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No doubt the question under consideration referred to insurance companies only, but the reasons for the decision apply equally to companies of all classes.
The power given the Dominion Parliament in this respect is held to be given under the enumerated clauses of section 91 of the British North America Act, and Dominion legislation upon the subject of foreign companies would oust Provincial legislation on the same subject. The right to hold the lands in Canada is conferred on aliens not by Provincial legislation but by Federal. A curious situation is brought about by this conclusion. With properly drawn Dominion licensing legislation, the extra-provincial legislation of the Provinces could be set aside and persons desiring to proceed with company activities without control of the Provinces could incorporate in Delaware and obtain a Dominion license, and hold lands notwithstanding the Provincial mortmain legislation.
The modern joint stock company is the great instrument of modern business. If the tendency of the past few years is continued, it may be fairly said that modern business is carried on exclusively by joint stock companies. Any doubt cast upon the effect or operation of company legislation must hamper business. At the present time more than any other during the history of Canada, the greater freedom of business method is necessary. When a lawyer cannot advise his client with respect to the capacity of a proposed company or with respect to the limitations under which it may be placed, business development must be hampered. The difficulties above indicated should be solved. The solution may be assisted by the members of the Canadian Bar Association, and the pressure which the members of the bar throughout Canada may bring to bear upon the Dominion Parliament and the Provincial Legislatures. This will be assisted by a more exhaustive study of the various questions of company law presented to the Courts. The time for quibbling is past. The working out of logical conclusions of theoretical principles which were sufficient for past times will not avail us at present. Company law is for the business community and the advancement of trade. Company law should not be for the sophist or the quibbler. The question of the method of solving these difficulties remains.
The Chief Justice of Ontario in his judgment in Currie v. Harris Lithographing Co., Limited (1), after considering the authorities and the interpretation of the Statutes upon the subject, refers to the political considerations which induced him to decide as he did. There can be no doubt that political considerations should be dealt with in disposing of the question. When a Statute is capable of more than one interpretation, it seems on the ground of expediency and also in the best in
(1) 1917, 41 O.L.R., 475, at p. 498.
terests of the community that, where no principle is infringed, that construction which will most greatly promote trade and commerce should be adhered to. The Chief Justice refers to the subject as follows:
"It is, I think, to be regretted that at the outset it was not determined that the authority of the Parliament of Canada to incorporate companies was limited to creating them and endowing them with capacity to exercise such powers as it might be deemed proper that they should possess, but leaving to each Province the power of determining how far, if at all, those powers should be exercised within its limits.
"Such a construction would, of course, have left to the Parliament of Canada authority to legislate for the incorporation of companies with other than provincial objects, using the words 'incorporation of companies' in the sense which I have just mentioned, but leaving it to the province to endow the company with such powers as it should deem proper that it should possess."
There can be no doubt that for the purpose of determining the status and the scope of a company this method of distributing legislative jurisdiction in the incorporation of companies would have been quite simple. It is doubtful, however, whether it would have been in the best interests of the Dominion at large. Under such a method, while a company might be incorporated by the Dominion, it would have no capacity to do business or carry on its activities without the consent and approval of the Provinces. This would leave the operation of the company in the control not of its creator, the Dominion, but in the control of the Provinces. It is likely to follow therefore that the control would be exercised in the interests of the Provinces, and not in the interests of the Dominion at large.
We have copied many things from the United States: many things, in fact, which would have been to our advantage not to have copied. Moreover there are many developments in the past history of that country which are worthy of careful study. We are now in a similar state of commercial development which was found in the United States during the early decades following the Civil War. The development of trusts and combinations which can be traced in the United States forty or fifty years ago are now apparent in Canada. A study of the causes which led to the trusts of the United States and the methods devised to counteract them should be fruitful in Canada at present. In the United States the States have even greater control over the incorporation of companies and the Federal Government less than prevails in Carada. Adopting the suggestion of the Chief Justice would vary the circumstances very little except that the creation of the company carrying on Dominion-wide business would be in the hands of the Federal authorities although there would be no authority whatever
over its future actions. In the United States during the past thirty years or more there has been a growing and persistent agitation for the incorporation and control of companies carrying on interstate trade by the Congress of the United States. It has been pointed out that the control of trusts has not been adequate because of their creation by the States and that it is in fact only the authority which creates which can effectively control. This agitation in the United States developed as far as the introduction of a Bill in Congress for this purpose in the year 1910. This Bill was introduced following a special message to Congress by the then President of the United States, Mr. Taft (1). The pertinent references in the message are as follows:
"In considering violations of the antitrust law we ought, of course, not to forget that that law makes unlawful, methods of carrying on business which before its passage were regarded as evidence of business sagacity and success, and that they were denounced in this Act not because of their intrinsic immorality, but because of the dangerous results toward which they tended, the concentration of industrial power in the hands of the few, leading to oppression and injustice. In dealing, therefore, with many of the men who have used the methods condemned by the statute for the purpose of maintaining a profitable business, we may well facilitate a change by them in the method of doing business, and enable them to bring it back into the zone of lawfulness without losing to the country the economy of management by which in our domestic trade the cost of production has been materially lessened and in competition with foreign foreign manufacturers our foreign trade has been greatly increased.
"I therefore recommend the enactment by Congress of a general law providing for the formation of corporations to engage in trade and commerce among the States and with foreign nations, protecting them from undue interference by the States and regulating their activities, so as to prevent the recurrence, under national auspices, of those abuses which have arisen under state control.
"If the prohibition of the Antitrust Act against combinations in restraint of trade is to be effectively enforced, it is essential that the National Government shall provide for the creation of national corporations to carry on a legitimate business throughout the United States. The conflicting laws of the different States of the Union with respect to foreign corporations make it difficult, if not impossible, for one corporation to comply with their requirements so as to carry on business in a number of different States....
(1) 61st Congress, 2nd Session, House Document 484, vol. 131.
"Such a national incorporation law will be opposed, first, by those who believe that trusts should be completely broken up and their property destroyed. It will be opposed, second, by those who doubt the constitutionality of such federal incorporation, and even if it is valid, object to it as too great federal centralization. It will be opposed, third, by those who will insist that a mere voluntary incorporation like this will not attract to its acceptance the worst of the offenders against the antitrust statute and who will therefore propose instead of it a system of compulsory licenses for all federal corporations engaged in interstate business."
Mr. Taft proceeded to deal with these objections and after dwelling on the continued efforts of the Government to eliminate trusts proceeded.
"But it is not, and should not be, the policy of the Government to prevent reasonable concentration of capital which is necessary to the economic development of manufacture, trade, and commerce. This country has shown a power of economical production that has astonished the world, and has enabled us to compete with foreign manufacturers in many markets. It should be the care of the Government to permit such concentration of capital while keeping open the avenues of individual enterprise, and the opportunity for a man or corporation with reasonable capital to engage in business. If we would maintain our present business supremacy, we should give to industrial concerns an opportunity to reorganize and to concentrate their legitimate capital in a federal corporation, and to carry on their large business within the lines of the law."
The constitutionality of the Bill was then discussed. This need not concern us. There is no doubt of the constitutionality of the Dominion Companies Act.
"Even those who are willing to concede that the Supreme Court may sustain such federal incorporation are inclined to oppose it on the ground of its tendency to the enlargement of the federal power at the expense of the power of the States. It is a sufficient answer to this argument to say that no other method can be suggested which offers federal protection on the one hand and close federal supervision on the other of these great organizations that are in fact federal because they are as wide as the country and are entirely unlimited in their business by state lines. Nor is the centralization of federal power under this Act likely to be excessive. Only the largest corporations would avail themselves of such a law, because the burden of complete federal supervision and control that must certainly be imposed to accomplish the purpose of the incorporation would not be accepted by an ordinary business concern.
"The third objection, that the worst offenders will not accept federal incorporation, is easily answered. The decrees of injunction recently adopted in prosecutions under the anti
trust law are so thorough and sweeping that the corporations affected by them have but three courses before them:
"First, they must resolve themselves into their component parts in the different States, with a consequent loss to themselves of capital and effective organization and to the country of concentrated energy and enterprise; or
"Second, in defiance of law and under some secret trust they must attempt to continue their business in violation of the federal statute, and thus incur the penalries of contempt and bring on an inevitable criminal prosecution of the individuals named in the decree and their associates; or
"Third, they must reorganize and accept in good faith the federal charter I suggest."
It was not, however, enacted. We see further evidences quite recently in an amendment of the Act of Congress respecting the Federal Reserve Board. In the first instance authority was given the Federal Reserve Board to control state-created corporations to carry on foreign banking, and after a short experience there was a further amendment providing for the creation of federal corporations for this purpose (1). With this example in the United States it appears to be worthy of consideration whether all companies carrying on Dominionwide business should not be incorporated and regulated by Dominion legislation.
This subject was exhaustively investigated by the Industrial Commission appointed under an Act of Congress in 1898. The report was issued in 1902. This report (vol. 19, page 643) proposed three plans of legislation for Federal supervision which may control the combinations doing an interstate business as follows: the first that Congress might relegate to States its power of control over interstate commerce; the second, that Congress would enact a Federal incorporation law under which all corporations doing interstate business must be organized; the third involved modifications of the present law, which by regulative measures would give Congress control over corporations engaged in commerce between the States and with foreign
The first plan was set aside, it being considered inadvisable to adopt it, as great confusion in legislation would result.
The second plan was recommended, with certain criticism and reservations arising from the constitutional difficulties. These difficulties arise, primarily, from the fact that all companies in the United States are State incorporated, and it would create a revolution in business and legal methods to immediately require all of them to apply for Federal incorporation. This difficulty is very slight in Canada. It may fairly be said that all the large corporations in Canada are incorporated under
(1) 66th Congress 1st Session, Report 408, Senate Bill 2472.