C.P.R. v. City of Winnipeg

C.P.R. v. City of Winnipeg
Collection
Supreme Court Judgments
Date
1951-10-22
Report
[1952] 1 SCR 424
Judges
Rinfret, Thibaudeau; Kerwin, Patrick; Taschereau, Robert; Rand, Ivan Cleveland; Kellock, Roy Lindsay; Estey, James Wilfred; Locke, Charles Holland; Cartwright, John Robert; Fauteux, Joseph Honoré Gérald
On appeal from
Manitoba
Subjects
Taxation
Decision Content
Supreme Court of Canada
C.P.R. v. City of Winnipeg, [1952] 1 S.C.R. 424
Date: 1951-10-22
Canadian Pacific Railway Company (Plaintiff) Appellant;
and
The City Of Winnipeg (Defendant) Respondent
and
The City Of Winnipeg (Defendant).Appellant
and
Cadaian Pacific Railway Company (Plaintiff) Respondent
1951: February 20, 21, 26, 27, 28; 1951: October 22.
Present: Rinfret C.J. and Kerwin, Taschereau, Rand, Kellock, Estey, Locke, Cartwright and Fauteux JJ.
ON APPEAL FROM THE COURT OF APPEAL FOR MANITOBA.
Taxation—Municipal Corporations—Companies—Covenant by C.P.R. to continue its workshops within limits of City of Winnipeg forever— Covenant by City to forever exempt C.P.R. property then owned or thereafter owned within city's limits for railway purposes from all municipal taxes forever—C.P.R. incorporated by Letters Patent under Great Seal authorized by special act of Parliament—Whether possessed of powers of a Common Law corporation or of statutory company— Whether possessed of power to so covenant—By-laws embodying agreement validated by Act of Provincial Legislature—Whether agreement ultra vires of City—Whether city's limits to be construed as of date of agreement or to apply to subsequent extensions—Whether business tax within exemption—Whether exemption includes C.P.R. hotel and restaurant.—The Canadian Pacific Railway Act, 1881 (Can.) c. 1; 1883 (Man.) c. 64; Canada Joint Stock Companies' Act, 1877 (Can.) c. 43, s. 3.
Under an agreement entered into by the Canadian Pacific Railway Company and the City of Winnipeg ratified by by-law of the latter and validated by statute, the C.P.R. undertook to construct 100 miles of railroad from the city south westerly and to erect a passenger depot within the city on or before February 1, and November 1, 1883, respectively, and to deliver to the city a bond obligating it with all reasonable despatch to build within the limits of the city its principal workshops for the main line of its railway within the Province and the branches thereof radiating from Winnipeg and to forever continue the same within the city, and to erect within the city cattleyards suitable for its main line and the said branches. The city undertook in return to convey the lands upon which the depot was to be built and to issue to the company debentures for the sum of $200,000. The agreement further provided that upon the fulfilment by the C.P.R. of the conditions stipulated in the by-law, all property then owned or that might thereafter be owned by the company "within the limits of the City of Winnipeg for railway purposes, or in connection there-with shall be forever free and exempt from all municipal taxes, rates, and levies, and assessments of every nature and kind."
The obligations assumed by both parties were fulfilled and no question arose until 1948 when the City assessed all the lands and buildings, including a hotel and restaurant, owned by the company, for realty and business taxes.
In this action brought to restrain the assessment, four main questions arose :
(1) Is the said agreement valid and binding?
If valid—
(2) Is the exemption operative only within the limits of the city as these existed at the time the agreement was made or as those limits may have been from time to time constituted?
(3) Is the exemption applicable to the hotel and restaurant?
(4) Does the exemption include business tax?
All questions were decided by the trial judge in favour of the company. On appeal, his decision on question one was affirmed, but reversed on the others.
Held: The appeal of the C.P.R. should be allowed, the appeal of the City of Winnipeg dismissed, and the trial judgment restored. Rand and Kellock JJ. would have varied the judgment so as to exclude the hotel and restaurant from the exemption.
Per: Rinfret C.J., Kerwin, Taschereau, Locke and Fauteux JJ.—It was unnecessary to determine whether the company was a common law corporation; by virtue of 1881 (Can.) c. 1 and s. 4 of the Letters Patent, the company had the power to enter into the agreement. Per: Rand and Kellock JJ.—The powers of the company were not those of a common law corporation. Assuming that the company could not bind itself to maintain the works in the city forever, but considering that (1) the company might in fact maintain them indefinitely, (2) the city, having up to the present time received the entire current consideration for which it had bargained, (3) recission having been virtually impossible from the completion of the works, and (4) for any failure in the future, security by way of recoupment from future tax exemptions will be available, the city should be restrained from repealing the by-law, upon the company undertaking, in the event of any future removal of the works, to recoup the city for such damages, not to exceed the amount of the benefits enjoyed under the tax exemption hereafter, as might be found to be suffered by the city by reason of the removal.
Per: Estey and Cartwright JJ.—The power to execute the contract here in question was, in any event, necessarily incidental to the express powers.
APPEAL by the city of Winnipeg, and a further appeal by the Canadian Pacific Railway Company, from a judgment of the Court of Appeal of Manitoba 1 allowing in part an appeal by the city from a judgment of Williams C.J.K.B. 2 in favour of the C.P.R. in an action to enjoin the city of Winnipeg from imposing certain taxation.
C. F. H. Carson, K.C., H. A. V. Green, K.C. and Allan Findlay for the Appellant. As to whether the exemption is applicable to the part added to the City The City's contention is that the phrase "the City of Winnipeg", even though used without qualification, should be construed as meaning the City of Winnipeg as it existed at the time By-law 148 was passed. In the absence of such a qualification and of clear evidence to be derived from the facts and circumstances existing at the time or from subsequent conduct of the parties that such a qualification was intended, the phrase should be given its natural meaning, that is, the City as from time to time constituted. The facts and circumstances existing at the time of the By-law and the subsequent conduct of the parties indicate that it was not intended to give the phrase a restricted meaning but that it should have its natural meaning. Charrington & Co. Ltd. v. Wooder 3; River Wear Commsrs. v. Adamson 4. By-law 148 was submitted to and approved by the ratepayers of the city as then constituted on August 24, 1881, and less than a year later, on May 30, 1882, a considerable area was added to the city by c. 36 (Man.). On Sept. 20, 1882, By-law 195, the sole purpose of which was to amend By-law 148, was referred to the ratepayers of the city as extended. Had it been intended that the "City of Winnipeg" in By-law 148 was to have the restricted meaning, it might fairly be expected that this would have been indicated in the amending By-law. It was not. Similarly when the City became subject to the general Municipal Act of the Province, 1886, (Man.) c. 52, if the exemption was to be limited to the City as it existed prior to the 1882 extension, it might be expected that the City would have required some qualification to be inserted in the Act to make that clear.
According to the majority of the Court of Appeal the provision in clause 4(9) of By-law 148 that "this by-law shall take effect from and after" Sept. 21, 1881, indicated that the exemption was to be limited to the area of the City as it existed on the date the by-law came into effect. No such interpretation can be fairly put or any such inference drawn. There are at least two reasons why the by-law contained an express provision as when it was to take effect. 1st—the by-law recited that the debentures to be given by the City were to be payable in "twenty years from the date this by-law is to take effect"; 2nd— S. 931 of the City's charter 1875 (Man.) c. 50, provided that any by-law for contracting debts by borrowing money would only be valid if the by-law "shall name a day in the financial year in which the same is passed, when the bylaw shall take effect". The subsequent conduct of the parties and the practices they followed under the agreement constitute a useful guide in determining the construction to be placed on the phrases in the agreement which are ambiguous. Ottawa v. C.N.R. 5. If the exemption clause had not been operative in the added area prior to the time when The Railway Taxation Act, 1900 (Man.) c. 57, came into force the City would have had the power and the duty to tax the property of the Company in that area. Realizing the exemption applied to it the City did not, except for an unsuccessful attempt to levy school taxes, attempt to tax the Company's property-situated either within the City's limits as constituted in 1881 or as subsequently enlarged. The fact that the property of the Company in the area added by the City after 1881 was not taxed from 1882 to 1900 and like other property of the Company was shown on the assessment rolls with the notation "exempt by By-law 148", is cogent evidence of the City's own interpretation of the phrase "within the limits of the City of Winnipeg".
Pursuant to the bond and covenant given by the Company it duly built its principal workshops for Manitoba in the City of Winnipeg as it existed at the date of By-law 148 whereby it was bound to "forever continue the same within the said City of Winnipeg." In 1903 it moved the workshops to a location in the area added to the City in 1882 and has continued them there ever since. No complaint was made by the City. This indicates that neither the Company nor the City regarded the phrase "within the limits of the City of Winnipeg" as used in clause 4(3) to have the restricted meaning now contended for. If it was not used in the restricted sense in clause 4(3) of By-law 148, it can hardly be suggested that the same phrase was used in a restricted sense in the exemption clause 4(8). In City of Winnipeg v. C.P.R. 6, the City did not contend that the exemption was inapplicable to the part of the City added after 1881, and therefore, that at the very least the property of the Company in that part of the City was liable for school taxes. This again indicates that the City regarded the agreement as meaning that the exemption applied to the added areas. Assistance may be furnished by other cases in which the court had to deal with a similar problem. In City of Calgary v. Canadian Western Natural Gas Co. 7, it was held that "the city" referred to in a franchise agreement was not restricted to the limits of the City as it existed when the franchise was granted. Other cases are: Toronto By Co. v. Toronto 8; Union Natural Gas Co. v. Chatham Gas Co. 9; United Gas & Fuel Co. of Hamilton v. Dominion Natural Gas Co. 10. The question of whether the exemption is restricted in application to the City as it existed in 1881 is now res judicata by virtue of the School Tax case 11. The decision of the Court that the "property of the Company is exempt from any liability to contribute toward the support of the city schools", must be taken to have decided that the property of the Company in the area added to the City in 1882 was subject to exemption. Hoystead v. Commissioner of Taxation 12.
As to whether the exemption is applicable to the hotel and restaurant of the Company. The exemption as set out in clause 148 of By-law applies to "all property now owned or that hereafter may be owned" by the Company "… for railway purposes or in connection therewith". The question raised in the Empress Hotel case 13 was quite different. What was decided there was that that hotel within the meaning of s. 92(10) (a) of the B.N.A. Act and of ss. 2 (21) and 6(c) of The Railway Act 1919 (Can.) c. 68 was not part of the Company's "railway" as the expression "railway" was used in those sections. In the present case the question is whether the hotel is owned by the Company "for railway purposes or in connection therewith". In other words is the hotel owned by the Company for the purposes of the railway or in connection with the purposes of the railway. Even if the question had been the same in both cases, what the Privy Council decided as to the Empress Hotel could not bind this Court in considering the position of the Royal Alexandra Hotel. The decision of the Privy Council must be considered in the light of the facts of the case. The position here is different. The evidence as to the nature and functions of the hotel establishes clearly that it is owned "for railway purposes and in connection therewith."
The agreement dated August 4, 1906, whereby the Company agreed to make certain payments to the City, expressly recites that "the Company has built and constructed in the City of Winnipeg (in connection with its railway and the operation thereof) an hotel building …" Thus while the City had claimed that the hotel "was not originally included within the meaning of a railway or railway enterprise" it recognized by the terms of the recital that the hotel was constructed "in connection with" the railway and its operation, a recognition that the hotel was owned "for railway purposes or in connection therewith" within the meaning of the exemption in By-law 148. The Railway Taxation Act up to 1909 exempted "the property of every nature and kind" of the Company, with certain exceptions not relevant, and there could be no doubt the exemption included the hotel. By the 1909 amending Act an additional exception was made namely "all lands and property held by the Company not in actual use in the operation of the railway." In 1914 and 1942 the Company was called on and agreed to make larger payments to the City, on neither occasion did the City base its claim for payment on the ground that the hotel and restaurant were not "in actual use in the operation of the railway" and that because of the change in the Act the conditions which existed when the agreement of 1906 was entered into no longer existed. Not only on the evidence of fact but also on the interpretation placed on the terms of the exemption by the parties to the agreement the hotel and restaurant constitute property owned for railway purposes and in connection with railway purposes and are thus within the exemption. As to whether the business tax is within the exemption. The majority of the Court of Appeal were of the opinion that under the terms of the City's charter the assessment for business tax was not an assessment of property and the tax itself was a tax on the person and not on property, and therefore that the exemption did not apply. Their decision was reached before judgment was delivered in C.P.R. v. A.G. for Saswatchewan 14. It is submitted that for the reasons given in the majority judgment in that case the judgment of the majority of the Court of Appeal in the present case on the question of business tax should be reversed.
Whether the agreement between the City and the Company set forth in By-law 148 as amended by By-law 195 is valid and binding is raised by the appeal of the City from the judgment of the Court of Appeal. So far as this question is concerned the City is the appellant and the Company the respondent. It is clear that all necessary steps were taken to render By-law 148 and amending By-law 195 valid and binding upon the City. If there was any doubt as to the powers of the City when the agreement was made to enter into the agreement and to enact the two by-laws, such doubt was removed by the Legislature of Manitoba. By statute, 1883 (Man.) c. 64, s. 6, the two by-laws were declared to be "legal, binding and valid upon the said Mayor and Council of the City of Winnipeg". The Supreme Court of Canada in School Tax Case 15 held that "the whole and every part of the by-law was in express words confirmed" by the validating act. The question has therefore been concluded against the City.
Another question arising out of the City's appeal is whether the Company had power to enter into the agreement. It is submited (i) That the Company had the status of a common law company and as such had power to enter into the agreement. (ii) It also had such power by virtue of its expressly enumerated powers. The following cases are submited in support of the first proposition. Baroness Wenlock v. River Dee Co. 16; Bonanza Creek Gold Mining Co. v. The King 17. As to the second submission, the Company had the power to enter into and perform the agreemnt by virtue of the expressly enumerated powers granted it by the charter. Even if it were held to have the status of a statutory company with powers restricted to those expressly enumerated, it is submitted that the Company had power to enter into and perform the obligations contained in the Contract. Vide para. 4 of the Charter; clause 7 and 8 of the Contract.
The agreement with the City was intra vires the Company as being expressly authorized by its charter or as being reasonably incidental to the business expressly authorized by its charter. A. G. v. Mersey Ry. 18; A. G. v. Great Eastern Ry. Co. 19; Deuchar v. Gas Light & Coke Co. 20. As to Whitby v. G.T.R. Co. 21, the facts and the conditions imposed differ and the case is to be distinguished.
W. P. Fillmore, K.C., F. J. Sutton, K.C., and G. F. D. Bond, K.C., for the respondent. While the Company delivered to the City a form of bond and covenant in pur- ported compliance with the conditions and stipulations set out in By-law 148, s. 4 (3) and (4) such bond and covenant was of no force or effect as the Company had no power either expressly or by implication to give it. The fact that it was soon found necessary to remove the workshops outside the original limits of the City shows that the original site was not suitable and that the covenant to forever continue them within the City as then constituted was incompatible with the efficient operation and management of the railway. The directors of the railway had no power to enter into an agreement so onerous on the Company and binding on it for all time. It amounted to a covenant not to exercise its statutory powers. It was in conflict with the Company's contractual obligations to the government to forever efficiently maintain and operate the C.P.R. To ascertain the statutory powers of the Company it is necessary to turn to the Consolidated Railway Act, 1879 (Can.) c. 9, to which the charter is subject. The following sections appear material, ss. 2(2), 5 (1),(16), 6, and 7(1), (2), (8), (10) and (19). Nowhere in 1881 (Can.) c. 1, the incorporating Act or charter of the Company, nor in the Consolidated Ry. Act, 1879, is there any express power conferred on the Company to enter into a perpetual covenant to forever maintain their principal workshops for the main line at any designated location. On the contrary, there are clear implications that the Company had no such right or authority. The Company has not been able to point to any express power but it is argued that the Company has all the powers of a common law company on account of the charter having been dealt with under the Great Seal. As to the powers of the Company to enter into a perpetual covenant relating to the operation of the railway, the City relies upon Whitby v. G.T.R. 22; Montreal Park & Island Ry. Co. v. Chateauguay & Northern Ry. Co. 23; Town of Eastview v. R. C. Episcopal Corporation of Ottawa 24. The Company had no express or implied power to fetter or part with its statutory powers by entering into the covenant which was a condition precedent to tax exemption. Further any implications to be found in the charter and relevant statutes are to the contrary. The agreement must be construed as if the controversy had arisen the day after the agreement was executed. You cannot test the question of ultra vires by waiting to see whether the corporation which acted beyond its express powers made a good bargain. Re North Eastern Ry. v. Hastings 25; Charrington v. Wooder 26. The agreement must be evaluated in the light of the circumstances existing at the time it was entered into. Bank of N.Z. v. Simpson 27; River Weir Commsrs. v. Adamson 28.
The City contends that the incorporating Act, the contract thereby approved and the schedule annexed together with the Consolidated Ry. Act, 1879, exhibit all the powers Parliament granted or authorized to be granted the Company and the doctrine of ultra vires applies. It submits in particular that (a) The incorporating Act was a special Act. (b) The recitals in the incorporating Act and in the charter show that the Governor in Council carried out the directions of Parliament, acted as its delegate in issuing the prescribed charter and did not purport to exercise and did not exercise the royal prerogative in that behalf. (c) The Governor in Council could not by royal prerogative create a railway company with all the powers, privileges and property rights granted the Company and the charter would have been invalid without the Act of Parliament. (d) Any intention to create a common law corporation is excluded by necessary implication.
The incorporating Act was not only a special Act but a special Act for a special purpose and the Company derives its legal existence wholly from the incorporating statute and the charter thereby prescribed and authorized. 1881 (Can.) ss. 21, 22, The Railway Act, 1879, s. 5 (1) and (16). Corresponding sections of The Railway Act, 1919, were discussed in C.P.R. v. A.G. of B.C. 29. It was there held that it was only by virtue of this Act that the Company had power to acquire hotels, etc., and it was the opinion of the Court or some members thereof that the C.P.R. Act of 1902 was a special Act. (Estey J. at 386, 87). This opinion is in line with Elve v. Boyton 30. In the Bonanza Creek case 31 Lord Haldane at 584: "In the case of a company the legal existence of which is wholly derived from the words of a statute the company does not possess the general capacity of a natural person and the doctrine of ultra vires applies".
The recitals in the incorporating Act and in the charter show that the Governor-in-Council carried out the directions of Parliament and acted as its delegate in issuing a charter to the Company and did not purport to exercise and did not exercise the Royal Prerogative in that behalf. Vide s. 2 of the Act and the recital in the charter. Cobalt v. Temiskaming Telephone Co. 32. As the exact form of charter was prescribed by statute and agreed upon by the approved contract it is clear that the authority conferred upon the Governor General was merely to bring into existence the entity to be known as the Canadian Pacific Railway. The Governor General could not and did not purport to over-ride the Act of Parliament or the approved agreement by conferring additional powers on the railway company. The Governor-in-Council could not by Royal Prerogative create a railway company such as the C.P.R. and the charter would have been invalid if not authorized by an Act of Parliament. The Canada Joint Stock Companies Act, 1877 (Can.), c. 43, s. 3. C.P.R. v, Notre Dame de Bonsecours Parish 33.
Any intention to create a common law corporation is excluded by necessary implication. The Company derived its entire existence from the act and will of Parliament and did not require and did not receive any grant from the Crown either directly or through the Governor General as its delegate. It was brought into existence by direct legislative action. Cobalt v. Temiskaming Telephone Co. supra at 74, 75. A.G. v. De Keyer's Royal Hotel 34, B.C. Coal Corp. v. The King 35, Canadian Bank of Commerce v. Cudworth Telephone Co. 36, where the Bonanza Creek case was distinguished. In Re Northwestern Trust Co. and the Winding-up Act 37, the Cudworth case was followed and the Bonanza Creek case distinguished. Toronto Finance Corp. v. Banking Corp. 38 is also relied on.
The powers of the C.P.R. and the C.P.R. Act of 1902 are discussed at length in C.P.R. v. A.G. for B.C. 39 but the contention that the C.P.R. possessed all the powers of a common law corporation was apparently not made in the argument or referred to in any of the judgments. On this point the City refers to and relies on the judgment of Dysart J.A. in the court below, concurred in by Richards J.A. The majority of the judges in the court below failed to appreciate that the Company was not incorporated under a Joint Stock Companies Act but was a company incorporated for a special purpose and pursuant to a contract between the government and the promoters. They failed to appreciate that the Bonanza Creek Gold Mining Co. was incorporated by letters patent under the Ontario Joint Stock Companies Act and in the opinion of Lord Haldane purported to derive its existence from the Act of the sovereign and not merely from the words of the regulating statute and therefore possesed a status resembling that of a corporation at common law.
In the event of the Court holding that it was beyond the power of the Company to give the bond and covenant mentioned in By-law 148 as amended by By-law 195, the question arises whether the City is estopped from setting this up by reason of the judgment in C.P.R. v. Winnipeg 40. The power of the Company to give the bond and covenant was not discussed or even mentioned in the pleadings or judgment or reasons for judgment in the Supreme Court or in the Court below, and it is submitted that no issue was raised in the pleadings upon which this question could have been determined. It is submitted there can be no estoppel by res judicata unless everything in controversy in the proceedings where the question of estoppel is raised was also in controversy in the litigation which resulted in the judicial decision relied upon as an estoppel. Outram v. Morewood 41; Notes to the Duchess of Kingston's case 42 Spencer Bower's Res Judicata at p. 121 citing Moss v. Anglo Egyptian Navigation Co. 43; 13 Hals. pp. 411-12, s. 466 (2nd ed.) Langmead v. Maple 44; Johanesson v. C.P.R. 45; Howlett v. Tarte 46. All that the court decided in the first action between the City and the Company was that by-law No. 148 as amended by by-law 195 was a valid by-law and that school taxes were included in the phrase "municipal taxes, rates and levies and assessments of every nature and kind." The question of whether it was ultra vires the company to give the bond and covenant was not fundamental to the decision in the first action, and it is not res judicata in the present action.
If the agreement set forth in By-law 148 was ultra vires the Company it cannot become intra vires by reason of estoppel, lapse of time, ratification, acquiesence or delay. York Corp. v. Henry Leetham & Sons Ltd. 47; Toronto Electric Light Co. v. City of Toronto 48. It is also submitted for the reasons mentioned in para. 341 of the reasons for judgment of the learned trial judge, the agreements between the City and the Company relating to the Royal Alexandra Hotel in 1906, 1914 and 1942, do not operate as an estoppel as contended by the plaintiff.
The judgment of the Chief Justice, Kerwin, Taschereau and Fauteux, JJ. was delivered by:
Kerwin J.:—The Canadian Pacific Railway Company appeals and the city of Winnipeg cross-appeals against a judgment of the Court of Appeal for Manitoba. The dispute between the parties hinges upon clause 8 of by-law 148 of the city, passed September 5, 1881, which clause reads as follows:
8. Upon the fulfilment by the said Company of the conditions and stipulations herein-mentioned, by the said Canadian Pacific Railway Company all property now owned, or that hereafter may be owned by them within the limits of the City of Winnipeg, for Railway purposes, or in connection therewith shall be forever free and exempt from all municipal taxes, rates and levies, and assessments of every nature and kind.
The conditions and stipulations referred to are contained in preceding clauses of the by-law by which the company undertook to build, construct and complete, on certain property in the city, a substantial and commodious general passenger railway depot, and particularly clause 3, reading as follows:
3. The said Canadian Pacific Railway Company, shall immediately after the ratification of this by-law as aforesaid, make, execute and deliver to the mayor and Council of the City of Winnipeg a Bond and Covenant under their Corporate Seal, that the said company shall with all convenient and reasonable dispatch establish and build within the limits of the City of Winnipeg, their principal workshops for the main line of the Canadian Pacific Railway within the Province of Manitoba, and the branches thereof radiating from Winnipeg, within the limits of the said province, and for ever continue the same within the said City of Winnipeg.
This by-law and an amending by-law No. 195 passed September 20, 1882, were ratified and confirmed by an Act of the Manitoba Legislature. It is admitted that the company fulfilled its obligations and with the exception of an abortive attempt by the city to impose school taxes, Canadian Pacific Railway Co. v. City of Winnipeg 49, no question arose between the parties as to the company's liability to taxation until, in the year 1948, the city attempted to assess and levy realty and business taxes, when this action was brought for a declaration that the company was not so liable.
The company succeeded at the trial but the judgment in its favour was set aside by the Court of Appeal by a majority, although there a majority were in agreement with the conclusions of the trial judge upon the first question involved, viz., the capacity of the company to enter into the agreement evidenced by by-laws 148 and 195. The trial judge considered that the company had the status of a common law corporation with powers analogous to those of a natural person and in that view the Chief Justice of Manitoba and Coyne J.A. and Adamson J.A. agreed. The latter also held, as had the trial judge, that in any event the expressly enumerated powers of the company gave it authority to make the agreement, and on this additional ground held the agreement intra vires. Richards J.A. and Dysart J.A. held that the company's powers were limited to those set forth in a special Act authorizing its charter but the former held that the agreement was within such powers and intra vires the company so that the latter was the only member of the court dissenting on the question as to the company's power to enter into the agreement. On this first point I find it unnecessary to determine whether the city was incorporated by Royal Charter and hence had all the powers of a natural person, and therefore it is inadvisable to say anything upon the subject. The enumerated powers of the company, which appear in the reasons for judgment of several of the members of this court, and in the reasons for judgment in the courts below are sufficient in my view to authorize the company to do as it agreed, and as was subsequently carried out. Decisions like Whitby v. Grand Trunk Railway Co. 50 relied upon by the city, depend upon the terms of the enactments conferring the particular powers there in question. I might add that I have found it unnecessary in the consideration of this point, or any of the others, to deal with the company's argument that because of the decision in C.P.R. v. City of Winnipeg (supra), several of the matters now raised by the city are res judicata.
The second question is whether the exception is confined to property within the limits of the city existing at the date of by-law 148. Upon a review of all the terms of the by-law, and in view of the circumstances that existed at the time of its enactment, I have come to the conclusion that this question should be answered in the negative. If there be any ambiguity in the construction of those terms, which I do not think there is, the company's contention would be advanced by the fact that by the time by-law 195 was passed the company had executed part of its obligation on land that had been taken into the city subsequent to the enactment of by-law 148.
The third question, whether business taxes are included in the exemption is settled by the decision of this court in C.P.R. v. Attorney General of Saskatchewan 51.
The fourth question, whether the exemption is applicable to the company's Royal Alexandra Hotel and the restaurant in the railway station should be answered in the affirmative. Whatever bearing the company's enumerated powers under its charter might have upon the point as to the power of the company to build hotels need not be considered in view of the Act of 1902. Undoubtedly since then the company has such power and the Royal Alexandra Hotel and the restaurant fall in my opinion within the words of the exemption: "all property owned or that hereafter may be owned … for railway purposes, or in connection therewith." The hotel property or restaurant need not be owned exclusively either for railway purposes or in connection with railway purposes. Other cases decided upon other provisions are not helpful but in connection with the point as to the limits of the city, as well as the point now under discussion, the arrangement set forth in by-law 148 as amended should be construed as is said by Lord Sumner in City of Halifax v. Nova Scotia Car Works, Limited 52, as "one of bargain and of mutual advantage." The decision of the judicial committee in Canadian Pacific Railway Company v. Attorney General for British Columbia 53, depended upon the construction of the British North America Act, 1867.
The appeal should therefore be allowed and the cross-appeal dismissed, both with costs, the judgment of the Court of Appeal set aside and that of the trial judge restored. The appellant should have its costs in the Court of Appeal.
Rand J.:—Of the several points raised, I shall deal with only one: the authority of the company to bind itself forever to maintain the principal workshops for the province in the city and the legal situation resulting from its absence.
On the first branch of the argument, that is, whether the company, from its incorporation by letters patent under the Great Seal of Canada, possesses all the powers of a common law corporation, the controlling consideration, as decided by the judicial committee in the Bonanza Creek Co. case 54, is the source from which the incorporating efficacy is drawn, whether from the statute or from the prerogative. On this, I should say that that source cannot be the prerogative alone for the reason that the authority to construct a railway, as given to the company, could not arise from it. The incorporation not only creates the capacities of the company but clothes it with essential powers and some of these latter impinge on common law rights and liberties for which legislation is essential. Nor can I infer from the statute an intention to authorize faculties proceeding from both sources: the incorporation was of an entirety of objects, capacities and powers; and although special powers can by legislation be conferred on a common law corporation, I know of no authority under the prerogative to add capacities to a statutory corporation.
Then it is argued that the scope of the statutory endowment was sufficient for the covenant given. Viewing the question from the standpoint of the interest of the company as a private enterprise, it is difficult to see the creation of any obligation that violates the original compact of the shareholders inter se; but the principle of ultra vires, in addition to the general public interest in the authorization of corporate action, has public aspects of special significance in enterprises of the nature of that before us. Here was an undertaking conceived primarily for a high national purpose; it was designed as a bond to complete the scheme and organization of a Dominion extending from ocean to ocean by furnishing the essential means for the settlement and the utilization of the resources of its western half; and the company was made the beneficiary of substantial assistance from the public in money, lands and privileges. That object indeed exemplifies the importance of the initial construction; once permanent works were established, they would tend to draw to themselves an adjustment of other services and arrangements and the system of operations would become a settled accommodation which, in ordinary circumstances, would deepen its rigidity with the years. All this, in turn, would have its reflex in shaping the course and development of the social and business life of the community which it was to serve. But unusual circumstances, as at times eventuated in the early days of railway projects, might necessitate changes in transportation plans and arrangements and we might have such a situation as was presented to the courts of Ontario in Whitby v. Grand Trunk Railway Co. 55.
I do not find it necessary, however, to decide the question. I will assume that the company could not bind itself to continue forever the workshops, and the question is, what follows from that. The entire transaction must be kept in view, and for that purpose it is desirable to summarize the details. By-law No. 148 (later embodied in by-law No. 195) was passed by the city on September 5, 1881 and its provisions were to take effect from September 21, 1881. Along with others it was confirmed by c. 64, Statutes of Manitoba, 1883, and by c. 52 of the Statutes of 1886. It was to become effective as a contractual obligation of the city on the performance by the company, to which it is to be observed the company did not bind itself, of certain conditions. These were the construction of the Pembina branch line to the southwest on or before February 1, 1883; the construction of a passenger depot in the city within the same time; and the giving of a covenant forthwith after the passing of the by-law to build within the city and with all reasonable despatch and forever to continue the principal workshops of the railway within Manitoba, and as soon as convenient to erect suitable stockyards. Upon the fulfillment of those three conditions, bonds of the city in the sum of $200,000 were to be delivered to the company and all property of the company within the city was thereafter and forever to be free and exempt from municipal taxation.
A deed of the land on which the station was to be built was to be delivered to the company upon the delivery of the covenant. On April 18, 1882 that deed was executed and it recites in the preamble that "the said bond (covenant) has been by the said company made, executed and delivered as required in the said by-law mentioned". Upon the further completion of the branch line and the depot within the time stated, the bonds were delivered under the authority of by-law No. 219 passed on March 30, 1883. In its preamble it is recited:
AND WHEREAS the Canadian Pacific Railway Company mentioned in said by-law No. 195 have completed and performed all the conditions mentioned in the said by-law and in all other respects complied with the same: and it is desirable that the said trustee should be instructed to deliver the bonds mentioned therein, with the coupons still unmatured, to the Canadian Pacific Railway Company or their proper officer on that behalf.
Later, pursuant to the covenant, the workshops and the stockyards were constructed and the former have at all times since then been maintained. As from the same time, that is, the time for the delivery of the bonds, the exemption from taxation has been respected until 1948. The language of by-law No. 148 dealing with the furnishing of the covenant should be