Morse v. Kizer

to bestow upon it when so created; and it derives its existence, at least in part, from that statute under and pursuant to which the Lieutenant-Governor in Council purported to act in creating it. and in defining its purposes, I am, with respect, unable to read the facultative language of authorization of sections 9 and 15 of the Ontario "Companies Act" of 1897 as amounting J. to nothing more than by the Lieutenant-Governor in the exercise of the prerogative

In both cases alike-that of such a company incorporated by Letters Patent issued under the Act of 1897 and that of the like company incorporated by special Act-the source of the power or right to use or occupy the highways is the legislature, the corporate body enjoying them being brought into existence in the one case by the act of its delegate, the Lieutenant-Governor in Council, and in the other by direct legislative action.

In both alike, on the assumption that it is conferred in identical terms, the exercise of the power or right is conditional on the consent of the municipal corporation being obtained-which, so far as the constating instrument of the company affects the matter, may be given on such terms as the municipal corporation sees fit to impose-and remains subject to its control and regulation.

But when and so far as that consent is effectively given the condition is satisfied and the power and right is then exercisable not by virtue of the consent, which merely removes a restriction that might not exist if unexpressed: City but by virtue of the authority of the legislature over public highways exerted on behalf of the company, British Columbia Electric Rly. Co. v. Stewart (1). I, on the other hand, the view should prevail that the effect of its incorporation, whether by Letters Patent issued under the " Companies Act," or by special statute (the purpose and powers in either case being formulated in the terms of the plaintiff company's letters patent and of the Ontario "Companies Act" of 1897 above set forth), is merely the endowment of the company with a quasi-subjective capacity to acquire from those in control of it rights and powers in regard to the use of property vested in others, so that the exercise of such rights and powers when they are conferred upon it by those in control of the property on or over which they are to be enjoyed will not be ultra vires of the company or something to which any shareholder may object-for instance, to acquire from a municipal corporation the right to use and occupy highways under its control, so that the true source of the company's rights and powers in that respect is the act of the municipal council-what I am about to say as to limitations upon the consent, licence, or permission to use its highways which a municipal council in Ontario may give to a telephone company will lose none of its force.

When the question before us is considered from the aspect of the power of the municipality to permit or consent to the use of the public highways, it may well be that such a power would be implied from a special Act of tjhe legislature incorporating a company and granting to it powers similar to those here conferred in similar language, whereas the like implication would not arise upon the grant of Letters Patent of incorporation under the " Companies Act" couched in like terms. The Lieutenant-Governor in Council- is not by that Act made the delegate of the legislature to confer powers on municipal corporations.

Any implication from a special Act incoipokating a telephone company, however that power is thereby conferred on a municipal corporation to license the use of its high- Anglin J. ways by the company, would, in my opinion, be sub- . ject to such restrictions as are imposed by secs. 330 and 331 (1) of the "Municipal Act."

But if the charter of the plaintiff company did not impliedly authorize the Corporation of the Town of Cobalt to give the requisite consent to the exercise of its powers by the plaintiff company within that municipality, sec. 559 (4) of the "Municipal Act," in my opinion, clearly did so, subject, however, to such limitations as were imposed by secs. 330 and 331 (1) of the same Act.

Sub-section 4 of sec. 559 (as enacted by 6 Edw. VII., ch. 34, sec. 20) and secs. 330 and 331 (1) of the "Municipal Act" of 1903 (3 Edw. VII., ch. 19) are as follows:- 559. By-laws may be passed by the councils of the municipalities and for the purposes in this section respectively mentioned, that is to (4) For permitting and regulating the erection and maintenance of electric light, power, telegraph and telephone poles and wires upon the highways or elsewhere within the limits of the municipality. 330. Subject to the provisions of secs. 331 and 332 of this Act no council shall have the power to give any person an exclusive right of exercising within the municipality any trade or calling or to impose a special tax on any person exercising the same or to require a licence to be taken for exercising the same unless authorized or required by statute, so to do, but the council may direct a fee not exceeding $1 to be paid to the proper officer for a certificate of compliance with any regulations in regard to such trade or calling.

331 The council of every city, town or village may pass bylaws granting from time to time to any telephone company upon such terms and conditions as may be thought expedient the exclusive right Sections 331 (1) and 559 (4) being both found in the same statute must, if possible, be harmonized. So far as they may conflict, see. 331 (1) dealing with the special subject of user of highways by telephone companies must prevail over sec. 559 (4), which has to do with the more general subject of the erection and maintenance by. electric light, power, telegraph and telephone companies of poles and wires, whether on highways or elsewhere within the limits of the municipality. Whatever restriction or limitation may be necessary to give full effect to sec. 331 (1) must be placed on sec. 559 (4).

For the purposes of this appeal I shall assume that, were it not for the effect of secs. 330 and 331 the defendant municipal corporation might, under sec. 559 (4), have permitted or licensed a telephone company to erect and maintain its poles and wires upon highways within the municipality for an indefinite term without power of revocation.

Whether that has in fact been attempted in the present instance is, of course, another question. But I am, with respect, of the opinion that sees. 330 and 331 (1) impliedly precluded the giving of such a consent or the granting of such an irrevocable permit or licence to be effective for more than a term of five years.

It was, in my opinion, incompetent for the municipal corporation to do any act which would have the effect directly or indirectly either of creating a monopoly prohibited by section 330, or of divesting itself of, or curtailing the free exercise of, the power conferred on it by sec. 331 (1) of providing, by by-laws to be passed from time to time, for an exclusive right of user of its streets for the purpose of carrying on a telephone business during a period of five- years being vested in some one telephone company. A municipal corporation cannot validly contract not to use discretionary powers committed to it for the public good. Ayr Harbour Trustees v. Oswald at page 634, per Lord Blackburn;

Staffordshire and Worcestershire Canal Navigation v.

Birmingham Canal Navigations (2), at pages 268, 278-9; Brice on Ultra Vires (3rd ed.), p.

Dillon on Municipal Corporations (1911), par. 245;

Town Eastview v. Roman Catholic Episcopal Corporation Ottawa (3).

This case does not fall within the line of exceptions to or qualifications on. this salutary rule indicated in Stourcliffe Estates Co. v. Corporation of Bournemouth (4).

The minicipal corporation in the exercise of its control over streets is a trustee for the public.

It can sanction or licence the exercise of rights which derogate from the public right of user of the highways only in so far as it is given legislative-authority to do so.

The necessary effect of granting for an indefinite period-a period which might, therefore, endure throughout the existence of the licence-an irrevocable licence or permit to use the streets of the municipality for the purpose of carrying on a telephone. business would be to preclude the municipal council from granting to any other company at any future time such an exclusive right as sec. 331 (1) contemplates it may grant "from time to time."

The continued existence of such a licence is incompatible with the creation of such an exclusive right. In Hull Electric Co. v. Ottawa Electric Co cited at bar, the licence of the respondent was revocable.

Having regard to the practical necessity for single telephone system in a municipality owing to the manifest and manifold disadvantages and inconveniences of duplication, the granting of such an irrevocable licence for an indefinite term would, in effect, be tantamount to the conferring of an exclusive right of equally indefinite duration upon the licensee.

The legislature certainly did not contemplate that a municipality should be enabled, however indirectly, to tie itself up to one company as a donee of an exclusive right of indefinite duration. Its doing so would alike be contrary to the spirit, if not to the letter, of the prohibition of section 330 and would set at naught the limitation imposed by sec. 331 (1).

Upon the grounds that the granting of an irrevocable consent or a licence or permit of indefinite duration, such as it had been held the respondent company obtained, would involve the municipal corporation divesting itself of the discretionary power conferred by sec. 331 which it was the manifest policy of the legislature that it should retain in order to be in a position to exercise it from time to time in the interests of the municipality, and would, in effect, operate as an evasion, if not a direct violation, of section 330, I am of the opinion that such a consent, licence or permit, if the agreement here in question purported to grant it, would be ultra vires and therefore void.

I would, accordingly, allow this appeal with costs here and in the Appellate Division and would restore the judgment of the learned trial judge.

J.-Without expressing any view on the power of a municipal corporation to make a perpetual grant to a telephone company I am of opinion that in this particular case the contract passed between the appellant and the respondent would not authorize the respondent to claim a perpetual franchise in the streets of Cobalt.

The telephone company had no right to put its poles upon the streets of* the municipality without the consent of that municipality and on such terms for such times and at such rates and charges as were agreed upon with the municipal authorities. In this particular case, the time limit was five years and even during that time the privilege should be exclusive.

The contract was for that period of time only. The municipal corporation is' now entitled, the five years having expired, to have the poles removed from the streets and the telephone company cannot claim a perpetual franchise.

The appeal should be allowed with costs of this court and of the court below and the respondent's action should be dismissed.

J.-The question involved in this appeal is whether the appellant having, in 1912, made a contract with the respondent, whereby it consented to the latter exercising its powers by constructing, maintaining or operating its lines of telephone in the Town of Cobalt, and having agreed during the period of five years not to give to any other person, firm or company any licence or permission to use the highways, squares and public places of the town for the purpose of carrying on a telephone business, the respondent has the right to maintain its lines and poles in the said town indefinitely and in perpetuity.

would, I must confess, require _very cogent reasons to make me think that the parties ever contemplated that by this contract the Town of Cobalt had granted to the respondent a perpetual right to use its streets and public places for the purposes of its business.

And notwithstanding the negative form of clause 7 preventing the town from granting to any other person or company during five years the right to use its highways, I would think, reading the contract as a whole, that it should be construed as having given to the respondent an exclusive right for five years to construct, maintain and operate its telephone lines, and that at the expiration of this term any right of the respondent to maintain its lines and poles in the public streets of the town came to an end unless a new agreement was made. I would not easily assume, in the absence of an express and clear covenant, that a perpetual right was granted, which would virtually deprive the town from exercising its full powers as to its streets and from making improvements or alterations therein.

But, if I am wrong in this construction of the agreement, I am of the opinion that in view of the terms of secs. 330 and 331 of the "Municipal Act" of 1903 (3 Edw. VII. ch. 19), fully discussed by my brother Anglin, the appellant could not grant a perpetual right to the respondent to construct and maintain its telephone lines and poles in the Town of Cobalt. Had the appellant granted such a right-and I think it has not-it would have abdicated its power to