City of Three Rivers v. La Banque du Peuple

By a by-law passed by the city of Three Rivers on the 3rd March, 1886, granting a bonus of $20,000 to a firm for establishing a saw-mill and a box factory within the city limits, and a mortgage for a like amount of $20,000 granted by the firm to the corporation, on the 26th of November, 1886, it was provided that the entire establishment of a value equivalent to not less than $75,000 should be kept in operation for the space of four consecutive years from the beginning of said operation, and that 150 people at least should be kept employed during the space of five months of each of the four years.

The mill was in operation in June, 1886, and the box factory on the 2nd November, 1886.

They were kept in operation, with interruptions, until October, 1889, and at least 600 men were employed in both establishments during that time.

On a contestation by subsequent hypothecary claimants of an opposition afin conserver, filed by the corporation for the amount of their conditional mortgage on the proceeds of sale of the property.

Held, reversing the judgment of the courts below, that even if the words "four consecutive years " meant four consecutive seasons, there was ample evidence that the whole establishment was not in operation as required until November, 1886, when the mortgage was granted, the mill only being completed and in operation during that season and therefore there had been a breach of the conditions.

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APPEAL from the Court of Queen's Bench for Lower Canada (Appeal side) confirming the judgment of the :-Sir Henry Strong C.J. and Fournier, Taschereau, Gwynne and Sedgewick JJ.

Superior Court on a contestation by respondent of appellant's opposition afin de conserver.

The facts 'connected with this litigation are as follows:- In the winter and spring of 1886, a negotiation took place between the firm of Hall, Neilson & Co: and the ' city of Three Rivers, in reference to the removal to that city of Messrs. Hall & Co.'s luinber mills and the establishment of a box factory.

Messrs. Hall, Neilson & Co. wrote to the city authorities, on 19th January, 1886, that being about to reconstruct their lumber mills at the Grandes Piles, influential citizens of Three Rivers had suggested to them the advantages to the working classes if the mills were removed to that city. That they, Messrs. Hall, Neilson & Co. also intended to establish a box factory, in connection with their mill, which latter was specially adapted for providing the kind of lumber necessary for making boxes.

That the operation of said mill and said box factory would require the employment of at least 150 persons and could provide labour for at least 500 men and 125 horses during the winter season. That in order to realize these advantages, viz., the construction of the said saw-mills and box factory, the said Hall, Neilson & Co. would require assistance from the city of Three Rivers in the form of a cash bonus of $25,000 and exemption from taxation for 20 years. Some verbal communications passed between the city authorities and Messrs. Hall, Neilson & Co. and 22nd February, 1886, a letter of Messrs. Hall & Co. was laid before the City Council, accepting a verbal proposition which had been made by the city, which Messrs. Hall & Co. repeated as follows:- The bonus to be $20,000 and the exemption from taxes 10 years, the property to be hypothecated to the city for a term of four years, to the extent of said $20,000, as a guarantee for the fulfilment of the two 'F"

following conditions, viz.: That Messrs. Hall & Co. should furnish employment during the four years to a sufficient number of employees to equal the work men during five months each year, and 2nd, the total value of the establishment and dependencies, when completed, to be not less than $75,000.

Messrs. Hall & Co. also iandertook in addition, to enter into a personal obligation to continue the establishment in operation for six additional years after the expiry of the four covered by the mortgage. Thereupon the Council by resolution unanimously accepted this proposal and undertook to pay the said bonus of $20,000 upon the conditions of that letter, and ordered a by-law to that effect to be prepared and submitted to the ratepayers. These conditions are stated in the by-law as follows:- Ist. The establishment that the Messrs. Hall, Neilson & Co. are at present operating at the locality known as Grandes Piles, on the River St. Maurice, consisting of saw-mills, dryers, machinery, etc., to be transferred to, and rebuilt within the limits of the city of Three Rivers, in a place on the south-west side of the River St. Maurice, and to be there put in operation between this date and the close of the summer of the present year, and further, within same delay and said limits, a box factory to be also constructed and put in operation; and the entire establishment when finished to be of a value equivalent to not less than seventy-five thousand dollars.

2nd. During the course of the fifteen years following the operation of said establishment, the said establishment to be kept in operation for the space of four consecutive years from the beginning of said operation: One hundred and fifty people at least to be kept employed during the space of five months of each of the four years, and at the termination of said four years said establishment to be continued in operation for at least six of the eleven following years; and the number of people employed during said eleven years to be equivalent to the number of one hundred and fifty people during five months of the year, for the space six years.

This by-law was afterward formally adopted by the

Council and subsequently, on the 31st March, 1886, by the electors. In fulfilment of their part of the contract,

Messrs. Hall, Neilson & Co. proceeded at once to acquire the necessary site within the limits of the city and removed to it their lumber mill from the Grandes Piles and set them in operation in July of that year, 1886.

The box factory was completed on the 2nd November, 1886, and the total cost of the whole establishment is proved to have exceeded $100,000.

On the 5th November, 1886, Messrs. Hall, Neilson,

& Co. wrote to the city that the conditions of the bylaw on their part had been fulfilled, entitling them to the payment of the bonus.

The City Corporation paid over the $20,000 without protest or objection.

receiving from Messrs. Hall & Co. the four years guarantee in the form of a mortgage.

This bore date

November 29th, 1886.

The. establishment continued in operation until

October, 1889, when in consequence of a change in the

United States tariff in reference to the admission boxes, Messrs. Hall & Co. were obliged to discontinue work. They had in the meantime given a second mortgage upon their Three Rivers property to the

Banque du Peuple for advances. Financial difficulties followed the closing of the establishment and the property was afterwards sold at sheriff's sale.

The city of Three Rivers claimed from the proceeds, by special privilege, the payment of three years arrears of taxes and two years water rates, amounting with interest to $2,555, and in addition the payment of the $20,000 amount of their mortgage.

The bank did not dispute the claim for special water rates but contested the claims for taxes and also for any claim under the mortgage, on the ground that its conditions had been fulfilled, viz., that Hall & Co. had made the expenditure originally stipulated and had employed the equivalent 150 men for five months of each of four years.

The question on this appeal is whether the appellants are entitled to recover on their hypothecary guarantee that Messrs. Hall & Co. would keep in operation, for four consecutive years, 150 men employed during five months in each year at their mill establishment and box factory in the city of Three Rivers. The court below has held that they cannot on the ground that the Messrs. Hall & Co. have executed and fulfilled their obligations per equipollens. As the box factory was not completed till November 2nd, 1886, and the whole establishment only began operations in October, 1889, I do not think it can be contended that there has been a specific performance of the conditions upon which the ratepayers voted the bonus and it is the conditions and obligations contained in the by-law itself and not in Messrs. Hall, Neilson & Co.'s letters and petitions, that Messrs. Hall, Neilson & Co. accepted by their hypothecary guarantee in favour of the city. How it can be said that four years means four seasons, and that operations commenced in November, 1886, would be equivalent to one season, I cannot understand.

Then the object of the city being to have a number of men to settle in the town as citizens it cannot be said that it is e'quivalent to have 600 men employed during one year to 150 men during four consecutive years.

The main point to be decided according to our contention is whether the first season's operations, some of them prior to the execution of the mortgage and the payment of the bonus, are to be reckoned as one of the four years during which Hall & Co. guaranteed the establishment should be in operation. If it is then there is ample evidence that more than 150 men were employed in Three Rivers in connection with the whole establishment during the season of 1886.

Now as the box factory could not be in operation for five months during that season we have complied with that condition, per equipollens. See Simard v. Fortier

Moreover this is the interpretation put on the contract by the city, for when on the 5th November, 1886, Messrs. Hall

& Co., when the box factory was only just completed, wrote to the City Council that the conditions of the bylaw had been fulfilled and that they had paid wages to date for over 26,200 days, an excess over the contract requirement of 6,700 days, and that the cost of the establishment considerably exceeded their agreement in that respect, the council, who had daily seen the work progressing, paid over the bonus before the expiry of that month and did not collect any taxes for 1886.

Nor. did the council intimate any different view during the seasons of 1887, 1888 and 1889.

No taxes were imposed and no objection made in any form, either that the stipulated expenditure had not been made or that men were not employed in the box factory.

The only claim the appellant could set up might be the personal one (crdancier chirographaire) as a creditor of Hall, Neilson & Co. for a sum of $12,000.00 in case the firm of Hall, Neilson & Co. or their assigns neglected fulfilling the conditions of the by-law applying to the six years operation following the first four years ; but that firm or its assigns have plenty of time left to yet fulfil these remaining conditions.

BY THE COURT.-The agreement upon which the $20,000 bonus was lent by the corporation to the respondents is to be found in the by-law of the 3rd 1March, 1886, and in the mortgage dated the 26th November, 1886.

It is apparent that the four consecutive years during which the establishment was to be kept in operation under the second condition of the said by-law, can only date from the month of November, 1886, when the box factory (an important part of the proposed establishment of Messrs. Hall, Neilson & Co.) was completed and put in operation and when the mortgage was granted on a completed establishment of the value of $75,000, and that the appellants had not in November, 1889, complied with the said second condition of the by-law, viz., the establishment " to be kept in operation for -the space of four consecutive years.

FOURNIER, J. dissenting.-Le trois mars 1886, apr~s certains proc6dds pr61iminaires, la cit6 des Trois- Rivibres adopta un riglement municipal dans le pr6ambule duquel il est dit que les messieurs Hall, Neilson et Cie out, par leurs lettres du 25 janvier 1882 et du 22 f6vrier 1886, fait application an conseil de la ville des Trois-Rivibres pour une aide on bonus et une * exemption de taxes municipales en faveur d'une manufacture de botes-et attendu qu'il est avantageux d'acc6der h la.demande des dits Hall, Neilson et Cie, et de leur accorder un bonus de $20,000 et une exemption de taxes sur la dite manufacture, il est en cons6quence ordonn6:

Sec. 1. Un bonus de $20,000 et une exemption de taxes municipales sur les immeubles, bAtisses, machineries et outillages 6rig6s et affect6s sp6cialement et uniquement aux fins de la manufacture, consistant en moulins A scies, s6choirs, manufacture de boites et les bureaux de 1'6tablissement, sont accord6s aux conditions suivantes

L'6tablissement que les messieurs Hall, Neilson et Cie exploitent actuellement & 1'endroit appel6 les Grandes Piles, sur la rivibre St-Maurice, consistant en Fournier J. moulins A scies, s6choirs, machineries, etc., devront

6tre traiisport&s et rebAtis dans les limites de la cit6 des

Trois-Rivibres, au sud-onest de la dite rivibre St-Maurice, et mis en op6ration d'hui A la fin de l'6t6 de la presente ann6e, de plus il sera *construit et mis en operation, dans les mimes limites et dans le m~me d6lai, une manufacture de boltes, et tout l'6tablissement une fois termin6, devra valoir au moins soixante et quinzemille piastres.

2" Dans le cours des quinze ann6es qui suivront la mise eii op6ration du dit 6tablissement, le dit 6tablissement devra 6tre tenu en op6ration pendant an moins quatre ann6es cons6cutives A compter de sa mise en op6ration, et cent cinquante persunnes, au moins, devront y 6tre employ6es pendant 1'espace de cinq mois par annee, et A l'expiration des dites quatre ann~es, le dit 6tablissement sera tenu en op&ration pendant au moins six ans pendant les onze ann6es qui suivront, et le nombre de personnes employ6es pendant les dites onze ann6es, sera 6quivalant A un nombre de cent cinquante personnes durant cinq mois par annee pendant 1'espace de six ans.

Messieurs Hall, Neilson et Cie acceptbrent les obligations contenues dans le r6glement, transporthrent le moulin a scies qu'ils poss6daient aux Grandes Piles et construisirent la manufacture de bottes dans les limites de ]a cit6 des Trois-Rivires.

L'6tablissement fut mis en op6ration partie en juillet et le reste en novembre 1886.

Le 29 novembre 1886, la somme de $20,000, montant du bonus, ffit payee A messieurs Hall, Neilson et Cie. C'est cette somme que ]'appelante r~clame par une opposition en cette cause, en all6guant que messieurs Hall, Neilson et Cie n'ont pas rempli les obligations conditions auxquelles la dite somme leur avait t6 accord6e.

L'intimbe li6 contestation.

La seule question qui se pr~sente est de savoir si messieurs Hall, Neilson et Cie out rempli leurs engaments, lo, la mise en op6ration pendant quatre annies cons6cutives depuis la date de sa mise en op6ration, 2o. si pendant ce temps is ont employ

& leur 6tablissement au moins 150 personnes durant cinq mois chanune des dites ann6es ?

Ce qui a fait la principale cause de la difficult6, c'est 1'interpr6tation errone que l'appelante a donn6e aux rzglements.

Se fondant sur le pr~ambule des r~glements, elle pretend qu'il avait principalement pour but d'6tablir une manufacture de boltes et non pas un moulin A scies pour faire concurrence A ceux qui existaient

La proposition de 1'appelante, serait vraie si le r6glement consistait dans le pr6ambule seulement. On y voit en effet que messieurs Hall, Neilson et Cie. out demand6 un bonus et une exemption de taxes en faveur d'une manufacture de boltes.

On peut bien invoquer le pr6ambule d'un reglement pour le faire servir A l'interpr6tation de clauses obscures ou douteuses, mais on ne pent pas plus le faire servir limiter 1'effet des dispositions pr&cises du rglement, qu'ou ne pourrait 6tendre les dispositions d'un statut en se fondant sur les consid6rants de son pr~ambule. Dans son factum devant cette cour 1'appelante (p. 20) dit que Ball et Cie devront employer durant les quatre premibres annes d'op6ration de la manufacture de boltes, cent cinquante hommes. Elle s'exprime ainsi:

La mame manibre de voir est exprim6e comme suit -dans son factum du Bane de la Reine.

" Comme on le voit, l'affaire principale, l'objet en vue pour toutes les parties, 6tait la creation d'une industrie nouvelle, l'6tablissement d'une manufacture de boltes A Trois-Rivibres."

Cette maniere de voir qui ferait de la manufacture de boltes l'objet principal, et presque unique, du riglement n'est pas soutenue par le paragraphe no 1 du rTglement il est dit que I'6tablissement que Hall et Cie exploite aux Grandes Piles, sur le st-Maurice, .consistant en moulin a scie, schoirs, machineries, etc., devront transport6s et rebaltis dans la cit6 de Trois- Rivibres et mis en op&ration d'hui la fin de l'e6; de plus il sera construit dans les mimes liniites et dans le mime dlai, une manufacture de boites, et tout l'4tahlissement une fois termin6 devra valoir au moins soixante et quinze mille piastres.

Les avantages accord~s par le riglement 6taient done tout aussi bien pour le transport des moulins des Grandes Piles A Trois-Rivibres, que pour la manufacture de bottes.

Le riglement ne fait aucune distinetion quelconque entre les deux; mais an contraire ne les considbre tous deux que comme un seul 6tablissement, et tout l'4tablissement one fois termind, dit le rTglement devra valoir an moins soixante et quinze mille piastres.

Le riglement ne fait non plus aucune distinction entre les moulins A scies et la manufacture de boltes LB quant au nombre d'hommes qui devront y 6tre employ6s.

Au no 2 du dit raglement, il est dit que Fournier le dit 6tablissement devra tre tenu en op6ration pendant an moins quatre ann6es cons~cutives A compter de sa mise en opration, et cent cinquante personnes, an moins, devront y 6tre employ6es pendant l'espace de cinq mois par ann6e.

Il est 6vident que le nombre d'hommes qui doivent &tre employ6s est fix6 pour tout 1'6tablissement, A 6tre, sans doute, distribus suivant le besoin des op6rations. Il est indubitable que 1'interpr6tation 6mise par 1'appelante sur le riglement est erron6e.

La preuve faite par 1'intimbe a 6tabli de la maniare la plus positive qu'elle a rempli la premidre condition,. qui 6tait que 1'tablissement devait tre mis en op6ration avant la fin de 1'6t

1886 et valoir an moins $75,000. La preuve a 6tabli ces deux faits de la manihre la plus complkte.

Quant A la seconde question, au sujet de la dure des operations et an nombre des personnes qui devaient 6tre employ6es chaque ann6e A 1'6tablissement, il a t6 prouv6 6galement que 1'tablissement a t6 mis en operation au moins pendant cinq mois chaque ann6e, et pendant plus de vingt mois pour les quatre .premibres ann6es, et que le nombre de personnes qui y ont t6 employes exc6dait celui fix6 par le riglement. Il est vrai que ce nombre n'a jamais t6 employ6 & la fois dans la manufacture de boites qui n'en pouvait pas contenir plus de trente, mais ce que l'intim6e affirme et a prouv6, c'est que ce nombre, et an delA, a t employ6 dans tout 1'6tablissement pendant le temps voulu. '6tait suffisant de la part de messieurs Hall, Neilson et Cie pour remplir leurs obligations, et le rTglement n'exigeait rien de plus.

Apris un examen s~rieux de la preuve, je me suis convaincu que les deux cours qui ont d6ji prononc6 sur cette cause, en out fait une juste et correcte appr6ciation et que leur jugement doit Atre confirm6 avec d6pens.

Appeal with costs.