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I^OXSONliV SEXTON, B.Cl.., IJARRISTKR-AT-LAW 0[- IHK I'KOVIN'CE OF (JUKISEC, — AND — LOUIS H. pi(;nolei\ liARKIbJ'KR-AT-l.AW OF lllK I'kOVINCF OF F Till STATK .)F NKW V., had not 8 CONSTITl'TIONAr, QUFSTIONS r ' hi for its primary object) li(jUor licenses or any other of the subjects-matter specifically assigned to the Provincial Legis- latures, That, in this case, the Supreme Court of Canada held, that the Canada Temperance Act was lawfully passed under the specific power as a " Regulation of trade and Commerce," but the Privy Council, while holding that it was lawfully passed under the general power, intimated that tiiey did not wish to be understood as differing from the Supreme Court, in their opinion, that it was lawfully i)assed under the specific power. That the overbearing suj^remacy of the general and the absorbing sui)remacy of the specific power, is recognized in the opinion of their Lordships of the Privy Council, both in Hodge and TJie Qneen, and J^ussel and T/ie Queen. The Federal Legislature, therefore, claims the right under the Constitutional Act, when legislating under the general power for the promotion of tem])erance and good order throughout the Dominion, to restrict by means of licenses, the traffic in intoxicating liquors, and to this end, to orerbear the author- ized legislation of any Province, in relation to liquor licenses, or in relation to other local objects and subjects-matter specifically assigned to the Provinces. They also claim the right, under the specific power to make laws in relation to the "regulation of Trade and Commerce," to regulate the traffic in intoxicating li(juor by means of licenses, and to that end, to absorb all conflicting Provincial legislation in relation to li(\uor licenses. Thus, it is contended, that the Federal and Provincial Legislatures, are both equally sovereign and supreme, when lawfully dealing with things and matters within their assigned spheres of action, but, if while dealing v th the same thing (the liquor traffic for instance) in lawfully legislating "in re- lation to " different subjects-matter, their legi.slation comes into collision, Local legislation must give way to Federal legislation, and not Federal legislation to Local legislation. In other words, when the spheres of action of these differ- ent legislative bodies interfere, Local legislation must become , til de ;ti. 'Ve |ne it. b *n P IN THK PROVINCE OF QUEBEC 9 I ler of the :ial Legis- lada held, ,sed under jmmerce," \s lawfully ley did not ime Court, the specific ^al and the cognized in icil, both in -hicen. The t under the eneral power r throughout the traffic in r the author- quor licenses, ibjects-matter ^pecific power of Trade and ting li(luor by all conaicting ises. and Provincial ;upreme, when I their assigned -he same thing islating " in re- Vislation comes kvay to Federal ,ocal legislation, of these differ- on must become subordinate to Federal legislation, and not Federal legisla- tion subordinate to Local legislation. The atlemi)t has been made to assimilate a general grant of legislative power, conferred by the Im[)erial Par- liament, in the establishment of Representative Governments for its Colonial Dependencies, to the statutory enactment of a Legislature taking away the i)ersonal liberties of the subject as a penalty for the \'iolation of a criminal law. On the assumption of such an analogy, the a[)plication is made of the same rule of interpretation, which, by law, restricts the [udiciary in their construction of a penal statute. It is not surprising that jurists who take sucli a view of representative governments, and attempt to establish such analogies, have been perjilexed by some of the decisions of their Lordships of the Privy Council. But it is a well- settled rule of construction as to any grant of constitutional powers conferred upon a legislature in general terms (/.«'., without undertaking to restrict the grant by any specific enumeration), that it is to be liberally construed as to its extent and nature, and that it includes all t'le implied powers necessary to carry the general power into effect. Amid such diversity of views, both i)arties are ho])efully looking to the Imperial Privy Council to adjust and settle this question of jurisdiction on sound princi])les, so accurately I enunciated that they will constitute an abiding and well- idefined boundary line between I'ederal and Provmcial au- thority. The Supreme Court of C'anada, owing its orij^m to the ederal Legislature, which gave it its power and jurisdiction, lecessarily took cognizance of the questions submitted to it, although no case was before it directly mvolving the re- ress of any grievance, or the protection or enforcement of Jmy right, As the Imperial Statute, constituting the Judicial Com- littee of the Privy Council, a Court of Record, gave it a ,|pecial appellate jurisdiction in cases of appeals from orders, ntences and decrees of the Colonial Courts, some doubts Existed as to the competency of the Judicial Committee to 10 CONSTITUTIONAL QUESTIO.VS give an opinion upon the abstract question of the validity of this Federal Legislation, especially, as there would be noway of enforcing such opinion or judgment But, as this Impe- rial Statute authorizes Her Majesty, to refer to the Judicial Committee for hearing or consideration, any such " other matters whatever as Her Majesty shall think fit," no difficulty can exist, if Her Majesty shall be so advised, in obtaining the opinion of the Judicial Committee on the question. The Treasurers of the Province, having been thus far unsuccessful in their efforts to raise money by these modes of taxation, resort was had to the imposition of a I f L C ti( in as obj ace 'effi. :inoi fetat fthos tiot TAX UPON commp:rcial corporations, by a carefully prepared Act, purporting to impose a direct tax upon these corporate bodies, considered in accordance with the common law of this Province, as artificial persons. This Act, apparently imposed a tax as direct in its character as an Income tax, — the tax being levied upon corporate bodies, who are generally possessed of large resources, and could not be reached in any other way. r^^ This m:)de of taxation has aroused greater opposition than ^3 ^ any other, an 1 has brought together, in a i);)werful cjmbina- "'^i tion, the services and sup[)ort of a large body of legal ^'^^\ practitioners, formidable, by the array of talent, seldom if ^^^H ever l>efore united in sustaining the same side of a con- J troversy. Hundreds of actions are now pending against _"^^l these cor])'jrations (many of whom have their head offices ■ ^^1 in other Provinces), by whom the following ingenious and^^'l .subtle objections to the constitutionality of the Act havej ] been raised : // IS objected that the legislation of this Act is not direct' taxation, f(3r the reason that it is not a general tax assessed^ on any uniform principle, but is imposed upon commercial corporations as a particular class of traders, who have beetiJ thus unequally burdened by an invidious discrimination^ exemi)ting individual traders. /// answer, it is opposed that there is nothing in th^ Constitutional Act, as in many of the State Constitutions c' n\ HI IN THE PKOVINXE OF QUEBEC. 11 validity of i be no way this Impe- he j udicial Lich " other [lo difficulty n obtaining question, jen thus far :hese modes a the United States, which prescribes uniformity of taxation ; and, therefore, there is no restriction upon the legislative power of a Provincial Legislature to raise money by direct taxation, on any principle of apportionment or exemption it may see fit to adopt. And, moreover, as the Provincial Legislatures are held by their Lordships of the Privy Council to be supreme within the sjjhere of their jurisdic- tions, the right to exempt certain classes of persons, I industries, and professions from taxation must be recognized as a sovereign right, inherent in the Local Legislatures. Although political economists contend that the chief object of the members of every society must be the ,. ^ I acquisition of wealth, and that in the struggle, the least |efficient must sink and go down, and only the fittest and Iniost successful survive ; nevertheless, it is the duty of the IState to see that, in this struggle between capital and labor, ithose who are poorly renumerated for their labor, and are ^not certain of a day's subsistence, shall find some otlier ^^^ ' ^ ^ way out of their troubles than being permanently submerged ^y ^- ^ u ^y adverse circumstances. And in order to remedy this pposi I condition of things, grants and subsidies are made, and a '^'^ , , scheme of taxing property enacted that is far from being body of lega ^^ifo,,^,^ lent, seldom it side of a con- ATIONS, )Ose 1 accordance ficial persons. direct in its r levied upon Sometimes a State can only preserve its existence by . finding employment for the unemployed masses, either on )t,lH-l {5 O ,^ \tTnctt» Innrlc /-\r K\r /-1ciirt»lr\t >in rr inrl i icfr m 1 tm ivcii ift; tliof "'ill ar leir '^ ^^ its waste lands or by developing industrial pursuits that wi liable them to earn a subsistence. To this end, particula • m^enious anu^ , , r • • • > => , . ^n|ilroad and manufacturing corporations are sometimes ^^ aempted from taxation or encouraged by subsidies at the ,. .Jlpense of others ; also, for the promotion of the well- \rt is not direct Jv . . ' ' \W^^ of the State, certain religious and educational associa- .^ral tax assessed^ ^ ' ^ ^ ^ *-''* • «ns are often exempted from taxation. .^r.mmercial« .1 ^,.,. If there were in the grant of legislative power to the )vinces, any requirement that taxation should be uniform, operations of government would come to a stop from absolute impossibility of carrying it on ; but, by the istitutional Act it has been wisely left to the Provincial ipon commerci who have been| s discrimination. is nothing in thJ e Constitutions 4j[islatures, to decide when and how, and for what public :~ rtrag 12 CONSTITUTIONAL QUESTIONS if purposes, direct taxation shall be imposed, and to select the subjects and prescribe the scheme of taxation ; for, the power of direct taxation granted to the Provincial Legislatures, necessarily implies a power to apportion the tax as they shall judge fit, because the power of apportionment has no limit where there is no constitutional restraint. If it should be held that the tax in (question was invalid, because not apportioned upon princij)les of just eijuality, it would place the power of the Judiciary Department of Government above that of the Legislative, in a matter affecting the very existence of the Government, and would, in fact, regulate the api)ortionment of taxation by judicial and not by legislative discretion. The only (question for the judiciary is the simple question of the existence of the power. If the power exists, it cannot be impaired by reason of the objectionable or inequitable mode by which it is exercised. It cannot be maintained that by the enactment of the (Constitutional Act of this Dominion, it was ever intended by the Imperial Parliament in the scheme of their legislation to create Legislatures liable to have their independence taken nway by the Judiciary Department of the Government. Mistakes, abuses and injustice, have often occurred in general taxation ; but these are not grounds on which any ])articular system of meeting the current expenditure of the Government, can be condemned by the Judiciary Depart- ment as unconstitutional. If the system of taxation adopted by a legislature is unwise or unjust, it may be reformed by the Legislature on proper petitions of Remonstrance, showing the grievances com])laincd of; or, if a remedy cannot be found in this way, it may be wrought out at the [)olls, l)y means of a change in the members of the Legislative body. It is urged in opposition to the Act, that, on the piiu- ciplc of the United States decisions, which hold, that, as the operations of a corporation, chartered by the United Statics Federal Legislature as a fiscal ai^ent and instrument of the Federal Legislature for the execution of its powers, and for 4 1 P^-' I qui Pr IN THE PROVINCE OF gUEliEC. l;} select the for, the j'nslatures, X as they nt has no 'as invalid, eciuality, it irtment of a matter ind would, jy judicial tion for the nee of the i by reason which it is lent of the ir intended r legislation dence taken nment. occurred in 1 which any iture of the iary Depart- 3gislature is igislature on : grievances . in this way, | of a change on the priii- , til at, as the fnited States iimcnt of the iv'ers, and for 1 federal objects and purposes, could not be interfered with by taxation by the local Ljgislatures, so, therefore, the opera- tions of corporations chartered by the Dominion Legislature for the private objects and pecuniary gain of the share- holders, could not be interfered with by taxation by the Provincial Legislatures. In answer to this, it is opposed that on a careful examina- tion of the principle involved in the United States decisions, and the distinction between the two cases, it becomes apparent that the distinction is too broad to sustain the analogy, and the analogy failing, the reasoning based upon it must also fail. And besides, their Lordships of the Privy Council have already defined the boundary between the powers of the two Legislatures in this respect, by sustaiidng the validity of the Ontario legislation in Parsons and the Citizens Insurance Com- pany. This legislation interfered with the contracts of Insur- ance Corporations incorporated by the Dominion Parliament, but their Lordships, notwithstanding, held that the efi'ect of the creation of an insurance company into a corporate body by the Dominion Parliament, merely gave it a corporate existence, with the right to transact business in any Province where no restriction was placed on its operations; and that such a corporation might be prohibited from doing business in every Province of the Dominion unless it complied with the requirements of Provincial legislation. And it was explicitly laid down by their Lordships, that a company might be incorporated by the Dominion Parliament to carry on business throughout the Dominion, and it might so happen that it could do no business in any part of the Dominion, by reason of legislative restrictions in all the Provinces interfer- ing with its operations, though it would still exist and preserve its status as a corporate body. This decision of their Lordships also disposes of the objection that the Act in question is a restriction on trade and commerce, and there- fore objectionable, as being " in relation to " the regulation of trade and commerce, (a matter not within the scope of the Provincial Legislatures.) .' ,^i "Ira ii«iii«ii -. 14 CONSTITUTIONfAL QUESTIONS This decision, also disposes of the objection that Provin- cial lei^islation cannot interfere by taxation, with the opera- tions of Banks chartered by the Dominion Parliament. It is also objected, that the Act in question is a tax upon the franchises of corporations, and therefore a license, and consequently u/fra vires. In answer to this objection, it is opposed that their Lordships of the Privy Council have declared in a former decision, that an Act cannot be a License Act unless it con- tains a prohibition against carrying on the business licensed if the license tax be not paid. As there is no such pro- hibition in the Act in question, the objection that it is analogous to a License Act has no foundation. It is also objected that the Act in question is not in re- lation to taxation ivithin the Province. In answer to this objection, it is opposed that the restrictive principles necessarily governing every system of taxation is, that the power of taxation must be limited to subjects within the jurisdiction of the power imposing the tax. These subjects of taxation are — persons, property and business. The Constitutional Act of Canada has therefore restricted Provincial taxation in express terms, by providing that it should be "within the Province." But considering all corporations as artificial persons, a domestic corporation, having its head office within the Province, is naturally and properly treated as having its domicile there, and is therefore liable to taxation there, on the whole of its capital. And a foreign corporation, having a place of business within the Province where it transacts business through its agents, who represent it there, is treated as personally present and doing business, through its repre- sentatives " within the Province," and, as the capital of a corporation is held in law to be personal or movable property, it therefore follows such artificial person or corporate body, and has its situs within the Province. And the whole of the capital or income of eveiy corporate body may, therefore, be- (!ome subject to taxation within the Province where it carries on business or has a residence. IN THE PROVINCE OF ()UEBEC. 15 it Provin- lie opera- nt. tax upon 3onse, and ;hat their a former ess it con- s licensed such pro- that it is not in re- that the system of limited to ing the tax. d business, restricted ing that it persons, a ^vithin the having its n there, on tn, having a ,3*? The objection has also been taken that the Act in question is not an Act in relation to "direct taxation within the Province," but, on the contrary, being an interference with trade and commerce, is therefore an Act in relation to '* the regulation of trade and commerce," and consequently not within the power of the Provincial Legislatures. In answer to this objection, it is opposed that such a limited and unreasonable construction of the Provincial Clauses of the Constitutional Act has been explicitly dis- approved by their Lordships of the Privy Council, who have repeatedly held that Provincial legislation " in relation to " local matters, may incidentally deal with a subject-matter assigned to the sphere of the Federal Legislature, without such legislation being necessarily " in relation to " such sub- ject-matter, or in con.liet with Federal legislation in relation thereto. The constitutionality of the tax on commercial corpora- tions has been sustained by the highest court of this Province, and will soon be passed upon by their Lordships of the Privy Council, and their decision in this matter and upon the validity of the Dominion License Act of 1883, will have an important bearing in settling the principles of construction of the Constitutional Act, and defining the line of demarcation between Federal and Provincial powers. In the consideration of the constitutional limitations im- posed by the Confederation Act, subtle distinctions have been drawn, both by Provincial and Dominion Judges, and such an ill-defined line of demarcation laid down between the powers of the Federal Legislature and those of the Local Legisla- tures, that even jurists have loen perplexed in their attempts to follow it. A lack of reverential attention to the lanjiuajje of the Constitutional Act, has also led to a great divergence of views m its interpretation. In some instances, equivocal expressions have been formulated as interpretations of important clauses, and though these, have sometimes been correct expositions in the sense in which they were originally used, by being substi- ■i**! HWHNnmi 10 CONSTITUTION'Al. QUKSTIONS .1 tuted ])y otlior iiiterprotcrs as syjinnyiunii," with tlic text, they have led to a perversion of its true inoanin;j,'. And, moreover, it is not surprisinu; that in the interpre- tation of a Constitutional Act. not yet twenty years in existence, many f|nestions should arise difficult of solution ; for, in the ruMuhborini; Republic of the United States, after an existence of one liundred years, questions are still presented as to the constitutionality of the methods of taxation adopted by the local irovernments. There is a further reason for the more frequent occurrence of these questions in tliis Dominion, from the fact, that, in the distribution of powers in the United States Republic, the Local Lejiislatures are possessed of general powcsrs, and the Federal Leuislature is clotlied with enumerated powers only ; while in this Dominion, a system, the reverse of this, has so restricted the scope of Provincial LejLiislation, that in cases of conflict with Federal Lejrislation, the sphei'(^ of the former has been held to be subordinate to that of the latter. And therefore, wliile each leuislature is supremo in its Mwn s))here. wlien their spheres of action come in collision, Provincial legislation must L^ive way to Federal leiiislation. It is a matter for conirratulation that their Lordships of the Privy Council, as the court of ultimate resort, cannot be swayed by any local opinions or prejudices, and will not be diverted in their interpretation of the Constitutional Act from a careful consideration of its precise language, by any forms of expression which jnay have been accepted in this Dominion, as of synonymous meaninp: with the text of the Act. And tlie autlioritative decision of such a tribunal can alone satisfactorily adjust and settle questions of such magnitude, involving such nice distinctions and requiring such unbiased discrimination. ■n text, they 3 interprc- ycavH in solution ; :ates, after I presented m adopted nn for the Dominion, the United )bsessed of otlied with a system, Provincial legislation, late to that is supremo n come in to Federal ord ships of , cannot be will not be itional Act age, by any ted in this ; of the Act. II can alone magnitude, ill unbiased /'■'