Royal Bank of Canada v. Skene and Christie

doubt. The law of Ontario has, as is pointed out by the trial judge, Masten J., always recognized, subject to certain specified restrictions which do not enter into this case, the right of foreign corporations to carry on their authorized business and make contracts within their authorized powers outside of the country in which they are incorporated, so that the contract sued on in this case even if made in Ontario, being admittedly within the express corporate powers of the company to buy and sell real estate in Saskatchewan, was not ultra tires and was capable of being enforced in the Ontario courts.

The appellant relied upon the "Extra-Provincial Corporations Act,"

R.S.O. ch. 179.

The plaintiff admitted it did not have the license required by section 7 of that Act until after it had commenced this action, but it did then obtain the license and the statute expressly provides that the granting of the license put the company's right of resort to the Ontario Courts in the same position as if it had been granted before the action was instituted.

In the result I am of the opinion that whether the contract sued on was made in Saskatchewan as found by the Appellate Division, or in Ontario as contended by the appellant, the right of the plaintiff to maintain an action upon it in Ontario was clear.

The appeal should be dismissed with costs.

J.-The appellant is and has been throughout the period of time involved in the negotiations and bargaining in question herein, and this litigation founded thereon, a resident of Ontario. The respondent is a company incorporated (23rd March, 1912) under and by virtue of the "'Saskatchewan Companies Act" "'to carry on real estate, loan and general brokerage business. "

In the course of carrying on said business the respondent had its head office in Weyburn in Saskatchewan and acquired some lands in the said province. The appellant by an agreement of sale dated the 15th j. October, 1912, made between the respondent and himself, agreed to purchase from the former certain blocks of said land and to pay the price named, for balance of which this action is brought.

The defences set up at the trial failed, except as to one which raised the question that the said contract was ultra vires the respondent company and hence null and void.

The learned trial judge maintained this contention and dismissed, for that reason alone, respondent's action.

The agreement in question was drawn up in duplicate at Weyburn in Saskatchewan and forwarded to the appellant in Ontario, who executed both copies and returned them to the respondent, who, then in Weyburn, executed same there. That does not seem to me to constitute anything ultra vires the corporate powers or capacity of the respondent.

The said "Companies

Act"

of Saskatchewan appears in the Consolidation of 1909, which is enacted by a statute of the legislature, assented to January 26th, 1911, and professes to be an enactment of His Majesty by and with the advice and consent of the Legislative Assembly of Saskatchewan.

The first chapter of said Revised Statutes is called "The Interpretation Act" and by the second clause thereof provides that the following words may be inserted in the preamble of Acts and shall indicate the authority by virtue of which they are passed, that is to say:- From this Act I infer as well as from the words in the preamble to the Act respecting the Revised Statutes of Saskatchewan, 1909, which adopts these enacting words that the enactments in the consolidation are to be treated as if they were made in that form.

The fifth clause of the "Companies Act" declares as follows.- I am unable to understand how a company incorporated, without any limitations upon the powers or capacity of the legal entity thereby created, under and by virtue of .an enactment professing to be enacted by His Majesty by and with the advice of the legislature, and expressly intending that the full power of incorporation which a provincial legislature has to incorporate for certain specific objects is being exercised, can be said to have been acting ultra vires of the power thereby conferred, when confining its action within the obvious purposes of its creation; and that no matter where acting unless in violation of the law of the country or province where so acting or other local limitations upon the usual observance of the comity of a foreign state in relation to the recognition of corporations created beyond its jurisdiction.

I most respectfully submit that what was said in the Bonanza Creek Case(1), having been intended to be applicable only to an enactment using entirely differ- TOSITE ent language and mode of thought for expressing J. the purpose of the legislature, and also to a different state of facts from those presented herein, cannot be helpful herein or further than in an expressly identical sort of case.

I am quite sure that whenever it is in such an enactment the obvious intention of the legislature when indicated as above to exercise to the fullest extent the powers given it by the "British North America Act," the incorporating power it thereby confers upon those obtaining incorporation thereunder 'all the power and capacity that can be given by virtue of such powers as conferred by section 92, Item No. 11 of said Act.

" The Legislature, " which must be taken to mean all that section 92 of the "British North America Act" implied by the use of that very term which Parliament used when it expressly endowed each province with the incorporating power in question, has in the plainest and most comprehensive language quoted above, expressed such a purpose, and I am not prepared to minimize in the slightest degree the full effect thereof.

What Parliament in that regard conferred upon each province in question in the "British North America Act" has been conferred, by a process needless to trace here in detail, upon the Province of Saskatchewan.

What, in my opinion, that implied in Item II of the "British North American Act," I have heretofore expressed in several cases.

Though that proposition was ably and logically presented as a corollary of some of the reasons I cannot assent thereto.

Nor do I think the negotiations which took place in Ontario leading up to the execution of the above mentioned instrument under seal in which they would, so far as in any way affecting the relations bet reen the 'parties, be merged therein, can affect the a- ;wer to be given the question raised in one way or an. her. As to the right to sue in Ontario I assume t t a corporation created by the like authority which ited respondent may, as any one else may, be debarree rom using the courts of a province in violation of a alid statutory prohibition; but anything of that kind bich may have existed was removed by the licence respondent.

There is nothing in the Ontario legislatioi hich affects, or pretends to affect, in any way the 1 ility of the contract.

I am, therefore, of the opinion that this peal should be dismissed with costs.

J.-I slfhll assume for the purposes < this judgment that the respondent company was (a ying on business within the meaning of the Ontarit

-ute, in Ontario, when the contract was made and the contract, which is the subject of the action, was cted in the course of carrying on that business.

On that assumption, the principal question is whether the respondent company possesses capacity recognized by the laws of Ontario to become a party to that contract. The question whether it enjoys such Duf j.

capacity is primarily, of course, a question to be determined by the Ontario law

Ontario law on this subject, in so far as it has not been altered by statute, is the common law of England. The common law of England recognizes the legal personality of juristic persons, speaking generally, for the purposes for which they have been endowed with capacity to be the subjects of rights and duties by the authority to which they owe their existence.

The concrete point for decision is therefore, under the assumption above mentioned, did the respondent company under the law of Saskatchewan receive capacity to procure recognition in Ontario as a corporation and to acquire the right to enter into the contract it seeks to enforce?

It is argued that from the fact that the legislative authority of a Canadian province in relation to the incorporation of companies is an authority limited in respect of territory and subject matter, one of these two results follows: either (it is said) 1st., A corporation (to which the doctrine of ultra vires applies) owing its existence to legislation passed under the authority of No. 11 of section 92 is inherently wanting in capacity in consequence of the limitations laid down in the "British North America Act" to acquire recognition abroad for the purpose of pursuing the objects for which it is incorporated, or 2nd., it receives such capacity only when that is given in express words by the instruments defining its constitution.

To deal with these propositions in the order in which I have stated them, the legislative authority of a province is, of course, territorially limited-the power conferred by section 92 in relation to the subjects enumerated being a power to make laws for the IONBERGER province; but when a question arises in another jur- TowNsiTN isdiction touching the recognition of a right acquired Co. under the law of a Canadian province or alleged to Duff J. have been so acquired, the rules applicable for deciding the question do not in any presently relevant respect differ from those applicable where rights are alleged to arise under a system of law owing its sanctions to a sovereign authority unlimited as regards subject matter and unlimited by any constitutional instrument as regards territory.

The very point was discussed by Mr. Justice Willes in his most illuminating judgment at pages 18, 19 and 20(1), delivered on behalf of the Exchequer Chamber in Phillips v. Eyre, and he there says:- We are satisfied that a confirmed act of the local legislature lawfully constituted, whether in a settled or conquered colony, as to matters within its competence and the limits of its jurisdiction has the operation and force of sovereign legislation, though subject to be controlled by the Imperial parliament.

Almost identical language is used (with reference to the particular case of the Canadian Provinces) by Lord Watson in delivering the judgment of the Judicial Committee in The Maritime Bank v. Receiver General of New Brunswick(2), and by Lord Haldane in giving judgment on behalf of their Lordships in In re The Initiative and Referendum Act(3), at page 5. Lord Haldane's exact words are:- Subject to this (the qualification has no bearing on the present discussion) each province was to retain its independence and autonomy, and to be directly under the Crown as its head. Within these limits of area and subjects, its local Legislature, so long as the Imperial Parliament did not repeal its own Act conferring this status, was to be supreme, and had such powers as the Imperial Parliament possessed in (1) L.R. 6 Q.B. 1.

(2) [1892] A.C. 437.

(3) [1919] A.C. 935; 48 D.L.R. 18 at 22; [1919] 3 W.W.R. 1. the plenitude of its own freedom before it handed them over to the Dominion and the provinces, in accordance with the scheme of distribution which it enacted in 1867.

TownsrfE

There seems to be no reason for suggesting that Co.

the recognition of corporateness or juristic personality, Duff J.

which is only the capacity to be the subject of rights, should stand on a lower plane than, e.g. rights arising from a judgment (see Dicey, page 469 note and page 23); and speaking generally the law of England recognizes such capacity subject to the restrictions (if any) imposed by the authority from which the capacity is derived.

Where corporate capacity is derived from a legislature, having limited authority as regards the creation of corporations, the limits set to the legislative authority must, of course, be considered in determining the scope of such capacity and as I have already said the contention now advanced is that No. 11 of section 92 does confine the authority of a provincial legislature in relation to that subject to the creation of companies having capacity only to carry on business within the limits of the province.

The judgment of the Judicial Committee in the Bonanza Company's Case(1), seems to be decisive of the point in the opposite sense.

Their Lordships there enunciate at page 578, an interpretation of No. 11 of section 92-in these words:- For the words of section 92 are, in their Lordships' opinion, wide enough to enable the Legislature of the province to keep the power alive, if there existed in the Executive at the time of confederation a power to incorporate companies with provincial objects, but with an ambit of vitality wider than that of the geographical limits of the province.

Such provincial objevts would be of course the only objects in respect of which the province could confer actual rights. Rights outside the province would have to be derived from authorities outside the province.

And at page 583:- The whole matter may be put thus: The limitations of the legislative powers of a province expressed in section 92, and in particular (1) [1916] 1 A.C. 566, 26 D.L.R. 273.