted under certain conditions varying in each case just
as in the cases of banks and other companies in that case.
Counsel for appellant then invokes the authority
of the case of Woodruff v. The Attorney-General for Ontario, to shew that personal property
actually situated in a foreign state cannot be taxed by a provincial
legislature. The Ontario Act, R.S.O., ch. 24, is as fundamentally different
from the Quebec Act we are called upon herein to consider, as such Acts can
well be from each other. Section 4, sub-section (a) of the former is as
follows:—
(a) All property situate within this
province, and any interest therein or income therefrom, whether the deceased
person owning or entitled thereto was domiciled in Ontario at the time of his death or was domiciled elsewhere, passing either
by will or intestacy."
Let any one compare the two for a moment and
what I have just stated seems clear.
Before proceeding further it is proper to
inquire whether notwithstanding the radical differences between the two Acts it
has, as is contended, in truth
[Page 488]
been decided, by the Privy Council in the said Woodruff
v. Attorney-General for Ontario,
that the provincial legislature cannot tax a transmission in and by Quebec law of personal property outside the
province, and that the maxim mobilia sequuntur personam so much relied
upon relative to the laws of other countries, cannot avail in this case.
If that was the real issue raised in that case,
and it has been therein definitely decided, there is an end of the matter. If
it was not the real issue, and the decision did not necessarily involve the
decision of such issue, then it cannot bind us.
I may at once say that the statement of fact in
the following sentence of the judgment, seems to me to dispose of the question
of the fundamental grounds the judgment proceeds upon.
They (i.e., the two transactions
there in question) both were concerned with movable property locally situate
outside the province and the delivery under which the transferees took title
was equally in both cases made in the State of New York.
Surely that is as wide apart from what is
involved here as can well be. The title upon which the attempted taxation
herein rests arose in Quebec by
virtue of the transmission its laws give vitality to. It is upon the act of
giving force and validity thereto that the taxation is imposed. Whether such
transmission is taxable or not and the legal ambit thereof is entirely another
question. But it is not involved in the denial of a right by virtue of such a
statute as the Ontario Act to tax the property itself when in, or after taken
to, a foreign country, and has been in the lifetime of the deceased there
transferred to
[Page 489]
another, and thenceforward remains in the
foreign state the property of such transferee.
The Ontario Act was so framed that it did not
give rise to the very question raised here. When the interpretation of that Act
was called for, in said case, the first subject calling for consideration was
the scope of legislation whereof the keynote was the subsection I have just quoted.
It purports to tax property situate within the province and in taxing property,
not the owner in respect thereof, or the transmission thereof, lies the radical
difference between the Acts there in question and what we have to pass upon. In
trying to arrive at the correct interpretation naturally the taxing power of
the province was referred to. An obiter dictum appears relative thereto that
read in relation to the situation of the property there in question and the
facts relative thereto might well be attributed thereto. But it by no means
proves it is to be taken in the wide sense now contended for here, in relation
to another set of facts giving rise to other legal considerations. The.
judgment reached does not need its support nor does it seem the basis thereof.
And that is made abundantly clear when the
judgment expressly refers to the case of Blackwood v. The Queen as containing the reasoning which
covers the. case and I infer was in fact adopted in disposing of it.
If ever a case was decided on what was supposed
by the court to have been the intention of the legislature, as expressed in its
enactment, that was the case of Blackwood v. The Queen. The entire reasoning
[Page 490]
of the judgment was elaborated in order to the
making of that clear. The conclusion is thus summed up therein:—
All these things, the person to pay, the
occasion for payment, and the time for payment, point to the Victorian assets
as the sole subject of the tax.
Whilst impliedly admitting the power of the
colony of Victoria to go much
further by using language shewing such a purpose, it would have been idle to
elaborate as was done if the power in Victoria did not exist. All the case called for in such event was, if so, to
declare accordingly.
The court adds that the reasons which led
English courts to confine probate duty to the property directly affected by the
probate, notwithstanding the sweeping general words of the statute which
imposed it, apply in full force to the Victoria statute and the case arising
upon it; yet the court made it quite clear that said reasons were only
illustrative of how such Acts had been treated and their interpretation might
form a guide for reaching the meaning of the Victoria statute.
For in the early part of the judgment the court
points out that the discussion relative to the terms "probate duty"
and "legacy duty" could only be used as descriptive of two classes of
statutes familiar to English lawyers and adds: "If used for any more exact
application they are misleading."
Now passing that we have the following
declaration in the Quebec Act as amended which clears all this up if doubt ever
existed. The amending clause was apparently designed to clear it up whether
needed or not.
The clause is section 1191(c), as follows:—
1191(c). The word "property"
within the meaning of this section shall include all property, whether movable
or immovable, actually
[Page 491]
situate or owing within the province,
whether the deceased at the time of his death had his domicile within or
without the province, or whether the debt is payable within or without the
province, or whether the transmission takes place within or without the
province, and all movables, wherever situate, of persons having their domicile,
or residing, in the Province of Quebec at the time of their death.
This is most explicit as to what is to be
covered by the transmission to be taxed and most comprehensive. Perhaps it
comprehends too much, but as to that we are not concerned here, for the case
now in hand of the transmission of the estate of the late Mr.
H. H. Cotton who was domiciled at his death in the
province, falls within the latter part of the clause just quoted and is
preceded by language evidently intended to reach as far as the powers possessed
might go to express the intention not found in the Victoria Act or the Ontario
Act.
Nor are we concerned with the amendment since
made to rectify what were possibly too extensive claims. Neither of these
amendments is retrospective.
The clause should be held good for that which
the legislature had the power to enact when the excess of authority, if any,
was as here easily severable from what was ultra vires or capable of
being read as expressing only what was intra vires.
I am only concerned thus far to see if there was
an expression of intention such as was sought for but could not be found in the
Victoria Act. For the present I assume, but by no means say, the language
needed clarification.
It seems to me there can in regard to this Act
thus amended be no doubt of its intention to impose a tax on the transmission
in Quebec by force of its law,
of the personal estate wherever situate.
The next and most important question which
[Page 492]
arises here is this: Does such express intention
limited within what is necessary to cover the case of the transmission of the
late Mr. H. H. Cotton's estate
wheresoever situate, come within what it is competent for the Legislature of
Quebec to enact?
This question starts several others. In the
first place the taxability of any transmission of property in any case; the
principle upon which it can be rested; and «the kind of property respecting
which its transmission may be taxed. I cannot think any doubt can exist as to
the right to tax the transmission. The basis of such right as well expressed in
Winans v. Attorney-General
by Lord Loreburn, page 30:—
In both cases the property received the
full protection of British laws, which is a constant basis of taxation, and can
only be transferred from the deceased to other persons by a British court.
The basis of taxation and for transfer from the
deceased to others is not exactly in the same way here in evidence, as there,
but as to transfer is fully more so. The deceased had property in the province
for which his executor could get no title or reach it without probate or authentic
will (whichever happened to be the case), and that could only be got upon the
conditions determined by law. Even if one of these conditions happened in the
event to be most onerous, and possibly uncollectable by an action taken by the
Crown, I fail to see how the respondents can now and here attack it.
Again, the Lambe v. Manuel case, the converse of this upon the
same statute before the amendments referred to, proceeds upon the recognition
of the title got by the transfer or transmission involved
[Page 493]
in the grant of probate in another province
where the deceased had his domicile at death.
It seems to me to give impliedly just that
recognition of the grant relative to goods in another province which I have
already suggested.
It may at least primà facie be here given
in a limited sense to the mobilia sequuntur personam rule.
In the next place arises the question of the
power of the Quebec Legislature confined as already mentioned within the limits
assigned by the "British North America Act" regarding direct tax and
its imposition within the province.
Great stress is laid upon a passage in the
judgment in the Woodruff case apparently denying the power of taxation of
property beyond the province.
If I am right in pointing out as above that the court
was proceeding upon the statement of facts quoted above, and the peculiarity of
these facts, then the expression can only fairly be held to relate to the
position of affairs at the death of the testator in that case.
The property had been passed in a foreign state
to others and the maxim mobilia sequuntur personam could not on such a
state of facts be applied in any of the various ways it has been made
applicable in law.
The language of the Ontario Act did not permit
of that being done on the facts dealt with in that case.
And as already suggested the expression relied
upon might have a relevancy thereto, but cannot be fairly extended to something
else not needed for the disposal of that case.
I cannot think the expression was intended to
mean more, but if so it was obiter dicta.
Everything else aside from that partakes of obiter
[Page 494]
dicta, which, of
course, must be given that respectful consideration due at all times to eminent
authority. And giving that it is our duty, if an examination of the principles
of law to be applied do not seem to us to permit of the application of what is
expressed in obiter dicta, to say so, or at all events not feel bound
thereby.
With great respect, I cannot assent to the said obiter
dicta or its apparent assumption that "direct taxation within the
province" necessarily means only taxation in respect of property
physically within the province.
Counsel for respondents in his argument relied
so much upon these observations it seemed as if his whole hope rested therein
and the courts below have gone thereon entirely.
A man may be domiciled within a province and be
made answerable for taxes imposed upon him in respect of property outside the
province, but over which the laws of the province may have given him the only foundation
he can have for dominion or legal possession.
For example, a man domiciled within a province
may build railway cars and lease them to one of the railway companies running
into the United States, and sometimes have them at home and sometimes abroad.
Can he not be taxable in respect of such property?
The Canadian farmer may use land on each side of
the line between this country and the United States and his flocks or herds may be driven from his house and farm
steading in any one province to the end of his farm and pasture in the foreign
state. Can he not be taxed for or in respect of such personal property?
[Page 495]
Is the right of taxation to be determined by the
mere accident of where these cars, flocks or herds may be at a given time? Is
the income derivable therefrom to depend also on such accident? Reason seems to
say no. It is his domicile in the province that gives the power of taxation in
his case validity.
Yet in taxing such property or the man in
respect of such property, there is in a sense taxation of property which may be
outside the province. The man is taxed and may be made to pay in respect of
property abroad.
Is it conceivable that the right of taxation of
a multitude of other and especially commercial properties can depend on anything
else than the domicile of the man answerable for the tax and who is enjoying
all his rights or property therein by virtue of the legislation of his province
and the contracts he has formed therein ? And for the protection of such rights
should he not share part of the common expenses of such protection?
There are no doubt cases of personal property
within a province owned by some one outside the province which can be taxed
also.
Then we have the income tax which forms no mean
part of the aggregate municipal taxation. Yet it often rests upon no other
foundation in law than the domicile of the man taxed.
The income tax has never been questioned. Yet
the sources from which the income flows may be in every quarter of the globe.
The legislature of the province, where he thus
earning it is domiciled, having had committed to it the exclusive power over
property and civil rights and imposed upon it the duty of protecting him therein,
[Page 496]
has also the power of direct taxation to meet
the expenses of discharging such duty. Surely the fact that the income may
never have reached home and may be left abroad to earn more, is not to
determine the power of imposing such a tax.
Lest it may be said taxation of income is
indirect, I submit what was said in Bank of Toronto v. Lambe, at page 582, in the course of the
judgment dealing with the power of direct taxation given the provinces. It is
as follows:—
It would deny the character of a direct tax
to the income tax of this country, which is always spoken of as such, and is
generally looked upon as a direct tax of the most obvious kind; and it would
run counter to the common understanding of men on this subject, which is one
main clue to the meaning of the legislature.
If, therefore, we may safely assume an income
tax derivable from foreign ventures and not necessarily reaped and brought into
the home custody of him liable to such tax, why should we in this case be
confined to the test of the particular thing being physically within the
province as the true limit of the power of taxation within a province?
It is to be observed also that the same court,
in Blackwood v. The Queen,
thus expressed its views in reference to the power of taxation. It said at
page 96:—
There is nothing in the law of nations
which prevents a Government from taxing its own subjects on the basis of their
foreign possessions. It may be inconvenient to do so. The reasons against doing
so may apply more strongly to real than to personal estate. But the question is
one of discretion, and is to be answered by the statutes under which each state
levies its taxes, and not by mere reference to the laws which regulate
successions to real and' personal property.
This power, I submit, is that of direct taxation. It is not said that the extreme
exercise suggested as
[Page 497]
possible would be a proper
exercise of such power. It could not be exercised over any one domiciled in
another country or province. But by every principle of convenience and reason
relative to the partition of the powers thus existing and being apportioned
between the respective jurisdictions of dominion and provinces, there is
nothing that forbids and much that leads to the conclusion that it was intended
to assign to the provinces whatever powers of direct taxation a province or
state could properly exercise and usually exercised or had the power to
exercise.
Direct taxation, except for local purposes, had
never been resorted to by the old Province of Canada, and, so far as I am aware
and as it is generally understood by the term, has not yet been resorted to by
the Dominion, save possibly by the excise duties.
The Dominton quite consistently therewith might
also by virtue of the power assigned it possibly resort thereto. But when the
conditions existent relative to direct taxation were such as to induce the
belief that its resort thereto by the Dominion might only be in a very remote
contingency, why should we assume that the usual and general power was not that
assigned to the provinces which alone were likely to exercise it; and that it was
not intended to enable them to exercise it in their respective dealings with
their own citizens?
There is nothing to indicate that the general
power declared as above to be possible, was reserved for the Dominion only, or
that some implied limitation was intended, reserving and preserving part of it
in a dormant condition, only to be exercised on extreme occasions, or for
special purposes. In contradistinction to the power extending over all persons
and given
[Page 498]
the dominion to resort to any mode of taxation,
it was quite natural in assigning direct taxation to express it as appears.
I submit, what was intended was that which the
language indicates, when we have regard to the nature of the Act which consists
of a concise description of a number of enumerated powers.
It is an extremely improbable thing that for the
mere purposes of raising a revenue for provincial purposes by direct taxation,
any abuse such a power may be in this particular regard susceptible of, was
dreamed of as a thing to be guarded against, by 'any one. If it had, we would
likely have found other expression given thereto.
Moreover, we must bear in mind that of those
federated provinces, Nova Scotia and New Brunswick
had long enjoyed just as complete powers in this regard as the colony of Victoria of which the legislation was in
question in the judgment I have referred to. It does not seem to have occurred
to the court in making the remarks I have quoted, that any distinction then
existed between the powers of that colony relative to such taxation and those
of any other country.
Are we to assume that these other provinces
surrendered in this regard what in theory they had enjoyed up to Confederation?
The same is true of the old Province of Canada; but as it was divided into two provinces, the
illustration drawn therefrom is not so direct.
"Direct taxation within a province"
and "direct taxation of property within a province" are, I submit,
not interchangeable terms. It is the former term that is used, and if the
meaning of the latter term
[Page 499]
was what it purposed surely it would 'have been
so expressed.
And when we find that the Privy Council has not
adhered to the literal expression of the same power by limiting it to the
"revenue for provincial purposes/' but has heretofore found in that,
despite the words used, power to delegate it to corporate municipal and school
boards, I do not think we should seek in another spirit of interpretation,
relative to words in the same sentence, to restrict the power by something not
expressed and to something quite unusual. Parliament was not accurately
defining the powers of a petty corporation to be created, but designating in
general terms where that line was to be drawn in dividing the legislative
powers of a great state. It must be borne in mind that the legacy duty had long
been in force in England and that the "Succession Duty Act" had been
passed some twelve years before the "British North America Act," and
that both, within the memory of those transacting affairs, had been the subject
of judicial construction whereby the line was drawn at where the rule mobilia
sequuntur personam would put it. See Thomson v. The
Advocate-General; and Wallace
v. Attorney-General; each
dealing with the respective Acts referred to. And to this day the rule said
maxim implies has been applied in the Manuel Case I have referred to, to govern in one way
the construction of this very Act now in question before its amendment. The
principle being so declared the converse case surely must be held arid applied herein.
Or is this interpretation in Lambe v. Manuel
[Page 500]
when restrictive in its operation to be all
right, and in the converse case all wrong?
The view held in Wallace v. Attorney-General may since have varied by statute but that
does not affect the line of argument I suggest.
Again I shall not readily impute to the framers
of the "British North America Act" the purpose of so limiting the
powers of a province in this regard that the economic results of such
limitations inevitably would be, by so limiting its taxing power, to drive a
large portion of capital owned by those domiciled in a province to use it in a
foreign country.
In conclusion it seems to me the man domiciled
in a province is liable to such direct taxation for the specified purposes of
provincial revenue as may be usually, exercised over him for the like purpose
in any other state.
When living he is liable to taxation upon his
income derivable from his investments abroad, and if the legislature sees fit
all else he has abroad, and when he is dead the transmission of his estate in
so far as it requires the protection and support of the law ( as in Quebec
under the principles of the Civil Law or Code) the sanction or authority of the
province exercised by or through the ordinary channels it has created for the
purpose can only be obtained upon the terms the province has seen fit to enact
as to the condition of giving that legal support or needed sanction or
authority.
However much all I have advanced by way of
illustration relative to the taxing power may be subject to limitation or
reservation, I am unable to see
[Page 501]
how or by what process it is possible to compel
a province to give that sanction save on its own terms.
The will of the late Mr. Cotton was made in
Quebec, where he undoubtedly was domiciled when it was made and at his death,
and his will rested for its validity on the laws of Quebec, and was expressly
made subject to the conditions imposed by this statute before it could obtain
any force or effect.
The respondents have not shewn that in respect
of this estate there was any mistake made in that regard or that the securities
in respect of which, or upon the basis of the value of which, they paid this
tax did not, or rather respondents in order to acquire title thereto did not,
require this sanction.
I can conceive of a case wherein a foreign state
or another province may have expressly provided for a statutory or other
representative of a deceased person who in life was domiciled elsewhere,
getting his personal property situate within its jurisdiction without any
evidence of what had taken place in the jurisdiction of his late domicile.
This, however, is not in accord with the known international law relative to
personal property.
Prima facie his
personal property had according to the legal maxim mobilia sequuntur
personam its location in the province where he was in life domiciled at the
time of his death. And fully agreeing in and duly observing all that has been
said in the case of Blackwood v. The Queen, relative to the interpretation of
legislation which deals with personal property or estate by an Act of this kind
not warranting the application of the said maxim to interpret the statute
[Page 502]
which does not make clear the purpose of its covering
by the application of the said maxim all beyond the state of his domicile I yet
think when the legislature has expressed a clear intention to cover all that,
then the maxim may well be taken as a starting point of presumption which the
plaintiff in a case such as this to recover back must rebut if it can be
rebutted.
Whether or not because of another form of law
and another mode of thought than ruled the minds of the framers of the Victoria
Act dealt with in that case, the word transmission is used and a more direct
and comprehensive result is reached.
Those enjoying the benefits of the transmission
by virtue of Quebec law and Quebec courts must pay for or upon the
transmission.
We had the Attorney-General for Quebec v.
Reed, in
the first but not on second argument, pressed upon us, but the respondents'
factum still presents it as covering the alternative argument that if it was
not property that was being taxed, then it was not direct, but indirect
taxation.
In a like case I would feel bound to follow this
authority, but fortunately the reasoning it proceeded upon and ground given in
support thereof,, have since been revised in the Bank of Toronto v. Lambe case, by the same court and relieves from
any embarrassment which otherwise
might have been felt.
I would add that to my mind if we imposed no
taxes but those which would not fall in part at least on someone else than he
first paying, we never would be troubled with taxes.
No one possessing clearness of vision can
imagine
[Page 503]
that a single tax upon land is not in part borne
by others than the land owner who pays it.
Its payment or the burden of its payment has to
be reckoned with and met by every member of society. Its simplicity is
attractive.
It is admitted the probate of the late Mrs.
Cotton's will executed in Boston was first applied for and got in Quebec.
And her husband as the executor of her will
obeyed that law, concluded he was, and consequently his wife must be held to
have been domiciled in Quebec
at the time of her death.
I am unable to see how in face of the
proceedings at the time the declarations made then and upon which the Court of
Probate, if the will was probated as admitted, can be overturned by such
evidence as now adduced. The amending section 1191(c) defining the word
"property" is not applicable to her case, but as already suggested
the statute did not, in my opinion, or my reading of the Lambe v. Manuel case, need it.
The law of Quebec operated on each estate, was recognized as having so operated and I
fail to see how his representatives can now claim to defeat the law in either
case.
The appeal should be allowed with costs and
doing so seems to render consideration of the cross-appeal needless.
Duff J.—-This appeal raises the question whether an Act of the
Legislature of Quebec imposing certain duties described as "succession
duties" in respect of
[Page 504]
transmissions of property
under the law of that province in consequence of death is within the competence
of that legislature in so far as such transmissions affect movable property
locally situate outside that province.
The court below held the Act to be in that
respect ultra vires conceiving itself to be governed in the
determination of the point in question by the decision of their Lordships of
the Privy Council in Woodruff v. Attorney-General for Ontario.
In that case their Lordships had to pass upon
the power of the Legislature of Ontario to impose a tax in respect of
particular items of property locally situate outside the province on the
occasion of a transfer of that property inter vivos effected by delivery
of it in the State of New York.
The two cases seem to be clearly distinguishable; and I do not think we are relieved from
considering the points raised on this appeal either by the decision itself in Woodruff
v. Attorney-General for Ontario or by any of the
observations of the distinguished and lamented judge who delivered their
Lordship's judgment. The learned judges in the courts below appear, if I may
say so with the greatest respect, to have overlooked (in its bearing on this case)
the fundamental difference in point of law between the devolution under the law
of a province of a movable succession comprising movables having an
extra-provincial situs and a transfer inter vivos of the title to
particular movables (having such a situs) effected by delivery of them
outside the province; and thus, as I conceive, to have missed the broad
distinction between the question presented in this case and that
[Page 505]
pronounced upon in the decision by which they
considered themselves to be governed.
It is a principle now generally recognized in
countries where either the common law or the civil law prevails that as regards
movables (wherever they may be situated in fact) a testate or intestate
succession is for many purposes considered as an integer devolving under and
governed by a single law — that namely which was the personal law of the
decedent at the time of his death. "The logical consequences of this
general principle are kept intact by the application of the fiction mobilia
ossibus inhœrent." (Bar, Private International Law, sec. 362.) The principle is
recognized by articles 6, 599 and 600 of the Civil Code of Quebec; the latter
of which in effect adopts in this connection the rule of English law that the
"personal law" is the law of the territory in which the decujus had
his domicile.
This principle has never, by the law of England
at all events, been regarded as excluding the authority of the law of the situs
in respect of the particular movable items comprised in a succession; but
it does involve the regulation by the law of the domicile of the distribution
of the beneficial surplus belonging to the succession after the satisfaction of such claims as debts and
expenses of administration. By that law then is determined the extent to which
the property is subject to testamentary disposition and the conditions upon
which the beneficiaries become entitled to accede to a share of the estate
through such disposition or by operation of law; and among the generally
recognized logical consequences of this principle (preserved as above mentioned
by the maxim mobilia ossibus inhœrent) is
[Page 506]
that the legislative authority of the domicile
is acting within its proper sphere in assuming for public purposes a share of
the surplus as a toll exacted from the beneficiaries by way of condition upon
or as an incident of the accession to the benefits of the succession. Bar 254, 255; Wharton, 183, 184, 185; Dicey, 751, 752, 753; Eidman
v. Martinez, at
page 591; State of Maryland v. Dalrymple; West, Inheritance Tax, 180 to 188.
In the fiscal legislation of the United Kingdom these principles have for
nearly a century had full play. The enactments of the statute (55 Geo. III. ch.
184) imposing legacy duty were expressed in general terms comprehensive enough
in themselves to apply to all persons and to all bequests of or payable out of
personal property wherever situate. It was held in a well-known series of cases
that the statute must be construed in accordance with the principle expressed
in the maxim quoted above. In 1842 in Thomson v. Advocate-General all the Lords (accepting the
unanimous opinion of the judges) affirmed that the legislature must be supposed
to have been legislating with reference to the principle mobilia sequuntur
personam. In 1865 (in Wallace v. Attorney-General) Lord Cranworth in construing the general
words found in the Succession Duty Act" of 1853, said that the incidence
of legacy duties was regulated by the principle that such imposts should be
charged upon benefits accruing under "the laws of this country."
Nobody doubts, of course, the competence of the
Imperial Parliament to pass legislation obligatory
[Page 507]
upon the courts of the Empire professing
directly to affect property situate in foreign countries whatever the ownership
under which it is held. But there are certain recognized principles of
international conduct which in the absence of a clear indication to the
contrary the courts will assume Parliament has not disregarded. It was in these
cases considered to be no infringement of these rules that Parliament should
impose legacy duties in respect of a succession composed in part of movables
having an actual situs in a foreign country, provided the decedent had
at the time of his death a domicile within the United
Kingdom. This restriction of the duty to the estates
of persons so domiciled was sufficient, as Lord Herschell said in Colquhoun v.
Brooks, at
page 503, to "bring the matter dealt with within our territorial
jurisdiction."
I dwell upon this phrase of Lord Herschell’s in
order to emphasize the fact that this jurisdiction of the law-making authority
of the domicile to tax the benefits derived from a movable succession as a
whole has not been regarded in the courts of the United Kingdom as in any way
resting on the extra-territorial authority which a sovereign power asserts in
respect of its own subjects wherever they may be or as having any necessary
relation to the nationality of the decedent. It is regarded simply as an
exercise of the "territorial jurisdiction." Therefore, no distinction
has been drawn in this connection between the legislative authority of a colony
invested with powers of self-government or of a state or province which is the
member of a federation and that of a Parliament possessing unrestricted
sovereign powers.
[Page 508]
In the numerous cases which have come before the Privy Council from the Australasian
colonies touching the scope of enactments imposing death duties the
constitutional competence of the legislatures of those colonies to proceed in
these matters on the principle mobilia sequuntur personam seems never to
have been doubted. Harding v. Commissioners of Stamps for Queensland. Indeed, as Mr. Dicey has pointed out, since the Treaty of
Independence with the American colonies in 1783, the policy of the Parliament
of the United Kingdom has been
to treat the colonies as in the matter of such taxation possessing fiscal
independence. In the United States, it is perhaps superfluous to observe, in this respect the several
States have been regarded as exercising an independent sovereignty.
Is the taxing authority of a province of Canada
affected by any restriction which makes such a province incompetent to apply
these principles in framing its plan of taxation in respect of successions?
Nobody can doubt that prior to Confederation the Province of Nova Scotia (let us say) possessed such authority. How far then
was this authority curtailed by the "British North America Act?" I
make no apology for quoting once again what one may perhaps call the classic
passage in Lord Watson's judgment in Liquidators of the Maritime Bank v.
Receiver-General of New Brunswick,
at pages 441 and 442, where he explains the constitutional relation in which
the provinces stand to the Canadian Union.
Their Lordships do not think it necessary
to examine, in minute detail, the provisions of the Act of 1867, which nowhere
profess to curtail in any respect the rights and privileges of the Crown, or to
[Page 509]
disturb the relations then subsisting
between the Sovereign and the provinces. The object of the Act was neither to
weld the provinces into one, nor to subordinate provincial governments to a
central authority, but to create a federal government, in which they should all
be represented, entrusted with the exclusive administration of affairs in which
they had a common interest, each province retaining its independence and
autonomy. That object was accomplished by distributing, between the Dominion
and the provinces, all powers executive and legislative, and all public
property and revenues which had previously belonged to the provinces; so that
the Dominion Governments should be vested with such of these powers, property,
and revenues as were necessary for the due performance of its constitutional
functions, and that the remainder should be retained by the provinces for the
purposes of provincial governments. But, in so far as regards those matters
which, by section 92, are specially reserved for provincial legislation, the
legislation of each province continues to be free from the control of the
Dominion, and as supreme as it was before the passing of the Act.
The subject of taxation was not under the Act
exclusively assigned as a domain of legislation to either the Dominion or the
provinces. The Dominion in that field is given unrestricted authority; the
provinces have a concurrent, but more limited, authority. The scope of this
provincial authority is defined by the words
direct taxation within the province for the
raising of a revenue for provincial purposes.
In this case we are concerned only with the
condition" that the taxation shall be "within the province."
Some point, it is true, was raised on the words "direct taxation;"
but since the decisions of the Privy Council in Bank of Toronto v. Lambe, and Brewers and Maltsters
Association of Ontario v. Attorney-General for Ontario, it does not appear to be any longer open
to question that duties imposed upon or in respect of benefits acquired under a
will or intestacy are direct taxes within the meaning of the provision under
discussion.
[Page 510]
The point for consideration then is this: Was
the authority (which the provinces unquestionably possessed before
Confederation) to impose duties upon or in respect of the benefits acquired
under a succession comprising in part extra-territorial movables abrogated by
the provision of the "British North America Act" which limits the
provincial power of taxation to "taxation within the province."
The question at issue cannot, I think, be fully
appreciated without taking into account the authority of the provinces to
legislate upon the subject of "Property and Civil Rights in the
Province." It is, of course, settled that the Dominion in the exercise of
its authority relating to the subjects of legislation mentioned in section 91
may while acting within its own proper sphere legitimately pass laws which in
their operation affect property and civil rights within the provinces; but it
is equally well settled that over property and civil rights regarded as
subjects of legislation in themselves the Dominion (except when acting under
the specific provisions of that section) possesses no legislative authority. Citizens
Ins. Co. v. Parsons, at
pages 110 and 111. The subject of successions, the decujus being
domiciled in Quebec, is one of those subjects which is within the exclusive
authority of the Legislature of Quebec — in respect of which the authority of
that legislature is in Lord Watson's phrase "as supreme" as before
the passing of the Act. The right of a beneficiary entitled to share under such
a succession is regulated by that legislature alone. In the courts of any
country, which accepts the law of the domicile as prescribing the rules of
succession,
[Page 511]
the right of a person claiming to share in the
benefit of such a succession would fall to be determined by the application of
such rules as that legislature prescribes as applicable to such a case.
In accordance with the principles already
indicated the "logical consequences" of this control of such
successions by the Province of Quebec "kept intact" by the
application of the fiction mobilia ossibus inhœrent seem to involve this — every such
succession may be deemed for the purpose among others of determining the
incidence of duties imposed upon benefits accruing from the devolution of it to
have as an entirety its seat in Quebec. On what ground, then, are we so to
restrict the words "taxation within the province" as to exclude such
successions from the taxing authority of that province? There appears to be no
ground for doing so. The possibility of those words being so restricted does
not appear to have occurred to the Judicial Committee when considering the case
of Lovitt v. The King.
I have not been able to discover anything in Woodruff
v. The Attorney-General for Ontario
which affects the force of these considerations. There was in that case no
question of a testamentary or intestate succession. The Province of Ontario
had attempted to exact duties in respect of transfers made inter vivos, though
in contemplation of death, of movables having at the time the transfers were
made a situs in the State of New York according to both the law of Ontario and the law of New York. The transfers were, as their Lordships held, effected by delivery
in New York. It is argued,
however, that a passage
[Page 512]
in the judgment of Lord Collins lays down two
propositions, 1st, that taxation, by a province, of property locally situated
outside the province is ultra vires, and 2ndly, succession duties
levied, by a province, upon benefits accruing from a succession devolving under
the law of the province and composed in part of movables locally situate
outside the province are taxes imposed on extra-provincial property within this
rule. It is needless to say that if such were the sense of a passage which
forms the ground, or one of the grounds, of the judgment it is not for this
court to refuse to follow it or to seek to fritter it away by insubstantial
distinctions.
I think this is a misreading of their Lordships'
judgment. It is not without some bearing upon the point of the meaning of the
judgment that the appeal then before their Lordships did not involve the
consideration of the validity of taxes imposed upon a succession such as we
have here and that their Lordships' judgment does not in terms mention such a
succession.
Indeed, it seems to me that the second of the
above mentioned propositions can be deduced from the judgment
only through an assumption that it follows as a logical
consequence from the first. A moment's consideration will shew that this is not
the case. Such benefits are generally recognized as being subject to the taxing
power of the province as we have seen upon the principle that the totality of
objects constituting a succession is subject to the personal law of the decujus
and consequently that the rights of persons claiming such benefits are
governed by this personal law and are regarded as having their seat in the
territory subject to it. There is, however, no principle
[Page 513]
generally recognized under which transactions inter
vivos respecting particular movables objects are held to be governed by the
lex domicilii. The more generally accepted view appears to be that
according to the principle indicated by the maxim mobilia se-quuntur personam the lex domicilii does not become applicable to such
transactions as those which were in question in Woodruff v. Attorney-General
for Ontario, but
that, broadly speaking, it is only in respect of those transactions which, (to
use Mr. West-lake's phrase,) a person's property is conceived and dealt with,
(e.g., marriage contract,) "as an entirety grouped round the owner's
person as a centre" that the lex situs has resort to the law of the
domicile for its legal rules; and this on the ground that in such cases, as in
the case of movable successions, convenience imperatively requires that they be
governed by a single law. Westlake, p. 181-186, 191-195; Savigny (Guthrie's
translation) 176, note (2); Wharton, vol. II., 680-684; Bar, 488-491; Fcelix,
paragraph 62; 1 Aubry et Eau, p. 103
; 1 Demolombe, pp. 110 and 111. According to the law of Ontario (which follows the law of England) there seems to be no room for
controversy that the transactions in question in that case were governed by the
law of New York. The
authorities are fully reviewed by Mr. Westlake (pp. 191-195), and his argument
appears to leave no doubt upon the point. The donees consequently derived
nothing through the law of Ontario. That was the view presented by Mr. Danckwertz in his argument
before the Privy Council on behalf of the appellants and that was evidently the
view upon which their Lordships acted.
[Page 514]
It is perhaps not to be expected that statutes
such as that before us — which impose duties in respect of transmissions of the
estates of domiciled residents including property situate abroad, and at the
same time upon all property within the jurisdiction transmitted by death,
wherever the domicile of the decedent may be — could escape criticism as
putting into operation two seemingly incompatible principles. Strictly we are
concerned in this case only with the question of the power of the legislature
in respect of the first mentioned class of duties; and constitutionally the
legislature's action in imposing such duties so far as it is constitutional,
cannot be affected by the circumstance that it has also professed to exact them
(if it have done so) in circumstances to which its authority does not apply.
The truth is, however, that the practice very widely prevails of taxing all
personal property having a situs within the territorial jurisdiction of
the taxing power on the occasion of a transmission of title by or in
consequence of death. The law of England, for example, maintains "the paramount authority of the situs
over the assets themselves as distinguished from the beneficial in the
clear surplus." Westlake,
p. 125; and the estate duty applies to all such items having an actual local situs
in the United Kingdom.
"No one doubts," says Mr. Justice
Holmes, delivering the judgment of the Supreme Court of the United States, in Blackstone v. Miller, at page 204,
that succession to a tangible chattel may
be taxed wherever the property is found, and none the less that the law of the situs
accepts its rules of succession from the law of the domicil, or that by the
law of the domicil the chattel is part of a universitas and is taken into
account again in the succession tax there. Eidman v. Martinez
[Page 515]
. See Mager v. Grima;
Coe v. Errol; Pullman's
Palace Car Co. v. Pennsylvania;
Magoun v. Illinois Trust and Savings Bank; New Orleans v. Stemple; Bristol v. Washington County; and for state decisions Matter
of Estate of Romaine; Callahan v.
Woodbridge; Greves v. Shaw; Allen v. National State Bank of
Camden.
No doubt this power on the part of two
States to tax on different and more or less inconsistent principles, leads to
some hardship. It may be regretted, also, that one and the same State should be
seen taxing on the one hand according to the fact of power, and on the other,
at the same time, according to the fiction that, in successions after death, mobilia
sequuntur personam and domicile governs the whole. But these
inconsistencies infringe no rule of constitutional law. Coe v. Errol;
Knowlton v. Moore.
There is certainly nothing in the "British
North America Act" pointing to the conclusion that a Canadian province is
confined to either one or the other of these principles of taxation. One
province may adopt that which gives special prominence to the circumstance that
the succession is regulated by the law of the domicile, another to the fact
that the title to particular items of movable property is controlled by the law
of the situs. Toll may be exacted as an incident of the accrual of the
benefit or as a condition of the passing of the title. And since either may be
validly acted upon to the exclusion of the other, I do not see upon what ground
it can be said that both principles may not be brought, so to speak, under the
same roof and combined in a single system. The decision of the Judicial Committee
in Lovitt v. The King
appears to support this view.
[Page 516]
This disposes of the question touching the duties charged against the benefits
under the will of Henry Cotton.
It is not without some hesitation that I have
concluded that the duties imposed by the earlier statute must be held to be
leviable in the respect of Mrs. Cotton's estate as a whole. As to the question
of domicile, Henry Cotton's admission creates a presumption which has not been
displaced and the point now relied upon appears to have been taken for the
first time in this court. The question upon which I have had some doubt relates
to the construction of the statute itself. The provision to be considered is:—
1191(b). All transmissions, owing to death,
of the property in, usufruct or enjoyment of, movable and immovable property in
the province shall be liable to the following taxes.
That is the English version. In the French
version, however, instead of the words "property in the province," we
have "propriété située dans la province;" and the contention is that these words shew the
legislature to have been aiming at transmissions only of property having an
actual physical situs within the province or property which considered
apart altogether from the fact of its constituting part of a succession
devolving under the law of the province has a situs within the province
by construction of law. After a most careful examination of the judgments in
the case of Lambe v. Manuel
I think the decision in that case relieves us from considering the construction
of the statute in this aspect. I think the effect of that decision is that the situs
indicated by the phrase above quoted from the French version is the situs
as determined in the case of movables by the application
[Page 517]
of the maxim mobilia sequuntur personam. The
question which arose in Lambe v. Manuel was whether certain movables which
formed part of the patrimony of a person who had died domiciled in the Province of Ontario, (but which admittedly,
if that circumstance were to be left out of consideration, has a situs within
the Province of Quebec) were dutiable under the enactment referred to. It was held they
were not dutiable and on the ground as it appears to me that in the application
of the phrase above quoted "située dans la province" the principle mobilia sequuntur personam must
govern. In that case the contention on behalf of the Attorney-General was the
contention which is now made on behalf of the respondents, viz., that the
principle upon which the legislature had proceeded was that all property having
(irrespectively of the operation of the maxim mobilia. sequuntur personam) a
local situation in the province should be subject to the duties imposed by the
Act. That construction was rejected by the Superior Court, by the court of
appeal and by the Judicial Committee successively. The ground upon which the
Superior Court proceeded as appears by the judgment of Sir Melbourne Tait, was that the legislature had acted upon
the principle consistently adopted by the English courts in construing the
Legacy Duty Acts, viz., that for the purpose of determining the incidence of
duties imposed upon transmissions of benefits in consequence of death the
situation of the property is to be determined by the maxim referred to. His
views are summed up in the last paragraph of his judgment, which is in the
following words:—
[Page 518]
I have come to the conclusion that I should
interpret article 1191(6) in accordance with the rule of our law and of the
English law regarding movable property above stated and hold that it means all
transmissions of such property in the province, belonging to persons domiciled
therein at the time of their death, in other words, transmissions resulting
from a succession devolving here and that in the eye of the law the movable
property in question is not situated in this province and is not subject to
the tax sought to be imposed. This construction will not only be consistent
with such rule, but also with the other provisions of the Act.
In the court of appeal the judgment of Mr.
Justice Bossé is to the same
effect as appears by the following passage:—
II nous faut donc déclarer que, lors du décès,
les biens dont il s'agit avaient leur assiette dans la province d'Ontario et
qu'ils doivent être considérés comme situés dans Ontario, lieu du domicile due de
eu jus. Ils échappent partant, au droit de fisc de la province de Québec.
Notre statut rend la chose encore plus claire
en imposant un droit sur les seuls
biens situés dans la province de Québec.
Il n'était pas, d'ailleurs, nécessaire de
faire cette restriction: nous ne pouvons pas taxer l'es biens situés à
l'étranger.
The view indicated by this passage is emphasized
by the citations made by Bossé J.,
from the judgment of Lord Hobhouse in Harding v. Commissioners of
Stamps for Queensland, at
page 773.
The judgment of the-Judicial Committee was
delivered by Lord Macnaghten and in the course of that judgment His Lordship
says, referring to the reasons given by Sir Melbourne Tait
and Mr. Justice Bossé:—
The decisions of the Quebec courts are, in
their Lordships' opinion, entirely in consonance with well-established
principles, which have been recognized in England in the well-known cases of Thomson
v. Advocate-General, and Wallace
v. Attorney-General, and
by this board in the case of Harding y. Commissioners of Stamps for
Queensland.
[Page 519]
Now, what are the principles established in the
cases to which His Lordship refers? These principles can best be stated in the ipsissima
verba of the learned judges by whom those cases were decided. In Thomson
v. Advocate-General, the
Lord Chancellor, Lord Lyndhurst, said, at page 21:—
An Englishman made his will in England: he had foreign stock in Russia, in America, in France, and in Austria. The question was whether the
legacy duty attached to that foreign stock, which was given as part of the
residue, the estate being administered in England; and it was contended, I
believe, in the course of the argument by my noble and learned friend who
argued the case, in the first place, that it was real property, but, finding
that that distinction could not be maintained, the next question was whether it
came within the operation of the Act, and although the property was all abroad,
it was decided to be within the operation of the Act as personal property, on
this ground, and this ground only, that as it was personal property, it must in
point of law, be considered as following the domicile of the testator, which
domicile was England.
Now, my Lords, if you apply that principle,
which has never been quarrelled with, which is a known principle of our law, to
the present case, it decides the whole point in controversy. The property,
personal property, being In this country at the time of the death, you must
take the principle laid down in the case of In re Ewin, and it must be considered as
property within the domicile of the testator, which domicile was Demerara. It
is admitted that if it was property within the domicile of the testator in
Demerara, it cannot be subject to legacy duty. Now, my Lords, that is the
principle upon which this case is to be decided. The only distinction is that
to which I have referred, and which distinction is decided by the case In re
Ewin to be immaterial.
At page 26, Lord Brougham observed: —
The rule of law, indeed, is quite general
that in such cases the domicile governs the personal property, not the real;
but -the personal property is in contemplation of the law, whatever may be the
fact supposed to be within the domicile of the testator or intestate.
And finally at page 29 these words are
attributed by the Report to Lord Campbell:—
[Page 520]
If a testator has died out of Great Britain
with a domicile abroad, although he may have personal property that is in Great
Britain at the time of his death, in contemplation of law that property is
supposed to he situate where he was domiciled, and therefore does not come
within the Act; this seems to be the most reasonable construction to be put
upon the Act of Parliament.
In Attorney-General v. Napier,—it
may be added—Parke B. thus refers to the decision in Thomson v. The
Advocate-General:—
In the case of In re Ewin the doctrine was first broached
that the true criterion whether the parties were liable to legacy duty depended
upon the fact whether the testator at his death was domiciled in England; and
that is the rule adopted by the learned judges in their decision in the case of
Thomson v. The Advocate-General; and Lords Lyndhurst,
Brougham and Campbell put it
upon the great principle that personal property is to be considered as situate
in the place where the owner of it is domiciled at the time of his death.
The effect of the other two cases mentioned by
His Lordship may be stated in the language
of Lord Hobhouse in Harding v. Commissioners of Stamps for Queensland, at page 774:—
The matter appears to be well summed up in
Mr. Dicey's work on the Conflict of Laws at page 785, in "which he
paraphrases Lord Cranworth's application-of the principle mobilia sequuntur
personam by saying that the law of domicile prevails over that of
situation.
These then are the principles we are to apply;
and, applying these principles, it seems impossible to escape the conclusion
that for the purposes of this enactment the situs of movables forming
part of a succession devolving under the law of Quebec must be taken to follow the domicile of the decedent.
Anglin J. (dissenting ). — The Crown appeals against the judgment of the
Court of King's Bench of the Province of Quebec disaffirming its right to
retain
[Page 521]
succession duties levied against the estates of
the late Charlotte Cotton and her husband, Henry H. Cotton, in respect of
movable property consisting of bonds, stocks, promissory notes, jewellery and
pictures actually situate in the United States of
America at the date of the demise of each decedent.
That the actual situs of the tangible
portion of this property was foreign is, of course, unquestionable: According
to the rules stated in Commissioner of Stamps v. Hope, at pages 481-2, and accepted in Payne v.
The King, at
pages 559-60, the intangible portion also had a "local existence" —
was "actually situate," or, as put in the cases (Thomson v. Advocate-General; Winans v. Attorney-General; Woodruff v. Attorney-General
for Ontario,
"locally situate" and, as far as property of that class can be, was
"physically situated" (Winans v. Attorney-General) either at Boston or elsewhere in the
United States — certainly not in the Province of Quebec. No reason was advanced
in argument, and I know of none, why those rules should not obtain in that
province.
Although in many of the cases property so
situate is described as "locally situate" I am unable to appreciate
the force of the word "locally" in this phrase (Commissioners of
Inland, Revenue v. Midler & Co.'s Margarine, per Lord James of Hereford at page 228; Treasurer of the
Province of Ontario v. Pattin,
unless, indeed, it is used in a sense which makes it interchangeable with the
word "actually"—in the
[Page 522]
case of tangible property as the equivalent of
"physically" and in the case of intangible property to denote that
attribute of locality which it possesses according to such rules as those laid
down in Commissioner of Stamps v. Hope; in Commissioner of Stamps v. Salting, and in Re Hoyles. To signify property thus situate,
as well as property having a physical situs, within or without the
territorial limits of the taxing province or state I shall in this opinion
employ the phrase "actually situate." Charlotte Cotton died on the 11th of April, 1902; Henry H. Cotton on the 28th of December, 1906. Both dates are
important because the Quebec
succession duties law was materially amended and was consolidated in the
interval.
It is admitted that Henry H. Cotton was
domiciled in the Province of
Quebec when he died. The respondents allege that his domicile, which, of
course, was also that of Mrs. Cotton, was at the time of her death in the State
of Massachusetts. In the view
of the case taken by the provincial courts it was unnecessary to pass upon the
question of Mrs. Cotton's domicile, and it was left undetermined.
Henry Cotton made two solemn declarations
respecting his wife's domicile which were filed with the provincial revenue
officers. In the first, made in 1902, he stated that Mrs. Cotton's domicile at
the time of her death was in the State of Massachusetts: in the second, made in
1904, that it was in the Province of Quebec. The decision of the Privy Council
in Lambe v.Manuel, is
put forward as the reason for his change of view. But the bearing of that
decision on
[Page 523]
the question as to the domicile of Mrs. Cotton
is scarcely apparent.
When sixteen years of age Henry Cotton left the Province of Quebec
and went to reside in Boston.
He lived and carried on business there for thirty-six years. He became a
naturalized American citizen. He married a lady born and brought up in the
State of Massachusetts. During
the summer he often paid visits with his wife to Cowansville, Quebec, where his mother resided. In 1901 he appears to have
decided to retire from business. He came as usual to Cowansville that summer.
During this visit he and his wife resided, as had been customary, with his
mother. He, however, then bought a property in Cowansville and proceded to
improve it with a view to making it his future permanent residence. In the
autumn he returned as usual with his wife to Boston. They both appear to have remained there until Mrs. Cotton died in
April, 1902. In his second declaration filed with the revenue officers he swore
that he believed his domicile was at Boston when he married. Notwithstanding the difficulty of establishing
that a domicile of origin has been changed (Winans v. Attorney-General), I have no doubt upon these facts that
Henry Cotton had acquired a domicile in the Commonwealth
of Massachusetts. It may require
less cogent evidence to make out a case of change or loss of an acquired
domicile, or domicile of choice, but upon the facts in evidence,
notwithstanding the second declaration of Henry Cotton, my conclusion would be
that, although he had, sometime before his wife died, formed an intention of
abandoning his
[Page 524]
Massachusetts domicile and
of again acquiring a domicile in
the Province of Quebec, he had not
up to the time of her death actually carried out that intention; that, although
he had taken some preliminary steps with that end in view, the actual change of
domicile had not been made and he still retained his domicile in the State of
Massachusetts, as well as his American citizenship.
The respondents, however, did not allege in
their pleadings that Mrs. Cotton died domiciled in Boston. On the contrary, by claiming the return only of duties paid on her
foreign assets they appear to admit and to base their action on her domicile
being in Quebec. Moreover, in
their factum in the Court of King's Bench, and again in their factum in this
court, they state that Henry Cotton's "wife died in Boston, where he had returned to live temporarily."
It would be regrettable if a misapprehension of counsel as to the proper
inference to be drawn from, or as to the legal effect of. the facts
established, should prevent the appellants asserting their legal rights.
Fortunately, so far as it affects Mrs. Cotton's estate, this case may be
disposed of on another ground which leads to the same result as if she were held
to have been domiciled at Boston when she died.
The provincial courts have held that, although
the Quebec "Succession Duties Act" in terms imposes a tax on the transmission of the inheritance, the
legislature intended that that tax should in fact be fastened on the property
itself which passes from the decedent to his heirs or legatees; and that, in so
far as it imposes this tax on movable property actually situate outside the
province, the Act is ultra vires and unconstitional, this case being in
their opinion ruled by the
[Page 525]
decision of the Judicial Committee in Woodruff
v. Attorney-General for Ontario.
Upon this ground the plaintiffs have been awarded judgment for the repayment by
the Crown of the succession duties which it received from both estates in
respect of the property in question.
The respondents, in support of the judgment in
their favour, also assert that, upon its proper construction, the Quebec
"Succession Duties Act" applicable to the estate of Mrs. Cotton did
not purport to impose a tax in respect of movable property of domiciled
decedents, which was actually situate outside the province. Because before
considering the constitutionality of any statute it is desirable, if possible,
to appreciate its precise scope and purview and also because it seems fitting
that a court should not determine an issue as to the constitutionality of a
statute unless the cause before it cannot otherwise be satisfactorily disposed
of, it will be proper first to deal with the contention of the respondents that
the Quebec statutes in force in 1902 did not purport to impose succession
duties on movable property actually situate abroad. It will be convenient at
the same time to consider whether the intention of the legislature was to
impose a tax upon the transmission of the property or upon the property itself.
Counsel for both parties rejected a suggestion that the tax might be regarded
as imposed on the beneficiaries, that upon a proper construction of the Act
only beneficiaries within the province would be subject to it and that it
should on that ground be held intra vires.
When Mrs. Cotton died the Act in force was the
statute 55 & 56 Vict. ch. 17, amended by 57 Vict. ch. 16;
[Page 526]
58 Vict. ch. 16, and 59 Vict. ch. 17; section
1191(6) (57 Vict. ch. 16, sec. 2), so far as material reads as follows:—
1191(b) All transmissions, owing to death,
of the property in, usufruct or enjoyment of movable and immovable property in
the province, shall be liable to the following taxes, calculated upon the value
of the property transmitted, after deducting debts and charges existing at the
time of the death.
There followed a table of rates varying
according to the value of the estate and the degree of relationship borne by
the several beneficiaries to the decedent. The statute then contained no
definition of the word "property."
In the form in which it stood at the time of
Mrs. Cotton's death — except for an immaterial amendment (59 Vict. ch. 17) —the
Quebec succession duties law was considered by the Privy Council in Lambe v.
Manuel. In
that case the question presented was whether certain bank stocks, registered
and transferable at Montreal,
Que., and a mortgage debt secured by hypothec on land in Montreal, which formed part of the estate
of a decedent domiciled in the Province of Ontario, were liable to succession duties in Quebec. All this property was held not to
be taxable because
according to their true construction the
Quebec "Succession Duties Acts" only apply in the case of movable
property to transmissions of property resulting from, the devolution of a
succession in the Province of Quebec.
That the transmission of the property took place
outside Quebec and not under Quebec law was the ground on which it was
held that the Quebec statutes
did not purport to authorize the imposition of the succession duties claimed.
This judgment proceeds upon the
[Page 527]
view that by section 1191(5) the legislature
intended to impose a tax on the transmission of the property passing and not on
the property itself. The statute in express terms declares that "all
transmissions owing to death * * * shall be liable" — "toute transmission par décès * * * est frappé."
Notwithstanding that the value of the property
determines the rate of taxation and that in several sub-sections the duty
appears to be treated as charged upon and as payable out of the estate, it
must, I think, be assumed that the legislature intended what it said when it
expressly imposed the tax on the transmission. The decision in Lambe v. Manuel appears to me to be conclusive upon
that point, although it does not determine what is the real incidence or
subject of the tax imposed. That question was not before the board. I am,
therefore, with respect, of the opinion that, whatever may be in fact their
ultimate incidence, the Quebec
succession duties were intended to be imposed directly and primarily not upon
the property of the succession, but upon its transmission.
In Lambe v. Manuel the
Judicial Committee proceeds upon a well-known principle of construction in
determining that the word "transmissions," though not expressly
qualified or restricted, should be held to include only transmissions taking
place under the law of the province. Lord Macnaghten makes this abundantly
clear, when he says that the decision is.
entirely in consonance with
well-established principles which have been recognized in England in the well-known cases of Thomson
.v. Advocate-General, and Wallace
v. Attorney-General, and
by this board in the case of Harding v. Commissioners of Stamps for Queensland.
[Page 528]
Their Lordships did not, as was contended at bar
by counsel for the present appellants upon the first argument of this appeal,
treat the words "in the province" found in section 1191(b.) as
qualifying or restrictive of the word "transmissions." The phrase
"in the province" is referred to only in the statement of the object
of the action in the earlier part of the judgment, where it is applied to the
subject "movable or immovable property." If there could be any doubt
upon the point—I have none—a glance at the French version of section 1191(b)
makes it certain that this is its proper application:—
1191(b) Toute transmission, par décès, de propriété,
d'usufruit ou de jouissance de biens mobiliers ou immobiliers, situés dans
la province, est frappée des droits suivants, sur la valeur du bien
transmis, déduction faite des dettes et charges existant au moment du décès.
But for the -appellants it
is urged that by the words "in the province" — "situés
dans la province" — the legislature meant to
include not only property actually situate in Quebec, but also movable property
which, though actually situate elsewhere, is for purposes of succession and
enjoyment, according to the maxim mobilia sequuntur personam (Blackwood v.
The Queen),
governed by the law of the testator's domicile, which has been assumed to be in
the Province of Quebec. 1 am unable to accede to that view. Prima facie the
expressions "in the province" — "situés
dans la province" — refer to property actually
situate in Quebec. They are
applied in the statute to immovable as well as movable property. To immovables
the maxim invoked has, of course, no application. The force of the expressions
is restrictive,
[Page 529]
not expansive. Had the legislature meant to
include all movable property passing under the law of Quebec —all property of which the transmission occurs in Quebec or is governed by Quebec law — wherever actually situate, I
cannot conceive that it would have employed the terms "situés
dans la province." In another section of the same
Act (55 & 56 Vict. ch. 17), 1191(a), we find the expression "situés dans la province" —
"within the province." There it clearly means physically or actually
situated in Quebec. This
affords "one of the safest guides to the construction" of the same
words in section 1191 (6), which immediately follows; Blackwood v. The
Queen. If we
may consider the subsequent action of the legislature in defining the word
"property" as including all property, whether movable or immovable,
actually situate within the province (3 Edw. VII. ch. 20), in afterwards
extending this definition so that by express terms "property" was
made to include all the movable property wherever situate of a domiciled
decedent (6 Edw. VII. ch. 11, sec. 1191(c) ) and in finally removing entirely
the. words "in the province"—"situés dans la province"—from section 1191(6) (7 Edw. VII. ch. 14,
sec. 2), the view which I have taken of the proper construction of that section
as it stood in 1902 would appear to be fortified. If by an application of the
maxim mobilia sequuntur personam the words "situés
dans la province" should be construed as including
the movables actually situated abroad of a domiciled decedent, the concluding
clause of the definition of the word "property" introduced in 1906
was quite unnecessary. - Winans. v. Attorney-General.
[Page 530]
Comparing the Quebec "Succession Duty
Acts" and their development with the corresponding Acts of the Province of
Ontario (55 Vict. ch. 6, sec. 4; R.S.O. 1897, ch. 24, sec. 4(a) ) and their
development (1 Edw. VII. ch. 8, sec. 6; 7 Edw. VII. ch. 10, sec. 6), it appears
to me that, probably actuated by fears that a tax imposed upon or in respect of
property not actually situate within the province would not be "taxation
within the province" ("British North America Act," sec. 92(2) )
the authorities of both provinces, in order to ensure the constitutionality of
their legislation, at first advisedly confined themselves to the imposition of
succession duties in respect of property actually situate within the province.
Perhaps grown bolder as the needs of revenue became more pressing, or it may be
more grasping and prepared to risk a contest upon the constitutionality of a
mere severable amendment, or, possibly, having had their fears and doubts as to
their jurisdiction allayed, both provinces later on sought to extend the scope
of this taxation so that they might obtain succession duty revenue in respect
of movable property of domiciled decedents actually situate abroad.
I am convinced that as the law stood in the
Province of Quebec at the time of Mrs. Cotton's death only so much of her
estate as was actually situate in that province was liable to the succession
duties imposed by section 1191 (b) above quoted. In respect of her
foreign bonds, etc., her estate was not liable to Quebec succession duties, because, whatever may have been the power of the
legislature in that respect, the statute as it then stood did not purport to
impose a tax upon the transmission of property actually situate outside the
province.
[Page 531]
But when Henry Cotton died the consolidated
succession duties provisions of the Act, 6 Edw. VII. ch. 11, were in force. By
that statute the portion of section 1191(6) above quoted was re-enacted in the
same terms, except that the words, "or the," were inserted before the
word "usufruct." There was added, however, section 1191(c):—
1191(c). The word "property"
within the meaning of this section shall include all property, whether movable
or immovable, actually situate or owing within the province, whether the
deceased at the time of his death had his domicile within or without the
province, or whether the debt is payable within or without the province, or
whether the transmission takes place within or without the province, and all
movables, wherever situate, of persons having their domicile, or residing, in
the Province of Quebec at the time of their death.
The words "in the province"—"situés dans la province"—still
remained in section 1191(b), being stricken out after Mr. Cotton's death by the
Act, 7 Edw. VII. ch. 14.
There is a manifest repugnancy arising from the
presence in the same Act (6 Edw. VII. ch. 11) of the words "in the
province" found in section 1191 (b) and the definition of the word
"property" in section 1191(c). By the former the tax is confined to
transmissions of property which is within the province; by the latter it is
extended to property without the province. The two provisions are
irreconcilable.
Having regard, however, to the history of this
legislation and to the manifest intention of the legislature to extend the
application of succession duties, first, in 1903, to all property of
non-domiciled decedents actually situate within the province—obviously in order
to meet the decision in Lambe v. Manuel—and again, in 1906, to movable property of
[Page 532]
domiciled decedents actually situate outside the
province, I am of the opinion that in the consolidation of 1906 the words
"in the province" — "situés dans la province" — should be deemed to have been allowed to remain
in section" 1191 (b) per incuriam. Their deletion in the following
year tends to confirm this view. Moreover, a construction which rejects them
accords with the rule that if two sections of the same Act are repugnant the
latter must prevail. Wood v. Riley, per Keating J.; The King v. Justices
of Middlesex. The
principles of statutory construction are, I think, the same in the Province of Quebec as in the other
provinces of Canada where the
English common law prevails.
It follows that at the time of the death of
Henry Cotton, who was then admittedly domiciled in Quebec, his movable property
actually situate abroad was subject to succession duties under the statutes of
that province, if its legislature had the power to impose such taxation.
In determining this question of provincial
legislative jurisdiction in Canada, decisions upon the proper construction, the
scope, purview and effect of statutes enacted by Parliaments or legislatures
whose powers of taxation are unrestricted are of little, if any, practical
value. A consideration of them rather tends to confuse the issue.
In the matter of taxation, as in other matters,
our provincial legislatures possess only such powers as the "British North
America Act" confers upon them. By section 92 they are empowered
[Page 533]
To make laws in relation to
(2) Direct taxation within the province in
order to the raising of a revenue for provincial purposes.
These words clearly confer not a general power
of taxation, but a power subject to a triple limitation. The taxation must be
direct; it must be within the province; it must be imposed in order to the
raising of a revenue for provincial purposes. The taxation in question is
admittedly imposed "in order to the Raising of a revenue for provincial
purposes." But the respondents contend that it is neither
"direct" nor "within the province." Of these two
restrictions the first is obviously concerned with the delimitation of the line
between provincial and Dominion powers, saving to the Dominion the field of
indirect taxation; whereas the second appears to be designed to prevent
encroachment by one province upon the domain of another, or of a foreign state.
The latter limitation seems to me to present the more formidable objection to
the constitutionality of the taxation here in question. The conclusion which I
have reached upon it renders it unnecessary for me to consider the question
whether a tax in terms imposed upon the transmission of property, but in its
ultimate incidence falling upon the property transmitted, is direct or indirect
taxation.
That the words "within the province"
were introduced either as declaratory of a restriction on the provincial power
of taxation which would have been implied, or in order to impose such a
restriction, admits of no question. But the precise nature and extent of the
limitation which is thus expressed as it affects the right to pass death duty
legislation has been a subject of much debate. If these duties could
[Page 534]
be regarded as imposed upon the transmission
only and not at all upon the property transmitted, in the case of the domiciled
decedent the taxation in respect of his movable property abroad as well as at
home might be "within the province:" if they should be regarded as
imposed on the property transmitted, the taxation in respect of movable
property of a non-domiciled decedent situate in the province, although the
transmission of it takes place, usually, but not always (Dicey on Conflict of
Laws (2 ed.), p. 753), under
foreign law, would be "within the province."
Can it be that a provincial legislature
empowered to levy taxation only within the province may validly impose death
duties in respect of movable property actually situate abroad under the guise
of a tax upon transmission, invoking the maxim mobilia sequuntur personam to
bring such property constructively within the province, and at the same time,
repudiating that maxim, may legitimately exercise the same taxing power in
respect of movables which under it would be constructively situate aboard
though actually situate within the borders of the province? That it has the
latter power is definitely established by the recent decision of the Privy
Council in the The King v. Lovitt Has it also the former? I cannot
believe that it has under the restrictive words of the "British North
America Act" with which we are now dealing. I adhere to the view which I
expressed in Lovitt v. The King, at page 161, which is not affected
by the disposition of that case by the Judicial Committee, that if the
legislature of a Canadian province can
[Page 535]
by legislative declaration make anything
property "within the province" which would not be such according to
the recognized principles of English law * * * this
constitutional limitation upon its power (of taxation) would be a mere dead
letter.
Could such a legislature validly enact that, as
a condition of obtaining from its courts letters probate or of administration
required for the reduction into possession and administration of assets,
however trifling in value, actually situate within the provincial borders, a
tax must be paid based on the value of the entire estate of the decedent,
including movables (and in that case perhaps immovables also) actually situate
elsewhere and in respect of the administration and collection of which such
letters were wholly unnecessary — a tax which, however or by whomsoever payable
in the first instance, would in most cases ultimately have the effect of
reducing the value to the beneficiary of such foreign assets passing to him by
succession? There is nothing in the law of nations which forbids the
legislature of a sovereign state imposing such a tax. Blackwood v. The
Queen. But,
if the legislature of a Canadian province may do so, the restriction upon the
provincial taxing power under the words "within the province" would,
in the case of succession to movables, seem to be illusory.
In construing the restrictive words of the
"British North America Act," "within the province," we
must, I think, ascribe to the Imperial Parliament the intention that the
restriction thereby placed upon the provincial power of taxation should be
definite and certain and should be the same in every province. The Queen v.
Commissioners of Income Tax; Lord
Saltoun v. Advocate-General. This excludes the
[Page 536]
idea that, confining itself to one or the other,
each province may in this matter
select its own basis of taxation -- transmission and constructive situs
according to the maxim mobilia sequuntur personam, or property and
actual situs. If some provinces, adopting the maxim mobilia sequuntur
personam, should impose a tax in respect of the movable property of their
domiciled decedents "actually situate" abroad and others should
declare dutiable all property actually situate within their respective local areas
regardless of the domiciliation of the deceased owners, double taxation of some
movables and entire exemption of others would result. Uncertainty,
inconvenience and confusion would ensue; and the sanctity of the legislative
domain of one province might be successfully invaded by the legislation of
another.
It may be urged that such consequences could be
obviated if the provinces would agree amongst themselves upon the basis of this
taxation. But there-is no assurance that all would concur in such an arrangement;
and the jurisdiction conferred by sub-section 2 of section 92 of the
"British North America Act" does not depend upon and cannot be
determined by an agreement between provincial governments.
In order that a provincial tax should be valid
under the "British North America Act," in my opinion the subject of
taxation must be within the province. To determine what is the real subject of
taxation the substantial result
and not the mere form of the taxing Act must be considered. The ultimate effect
of succession duties such as are provided for by the Quebec statutes, whether
imposed directly upon the transmission or directly upon the property, is to
reduce the amount of the estate to which the beneficiaries succeed
[Page 537]
(Cooley on Taxation (3 ed.), p. 32.) Whether
paid by the personal representative or secured by his bond before he obtains
probate or letters of administration, or paid by him before handing over the
property to the beneficiaries, or by the beneficiaries themselves prior to, or
upon receipt of the property to which they succeed, the substantial result is
the same — they come out of, or lessen the value of that which passes by the
succession. The tangible thing affected by the tax is the property which
passes. In substance the taxing state takes for itself directly or indirectly a
part of the property transmitted from the decedent to his beneficiary.
Where a testator by his will provides that his
legacies shall be exempted from death duties, he in effect adds to each bequest
the amount of the duty which it would otherwise have borne. In such a case,
therefore, although — it may be for the advantage of the beneficiary, or it may
be for the convenience of the estate — the testator has provided that payment
of the tax shall be made out of the residuary estate and not out of the
property bequeathed to each individual beneficiary, the tax is none the less
imposed in respect of that property and is in substance a tax upon it. In
whatever form of words — tax upon transmission, tax upon succession to property
devolving under the law of the province, or tax upon probate — the duty may be
imposed, if the beneficiary ultimately has to pay it as a condition of
receiving his share of the estate or has to accept that share reduced by its
amount, or if the tax is paid out of the residuary estate in exoneration of the
specific or pecuniary legatee, the result is that the real incidence of the tax
is upon the property of the succession.
[Page 538]
This is always the case where taxation is levied
in respect of particular property
of whatever nature, whether the taxing Act constitutes the tax a lien or charge
upon such property and provides for its seizure and sale if necessary to
satisfy the impost, or the remedy prescribed for the recovery of the tax is by
personal action or proceedings against the persons required to pay it.
That the property so to be affected should
itself be within the province at the time when the taxation attaches in respect
of it seems to me to be primà facie the restriction which the Imperial
Parliament intended to impose upon the provincial power of taxation in respect
of property. Under the Quebec
law the duties attach upon the transmission of the property — that is, at the
moment of the decedent's demise. Its situation at that time determines its
liability to provincial taxation. That the situs of the subject of
taxation is the test by which provincial jurisdiction to tax it should be
settled seems to be undisputed in the case of immovable property. In the case
of movable property the large portion of it which is tangible has an actual
physical situs equally with immovables. It is only intangible personalty
which must of necessity be given a situs by fiction of law. If the maxim
mobilia sequuntur personam be applied for the purpose of determining in
respect of what property a Canadian province is by the "British North
America Act" given the power of direct taxation all movable property,
tangible and intangible alike, will be given a fictitious situs notwithstanding
that tangible movables have an actual situs which is physical and that
intangible movables have in contemplation of law an equally well-established
actual situs—and that
[Page 539]
for purposes of taxation. Commissioner of
Stamps v. Hope;
Payne v. The King; Commissioners
of Inland Revenue v. Muller & Co.'s Margarine; Commissioner of Stamp Duties v. Salting. In fact movables actually situate
outside the borders of the province are as far beyond the "direct
power" of the Quebec Legislature as immovables similarly situate. Blackwood
v. The Queen.
It is contended that to hold that, where
provincial taxation is levied in respect of property, the property must be
within the province is in effect to insert the words "on property"
before the words "within the province" in sub-section 2 of section 92
of the "British North America Act," Treasurer of Ontario v. Pattin, and that the insertion of these words
would exclude the imposition of many purely personal direct taxes — such as a
poll tax — which it was certainly intended that the provinces should have the
power to impose. But the view which I take of the "British North America
Act" provision is that it should be read as authorizing direct taxation
only where the real subject of the tax — whether person, business or property—is
within the province. In testing the validity under this construction of any
particular provincial tax it would, of course, be necessary to determine what
is the real subject of taxation.
Under the Quebec Act imposing death duties for
the reasons I have stated I am of the opinion that the real subject of taxation
is the property passing, notwithstanding the clearly expressed intention of the
legislature to fasten the tax upon the transmission.
[Page 540]
I think it improbable that the Imperial Parliament
meant to confer on the provincial legislatures the right to tax any property
real or personal beyond their "direct power." Blackwood v. The
Queen. The
Lovitt decision has established that it was not intended that a province should
be denied the power to tax property actually situate within its borders merely
because for some other purposes (Blackwood Case, at
page 93), such property is in law deemed to be constructively elsewhere.
Apart from authority I would for the foregoing
reasons hold that the Quebec Legislature in attempting to impose death duties
in respect of property actually situate outside the province exceeded its
constitutional powers.
But I also think the matter concluded by the
authority of the decision of the Privy Council in Woodruff v. Attorney-General
for Ontario. I
concede that the facts in that case are readily distinguishable from those
before us. It may also be said that Woodruff v. Attorney-General for Ontario
might have been disposed of, without determining the constitutional question
now under consideration, on the ground that there a complete transfer of the
property had taken place in a foreign state by an act inter vivos and
the property itself was actually situated without the province, and the Ontario
statutes, therefore, had no application. But their Lordships of the Judicial
Committee did not see fit to rest their decision upon that ground. On the
contrary they say:—
The pith of the matter seems to be that,
the powers of the provincial legislature being strictly limited to "direct
taxation within
[Page 541]
the province" ("British North
America Act," 30 & 31 Vict. ch. 3 , sec. 92 , sub-sec. 2 ), any attempt
to levy a tax on property locally situate outside the province is -beyond their
competence. This consideration renders it unnecessary to discuss the effect of
the various sub-sections of section 4 of the "Succession Duty Act,"
on which so much stress was laid in argument. Directly or indirectly, the
contention of the Attorney-General involves the very thing which the legislature
has forbidden to the province — taxation of property not within the province.
The reasoning of this board in Blackwood
v. The Queen seems
to cover this case.
"The contention of the
Attorney-General" referred to can scarcely have been aught else than the
reported argument of counsel representing him that the transfers were
testamentary in substance;
the duty claimed was not a tax on property,
but a tax on the devolution or succession: the duty was imposed on persons
beneficially entitled * * * the persons taxed were resident in the province.
It is to this argument that Lord Collins makes
reply that directly or indirectly — although the transfers should be deemed
testamentary and although the tax should be regarded as primarily imposed on
the transmission, or on the beneficiaries — it involves the very thing
forbidden — taxation of property not within the province. Not content with
expressly basing his judgment on this ground, his Lordship emphasizes its
importance by the statement that it is "the pith of the matter."
Woodruff v. Attorney-General
for Ontario
cannot be brushed aside by the familiar observation that the language used must
be read in the light of, and confined to the facts of, that case, and is
applicable only to legislation couched in the form of that then before the
court. Their Lordships
[Page 542]
have anticipated and precluded such an argument
in their statement that the contention of the Attorney-General directly or
indirectly—i.e., either upon assumptions that the transfers were really
testamentary and that the Ontario Legislature should be deemed to have imposed
its tax not on the property, but on the succession or devolution or on the
persons beneficially entitled, or upon contrary assumptions— involved taxation
of property not within the province ; and "any attempt to levy a tax on
property locally situate outside the province" is ultra vires of a
provincial legislature.
Neither may this portion of their Lordships'
judgment be regarded as obiter dictum. As put by Lord Macnaghten, in delivering
the judgment of the Judicial Committee, in New South Wales Taxation
Commissioners v. Palmer, at page 184:—
It is impossible to treat a proposition
which the court declares to be a distinct and sufficient ground for its
decision as a mere dictum, simply because there is also another ground stated
upon which, standing alone, the case might have been determined.
See also Membery v. Great Western
Railway Co.,
per Lord Bramwell, at page 187.
As I understand the judgment of their Lordships
of the Judicial Committee in Lovitt v. The King, it determines nothing inconsistent with
the view I have expressed. Their actual decision turns upon the construction of
a deposit receipt which they held to be primarily payable at St. John. The asset which it represented,
being a simple contract debt, therefore had a local situs in New Brunswick. As property locally situate
in that province their Lordships held
[Page 543]
that it might be made subject to the succession
duty taxation of New Brunswick,
notwithstanding that the testator died domiciled in Nova
Scotia; and, the legislature having clearly expressed
its intention to impose succession duties upon such property, their Lordships
decided that those duties must be paid. Although in the course of the judgment
passing reference is made to section 92 of the "British North America
Act," and in the discussion of the maxim mobilia sequuntur personam invoked
by the respondent some expressions occur which are perhaps consistent with a
view contrary to that which I hold, the right of a provincial legislature to
impose taxation in respect of movable property locally situate outside the
province, and the double taxation of the same estate by two different provinces
which might ensue are aspects of the case now before us which Lovitt v. The
King did
not present and as to which the absence from their judgment of all allusion to Woodruff
v. Attorney-General for Ontario
would seem to warrant the conclusion that their Lordships did not express an
opinion.
For these reasons I conclude that in the case of
Henry Cotton the taxation in question was ultra vires of the provincial
legislature, and that on that ground the plaintiffs are entitled to succeed.
In the case of Mrs. Cotton, the plaintiffs would
be entitled to succeed upon the same ground if the Quebec statutes in force
when she died purported to tax movables of a decedent actually situate abroad;
but they are, in my opinion, entitled to judgment in her case because the
Quebec "Succession Duties Acts" as they stood at the time of her
death did not purport to impos,
[Page 544]
a tax in respect of movable property not actually
situate within the province and possibly also because Mrs. Cotton was not
domiciled in Quebec at the time
of her death.
I should, perhaps, note that, as the statute was
amended in 1903 and consolidated in 1906, although the tax purports to be
imposed upon the transmission, it is extended to the Quebec movables of a
non-domiciled decedent the transmission of which takes" place abroad and
under the law of the decedent's foreign domicile. By further amendment made in
the consolidation of 1906 the legislature sought to render dutiable the
foreign, movables not only of the domiciled decedent, but also of the decedent
who is resident, though not domiciled, in the Province
of Quebec. I allude to these
peculiar features of the legislation to make it clear that they have not been
overlooked and also because they indicate how far the legislature was prepared
to go.
It was not urged on behalf of the appellants
that the monies claimed by the plaintiffs could not be recovered because they
were paid voluntarily and not in mistake of fact, but in mistake of law.
Counsel no doubt refrained from presenting this contention because it appears
to be well established under the system of law which obtains in the Province of
Quebec that where a person voluntarily makes a payment because he erroneously
believes he is compelled by law so to do, he may successfully maintain an
action en répétition de l'indû: Articles 1047 and 1048 C.C. In that case the error is in that which
was the principal consideration for making the payment (art. 992 C.C.) and,
though voluntarily paid, the monies may be recovered.
[Page 545]
Leprohon v. Mayor of Montreal; Boston v. L'Eriger; Lelerc v. Lelerce; Bain v. City of Montreal, per Strong J., at page 265, per
Taschereau J., at page 285.
The main appeal should, therefore, be dismissed
with costs.
I agree in the disposition made of the
cross-appeals on the ground indicated in the opinion of my Lord the Chief Justice.
Brodeur J.—This case, it seems to me, should be decided according to the
principles laid down by the Privy Council in the case of Lambe v. Manuel and the decision of Woodruff v. Attorney-General
for Ontario) cannot be successfully invoked.
There is a vast difference between the two
statutes that were submitted to the courts in those two cases.
In the case of Lambe v. Manuel, the "Succession Duty Act" of Quebec was at issue, and in the matter of
Woodruff, the Ontario
"Death Duty Act" had to be interpreted.
The Quebec law imposes a succession duty on the transmission or devolution
of the estate.
In the Ontario statute, on the contrary, the property itself is taxed.
Let me quote the two statutes side by side and
we will easily see the difference that exists between those two enactments:—
[Page 546]
|
Quebec Law.
|
Ontario Law.
|
|
All transmissions
owing to death of the property in usufruct or enjoyment of movable and
immovable property in the province shall be liable to the following taxes
calculated upon the value of the property transmitted.
The word
"property" within the meaning of this section shall include all
property, whether movable or immovable, actually situate or owing within the
province, whether the deceased at the time of his death had his domicile
within or without the province, or whether the transmission takes place
within or without the province, and all movables, wherever situate, of
persons having their domicile (or residing) in the Province of Quebec at the
time of their death.
|
Save as aforesaid,
the following property shall be subject to a succession duty as herein after
provided, to be paid for the use of the province over and above the fee
payable under the"Surrogate Courts Act;" (a) all property situate
within this province, etc. * * * passing either by will or
intestacy.
The word
"property" in this Act includes real and personal property of every
description, and every estate or interest therein capable of being devised
or. bequeathed by will or of passing on the death of the owner to his heirs
or personal representatives.
|
We are asked to decide whether movable property,
consisting in bonds and shares of foreign companies belonging to a deceased
person domiciled in Quebec is
liable to death duties.
The Privy Council in the case of Woodruff v.
Attorney-General for Ontario had
to deal, as I have already said, with a statute taxing the property itself. As
'the bonds in question in that case were due by foreign corporations, were in a
foreign country, and had not passed by will or intestacy, it is no wonder that
applying the provisions of the section 92 , sub-section 2 , of the "British
North America Act" they have declared that under such a statute the
Attorney-General of that province could not reach movable property whose situs
were not in Ontario.
The Ontario law does tax movable property situate
[Page 547]
in the province and belonging to an outsider,
but it does not affect any such property situate in another country.
The Quebec law, on the contrary, as interpreted
by the Privy Council in the case of Lambe v. Manuel, cannot reach movable property situate in
the province, because the duty that was authorized was not a duty on the
property itself, but on the transmission of the property.
The testator in the case of Lambe v. Manuel
was domiciled outside of Quebec
and left shares of banks having their place of business in Quebec.
The Privy Council confirmed the decision of the
Provincial courts and adopted the views expressed by Sir Melbourne Tait and Mr. Justice Bossé
that the Quebec "Succession Duty Act" only
applies, in the case of movables, to transmissions of property resulting from
the devolution of a succession in the Province of Quebec; or, in other words,
that the taxes imposed on movable property are imposed only on property which
the successor claims under, or by virtue of, the Quebec law.
It was declared that, in order to reach those
securities they should be transmitted according to the laws of Quebec and that what was taxed was the
right to inherit.
Applying those broad principles of Lambe v.
Manuel to the facts of this case, I come to
the conclusion that Mr. and Mrs. Cotton's representatives are liable because
the transmission of shares and bonds has been made according to the laws of
Quebec, and that the duty is imposed upon the devolution or upon the privilege
for their successors to take or
[Page 548]
receive property under their wills. By fiction
of the \law, movable property is considered to be situate wherever the
owner resides. It is referred to the domicile of the owner and governed by the
law of that domicile (art. 6 C.C.). It becomes subject to the law governing the
person of the owner.
Relying upon the following
decisions in England, where the maxim mobilia sequuntur personam has
been adopted, Thomson v. Advocate-General; Wallace v. Attorney-General; Harding v. Commissioners of Stamps
for Queensland, I
have come to the conclusion that the government had rightly collected duties on
those securities and shares and that the action en
répétition de deniers instituted by the respondents
should be dismissed.
In order to fortify my opinion, may quote Hanson
"Legacy and Succession Duties," where he says:—
It has already been pointed out that in
order to render personal property liable to duty it is necessary that it should
be situate within this country, and that as property of a movable nature
accompanies in construction of law the person of its owner the situation of the
owner's domicile at the time of his death and not the actual local situation of
the property itself is the true test of -the liability to duty.
I had some doubts, however, as to whether Mrs.
Cotton's estate was liable to duty. The statute in force at her death did not
contain a définition of the word
"property," as quoted above.
That definition was made after the judgment in
the case of Lambe v. Manuel. But the Quebec judges, in their decision as affirmed by the Privy Council, were so
strong in their idea that what the statute contemplated was to tax any
transmission re-
[Page 549]
suiting from a succession devolving here under
the laws of the province, that my doubts were removed.
We must not forget that under our laws in Quebec the transmission of a succession
takes place instantaneously at the death. "Le mort
saisit le vif" is the old saying, and in that
regard the laws of the two provinces of Ontario and Quebec shew a difference.
(Arts. 596-599 and 600 C.C.)
The respondents have claimed before this court
that Mrs. Cotton was not domiciled in Quebec when she died in Boston in 1902.
That question was not raised by the pleadings.
On the contrary, it is there implicitly admitted that her domicile was in that
province, when they acknowledged that her movable property locally situate
there was duly taxed. According to the judgment of Lambe v. Manuel, her movable property even situate in Quebec was not subject to duty if she was
domiciled elsewhere. The respondents in admitting by their pleadings that Mrs.
Cotton's movable property in Quebec was liable to taxation admitted virtually that she was domiciled
here.
Besides her husband has stated in his affidavit
of the 10th February, 1904:—
I have examined again that difficult
question of domicile, and all the facts and circumstances of the case and I
have come to the conclusion and admit that since the month of April, 1901, and,
therefore, at the time of the death of my wife, my domicile (which was, of
course, her domicile) was at Cowansville, in the said district.
The question of domicile, when a person does not
reside all the time at the same place, is determined by his own intention; and
if the person whose domicile is in question comes and declares that his
domicile
[Page 550]
is in a certain country, I believe that his
legal representatives are bound by
his extra-judicial admission, and such an admission can be successfully invoked
against them.
I am of opinion then that the domicile of Mrs.
Cotton at her death was in Quebec and that the respondents could not successfully raise that issue.
A cross-appeal has been made by the respondents
by which they claim that the Court of King's Bench should not have reduced the
amount of the judgment rendered by the Superior Court. They claim by this
cross-appeal that the debts of a succession should be entirely deducted from
the part of the amounts situate in this province when there is one part of the
estate not liable to duty and situate elsewhere. As I am of opinion that in
this case, all the assets of the succession had to pay succession duty, I am
not called upon to discuss the point raised. The cross-appeal then should be
dismissed and the appeal allowed with costs of this court and of the courts
below.
Appeal allowed in part with costs;
Gross-appeal dismissed with costs.
Solicitors for the appellant: Dorion & Marchand.
Solicitors for the respondents: Casgrain,
Mitchell, Mc-Dongall & Creelman.
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