Consumers Cordage Co. v. Connolly

Consumers Cordage Co. v. Connolly
Collection
Supreme Court Judgments
Date
1901-03-28
Report
(1901) 31 SCR 244
Judges
Girouard, Désiré; Gwynne, John Wellington; King, George Edwin; Sedgewick, Robert
On appeal from
Quebec
Subjects
Contract
Decision Content
Supreme Court of Canada
Consumers Cordage Company v. Connolly, (1901) 31 SCR 244
Date: 1901-03-28
THE CONSUMEES CORDAGE COMPANY (DEFENDANT AND INCIDENTAL PLAINTIFF)
Appellant;
And
NICHOLAS K. CONNOLLY AND MICHAEL CONNOLLY (PLAINTIFFS AND INCIDENTAL DEFENDANTS)
Respondent.
1900: Nov 13; 1990: Dec 7; 1901: Mar 28
PRESENT :—Taschereau, Gwynne, Sedgewick, King and Girouard. JJ.
PRESENT :—Gwynne, Sedgewick, King and Girouard JJ.
ON APPEAL FROM THE SUPERIOR COURT, SITTING IN REVIEW, AT MONTREAL.
Contract—Unlawful consideration—Répétition de l’indu—Account—Public policy—Monopoly — Trade combination — Conspiracy—Malum prohibitum—Malum in se Interest on advances—Foreign laws—Arts. 989, 1000, 1067, 1077, 2188 C. C.—Matters judicially noticed.
In an action to recover advances with interest under an agreement in respect to the manufacture of binder twine at the Central Prison at Toronto, the defence was the general issue, breach of contract and an incidental demand of damages for the breach. The judgment appealed from maintained the action and dismissed the incidental demand, giving the plaintiffs interest according to the terms of the contract
Held, per Sedgewick, King and Girouard JJ. that the evidence disclosed a conspiracy and that, although under the provisions of the Civil Code the moneys so advanced could be recovered back, yet no interest before action could be allowed thereon, as the law merely requires that the parties should be replaced in the position they respectively occupied before the illegal transactions took place. Rolland v. La Caisse d'Economie Notre-Dame de Québec. (24 S. C. R. 405) discussed and l'Association St Jean-Baptiste de Montréal v. Brault, (30 S. C. R. 598) referred to.
Held also, that laws of public order must be judicially noticed by the court ex propria motû. and that, in the absence of any proof to the contrary the foreign law must be presumed to be similar to that of the forum having jurisdiction in an action ex contractu.
Per Taschereau, J. (dissenting.)—1. A new point should never be entertained on appeal if evidence could have been brought to affect it had objection been taken at the trial. 2. In the present case, the concurrent findings of both courts below, amply supported by evidence ought not to be disturbed, and as the company itself prevented the performance of the condition of the agreement in question requiring the assent of the Government to the transfer of the binder twine manufacturing contract, its non-performance cannot be admitted as a defenece to the action upon the executed contract.
Gwynne J. also dissented on the ground that the judgment appealed from proceeded upon wholly inadmissible evidence and that therefore, the action should have been dismissed and further, that the evidence which was received and acted on though inadmissible for the purposes for which it was intended, shewed that the action was based upon a contract between the plaintiffs and defendant for the commission of an indictable offence; that neither party could recover either by action or by counter-claim upon such a contract and, therefore, that the incidental demand, as well as the action should be dismissed
APPEAL from a judgment of the Superior Court sitting in review, at Montreal, affirming the judgment of the Superior Court District of Montreal which maintained the plaintiffs' action to the extent of $22 -824 48 with interest thereon at eight per cent per annum from 1st October, 1896, until paid, and the interest at the same rate on $4880.26 from 1st October 1896 to the 18th of April 1898 and costs and further dismissing' the defendant's incidental demand with costs.
The circumstances under which litigation arose in this case and the questions at issue upon the appeal are stated in the above headnote and in the judgments reported. The appeal was heard upon the merits on 13th November 1900.
Fitzpatrick (Q.C (Solicitor General of Canada) and Chase-Casgrain Q.C. for the appellant.
E. A. D. Morgan for the respondents.
When the arguments of counsel were concluded, judgment was reserved and on the 7th of December, 1900, an order was made (Taschereau J. dissenting) in terms, settled by the majority of the court, stated as follows by His Lordship Mr. Justice Girouard:
"Before we decide this case we order a rehearing upon the following questions:
1. Does the evidence establish a conspiracy or illegal combination between the parties affecting public interests?
2. If so, can the court take notice of it, although, not pleaded or set up in the factums, or argued at the hearing?
3. And finally if both questions be answered in the affirmative, are the parties or either of them entitled to an account of the moneys paid and received in the course or by reason of the illegal dealings and operations of the parties and recover the same, or should the court refuse to entertain the action?"
His Lordship Mr. Justice Taschereau dissented from the order and said: "I do not take part in this order. I am of opinion that the appeal should be dismissed with costs." His Lordship's reasons for this judgment appear below.
His Lordship Mr. Justice Sedgwick concurred in the order, and His Lordship Mr. Justice King said: "I am of opinion that the questions framed by Mr. Justice Girouard for a re-argument of the appeal are appropriate they seem to me to be material" and he concurred in the order. On 7th March 1901 it was ordered that the re-argument should take place after the hearing of the Ontario Appeals at the Winter Sessions and, on 8th March, 1901, an order was made dispensing with the re-argument, discharging all orders and directions therefor, and the case stood for judgment as it was at the close of the hearing in November, 1900.
On the 28th of March, 1901, Their Lordships Justices Gwynne, Sedgwick, King and Girouard being present, (His Lordship Mr. Justice Taschereau, refusing to take any part, and not present,) judgment on the merits was pronounced by the majority of the court, Gwynne J. dissenting, by which the appeal on the principal demand was dismissed in part with costs, the judgment appealed from being reduced and the appellant condemned to, pay to the respondents $18,-044.86 with interest thereon from the 23rd of December 1896 and costs in all the courts, and the judgment appealed from on the incidental demand was affirmed with costs.
TASCHEREAU.J —On this appeal, which presents very little else but questions of fact, we would all be of opinion to confirm the judgment in the case that has been tried argued and determined in the court of first instance, that has been argued and determined in the Court of Review and that has been argued here on both sides. But it is now suggested for the first time that the case should be determined upon a ground never taken at bar, never argued here or in the two courts below and never tried in the court of first instance. Now, that is an untenable proposition.
I should have thought that if a new point, as the one suggested, had, in our opinion, necessarily to be determined the rational conclusion would have been,
*Reasons for dissenting judgment of 7th December, 1900. if not to remit the case to the court below at least to order that the parties should be heard here upon it.
How fraught with danger of doing injustice is the course proposed, it is unnecessary to insist upon.
If such a point had been taken at the trial evidence to meet it might have been given. The whole matter might have been explained. And it is à rule, never to be departed from, that a new point in appeal should not be allowed to be taken if evidence could have been brought to affect it had it been taken at the trial.
To me it seems almost incredible that it could be proposed, upon mere conjectures and suspicions, to find these parties guilty of conduct amounting to a crime punishable by seven years penitentiary, not only without ever having heard them upon that charge, but even when they have never been charged or accused of it.
As to the merits of the case that was argued and determined in the two courts below the only case that has been submitted for our consideration, the appeal entirely fails. The concurrent findings of the two courts is, upon overwhelming evidence, that as regards the tender and contract and in the taking possession of and working of the binder twine business in the Central Prison, leased to P. L. Connor by the contract of 25th September, 1895, and which was subsequently transferred to Robert Heddle the said Connor and Heddle were but the prête-noms and salaried representatives of the defendants and acted on their behalf and in their interest under their control and for their exclusive profit that for the purpose of the tender contract and working of said business which had been carried on by the defendants since the said 25th of September 1895, the plaintiffs advanced and procured for the defendants, at the agreed rate of interest, the sums mentioned in the declaration and that the plaintiffs fulfilled all their obligations towards the defendants under the agreement of the 29th of February, 1896; that at their request they caused a transfer of the contract of the 25th of September, 1895, to he made to Robert Heddle, the prête-nom and employee of the defendants, and also furnished the capital required for operating the said business and that this transfer would have received the consent of the Lieutenant-Grovernor-in-Council, if Heddle, under the advice of the defendants had not withdrawn his demand to that effect.
The appellant's contention, based upon the condition. requiring the consent of the Lieutenant-Goernoing Council to the transfer of the contract in quistión amounts to nothing else than a fraudulent attempt on its part to the rid of its responsibilities. Under the circumstances of the case, the appellant cannot now be admitted to avail itself of that defence upon an executed contract.
Sir Melbourne Tait in the Court of Review has fully demonstrated this. I do not see anything that can. be added to his comments upon the case.
GWYNEE J. (dissenting).—This appeal presents a most singular case of what the plaintiffs in the action, the now respondents, claim to be the simple case of money lent and advanced by the plaintiffs to the defendants and paid to and for their use at their request. To establish this contention a volume of 500 pages of printed matter containing the pleadings, evidence and reasons for the judgment now in appeal, and 49 pages of printed matter in an argument presented to us by the respondents in their factum have been deemed to be necessary an unusual circumstance in the case of a simple action to recover money lent and advanced to and to the use of the defendants at their request. The declaration, in which the plaintiffs' cause of action is asserted, alleges that on the 29th day of, February 1896 the defendants were indebted to the plaintiffs in divers sums of money, to wit, in the sum of $5,000 advanced for their benefit by the plaintiffs and deposited with the Government of the Province of Ontario to accompany a tender for the obtaining of a contract for the manufacture of binder twine at the Central Prison at the City of Toronto, and at their request and in the further sum of $7,350 for a like sum constituted a first charge on the earnings of said manufacturing institution at the sad Central Prison at Toronto and taken over by plaintiffs in settlement of a certain claim due them, and accepted by the said defendants as a debt and charged, on. said business to be repaid by them, and the further sun of $22,048.52 advanced by the plaintiffs at the' request of, said; defendants and invested in the said business and. interest on the said different amounts and lastly for an overcharge on a certain lot of twine amounting to $803.30." The declaration then alleges that on the. 29th day of February 1896 the said plaintiffs and the defendants acting by and through their general manager one Elisha M. Fulton entered into a certain written agreement whereby it was agreed and covenanted that the plaintiffs should transfer to the defendants the right from the Government of the Province of Ontario to manufacture binder twine in the Central Prison which contract P. L. Connor had already transferred to them, and further, that the plaintiffs would furnish the defendants with the necessary capital to carry on the business of manufacturing twine at said Central Prison during the then ensuing season of 1896 and that they should obtain necessary discounts with the assistance of the defendants from the Dominion Bank of Toronto and that at least $40,000 of the sum furnished should be repaid between the 1st and 15th days of June then next and as to the balance all the moneys invested by the plaintiffs in the said business were to be repaid by the 1st day of October then next save and except the aforesaid mentioned sum of $7,350, the repayment of which sum was to extend over the first two years of the Government contract.
The declaration then proceeded to claim in the. itemized account the said several sums of $5,000 as advanced on the 21st August 1895 with interest thereon from that date; $7350 as advanced on the 25th day of September, 1895, with interest thereon from that date; $22,048.22 as advanced on November 7th 1895 with interest thereon from that date and certain other items amounting in the whole (after deduction of certain sums entered therein as, credits) to $34,054.74 which sum with interest thereon at 8 per cent since October 1st, 1896, is what the plaintiffs claimed in the action.
Now here it is to be observed that the declaration contains no averment of the performance by the plaintiffs of any of the acts by the agreement of the 29th of February, 1896, covenanted to be performed by them, nor of any advances having been made by the plaintiffs to the defendants under the clause in that agreement by which they undertook to furnish the necessary capital to carry on the business of manufacturing twine in the Central Prison during the season of 1896. The sole claim made by the declaration is in respect of the principal sums of $5,000, $7,350 and $22,088.22 alleged to have been advanced to the defendants at the respective dates aforesaid of the 21st of August, 25th of September and 7th November, 1895, together with interest thereon and a few other items not appar ently connected with the agreement of 23th of February, 1896.
To this declaration the defendants pleaded;
1st plea: A general denial.
2ndly. A special plea that the plaintiffs never performed the essential condition precedent necessary to the contract of 29th February, 1896, going into effect and becoming binding upon the company defendant, and never gave and secured to the defendants the object and consideration of their said contract, to Wit, the right from the Government of Ontario to manufacture binder twine at the Central Prison for the period mentioned in the contract of the 25th of September, 1895, but wholly failed to secure such right to the defendants. And
3rdly. A plea in thirty-four paragraphs which is in substance and effect an amplified, repetition of the matters pleaded in and covered by the two previous pleas coupled with a long argument insisting with great prolixity upon the particular points in which the plaintiffs failed in the performance off their covenant in the said agreement, as had been pleaded in the said second plea. All of which matters, assuming the defendants'' construction of the agreement of 29th of February to be correct, were matters the performance of which it was necessary for the plaintiffs to have averred in their declaration, and to establish in evidence in order to succeed in an action against the defendants for breach of their covenants contained in the instrument.
Now as to the second plea the averments therein contained although proper and essential in an action or an incidental demand instituted by the defendants against the plaintiffs for breach of their covenants in the: instrument were quite inappropriate and unnecessary as a plea by way of defence to an action framed as the cause of action set out in the declaration in the present case is wherein the contention of the plain-tiffs simply is that the true construction of the instrument of February, 1896, is that the defendants thereby covenanted to pay to the plaintiffs moneys then due for money previously lent and advanced by the plaintiffs to and for the use of the defendants at their request a point determinable by the construction of the instrument.
The whole of the matters in the third plea ( it must I think, be admitted,) were also wholly irrelevant and unnecessary and improper to be set out upon the record as a "olea to the cause of action as set out in the declaration. A few of the paragraphs will serve as a specimen of the whole.
The fourth paragraph avers simply a fact appearing on the face of the contract of the 25th September, 1895, mentioned in the declaration, namely, the names and description of the several parties thereto.
The fifth paragraph simply stated what was the provision contained in the seventeenth paragraph of the said contract of the 25th of September, namely, that
the contractor shall not assign this agreement or sublet the same without the consent of the lieutenant in council.
The plea in its sixth paragraph averred that the contractor referred to in paragraph seventeen of the contract was the said P. L. Connor and the Lieutenant Governor in Council referred to was the Lieutenant Governor of the Province of Ontario and the Executive Council of that province.
In the seventh paragraph the plea averred that the said Lieutenant Governor in Council had never assented to any assignment of the said contract by the said P. L. Connor to the plaintiffs. In the eighth paragraph il was averred (in short substance) that it was a condition precedent to any obligation undertaken by defendants by the agreement of February, 1896, without which they would not have entered into that agreement that the said plaintiff should lawfully assign the said contract of the 25th September 1895 to the defendants in accordance with said seventeenth paragraph thereof, viz., with the assent and approval of the Lieutenant Governor in Council.
In the ninth paragraph it was averred that by the said agreement of February, 1896, the plaintiffs undertook and agreed that the said contract of the 25th September, 1895, should be legally transferred to the defendants with the consent of the Lieutenant Governor in Council.
In the tenth paragraph it was averred that the plaintiffs had frequently acknowledged and submitted, as was the fact, that they Were bound to transfer the said contract and to procure the assent of the Lieutenant Governor in Council thereto and that without such transfer the defendants never consented to, authorised or incurred any liability to the defendants.
By paragraph twenty-seven it was averred that without a due and legal transfer of the said contract of the 25th of September, 1895, duly assented to by the Lieutenant Governor in Council the said defendants would not have had any locus standi in and with respect to the said prison plant and would have been without any right or title to conduct the said operations and as a matter of fact the said prison authorities never in any manner or form recognised the said defendants in any manner in connection with the said prison plant hut always dealt in respect thereto, with the said P. L. Connor and his representatives. All these matters (and all the other paragraphs of this third plea are of similar nature) constitute simply an argument in support of the defendants construction of the contract of .February. 1896. and seem to have been inserted solely for the purpose of meeting the plaintiffs' construction of that agreement as appearing in their declaration to the effect that it was entered into merely in respect of, and to prescribe the times of payment of sums of money antecedently lent and advanced by the plaintiffs to the defendants at their request. These several matters so with great prolixity set out upon the record did not in reality constitute any issuable pleading by way of defences to the cause of action set out in the declaration which as already observed, was for the recovery of sums alleged to have been lent and advanced by the plaintiffs to the defendants at their request prior to the 29th of February 1896 and by that instrument covenanted to be paid at the times therein mentioned with interest as therein mentioned.
The plaintiffs by way of answer to the above pleas pleaded to the said second plea as follows:
That each, and all and every of the allegations of said plea is and are false except in so far as the same may be specially hereinafter admitted. That as appears by the allegations of the plaintiffs' declaration the defendants were indebted to the plaintiffs for the causes set out in the said declaration prior to the agreement of the 29th of February, 1896, which the said defendants' plea calls the “ pretended contract which is invoked by the plaintiffs, and which is really the sole (¡round of their pretended demand against defendants," and that the said agreement only fixed the date of the repayment of said sums advanced long previously by the plaintiffs to the defendants at their request and for their benefit in connection with the Central Prison binder twine contract."
And further among other things not necessary to be set down at large
that the said P. L. Connor, mentioned in the said agreement, had been long previous to the said 25th day of September, 1895, employee and prête-nom of the said defendants and both he and the plaintiffs would only have been too willing to transfer not only the right to manufacture which they did but also would have been willing that the contract should have been in name as it was in fact transferred to defendants but the latter never wished same to be done, but preferred carrying on as they ever did since the date of the said contract between the Inspector of Prisons and said P. L, Connor the business for the sole benefit of the said company defendant by whom it was assumed confidentially and under the asked and granted pledge of secrecy, and that for the benefit and advantage of the defendant company.
To the defendants' third plea, the plaintiffs pleaded an answer which, as it is pleaded in reply to a pleading itself irrelevant and defective for the reasons already stated, partakes necessarily of the same defects as those which characterized the plea to which it is pleaded in reply; it is unnecessary therefore to notice it further than to say that it repeats what had been alleged in the answer to the defendants' second plea, and contains what has been throughout the trial and still is, the main contention upon which the plaintiffs rest their cause of action and their right to maintain the judgment therein now under consideration.
The allegation is
That the said P. L Connor obtained the said contract for the benefit of his employers the said defendants; that the whole business was assumed confidentially by them, and that from and after the going into force of the said contract of the 25th of September, 1895. the whole business was carried on for the exclusive benefit of the said defendants and under their sole control, the only right pertaining to the said plaintiffs il respect of said contract, and the business connected therewith being their option of advancing the money necessary for the carrying on said business at six per cent interest per annuity and two per cent bonus,
The defendants filed an incidental demand for damages alleged to have been sustained by them by reason! of the non-fulfilment of the covenant of the plaintiffs contained in the said agreement of the 29th of February, 1896, to which the plaintiffs as incidental defendants pleaded by way of defence the same matters which they had pleaded by way of answer to the pleas of the defendants in the principal action.
Now the sole contention of the plaintiffs upon this singularly framed record was that the defendants being upon the 29th of February, 1896, indebted to the plaintiffs in the several sums stated in the declaration mentioned for advances of like sums made at the respective dates in the declaration mentioned by the plaintiffs to the defendants at their request executed the instrument of February, 1896, for the sole purpose of prescribing the times and mode of repayment of such loans, and that such was the sole intent and effect of that instrument, while on the contrary the contention of the defendants was that the sole obligation incurred by the defendants to the plaintiffs was incurred under and by virtue of, the terms of that instrument of February, 1896, which as they contend was a contract of purchase by the defendants, and of sale and transfer by the plaintiffs to the defendants, or as they should direct, of the contract between, the Ontario Government and P. L. Connor of the 25th September 1895, for the residue of the term by that contract created and which the plaintiffs declared to have been transferred to them and to be in their power to transfer to the defendants; and the defendants filed their incidental demand for damages alleged to have been sustained by them for non-fulfilment by the "plaintiffs of their covenant in that behalf contained in the said instrument and to be performed by them. The main contention between the parties thus appears to have been as to, and to be determinable by, the construction of the instrument of February, 1896. The case proceeded. to enquête. The contract of the 25th September, 1895, having been produced by and on behalf of the plaintiffs it appeared that Patrick Louis Connor therein described as of the City of Brantford, in the County of Barant thereinafter called the contractor' did for himself, his heirs, executors, administrators and assigns covenant with the Inspector of Prisons among other things,
to at all times at his own cost provide all expert labour and instruction necessary in manufacturing and to supervise and instruct the prisoners in the work required of them in operating the plant, &c.
The contract then contained provisions for limiting the price at which the twine manufactured at the prison should be sold to the farmers. Then by sections 13, 14 and 17 it was agreed as follows :
13.The contractor shall take over at cost all the manufactured twine and binder twine material on hand at the time of entering upon the contract, the twine at a price to be arrived at the same as provided in making up the selling price of twine by the contractor, and the unmanufactured material at invoice prices, with cost of delivery at the prison added.
14.This contract shall, subject to the herein contained provisions as to default and resumption by the Government, be in force from the 1st day of October, 1895, until the 1st day of October, 1900, renewable for a further period of five years provided the Lieutenant Governor in council considers it in the public interest that such further period should be granted.
17. The contractor shall not assign this agreement or sublet the same without the consent of the Lieutenant Governor in Council.
The plaintiffs also produced the agreement of the 29th of February, 1896, which is as follows :
It is hereby mutually agreed by and between the Consumers Cordage Company, limited, a body corporate and politic, with its head office and chief place of business in the City of Montreal, P.Q., party of the first part, and the firm of N. K. and M. Connolly, contractors of the City of Quebec, party of the second part, witnesseth that whereas Mr. P. L. Connor, of Brantford, Ontario, has acquired the right from the Government of the Province of Ontario, to manufacture binder twine in the Central Prison in the City of Toronto, in the said province, for a period of five years from October 1st, one thousand eight hundred and ninety-five, to October 1st, nineteen hundred, the party of the second part hereby agrees to transfer and make over to the party of the first part the. said right from the Government of the Province of Ontario to manufacture binder twine in the Central Prison in the City of Toronto in the said province for the full period of said contract with P. L. Connor.
The party of the second, part further agrees to furnish all the capital that may be required for said manufacturing operations at said Central Prison for and during the full term of the twine season of 1896 at which time the party of the first part hereby agrees to reimburse the party of the second part all money they have invested in the said business, and not later than October 1st, 1896, with interest thereon at eight per centum per annum, but it is understood and agreed that at least $40,000 forty thousand dollars) of this shall be paid between June 1st and 15th, 1896, and if required the party of the second part shall assist the party of the first part to obtain any part of this amount through the Dominion Bank at Toronto, as well as a sum of $73350 constituted by P. L- Connor as a first charge on the earnings of the said manufacturing institution and taken over by the party of the second part in settlement of accounts with John Connor of St John, N.B. The payment of this amount shall extend over the first two years of the Government contract.
This agreement is signed E. M. Fulton as manager of the consumers Cordage Company, limited, on behalf of that corporation, and by N. K. and M. Connolly, the plaintiffs in the present action. Now as the main question between the parties as to the plaintiffs' right to succeed in this action is as to the admissibility of evidence tendered by the plaintiffs and objected to by the defendants' counsel and received by the learned judge at enquête subject to such objection and to future consideration as to its admissibility and as to whether it should be acted upon, and as that question depends upon the construction of the contract of February, 1896, it will be convenient before entering upon this latter question to advert to certain other evidence given at enquête not objected to, or open to objection, and which seems to have also a bearing upon the question whether the evidence objected to by the defendants and received subject to further consideration should be accepted and acted upon as admissible. It appears then that in the summer of 1895 the plaintiffs, Nicholas K. Connolly and Michael Connolly and one John Connor, trading in partnership together tinder the name, style and firm of " The Continental Twine and Cordage Company," were carrying on the business of manufacturers of rope and binder twine at certain premises in the City of Brantford, leased from defendants, under a lease dated the twenty-eighth day of January, 1895, and also at the Penitentiary at Kingston under some contract executed by the Dominion Government which was not produced but of which the said partnership firm, had control. The business carried on by the said firm at Brantford was under the management of Patrick L. Connor as superintendent for and on behalf of the said partnership firm in which employment he himself said that he continued until the first of November, 1895, at which time the lease of the Brantford premises where the said partnership business had been carried on was taken off the hands of the lessees by their lessors the defendants.
In the month of July or early in the month of August 1895 the Ontario Government advertised for tenders for leasing the Central Prison plant for manufacturing rope and binder twine and required each tender to be accompanied with the deposit of $5,000 as security for the bona fides of the tenderer and to remain as security for the fulfilment by the lessee of the terms of the lease in the event of the tenderer be-coming the lessee. On or about the 21st of August, 1895, Patrick L. Connor, being at that time in the employment of the Connollys, and John Connor (who was his brother) as their superintendent of the home manufacturing business carried on by them at Brantford put in a tender to the Ontario Government in reply to their advertisement for tenders for a lease of the Central Prison twine manufacturing plant. About the 20th. of August John Connor drew upon his partners, the present plaintiffs, for $5,000, payable at sight to his own order. This draft was addressed to the plaintiffs to care of R. Moat & Co., bankers, Monreal, who were the brokers of the plaintiffs and (as deposed by the plaintiffs bookkeeper) was cashed by Messrs. Moat & Co. and forwarded to John Connor and was deposited with Patrick L. Connor's tender in accordance with the requirements of the Ontario Government's advertisement for tenders. This is This first item in the plaintiffs' declaration and in the itemized account therein charged under date of 21st August, 1895.
Afterwards on September 13th, 1895, P. L. Connor put in another or substituted tender and in relation thereto, on the 18th September, addressed and sent to the inspector of prisons a letter in which, referring to his new tender of the 13th instante, and to certain matters connected therewith, and to the contract tendered for he makes use of the following language :—
It is also understood that the cheque for $5,000 which accompanied my first tender in this matter is to be held by you as security to the Government for carrying out my second tender as explained by this letter
Then as to $1350 the second item in the plaintiffs' declaration and which the plaintiffs therein allege to have been an item of debt owed by the defendants to the plaintiffs upon, and prior to, the 29th day of February, 1896, and which is charged in the itemized account set out in the declaration as having accrued due upon the 25th day of September, 1895, and therefore from that date interest is charged thereon, Martin Connolly, the then book-keeper of the plaintiffs, deposed that all he knew as to that item was that he had seen a note for t at amount made by Patrick L. Connor to the plaintiffs but when he saw it, he did not say, but he said that he knew nothing whatever as-to the consideration for which it was given, although he adds that he was confidential clerk of the plaintiffs-as a rule. In short there is not a particle of evidence offered in the case for the purpose of establishing that,. and the plaintiffs do not contend that as is averred in the plaintiffs' declaration, this sum constituted a debt due by defendants to the plaintiffs prior to the 29th of February, 1896. The evidence does not profess to disclose any liability whatever of the defendants to the plaintiffs in respect of this item other than such as appears in the agreement of the 29th of February, 1896, the nature and character of which we shall consider in the construction of that instrument.
Now as to the sum of $22,0485.22, the third item in the plaintiff's declaration, that sum constituted money payable to the Ontario Government by Patrick L. Connor under the 13th paragraph of his contract ,-of the 25th September for the manufactured twine and binder twine material then on hand, and it was paid by him in the month of November of that year to the Ontario Government out of the proceeds of a cheque of Messrs. R. Moat & Co. Montreal the brokers of the plaintiffs,. dated the 7th November, 1895 for $25,000 (twenty-five thousand dollars), and made payable to the order of the plaintiffs and indorsed by them to the said John Con-nor the brother of Patrick L. Connor and plaintiffs' partner. Now as to this item Martin Connolly, the bookkeeper of the plaintiffs, and called as a witness by the plaintiffs, said that he knew that the plaintiffs' brokers in Montreal had charged this sum in the firm's account to Mr. Michael Connolly, and that on a subsequent occasion, but when he did not say, Mr. Michael Connolly told him to charge the amount,. $250(30 to the Central Prison account, which he said that he accordingly did; and he added that subsequently, it having appeared that some four hundred and. odd. dollars had gone into the Brantford business the charge to the Central Prison account was reduced to $22,048.22, and, this he said took place when the plaintiffs came to have a settlement with Mr. Fulton but when this took place he did not say, but naturally, in view of the contract of the 29th of February 1896 it must needs have been after the execution of that instrument and for the purpose of arriving at the amount of the moneys in that instrument referred to as the investments theretofore made by the plaintiffs in the binder twine manufacturing industry at the Central Prison with the view of determining the extent of the defendants' liability under that instrument.
Now the materiality of this evidence in the present case is that in the books of the plaintiffs there seems to have been an account opened as the Central Prison account to which this sum of $25 000 was by the direction of one of the plaintiffs, charged.
The evidence given by the plaintiffs' bookkeeper as to this item is important as evidencing the fact that the plaintiffs, when one of themselves directed this amount to be charged against an account opened in their books and known as the Central Prison account must have been interested in the business carried on at the Central Prison in respect of which the account was opened. That seems at least to be the natural conclusion to arrive at from the bookkeeper's evidence.
There is still one other piece of documentary evidence to be referred to, prior to the execution of the agreement of the 29th of February 1896 It is a letter of the 24th of February, written by the plaintiff, Michael Connolly, giving to Mr. Heddle an introduction to a Mr. Archbold, a person then employed as an accountant in the business of manufacturing twine at the Central Prison under the lease to P. L. Connor. My purpose of referring to it is simply to evidence the fact that Mr. Michael Connolly was exercising some control over that business quite inconsistent with the present , contention of the plaintiffs' that they never had any concern, with interest in, or control over the business carried on at the prison, the whole of which, as they allege, was the sole business of the defendants, which in fact and truth had always from the making of the contract of the 25th September been under the sole management and control of the defendants.
The terms of the letter are just those which would naturally be used by a person interested in and having management and control of the business The letter is as follows:
Montreal, Febuuary 24th, 1896.
Mr. Archbold,
Central Prison Toronto
DEAR SIR,—This letter will introduce to you the bearer, Mr. Heddle, to whom you will submit your accounts and any statement in connection with the industry you are able to furnish him; kindly introduce him to Mr. Daly who. as well as yourself, will kindly take any instructions Mr. Heddle wishes to give.
Yours very truly.
M. CONNOLLY.
Within four days after the date of this letter the agreement of the 29th February, 1896, already set out was executed and the plain construction of that instrument is that the plaintiffs thereby covenanted to transfer and make over to the defendants (or to cause to be transferred to them or to such person as they should direct, for that would be a discharge of the plaintiffs' covenant) the right granted by the Ontario Government by the contract of the 25th September, to P. L Connor to manufacture binder twine at the Central Prison for the full period of the five years granted by the said contract to said P. L. Connor; that in the said business of manufacturing twine under said contract they, the plaintiffs, had invested divers moneys, the amount of which is not stated; that further they were possessed of a claim for $7,350 which P. L. Connor had legally and effectually constituted a first charge upon the earnings of the said manufacturing institution in satisfaction of that sum due by John Connor (P. L. Connor's brother) upon a settlement of accounts between him and the plaintiffs his copartners; and by the instrument the plaintiffs further covenanted to furnish all the capital that might be required for said manufacturing operations at said Central Prison for and during the full term of the twine season of 1896, and the defendants in consideration thereof and as the purchase money to be paid by them for such transfer covenanted to pay to the plaintiffs all the moneys then already invested by them and thereafter to be invested by them in the said twine manufacturing operations by way of capital to be furnished by them under their covenant in that behalf with interest at 8 per cent not later than the 1st October, 1896, and of the sum total of such investments which was expected to exceed $40 000 the defendants covenanted to pay $40,000 between the first and fifteenth of June, 1896, and they further covenanted to pay to the plaintiffs within the first two, years of the term granted by the said contract between the Ontario Government and P. L. Connor, so as aforesaid covenanted to be transferred by the plaintiffs to the defendants, the said sum of $7,350, so as aforesaid alleged to have been constituted by P. L. Connor a first charge in favour of the plaintiffs upon the earnings of the manufacturing operations carried on under said contract.
Now as to this contract, and first as to this sum of $7,350, it appears to be recoverable only by way of satisfaction of a like sum alleged by the contract to have been constituted by P. L. Connor a first charge in favour of the plaintiffs upon the operations carried, on under his contract with the Ontario Government to be so constituted a valid charge upon the industry at the Central Prison by Connor it must have been so charged as to afect the legal term created by the instrument of the 25th September, 1895, vested in him and his assigns; and for the plaintiffs ever to recover that sum against the defendants upon this covenant of theirs in the instrument of February 1896, it would be necessary, I apprehend, for the plaintiffs to aver in their declaration and to prove in evidence that the charge was legally constituted by P. L. Connor, and that the legal estate and interest subjected to the charge by Connor had been effectually transferred to the defendants or to some person appointed by them so as to vest in the defendants or such person the legal estate or interest which had been vested in Connor and by him subjected to the charge. It cannot admit of a doubt that this sum of $7,350 is by the instrument of February, 1896, made part of the purchase money or consideration covenanted to be paid by the defendants for the legal and effectual transfer to the defendants, or as they should direct, of the Ontario Government's contract or lease with Connor, and there is nothing' whatever in the instrument to justify a suggestion that the consideration for the other sums made payable by the defendants by the instrument is different from the consideration for the covenant to pay the $7,350 namely, the transfer of the legal and beneficial interest in the contract of the 25th September 1895, which the plaintiffs covenanted by the instrument to transfer. In the declaration in the present action there is in reality no case whatever made for the recovery of that sum under the terms of the instrument of February, 1896, and so neither for the recovery of any of these other sums mentioned in the instrument to become payable by the defendants.
Then as to these sums of $5,000, and $22,048.52, claimed by the plaintiffs in their declaration, these sums clearly appear to be, and must be regarded as being, moneys then already invested by the plaintiffs in the said twine manufacturing business at the Central Prison. As to the $5,000 it was invested, as we have seen, on the 21st of August, 1895, at which date Mr. John Connor admits that he was not engaged in the service of the defendants, but was then the partner of the plaintiffs in manufacturing twine at Brantford, of which business, as already stated, P. L. Connor admitted himself to have been superintendent on behalf of the partnership firm consisting of his brother and the plaintiffs until the 1st of November, 1896, when the lease was taken off their hands by the defendants.
As to the $22,088.52 I have already adverted to the manner in which that sum came to be entered by the plaintiffs in the books kept by them as a charge against the Central Prison Account. As to the covenant to furnish all the capital necessary to carry on the manufacturing operations at the Central Prison during the season of 1896 it is to be observed that such capital was to be furnished at the sole charge and expense of the plaintiffs; the defendants were under no obligation whatever to assist the plaintiffs in providing that capital or any other sum whatever. This, the plaintiffs' covenant to furnish all the necessary capital to carry on the business during the year 1896, seems to constitute a joint adventure or partnership between the plaintiffs and the defendants in the said manufacturing operations until the close of the season of 1866 upon an agreement that the moneys which the plaintiffs had already invested in the said manufacturing operations prior to the 29th of February, 1896, together with what should there-after be invested by them under their covenant to furnish the necessary capital for the season's operations, together with interest at the rate of 8 per cent should be paid by the defendants to the plaintiffs at latest by the 1st of October, 1896, when the plaintiffs' connection with the business should cease the intention and expectation of both parties being, as I think would seem, that these sums should be paid out of the proceeds of the sale of the season's manufactured twine which by that time were expected to be realised; and this would seem to account also for the plaintiffs covenanting to assist the defendants, if required, in raising at the bank in June the moneys then payable in advance of the realisation of the stock manufactured during the season. Now that the plaintiffs had in fact at the time of the execution of the agreement of the 29th February, 1896, the beneficial interest of P. L. Connor in the agreement of the 28th September, 1895, and although not the legal estate vested in them in the sense of being accepted as lessees in the place of Connor under the seventeenth paragraph of the Government's contract yet that they had absolute control over P. L. Connor in compelling him to transfer such contract so that it should be effectually transferred and made over to the defendants or as they should direct for the full period of five years mentioned in the contract of September, 1895, as covenanted by the plaintiffs, appears from the following letter addressed by the plaintiff, Michael Connolly, to Martin Connolly the plaintiff's bookkeeper at Quebec;
COLORADO SPRINGS, Colo., April 18th, 1896.
MY DEAR MARTIN,—On my return I intend to stop off a day in Toronto and in order to save time and avoid making another trip there, if I had the papers that P. L. Gonnov signed making the transfer of the central Prison contract I might get ífc transeferred. While I. am there, I wish therefore you would. send the transfer he has signed to my address, Queen's Hotel, Toronto, and when I am there I will see if the transfer cannot be made to Heddle; but perhaps N. K. (meaning the other plaintiff) had best see Fulton and find out from him if there is no other person to whom he would as soon have the transfer made.
I expect to reach Leadville this evening about six and of course will then know what there is in sight.
Yours truly,
M. CONNOLLY.
The bookkeeper to whom this letter was addressed complied with the request therein contained.
Then there is a letter dated the 18th May 1896 from the plaintiffs to Mr. Heddle which seems to show very plainly that Mr. Heddle was then under the actual control and in the employment of the plaintiffs in the discharge of duties in connection with the Central Prison. It is as follows:
QUEBEC, May 18th, 1896,
R. HEDDLE, Esq , Brantford.
DEAR SIR,—Referring to your favour of the 12th instant we would say that we have been assured by Mr. John Connor that the different owners of the respective notes that have been protested would take immediate steps to make a settlement and we would wish you to get them from the bank when paid and forward to us here.
Our Mr. Michael Connolly writes asking us to get you to ascertain whether Mr. P. L. Connor's house at Brantford is free from incumbrance, and he also states that Mr. P. L. C. was to pay for horse and rig purchased by him from the Continental Company. If this has not been done it would be well for you to take possession of the horse for the company or sell it if you cannot find use for it.
Mr. Connolly also states that he promised the Dominion Bank that he would give them all out collections in connection with the Central Prison and wishes you to act accordingly.
Yours faithfully,
(Signed,) N. K. & M.CONNOLLY.
Per M. P. CONNOLLY.
Then by a letter dated 30th May, 1896, from the plaintiff, Michael Connolly, to Mr. Heddle, it appears that the plaintiffs were as anxious, as they allege the defendants were, to preserve secrecy as to the business of manufacturing twine at the Central Prison, and that such secrecy consisted in not letting it be known that either the plaintiffs or the defendants had any connection with the business carried on at the prison. The letter is as follows .
DEAR MR. HEDDLE, I wrote you to-day sending you a copy of a letter to be addressed to Mr. Gibson asking that you be substituted for Connor as the contractor for the Central Prison output or manufacture. I hope you will get the thing through as soon as possible.
I also sent you a letter from parties to Kelly making inquiries about prices of binder twine. When answering them you had best use plain paper so as to not identify the Continental with any of the prisons.
The copy of the letter to be sent to Mr. Gibson was also produced and it was headed with the words following:
Do not use any letter heading but plain paper.
" The Continental " here mentioned is a body corporate into which, by letters patent dated the 28th of December, 1895, Messrs. John Connor and the plaintiffs who had previously carried on business in partnership under the name style and firm of the;” Continental Twine and Cordage Company," and two others were incorporated into a company under the same name with the affix, " Limited."
If as is now contended by the plaintiffs, P. L. Connor acquired the Government contract of the 25th September in his own name, but in truth to and for the sole use and benefit of the defendants, holding it as their servant, agent or prête nom, and if from that date, (as is also now contended by the plaintiffs) always continually enjoyed the full benefit of that contract to their own use and have always had the sole management and control of the business carried on under the contract, and if as is also now alleged by the plaintiffs they had no interest whatever in said business and never interfered in its management or control it is difficult to understand how Mr. Heddle if at the date of the 30th May, 1896, he was acting solely as the agent of and under the sole management and control of the defendants), should have had in his possession the paper headed with the name of the Continental Twine and Cordage Company, or why Mr. Michael Connolly should have been the person to caution him to be guarded as to what paper he should use upon the occasions referred to in the letter of 30th May.
It must he admitted that the act of Mr. Michael Connolly upon that occasion is inconsistent with the present contention of the plaintiffs.
Now the admissibility of the evidence which was objected to by the defendants' counsel, and which was received subject to such objections and to future consideration as to its admissibility, and as to its being acted upon by the court, must be tested not merely by reference to the instrument of the 29th February, 1896 and to its true construction, but also by the other acts, documents and evidence to which I have referred.
The Superior Court adopted and acted upon as admissible the whole of the evidence so objected to, and the judgment founded upon that evidence has been maintained by the Court of Review. The judgment in its first considérant adjudges
that it results from the proof and [documents in the case that the tender the, contract, the taking possession and the operation of the rope factory established in the Central Prison of Ontario, at Toronto, and leased to one Patrick Louis Connor, by contract dated September 25th, 1895, and subsequently transferred to one Robert Heddle, the said Connor and Heddle were only the 'prête noms and salaried representatives of the defendant, that they acted on its behalf and for its interest, under its exclusive control and direction and for its profit and advantage solely, and that for the purpose of the tender, contract and operation of the said rope factory which was always operated by the defendants since September 25th, 1895, the plaintiff advanced and furnished to the defendant on demand of its authorised officers the sums of money at the rates of interest mentioned in the principal demand.
Then in a second considérant it is declared that the defendants have fulfilled all the obligations incumbent upon them by the agreement of February 29th, 1896. No possible force can be given to this considèrant. It was doubtless introduced in reference to the second plea above set out, which, as I have already shewn, offered no issuable matter by way of defence to the plaintiffs cause of action as set out in their declaration. The first considérant wholly disposed of that cause of action and in view of that adjudication the second considérant is insensible as in truth amounting no more than this that whereas by the first considérant it is established that the plaintiffs had never had any interest in or control over the property which, by the agreement of the 29th of February, 1896, they covenanted to transfer to the defendants, but that such property was always the property of the defendants and in their actual possession and enjoyment, and under their sole management and absolute control, and that therefore the plaintiffs could not have been and were not under any obligation to transfer to the defendants the property which they had always had in their actual possession and enjoyment and being under no such obligation by the instrument of the 29th of February, 1896, they fulfilled that obligation. In another considérant the court held that the $7,350 is not yet exigible and for that reason and for that only was deducted from the amount claimed, and after another considérant, that the pretention contained in the defendants' plea and incidental demand against the incidental defendants are unfounded, the judgment condemned the defendants to pay to the plaintiffs the sum of $22,324.48, with, interest at 8 per cent from 1st October, 1896, until payment, with costs, and dismissed the incidental demand with costs.
The effect of acting upon as admissible the evidence which was objected to by the defendants has been in. my opinion, and I say it with the greatest deference, and the effect of the first cosidèrant found thereon -as above set out has been to subvert and render wholly nugatory a rule prevailing in the jurisprudence of every country, and which, in the jurisprudence of the Province of Quebec, where the action in the present case was instituted, is expressed in art. 1234, C.C.,
that testimony cannot in any case be received to contradict or vary the terms of a valid written instrument
It has also had the effect of pronouncing at the instance of one of the parties the instrument of the 29th February, 1896, deliberately signed by both parties, to be absolutely delusive, nugatory and false, and for that reason to be wholly void, or else to be capable of the construction now contended for by the plaintiffs, which construction is wholy inadmissible as being in direct contradiction of the plain terms of the instrument and wholly inconsistent moreover with all the facts in evidence exclusive of the evidence objected to. The admission of the evidence objected to has also had the effect of introducing into the case a flood of false swearing, an evil, the prevention of which constitutes a large portion of the foundation upon which the rule of law, as expressed in art. 1234, C.C., is based. As I am of opinion that the evidence upon which the judgment is founded was inadmissible and that therefor, the judgment founded thereon cannot be maintained, I do not propose to analyze the evidence for the purpose of discovering upon which side the false swearing has been, nor whether upon one side only; but no one can read the large mass of matters which. have been introduced for the purpose of establishing a claim which, in contradiction of the plain terms of agreement of 29th February, 1896, is now alleged to have been at the time of the execution of that instrument the common case of a debt then due for moneys previously lent by the plaintiffs to the defendants at their request without seeing that there has been much false swearing in the case somewhere.
Now the judgment being based, as I think it is, upon inadmissible evidence cannot be maintained. But although the evidence is inadmissible for the purpose for which it was tendered by the plaintiffs, having been acted upon by the court it is now before us on this appeal and we cannot shut our eyes to what we think it does establish beyond all serious doubt or controversy, namely, that the contract of the 25th of September, 1895, and everything which has taken place there under which has been the subject of discussion in the action including the agreement of the 29th February, 1896, constitute merely steps in the carrying out or attempt to carry out a combination, arrangement, agreement and conspiracy entered into between Mr. John Connor and the plaintiffs, and Mr. Fulton, the manager of the defendant company, to unduly enhance the pride of binder twine in the interest of and for the benefit of the plaintiffs and the defendant company and others engaged in the manufacture of that article and to the manifest loss and prejudice of the farmers of the Province of Ontario for whose benefit the manufacture of binder twine at the Central Prison was instituted by the Government of the province under the authority of an Act of the Provincial Legislature in that behalf I much doubt that a contract of that nature or any contract to give effect to a combination or arrangement of such a nature could be made by Mr. Fulton so as to be binding upon the corporate body whose manager he is, hut assuming the corporate body to be bound by Mr. Fulton's act, so as to make such his act the act of the corporate body, I cannot entertain a doubt that courts of justice when a contract under discussion appears to a court of justice to have been entered into for the purpose of giving effect to a combination, arrangement or conspiracy of the nature mentioned, should not permit themselves to be made instruments in giving effect to such a contract. That a combination and arrangement of the nature I have spoken of is the true and only natural solution of the dealings of all the parties concerned in the combination namely Mr. John O'Connor the plaintiffs, and Mr. Fulton is, I think, the proper conclusion resulting from the evidence which has been acted upon by the Superior Court in the present case. Mr. Heddle, a witness called by both the plaintiffs and the defendants, accredited by both of them, and in the confidence of both seemed to have no doubt upon the point, and he seems to have been in a position to know. The principal part of the delicate business seems to have been confided to Mr. John Connor as a person from his ability and experience in matters of the very delicate nature of those in question made him most competent to assume and discharge the duties of the office. Some of his letters to which I refer without setting out their contents at large, throw light upon his method of procedure, namely, those filed as exhibits D 79, D 80, D 84, D 87, D 88, D 89, D 91, D 92.
In declining to give any effect to this contract either for plaintiffs or defendants, I would do so in the interest of public order and morality and to maintain the integrity of courts of justice, As we are bound to give the judgment which in our opinion should have been given by the Court of Review our judg- ment, I think should be to dismiss the principal action and the incidental demand and to leave each party to bear and pay their own costs of the action the incidental demand and this appeal.
SEDGEWICK and KING JJ. concurred in the judgment delivered by GIROUARD J
GIROUARD J.—The majority of this court agrees that the binder twine business of the Toronto Central Prison was the business of the appellants, carried on by agents for their sole advantage and benefit, and that if we had to decide this case upon the issues Presented in the courts below and also in this court our duty would be to dismiss the appeal for the reasons given by Mr. Justice Tellier, and more elaborately developed by Acting Chief Justice Tait. But in the course of our deliberations, suspicion came to our mind that perhaps the respondents were endeavouring to enforce an illegal contact, and, in consequence, we felt in duty bound to order a re-hearing upon some new points which embarassed us, and to which we desired to have the assistance of counsel. As these points affect public interests, which private parties might not perhaps feel inclined to clear up, we instructed the registrar of this court to communicate our order, together with the factums and case, to the Attorneys-General for Quebec and Ontario, and also to the Minister of Justice of Canada who are by statutes the constitutional guardians of the administration of justice, although no machinery is provided for such an emergency. We thought that this want of legislative enactment did not preclude courts of justice from giving such order as the ends of justice might commend in a particular case. Art. 3 C. P. Q. In taking this course we followed quite a respectable precedent in Scott v. Brown ([1]), where, in 1892 the English Court of Appeal took the same objection and. maintained, it after hearing both parties. It is unfortunate that for reasons which appear upon the proceedings of this court the re-hearing could not take place. Nothing more is left for us to do, but to dispose of the case as it stood before the re-hearing was ordered.
I must confess that my suspicions arose at the outset, when reading the factums. At page 5 of the appellants' factum, they say :
To form a correct idea of what was the true position between the respondents and the appellants previous to the 29th of February 1896 it is necessary to recall the condition of the binder twine trade at that time. The appellants for several years had controlled the business in Canada. They had factories in Halifax, Montreal, Brantford Port Hope, etc. They could produce sufficient twine for the Canadian consumption, and were protected against imported twine by a duty of 25 per cent. In 1896, the protective duty was reduced to 12 1/2 per cent. Previous to this date, the Government of Ontario introduced into the Central Prison at Toronto, a plant to manufacture twine and the Dominion Government did the same thing in the Kingston Penitentiary, with the object of competing by prison labour against the appellants. The Ontario Government, after working the plant themselves, advertised for tenders. It will be seen at a glance how important it was for the appellants that the contractor who secured the plant, should work in harmony with them to prevent the slaughter of prices which had previously taken place under the management of the Ontario Government. Two contractors were bidding for the plant, Mr. Hallam and Mr. John Connor, under the name of his brother P. L. Connor. John Connor, in the name of his brother was the successful competitor.
The two courts below unanimously found that Hallam and Connor were bidding confidentially for and on behalf of the appellants As Sir Melbourne Tait, A.C.J., truly observes :
As to the transfer of the Government contract to the defendants, I think the evidence clearly shows that they wanted to keep it secrete that the Central Prison business was carried on in their interest and never wanted the contract transferred to their own names And at page 43 of the respondents' factum, more light is thrown upon the true character of the trans actions '.
The question naturally arises, if the appellants owned this contract, why should the respondents agree to obtain a transfer of it through P. L. Connor to them? It must be remembered, however, that absolute secrecy was necessary for the purpose of the successful working of the scheme by which the appelants wanted to control the output of all the twine mills in Canada and of this prison mill where the Government was endeavouring by the means of prison labour to defeat the monopoly in binding twine by selling it to the farmers at a fraction over cost, and had P. L. Connor refused to carry out the provisions of the letter of 29th of October the appellants could never have compelled him to do so as the Government of Ontario would have cancelled the right to manufacture as provided in clause 12 of the contract, (exhibit P., 6, case p. 55,) had it become known that the appellants, the very institution which the Government was seeking to fight were the contractors
The respondents do not seem to realize that by giving to the appellants the aid of their money and credit, and every other possible assistance, they placed themselves in almost the same objectionable position. They, perhaps, thought that they were only helping a movement tending to remove slaughtering prices in an article of commerce, which, jointly with John Connor, they were producing in the Brantford mill leased by them from the appellants in January, 1895, and operated for export only. But they knew, at least should have known, that legal combinations are formed openly and in good faith between all the producers interested for the honest purpose of giving them all fair and equal protection against ruinous competition, without causing any injury to the public or any class of the community. They should have known that combinations secretly organized by the fraudulent interposition of third persons paid and salaried for the purpose, to unduly enhance the price of a commercial commodity, are contrary to public policy and even criminal. Secrecy and false representations constitute one of the elements of conspiracy. Grain to be made and injury to be done to the public or an individual are another.
I do not propose to review the 250 pages of oral evidence, and the 200 pages of printed documents thrown in pêle-mêle at different stages of the trial. Conspiracies are always intricate and difficult to prove and I regret that I cannot be as brief as I would like to be. Dealing with facts in the first instance and of our own motion, our findings must be clear.
It appears that in August and September, 1895, John Connor, of St. John, N.B., a large shareholder of the company appellants, E. M. Fulton, its president and general manager, Michael Connolly, and others, met in Toronto and Montreal for the purpose of acquiring, for and on behalf of the said company, the business of the Toronto Central Prison then advertised to let. As it is important to know exactly what took place at the very inception of the proceedings, I will quote the story as told by all the parties interested.
Patrick L. Connor's story is short. He was not a leading actor on the scene, but merely played a secondary and passive roll assigned by the Consumers' manipulators; he does not appear to have possessed pecuniary means of any consequence; he was a practical twine manufacturer in charge of the Brantford mill, and his name was necessary to better deceive the Ontario Government. His brother, John, conducted the negotiations.
The Consumers' Cordage Company, (he says) put through the deal and my brother as well as I considered we were both representing the Consumers' Cordage Company.
On the 18th September, 1895, he writes to Mr. Noxon, the inspector, that he is ready to satisfy him- self and the Government as to his financial ability to carry out the terms of his tender.
It is also understood (he adds) that the cheque for $50000 which accompanied my first tender in this matter is to be held by you as security to the Government for carrying out my second tender.
John Connor :
Q. Will you please state now that the correspondence is filed, as shortly as possible, what have been your transactions with the Consumers Cordage Company, your brother, and the officials of the Ontario Government with regard to the Central Prison twine contract?
A. In the latter part of August, 1895. I had various conversations with E. M. Fulton, sr., in the office of the Consumers Cordage Company, in reference to the Central Prison binder twine plant, which was at the time advertised through the public press, by which tenders for the operation of this plant were invited from the public. I think it would be probably the 28th or 29th of August, Mr. Fulton, on behalf of the Consumers Cordage Company, closed an agreement with me by which I was to enter the employment of the Consumers Cordage Company. The agreement, which was then closed verbally, was reduced to writing, and signed under the date of 29th of August, that is the agreement was kept in abeyance from the latter part of August, and only executed in the office of Mr. Fulton's of October, but I was to enter the employ of the Consumers Cordage Company under the terms of the company on the 1st day of September. * * *
So, on September 1st, I entered the employ, pursuant with the agreement—the understanding with Mr. Fulton, on behalf of the company. I was immediately detailed to go to Toronto, for the purpose of preparing a tender which was to be presented to the Ontario Government, and I was directed by Mr. Fulton to secure if possible that tender. Before starting for Toronto, it was arranged that that tender would go in in the name of my brother, P. L. Connor who was a resident of Brantford, Ontario, audit was thought, both by Mr. Fulton and myself, that it was better that the bidder on this contract should be from the province of Ontario, more especially as my brother was acquainted with some of those governing the province, and he resided in the city of Brant ford, and was a binder twine manufacturer. * * *
Q. In the conversations you had, and in the negotiations with Mr. Fulton, or the Consumers Cordage Company, and the Messrs. Connolly, how was Mr. P. L. Connor treated in relation to that contract?
A. He was treated, Your Honour, as an employee of the Con u mers' Cordage Company; just simply his name was used as the lessee, believing it was expedient in the interests of the Consumers' Cordage Company that his name should be so used?
Michael Connolly :
Q. Mr. Connolly, would you tell us what you know about the obtaining of the contract for the Central Prison in the month of September, one thousand eight hundred and ninety-five, aud how you came to-be mixed up with it?
A. Well the first intimation I had or the first knowledge I had of the matter, was from John Connor, who called to see me in Kingston and laid the matter before me telling me the Consumers' Cordage Company desired to control the output from the different mills in the Dominion, as fast as they could acquire them, and when the time came he would tender on their behalf, but in somebody else's name, and thereby secure the contract for them and if we chose we would contribute. * * *
Q. After meeting Mr. Connor did you meet anybody connected with the Consumers' Cordage Company?
A. Yes.
Q. Whom, and tell us what took place?
A. I met Mr. Fulton, senior, the president and general manager of the Consumers' Cordage Company who confirmed all that Mr. Connor had represented to me.
N. K. Connolly :
At the time that the lease of the Toronto binder twine factory or the prison factory, was leased, the Consumers' Cordage Company was very anxious to control the output of the country, and they wanted to get that lease and I believe they employed Mr. Connor as well as another gentleman in Toronto, to get it for them.
The promise (to refund advances) was made soon after the contract on or about the contract being signed. It may have been done previous to the contract being signed, for Mr. Fulton was talking to both my brother and myself regarding getting the contract—what a good thing it would be for the Consumers' Cordage Company to have control of the whole outfit, that it would then keep the market at any price they thought fit, or at least, at a paying price.
The testimony of Mr. Fulton, an old man of TO years is somewhat contradictory, but the documentary evidence produced, which, in cases like this, is always of great value in determining les faits et gestes des parties clearly shews that his memory was very deficient; he admits himself that it is weak. In substance his evi- dence does not however differ from that of the other witnesses He states that the Toronto Central Prison and the penitentiary at Kingston had practically ruined the twine business of Canada, and on hearing of the advertisements for the lease of the Toronto mill he proceeded to that city about the middle of August, 1895 to see what could be done in the interests of his company. He made several trips to Toronto, always in great secrecy, being even afraid to register his name at any hotel. On the 4th September, 1895, he writes a note to John Connor while in Toronto;
I am hereby invitation, incog., so do not mention it to any one.
He first saw one Hallam, and immediately came to terms with him. He learned from him that John Connor was also looking after the Central Prison contract. After some delay and a good deal of negotiations, held both in Montreal and in Toronto he succeeded in securing the services of both Hallam and Connor, and the assistance of the respondents. Fifty-seven cents per 100 lbs. of twine or rope to be produced was the figure first settled by them as the bid or rent of plant and convict labour. But on the 31st of August, Fulton tele graphed John Connor to raise it to 72, and finally, when the Government decided to call for new tenders John Connor and Hallam agreed with him to put in a concurrent bid of 75c, prepared by himself and similar in every respect. It turned out however that this was done by Hallam alone and not by Connor. The latter had learned that "eighty will close and nothing else;" in féct, Fulton had telegraphed him on the 10th of September, that Hallam wired him so. He, therefore came to the conclusion that it would be prudent to advance his tender by 71/2, and make it 82k. Fulton looked upon this change as a " trickery," and he complained bitterly in a letter written to Patrick L. Connor, on the 21st September, but the same day John Connor telegraphed Fulton:. Executed contract with my brother. Hallam out of it. Agreed to take over stock October 1st. Rest easy and do nothing more.
The contract was actually signed on the 25th September, 1895, by Patrick L. Connor and Noxon, the inspector of prisons and public charities for Ontario.
In order to, prevent the possibility of a combination with monopolists several clauses were inserted in the contract which will be noticed later on; but one should be mentioned here. Clause 17 provides that
the contractor shall not assign this agreement or sub-let the same without the consent of the Lieutenant-Governor in council.
What a revelation' if before signing or afterwards, the inspector had been told that the c contractor " was the great Consumers' Cordage Company. Noxon swears that neither Fulton or any employee of the company ever told him that Fulton was at the back of the Central Prison contract.
A cheque for $5,000 accompanied both the tender and the contract, as requested in the advertisements. It had been provided for by the respondents accepting and cashing on the 21st August, 1895, in Montreal, the draft of John Connor on them for the same amount, dated Brantford, 20th August, 1895. P. L. Connor swears that this cash reached him in the shape of a c certified cheque or draft" which he deposited with his tender.
During all these negotiations, no complete under standing was put in writing beyond telegrams and letters, which might be mislaid or destroyed. On the 18th October 1895, Fulton writes to John Connor :
I think it advisable that you and Connolly should come to Montreal just as soon as possible and have all understandings and agreements placed in proper ship shape.
This was done in Montreal on the 29th October, 1895, where four documents were carefully prepared and signed simultaneously in Mr. Fulton's lawyer's office: First. A letter from John Connor to Fulton in the following terms:
As my brother, P. L. Connor, has secured the control of the Ontario prison plant for five (5) years on certain terms, with which you are familiar. I beg hereby to state, on his behalf that this contract was secured by him and myself in the interests and for the benefit of your company, and is to be assumed by you confidentially, the business to be conducted in P. L. Conner's name; our colleagues, Messrs. M. and N. K. Connolly, to have the option of contributing the working capital required at 6 per cent interest and a bonus of 2 per cent.
The output is to be marketed from year to year.
Secondly. A proposal of agreement respecting the Brantford mill and also the Toronto Central Prison signed by John Connor, and agreed to in. a P. S. by the respondents, who are styled his " associates s where he formally offers to appellants his services in the twine and cordage business for a term of years from the 1st of September, 1895; at a salary of $2,500 per annum not more than six months to be called for annually. In fact, he had been engaged on the 29th of August, and on the 22nd October, 1895, he received $208.33, "being for one month's salary." Mr. John Connor's last conditions were °
8.This agreement and the connection between me and your company to be kept absolutely confidential and secret by myself and my associates
9.P. L. Conner to be retained as superintendent of the Brantford mill, or otherwise in the employ of the' company at fifteen hundred dollars ($1,500) per annum.
Thirdly. An acceptance by Fulton of the above proposals and terms, in which he says :
On behalf of the company, I now agree to all the terms and conditions of your letter, and shall consider the agreement a binding one from September 1st, 1895, until September 1st, 1896, and thereafter until terminated according to your letter.
With respect to the necessity for preserving the secrecy regarding your connection, I think the suggestion an admirable one, but we will have many opportunities of discussing this and other business matters I see no necessity for further contracts between us. Your letter and this reply are enough, and, therefore, again accepting the offer made by you with the approval of your esteemed colleagues.
The fourth document had reference to the price of twine to be manufactured at the prison and will be noticed hereafter.
The combination having been thus f