John Deere Plow Co. v. Agnew, (1913) 48 SCR 208

Supreme Court of Canada

John Deere Plow Co. v. Agnew, (1913) 48 S.C.R. 208

Date: 1913-04-07

The John Deere Plow Company (Plaintiffs) Appellants;

and

Joseph Merritt Agnew, Trading Under The Name, Style and Firm of Agnew McBain Hardware and Trading Co. (Defendant) Respondent.

1913: February 28; 1913: April 7.

Present: Sir Charles Fitzpatrick C.J. and Davies, Idington, Duff, Anglin and Brodeur JJ.

On Appeal From The Supreme Court of British Columbia.

Company law—Foreign corporation—Conflict of laws—Incorporation by Dominion authority—Powers—B.C. "Companies Act"—Unlicensed extra-provincial companies—"Carrying on business"—Contract—Transactions beyond limits of province—Promissory notes—Right of action—Juristic disability—Construction of statute—(B.C.) 10 Edw. VII. c. 7, ss. 139, 166, 168.

The "Companies Act" (B.C.) .10 Edw. VII., ch. 7, secs. 139, 166, 168, prohibits companies incorporated otherwise than under the laws of British Columbia carrying on without registration or license in the province any part of their business; penalties are provided for doing so without provincial registration or licence; and they are denied the right of maintaining actions, suits or proceedings in the courts of the province in respect of any contract made in whole or in part within the province in the course of or in connection with any business carried on contrary to the provisions of the Act. The appellant company, incorporated under the Dominion "Companies Act," R.S.C., 1906, ch. 79, has its head-office in Winnipeg, Man., and did not become licensed under the B.C. "Companies Act." In February, 1911, the company entered into an agreement with A., who is domiciled in British Columbia, giving him the exclusive right to sell their goods in British Columbia in pursuance of which he ordered

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goods from the company to be shipped from Winnipeg to him, f.o.b. Calgary, Alta., assuming all risk and charges himself from that point to Elko, B.C., where the goods were to be received and sold by him. He gave the company his promissory notes, dated at Winnipeg, for the price of these goods, some of the notes being actually signed by him at Elko. In an action by the company to recover the amount of these notes the trial judge held that the action was barred by the statute and could not be maintained by the company in any court in the Province of British Columbia. On an appeal, per saltum, to the Supreme Court of Canada the judgment appealed from (8 D.L.R. 65; 2 West. W.R. 1013; 22 W.L.R. 243) was reversed, and it was Held, per FitzpatrickC.J. and Davies, Duff, Anglin and Brodeur JJ., that the transactions which had taken place between the company and A. did not constitute the carrying on of business by the company in the Province of British Columbia within the meaning of the B.C. "Companies Act" and, therefore, the disabilities imposed by that statute could have no effect in respect of the right of the company to recover the amount claimed in the action in the provincial court.

Per Idington J.—As the exclusive jurisdiction in respect of bills of exchange and promissory notes has been assigned to the Parliament of Canada, under item 18 of section 91 of the "British North America Act, 1867," the word "contract" as used in section 166 of the B.C. "Companies Act," 10 Edw. VII., ch. 7, cannot be considered as having any application to promissory notes; the plaintiffs' right of action in the provincial court was, therefore, not barred by the provincial statute.

APPEAL, per saltum, (by leave of a judge of the Supreme Court of Canada), from the judgment of Murphy J., at the trial in the Supreme Court of British Columbia[1], dismissing the plaintiffs' action with costs.

The action was commenced on 1st March, 1912, and the questions at issue were settled in a special case which, after reciting the claim for the amount of four promissory notes with interest ($3,315.85), given for the price of the goods shipped as mentioned in the head—note, proceeded as follows:—

"1. The plaintiff is a company incorporated by

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letters patent * * * duly issued by the Secretary of State of Canada under the authority of the 'Companies Act' of Canada (R.S.C., ch. 79) giving power amongst other things to carry on throughout Canada the business of dealers in agricultural implements, carriages and wagons and machinery and a general agency, commission and mercantile business.

"2. The head-office of the plaintiff is at Winnipeg, in the Province of Manitoba.

"3. The defendant, Agnew, is a merchant residing at Elko, in the Province of British Columbia, and carrying on at that place the business of a general merchant.

"4. On 18th February, 1911, at the City of Winnipeg, the defendant, Agnew, entered into a contract * * * with the plaintiff under which contract the defendant was given the exclusive right for a certain territory in British Columbia to sell certain of the plaintiff's products.

"5. In pursuance of the contract the defendant ordered at different dates from the plaintiff to be shipped to the defendant f.o.b. Calgary, in the Province of Alberta, certain goods, for which goods the defendant gave promissory notes.

"6. The following notes represent goods ordered by the defendant at Winnipeg, in the Province of Manitoba, namely: The promissory note for $1,082.25, dated the 20th May, 1911, represents goods ordered by the defendant in person at Winnipeg, in the Province of Manitoba, which order was filled by the plaintiff by shipping the said goods in Winnipeg to the defendant at Elko aforesaid. The remainder of the promissory notes represent goods ordered by the defendant by post, by way of letters posted at Elko aforesaid,

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directed to the plaintiff at Winnipeg, which said orders were filled by the plaintiff by shipping the said goods to the defendant at Elko aforesaid.

"7. The two promissory notes last above mentioned, though dated at Winnipeg were in fact signed by the defendant at Elko in the Province of British Columbia.

"8. The plaintiff is not and was not licensed under Part VI. of the 'Companies Act' of British Columbia nor under any other Act of that province.

"The questions for the opinion of the court are:—

"First: Whether the plaintiff is, in the absence of a licence under Part VI. of the 'Companies Act' of British Columbia (10 Edw. VII. ch. 7), precluded from carrying on business in British Columbia or from maintaining action in respect to any of the claims or notes aforesaid.

"Second: Whether the provisions of said Part VI. of the 'Companies Act' are, in so far as they purport to prohibit the plaintiff from carrying on business in the Province of British Columbia and to maintain actions in the courts of the said province, intra vires of the Legislature of the Province of British Columbia.

"If the court shall answer each of the above questions in the negative, as to all of the items comprised in the claim of the plaintiff, then judgment shall be entered for the plaintiff for the sum of $3,315.85, together with interest at the rate of five per cent from the date of the writ in this action until the entry of judgment and costs of action to be taxed.

"If the court shall answer each of the above questions in the negative, as to the transactions and notes which represent the goods ordered by the defendant at Elko, then judgment shall be entered for the plaintiff

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for the sum of $2,197.90, together with interest at the rate of five per cent, per annum from the date of the writ to the entry of judgment, together with the costs of the action to be taxed.

"If the court shall answer each of the above questions in the negative, as to the transactions and notes which represent the goods ordered by the defendant at Winnipeg, then judgment shall be entered for the plaintiff for the sum of $1,117.95, together with interest at the rate of five per cent, per annum from the date of the writ to the entry of judgment, together with the costs of the action to be taxed.

"If the court shall answer the above questions in any other way than as above indicated judgment shall be pronounced in accordance with the effect and intent of such answers as may be given by the court or as the court may direct."

The following conditions governing shipments were made part of the contract referred to in the statement of the special case.

"The subscribers agree as follows:—

"1. To accept the goods shipped on arrival as specified for herein, or hereafter, during the life of this agreement, paying the carrying charges thereon, safely housing and keeping free from taxes and all other charges for the company, goods on hand, and insure from loss or damage by fire in a reliable company by policy in the company's name at the subscribers' expense, all goods while in the subscribers' custody, and all goods shipped hereafter shall be subject to the same conditions as those herein specified for.

"2. That the said goods shall be at the risk of the subscribers hereto as to damage or destruction from any cause from the time of shipment until all oblige-

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tions given therefor have been satisfied, and the subscribers hereto will fulfil and carry out the covenants and agreements herein contained and satisfy all obligations given therefor with interest, notwithstanding that the said goods may become damaged or destroyed while in the possession of the subscribers hereto.

"3. That no claims will be made against the company for breakages unless they occur from manifest defects in material. Breakages thus caused during the first season's use of the implement or vehicle will be made good by new parts, which will be charged for when sent and corresponding credit will be made, only on return of the defective parts to the company, charges prepaid, and the carrying charges on the parts so replaced shall be paid by the subscribers hereto.

"4. That no claims for damages will be made against the company for delay in shipments for any cause whatever.

"5. That a clear shipping receipt for goods shipped shall relieve the company of all responsibility and place the same with the carriers.

"6. That the proceeds of all goods shipped by the company pursuant to this agreement, or which may hereafter be shipped by them, shall be and remain the absolute property of the company, and shall be held by the subscribers hereto in trust for them until payment in full is made to the company of all obligations under this agreement, and the said company shall not rely only on the personal liability of the shareholders hereto in respect hereof.

"7. That all goods shipped under this agreement are to be sold by the subscribers hereto at the prices and on the terms specified in the price list furnished by the company, either for cash or on lien notes to be taken

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on the form of and drawn to the order of the company when so requested, which notes must be taken by the subscribers hereto at the time of the delivery of the goods, and promptly forwarded to the company together with cash received; and upon payment in full of all obligations in respect hereof to the company under this agreement, all notes so taken in the name of the company shall be transferred by them back to the subscribers hereto, without recourse to the company.

"8. That the property and the title to all goods and the proceeds thereof shipped by the company as in this order provided, or which may be subsequently shipped by the company, shall remain in the company and shall not pass from them until all obligations given therefor shall have been satisfied; but the subscribers hereto shall have the right to the possession of same until default in payment of any note or notes or other obligations given to the company for all goods shipped. Upon default in payment, the whole of the amount remaining unpaid, and all obligations given therefor, shall, notwithstanding deferred times of payment mentioned in such obligations, become due and payable as cash forthwith, and the subscribers hereto covenant with the company to pay the same on demand, and in default of payment of all obligations given therefor, the company may resume possession of all goods shipped under this agreement, and which may be subsequently shipped by them, which the company may also do if any of the statements made herein are ascertained to be untrue, or if the subscribers hereto become insolvent or if the company consider themselves insecure, or whenever they may deem it necessary to resume possession from any good cause;

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and this agreement shall not be in any way cancelled or rescinded or otherwise affected thereby, or by any resale of such goods: and in the event of the company resuming possession as aforesaid, the subscribers hereto authorize and empower the company to sell the said goods or any of them on the subscribers' account, by public auction or private sale, and to credit the net proceeds of such resale, after deducting all expenses of resuming possession and reselling same, on the purchase money payable hereunder; and the subscribers hereto shall remain liable for the balance of such purchase money and interest, which shall then be payable forthwith, notwithstanding any deferred time of payment mentioned in any obligations given therefor and shall be collectable from any liens or securities held by the company, or by process of law against the subscribers hereto.

"9. To settle by cash and notes bearing the signature of the subscribers hereto promptly the first of the month following date of shipment for all goods shipped, upon the terms as set forth on pages 5, 6, and 7 of this agreement, and at the prices appearing therein opposite each article shipped, with all collection charges, and interest after maturity.

"10. That the rate of interest on accounts and notes past due or extended shall be eight per cent. (8%) and indebtedness past due or extended shall be secured by good farmers' paper, as collateral, at the rate of 1.25 of collateral paper for every dollar of past due or extended indebtedness.

"11. That in the event of the death of one or all the subscribers hereto, or failure, insolvency, loss by fire, transfer of property, suit filed against me or either (of us), discontinuing business, non-payment of ac-

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counts or notes covered by this agreement, or in case of preference given other creditors, all obligations arising under this agreement shall become due and payable forthwith, notwithstanding deferred times of payment.

"12. That no agreements, conditions or stipulations, verbal or otherwise, save those mentioned in this agreement will be recognized.

"13. That the copy of this agreement retained by the company is the original and to be the binding agreement in case the duplicate varies from it in any particular.

"14. All implements are shipped subject to the usual manufacturer's warranty to do good work when properly operated, and failing to do this after the subscribers have used their best efforts, they will give immediate notice to the company and allow time for instructions to be given, or, if necessary, the sending of a person to put it in order. Failing then to make the implement do good work, it may be held subject to the order of the company, but under no circumstances will the subscribers return goods without direction from the company. In case this fault is with the subscribers through their failure to follow directions or carelessness in using, the subscribers agree to pay for the time and expense of the person sent to put it in order.

"15. All claims for shortages must be made to the company in writing within forty-eight hours from receipt of goods. If a written notification of such claims does not reach the company at their office in Winnipeg within five days, no allowance will be made.

"16. No claim shall be allowed for breakage of hardened moulds, shares or landsides, nor for alleged

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defective material or workmanship, unless the article is produced and the defect is plainly apparent.

"17. The company shall not be held responsible for the performance of a plow, after it has been heated or radically changed by any one except from the factory."

At the trial, in the Supreme Court of British Columbia, it was held, (Murphy J.), that the action was barred by the B.C. "Companies Act" and could not be maintained by the company in any court in the Province of British Columbia. On the application of the company leave to appeal per saltum from this judgment was allowed by a judge of the Supreme Court of Canada.

Chrysler K.C., Wegenast and Caldwell, for the appellant.

G.F. Henderson K.C. for the respondent.

THE CHIEF JUSTICE.— I am of the opinion that this appeal should be allowed with costs.

Both of the questions submitted for the opinion of the court assume that the appellant company, in the circumstances of the transactions in question, carried on in British Columbia "a part of its business" within the meaning of the statutory prohibition relied upon—section 166 of the provincial "Companies Act,"—or that the notes sued on were contracts made by that company in the province in the course of or in connection with its business. I do not pause to inquire whether the statute is intended to penalize contracts made in the province in connection with the business carried on there by an unlicensed or unregistered extra-provincial company, or whether all contracts made

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in the province by such companies are uninforceable. The distinction is not material in view of the conclusion I have reached, which is that, on the facts of this case, it does not appear that in taking the notes sued on the company appellant carried on any part of its business in the Province of British Columbia, and, therefore, the assumption on which the questions submitted are predicated is not founded.

As stated in the special case, the facts are: An agreement was entered into between the appellants and the respondent, at Winnipeg, in the Province of Manitoba, under which the respondent was given the exclusive right to buy and sell certain of appellants' machines within a defined area of the Province of British Columbia. Under this agreement, the respondent ordered a shipment of goods, which was executed by delivering them f.o.b. at Calgary, in the Province of Alberta; the goods to be, thereafter, at the expense and risk of the purchaser. The consignment was to be paid for by promissory notes, and the notes sued on herein were made in execution of that undertaking. All of the notes are dated at Winnipeg, where the head-office of the company, appellants, is situate, and made payable at Elko, in British Columbia, where two of them were actually signed.

I cannot see how, assuming the respondent was the agent of the appellants, under the agreement made in Winnipeg, it can be said, on these facts, that the company, appellants, carried on "any part of its business" in British Columbia. The most that can be said is that the appellants sold and delivered goods to the respondent in the Province of Alberta to be afterwards re-sold, possibly by the latter, within the Province of British Columbia. The statute is not in-

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tended to reach those who trade with the province, but those who carry on business within the province, and no act was done by the appellants within the province. If we had to deal with the sale of goods by the respondent to a customer, then the question of carrying on business through an agent in the province might arise.

can it be said that the promissory notes, made in the province and payable there, but sent to Winnipeg in payment of a debt due under a purchase made at the latter place is a contract made in the province in the course or in connection with the business of the company? A note executed, made payable and delivered to the payee in the province may be a contract made there by the maker of the note, but it is not a contract made by the appellants who assumed no obligation with respect to it. The notes must be considered in connection with the contract of sale and delivery, which is the consideration for which they were given. That contract was complete by the delivery of the goods beyond the limits of the province, and the notes made by the respondent, in British Columbia, were only made in performance of his obligation to pay the amounts specified in those notes under that contract.

As to whether a promissory note is a contract, see Pothier, "Lettre de Change" (Bugnet ed.), vol. 4, pages 473 and 474:—

La lettre de change appartient a l'execution du contrat du change; elle est le moyen par lequel ce contrat s'execute; elle le suppose et l'etablit, mais elle n'est pas le contrat meme.

Judgment will be entered for $3,515.85, the amount demanded, together with interest from the date of the issue of the writ, at five per cent, and for costs.

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DAVIES J.—I am of opinion that this appeal should be allowed.

Under the facts stated in the case submitted to us, the plaintiffs were not doing or "carrying on business" in the Province of British Columbia. I think myself bound by the principle of the judgment of this court in City of Halifax v. The McLaughlin Carriage Co.[2], and Kirkwood v. Gadd[3]. Applying the test stated in those cases to the facts in this case it is impossible to hold, on the facts as stated, that the John Deere Plow Company could be considered as "carrying on business" in British Columbia, within the meaning of that phrase as used in the statute.

In this view it is unnecessary for me to categorically answer the questions submitted as the answers I would give are evident from what I have said above.

IDINGTON J.—The judgment against which this appeal is taken is upon a stated case so framed as to raise questions that are not necessarily involved in determining the right of appellant to recover upon the promissory notes upon which it sues.

Counsel for appellant in answer to a question I put as to whether or not this was the result of a design to obtain the opinion of the court upon legal questions not arising out of the facts stated, but of importance to the parties concerned herein, assured us such was not the case. Counsel for respondent did not dissent from this assurance. The learned trial judge must be taken also to have so viewed the action or he would not have heard it. I think we must, therefore, treat the case as if, on the facts stated, the submission had been whether or not the provisions of

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the "Companies Act" of British Columbia as it stood in the earlier half of the year 1911, or as revised later, when applied thereto constitute a defence in whole or in part to appellant's claim to recover on the promisory notes in question. The revision which took place in 1911 altered the numbering of sections and modified the language used in many parts. The action began in 1912 and the part prohibiting certain actions must be looked at as it stood in 1912. The pamphlet copy of this revision was used in argument and hence I refer to sections as numbered therein.

The Act is badly drawn. In the sections 139, 152, 153, and 168, which we have specially to consider, the object designated by the phrase "every extra-provincial company" is expressly or impliedly referred to as subject thereto.

The interpretation clause defines the term as follows:—

"Extra-provincial company" means any duly incorporated company other than a company incorporated under the laws of the Province of British Columbia, or the former colonies of British Columbia and Vancouver Island.

By close examination we find later it does not mean what is thus interpreted, but only means it subject to the awkwardly expressed limitation which the language of section 153 gives.

That section, which I take as the key of this part 6 of the Act, is as follows:—

153. Any extra-provincial company duly incorporated under the laws of—

(a) The United Kingdom;

(b) The Dominion;

(c) The former Province of Canada;

(d) Any of the provinces of the Dominion of Canada; and

(e) Any insurance company duly authorized by its charter and regulations to carry out or effect any of the purposes or objects to

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which the legislative authority of the Legislature of British Columbia extends, may obtain a licence from the registrar authorizing it to carry on business within the province on compliance with the provisions of this Act, and on payment to the registrar in respect of the several matters mentioned in the table marked "B" in the first schedule hereto the several fees therein specified, and shall, subject to the provisions of the charter and regulations of the company, and to the terms of the licence, thereupon have the same powers and privileges in the province as if incorporated under this Act.

What does this phrase

any of the purposes or objects to which the legislative authority of the Legislature of British Columbia extends

mean? Let it be noted that it is what "the charter and regulations" of the foreign legislative or creative power of both have authorized to be done by the supposed corporate body that is to become the purpose or object to which the legislative authority of the provincial legislature has been thus directed.

The puzzles of the section do not end with these lines in the beginning of it, but are continued by the lines

and shall, subject to the provisions of the charter and regulations of the company, and to the terms of the licence, thereupon have the same powers and privileges in this province as if incorporated under this Act.

It is quite possible for a company, by virtue of the limitations of its creation, to be prohibited from carrying on business in British Columbia and yet be able to make, as the appellant did in the case in hand, a contract outside of that province and in respect of some breach thereof be under the need of suing in British Columbia and be entitled to sue therefor in the courts of that province.

I know not whether the appellant has "by its charter and regulations" the right to apply for a license to do business in British Columbia or not. Primâ

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facie the patent creating it enables it to apply anywhere to do its business. This suggestion of its regulations limiting its capacity starts the inquiry I have just mentioned as possible. In light of what section 139 provides it becomes a pertinent inquiry as to whether or not the scope of this part VI. of the Act is such that a company may by virtue of its Dominion charter be entitled to enter into such a contract as I have suggested yet be disabled from following its debtor in the courts of that province without taking out a licence which its self-restrictive regulations may render useless for any other purpose than such litigation.

The language of section 139 seems to have been held by the learned trial judge to have some such effect. True, he relies upon other incidents such as the insurance of property that the appellant permitted another to carry into the province and deal with therein. Can the appellant not ship its goods through British Columbia, say to Seattle, and, in doing so, employ men in British Columbia to take care of them and if need be insure them there ? And for breach of duty on the part of those bound by or concerned in such obligations can it not bring an action in the courts of that province?

I am not concerned with solving all these problems. I am only raising them here to illustrate the curious things that may happen if this section and some others are to be applied literally.

We are concerned here with section 166 as it stood in 1911, and section 168, of which the first part is as follows:—

166. * * * So long as it, (any extra-provincial company,) remains unlicensed or unregistered under this Act it shall not be capable of maintaining any action, suit, or other proceeding in any

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court in British Columbia in respect of any contract made in whole or in part within this province in the course of or in connection with its business, contrary to the requirements of this part

of this Act.

This provision, it is said, bars this action. If the methods of interpretation and construction I have adverted to are correct the defence herein may be well founded.

Section 153, quoted above, does not, however, seem to me to have been so framed as to warrant that mode of treatment. These other sections (including 168 just quoted) must be read as operative within its terms or not at all. It is the one which provides for a licence. The subject throughout part VI. is licence, and the meaning declared by section 152 must be held as limiting the operative effect of all these other penalizing and puzzling sections aimed at the consequence of not obtaining a licence.

I must, therefore, revert to the consideration of the meaning to be extracted from section 152 to give the other sections vitality or force.

It seems inconceivable that a charter of another power can have had in view the carrying out or effecting of

any of the purposes or objects to which the legislative authority of the Legislature of British Columbia extends.

Yet such creations are those that the literal meaning of this clause deals with.

Passing that for the moment, what we are concerned with here is the recovery upon a number of promissory notes of which some were given in, and some outside the province.

Now, it is as plainly written in the enumerated subjects of section 91, over which exclusive power is

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given to the Dominion, as anything can well be, that bills of exchange and promissory notes are not within either

the purposes or objects to which the legislative authority of the Legis lature of British Columbia extends.

Hence it seems to me that the kind of contract involved herein is one over which the legislature enacting the disabling section 168, which is relied on, has no more authority than it has over the other corporations and contracts founded on any of the subjects enumerated in section 91 over which Parliament has exclusive legislative authority.

It is possible that Parliament has not yet in this regard covered all the ground thus open to it to take in aid of its corporate creations which must rest only upon its residual power over "Peace, Order and Good Government" as distinguished from those other corporate creations I refer to above and hereinafter.

But the language of this section 152 which I have called particular attention to, lends itself peculiarly to the application of the principle that the legislature cannot deal with promissory notes. Indeed, it seems as if intended, however awkwardly, to exclude the field of legislation beyond its powers, from the range of anything contemplated by this legislation.

The legislatures of the provinces, having assigned to them exclusive legislative authority over property and civil rights beyond that part thereof primarily assigned exclusively to Parliament by said enumeration in section 91 and possibly by implication in a few other sections of the Act which do not concern us here, may, no matter how much inconvenience may possibly by reckless or improper legislation arise, so enact as to contracts as to render them in certain cases null.

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This power clearly cannot be so used as to affect the validity of promissory notes which Parliament has declared shall not be thereby invalidated.

Parliament in the "Bills of Exchange Act" has not expressly dealt with this aspect of the matter and gone so far as it may have a right to go. But, it may be asked, must we not hold that Parliament, by providing for the creation of such companies as the appellant, with the evident purposes of making the franchises so granted as effective as Parliament, acting within its powers, can make them for the execution of their respective purposes, has, so far as necessary therefor by implication, given such effect as it can in relation to promissory notes ? I express no opinion.

Such is the problem which I conceive may arise upon this Act in relation to the rights of the Dominion corporate creations resting upon the residual power of Parliament alone and on the law as it stands at present.

Of course, other extra-provincial companies may not stand in the same position.

It seems to me that in this case and in view of the phraseology used in section 152, to which I have adverted the legislature has refrained from questioning the power of Parliament and so advisedly used the word "contract" in section 168, as to avoid any question of conflict.

I admit the word contract might include promissory notes, but when we read it in light of all these considerations I have referred to, I conclude it does not.

For that reason alone the section 168 does not apply as a bar to this action.

There are many other considerations leading to the same result.

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The whole meaning of the section must turn upon the effect of the words "carry on business within this province." That is what the licence is provided for. The fees exacted indicate it must be something thus substantial and not the mere incident, for example, of bringing an action.

I admit the language used in other sections does seem at times to strike at isolated Acts. I cannot think they alter the scope and purpose of the whole of this part of the Act, but must be controlled or read in light of what seems to me the obvious purpose of section 152 as a licensing Act.

I assume for argument's sake such a power of licensing exists, but by no means express any opinion in regard thereto.

Then it has been urged it is a taxing Act within the power to impose direct taxation within the province, and the authority of Bank of Toronto v. Lambe[4] is invoked.

It seems as clear as can be that banks and railways and other subjects falling within the enumerated subjects of section 91 of the "British North America Act" may be taxable by a province. But I do not think that involves the liability to comply with such regulations as these sections of the "Companies Act" in question require compliance with. And I should say that none of the conceivable corporate creations which may be the product of the exclusive powers over said enumerated subjects of section 91 fall within the sweeping language of these sections now in question unless restricted within the necessarily incidental powers for executing the taxing power. Destroying their right of contracting, or suing, does not seem to fall within

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that. And so far as the mere taxing power goes this should hold good also relative to other companies. These respective spheres of legislative authority of Dominion and provinces may well be viewed as if appertaining to two independent states in their relation to each other. Each may help the other, but can go no further. It never, however, was intended either should try to destroy the other.

It seems to me that there is also much to be said relative to the quality of the taxation. If it is imposed purely to enable a company to do what appellant has done, then, I submit, such methods of taxation would be indirect taxation and not within provincial powers.

I am not to be taken as suggesting that promissory notes are, as a matter of course, to be held free from taints of illegality and consequence, thereof. The causes of illegality founded on mere revenue laws, however, may in regard to promissory notes be ultimately found such as Parliament alone may declare. I express no opinion here in regard thereto and only desire to avoid unwarranted inferences from what I have said.

I conclude that there is nothing in the facts submitted that entitles a province to deprive a company of its ordinary rights of contract and suing in the province.

I think the appeal should be allowed with costs.

DUFF J.—I think the British Columbia "Companies Act" (B.C. Stats., 1910) does not in its true construction disable the appellant company from maintaining this action.

The relevant provisions of the Act are sections 139 and 166. These are in these words:—

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139. Every extra-provincial company having gain for its purpose and object within the scope of this Act is hereby required to be licensed or registered under this or some former Act, and no company, firm, broker or other person shall, as the representative or agent of or acting in any other capacity for any such extra-provincial company, carry on any of the business of an extra-provincial company within this province until such extra-provincial company shall have been licensed or registered as aforesaid.

This section shall apply to an extra-provincial Company notwithstanding that it was heretofore registered as a foreign company under the provisions of any Act.

166. If any extra-provincial company shall, without being licensed or registered pursuant to this part, carry on in the Province of British Columbia any part of its business, such extra-provincial company shall be liable to a penalty of fifty dollars for every day upon which it so carries on business, and so long as it remains unlicensed or unregistered under this Act, it shall not be capable of maintaining any action, suit, or other proceeding in any court in British Columbia in respect of any contract made in whole or in part within this province, in the course of or in connection with its business contrary to the requirements of this part:

Provided, however, that upon the granting or restoration of the licence or the issuance or restoration of the certificate of registration or the removal of any suspension of either the license or the certificate, any action, suit or other proceeding may be maintained as if such licence or certificate had been granted or restored or such suspension removed before the institution of any such action, suit, or other proceedings.

The disability to sue imposed by section 166 only affects the company in respect of rights of action alleged to arise out of some contract made

in whole or in part within this province * * * contrary to the requirements of this part;

and the last words "contrary to the requirements of this part" of this Act refer, it seems to me, to the requirements imposed by sections 139 to 167, which ordain that an extra-provincial company shall be licensed or registered under the Act before it can become entitled to "carry on in the province any part of its business." The contracts, therefore, which an extra-provincial company not licensed or registered under the Act is disabled from enforcing by action

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in the courts of British Columbia in virtue of the provisions of section 166 are contracts made in course of or in connection with some business which the company in whole or in part "carries on" in that province.

The learned trial judge held that the appellants were carrying on business by the respondent as their agent or representative, and that the contracts in question were made in connection with that business. In support of this conclusion the respondent relies upon the provisions of an agreement set out in the special case between the parties to the action[5]. The appellants are manufacturers of ploughs, and their principal place of business is at Winnipeg; the respondent is a general merchant at Elko, B.C. The promissory notes sued on were given for goods shipped at Calgary by the appellants to the respondent at Elko under the terms of the agreement already mentioned. Some of these goods were ordered by the defendant in person at Winnipeg and others by letter from Elko. The agreement in question binds the respondent to accept all goods shipped under it and to "settle by cash and notes" for all such goods according to the prices set forth in the price list on the first of the month following each shipment. All goods affected by the agreement are to be at the risk of the respondent until paid for; and the respondent is to insure them for the protection of the appellants. In the event of the death of the respondent or his insolvency or of an action being brought against him all moneys owing are to become immediately payable. In default of payment of any obligation given to the appellants for any goods shipped under the agreement all moneys owing by the respondent become payable and the appellants are authorized to sell all goods to which the agreement re-

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lates and credit the proceeds to the respondent, who is to remain liable for any deficiency. In the meantime, pending the payment of all obligations in full, the title to all goods shipped remains, until they are sold by the respondent, in the appellants, and all notes taken on the sale of any of them by the respondent from purchasers are to be taken in the name of the appellants. The sales made by the respondent are to be according to a price list furnished by the appellants. This agreement constituted—the learned trial judge holds—the respondent the agent of the appellants for the sale of goods to which it relates. I cannot agree with this. It is, in my judgment, an agreement relating to the sale and purchasing of goods embodying elaborate provisions for the protection of the sellers. Until the sellers have been paid in full the property remains vested in them and all moneys received on sale by the respondent are to be treated as theirs; but the rights thus reserved to them are only for securing the payment of the purchase money; and on payment they would disappear at once. Subject to the rights so held by the sellers as security the purchaser is the beneficial owner of the goods. True, there is a covenant that he will not sell except at the prices specified in the agreement. I doubt very much whether this provision was intended to bind the purchaser with respect to goods that have been fully paid for. If it was intended to apply to goods that have become fully vested in the purchaser its validity is doubtful; but in any case it could only operate as a personal covenant by the respondent affecting the conduct of his own business.

I see nothing in these provisions requiring or, indeed, justifying the inference that the respondent in

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carrying out the agreement was acting as the agent or representative of the appellants in carrying on the appellants' business. What was contemplated was that in the conduct of his own business he should observe the provisions of this contract that he had made with the appellants. The second part of the first question,

whether the plaintiff * * * is precluded from * * * maintaining action in respect of any of the claims or notes aforesaid

ought to be answered in the negative. The first branch of the first question, and the second question, do not arise on the facts and it would, therefore, be improper to answer them.

I may add, although it is not strictly necessary to the decision, that section 166, which subjects extraprovincial companies to penalties for carrying on in the province any part of their business without licence or registration appears to indicate that the legislature by the phrase "carrying on business" contemplated such conduct on the part of the company as would, according to the general principles of law, amount to a submission to the jurisdiction of the British Columbia courts. According to that view no company would come within the penalties or disabilities imposed by the enactments quoted above unless it had a fixed place of business at which it carried on some part of its own business within the province.

ANGLIN J.—In my opinion the notes sued on were not given to or taken by the plaintiffs in the course of carrying on their business within British Columbia. The burden was on the defendant to prove this. The evidence in the record does not establish that the plaintiffs carried on any part of their business in that

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province. On that short ground this appeal should, in my opinion, be allowed.

BRODEUR J.—The main question to be decided in this case is whether the appellants are carrying on business in the Province of British Columbia.

By the "Companies Act" of that province, it is provided that every extra-provincial company having gain for its purpose is required to take out a licence, and it is also provided, by the same Act, that

no person shall as the representative or agent of, or acting in any other capacity, for any such extra-provincial company, carry on any of the business of that company until such extra-provincial company shall have been licensed. (Section 139.)

And, if any extra-provincial company shall carry on any of its business in the province, it shall not be capable of maintaining any action in any court of British Columbia in respect to any contract made, in whole or in part, within that province in connection with its business. (Sec. 166.)

It appears by the stated case that the head-office of the company is at Winnipeg; that the respondent, Agnew, is residing in British Columbia and carrying on there the business of a general merchant. In February, 1911, Agnew, in Winnipeg, made a contract with the appellants under which they agreed not to sell, in a certain territory in British Columbia, the classes of goods which the respondent would order. In execution of that contract the respondent, at different dates, ordered from the appellants certain goods to be shipped to him in Calgary, in Alberta, and he gave his promissory notes for those goods. Some of those notes were made and signed in Manitoba. The other notes, though dated in Winnipeg, were, in fact, signed by the respondent at his place of business.

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The company was not registered in British Columbia.

The trial judge found that the appellant company should be considered, on the above facts, as carrying on business in the Province of British Columbia, and, as the company was not registered there, that it could not take any action to enforce the contract with the respondent.

I am not able, for my part, to come to such a conclusion. It cannot be said that the appellants were carrying on any business in the Province of British Columbia. Some of their goods were being sold, it is true, by the respondent, but he was not their representative or agent and did not act in any such like capacity for the appellants, but he was doing with those goods the same as he would do with any other goods which, in his ordinary business, he would bring from any other part of the country.

Having come to that conclusion, I do not think it is necessary then to examine the other question which has been submitted by the plaintiffs, namely, whether or not the appellants, being a company incorporated by the Dominion Parliament, could be subjected to the requirements of the Act above mentioned.

I think that the appeal is well founded and it should be allowed with costs.

Appeal allowed with costs.

Solicitors for the appellants: Tupper, Kitto & Wightman.

Solicitors for the respondent: Wilson & Jamieson.