Lovitt v. The King

Lovitt v. The King
Collection
Supreme Court Judgments
Date
1910-03-11
Report
(1910) 43 SCR 106
Judges
Fitzpatrick, Charles; Girouard, Désiré; Davies, Louis Henry; Idington, John; Duff, Lyman Poore; Anglin, Francis Alexander
On appeal from
New Brunswick
Subjects
Estates
Decision Content
Supreme Court of Canada
Lovitt v. The King, (1910) 43 S.C.R. 106
Date: 1910-03-11
Irvine A. Lovitt and Others, Executors of the last will and Testament of George H. Lovitt, Deceased (Defendants) Appellants;
and
His Majesty The King, Represented by the Receiver-General of New Brunswick (Plaintiff) Respondent.
1909: October 27; 1910: March 11.
Present: Sir Charles Fitzpatrick C.J. and Girouard, Davies, Idington, Duff and Anglin JJ.
ON APPEAL FROM THE SUPREME COURT OF NEW BRUNSWICK.
Succession duties—New Brunswick statute—Foreign bank—Special deposit in local branch—Depositor domiciled in Nova Scotia— Debt due by bank—Notice of withdrawal—Enforcement of payment.
L., whose domicile was in Nova Scotia, had, when he died, $90,000 on deposit in the branch of the Bank of British North America, at St. John, N.B. 'The receipt given him when the deposit was made provided that the amount would be accounted for by the Bank of British North America on surrender of the receipt and would bear interest at the rate of 3 per cent. per annum. Fifteen days' notice was to be given of its withdrawal. L.'s executors, on demand of the manager at St. John, took out ancillary probate of his will in that city, and were paid the money. The Government of New Brunswick claimed succession duty on the amount.
Held, reversing the judgment of the Supreme Court of New Brunswick (37 N.B. Rep. 558), Idington and Duff JJ. dissenting, that the Government was not entitled to such duty.
Held, per Davies and Anglin JJ., that notice of withdrawal could be given and payment enforced at the head office of the bank in London, England, and perhaps at the branch in Montreal, the chief office of the bank in Canada.
Attorney-General of Ontario v. Newman (31 O.R. 340, 1 Ont. L.R. 511), questioned. APPEAL from the judgment of the Supreme Court of New Brunswick[1], in favour of the respondent on a stated case.
The case stated and agreed upon for submission to the Supreme Court of New Brunswick was in the following terms:
"1. George H. Lovitt, late of Yarmouth; in the Province of Nova Scotia, ship-owner, departed this life at Yarmouth on the fourteenth day of November, A.D. 1900, having made his last will and testament, a copy of which is hereto annexed, whereby he appointed the defendants Irvine A. Lovitt, John Lovitt and Erastus H. Lovitt, the executors and trustees of his estate.
"2. That the said George H. Lovitt was, immediately before his death, a resident of Yarmouth aforesaid and was domiciled in the Province of Nova Scotia.
"3. Probate of the said will was duly granted by the judge of the Court of Probate, in and for the County of Yarmouth on the 19th day of November, A.D. 1900.
"4. That the following are the several persons to whom the estate of the said George H. Lovitt will pass under his last will and testament, and the degree of relationship in which they stand to the testator.
"Margaret Jane Lovitt, widow of testator; Frank Lovitt, Irvine Ashby Lovitt, Erastus Hurd Lovitt, sons of testator; and Jane J. Burrill, daughter of testator, all of Yarmouth, in the Province of Nova Scotia; and Abbie Thomas and Blanche Thomas, of St. John, in the Province of New Brunswick, no relation to testator, and "The Old Ladies' Home" of Yarmouth, in the Province of Nova Scotia.
"5. That the said George H. Lovitt died seized and
possessed of real and personal property of the value of $557,982.88.
"6. That a portion of the estate of the said George H. Lovitt consisted of the sum of $ 90,351.75, which in his lifetime he had placed on special deposit in the Bank of British North America in the City of St. John, taking from the said bank two deposit receipts in the following form:
"No. 2111. Deposit Receipt.
"Incorporated. Royal Charter.
Bank of British North America.
St. John, N.B., 30th December, 1898.
"Received from George H. Lovitt the sum of eighty-six thousand, seven hundred and seventy-five dollars, and 92-100 dollars, which amount will be accounted for by the Bank of British North America on the surrender of this receipt, and will bear interest until further notice at the rate of three per cent, per annum. Fifteen days' notice to be given of its withdrawal and no interest to be paid unless the money remains in the bank three months.
"For the Bank of British North America,
H. A. Harvey,
Manager.
"$86,775.92, Entd. O. H. Sharp,
Accountant.
"Not transferable.
"No. 2112. Deposit Receipt.
"Incorporated. Royal Charter.
Bank of British North America.
St. John, N.B., 30th December, 1898.
"Received from George. H. Lovitt the sum of three thousand, five hundred and seventy-five dollars, and 83-100 dollars, which amount will be accounted for by the Bank of British North America on the surrender of this receipt, and will bear interest until further notice at the rate of three per cent, per annum. Fifteen days' notice to be given of its withdrawal and no interest to be paid unless the money remains in the bank three months.
"For the Bank of British North America,
H. A. Harvey,
Manager.
"$3,575.83, Entd. O. H. Sharp,
Accountant.
"Not transferable.
"7. That the head office of the said Bank of British North America is in the City of London, in that part of the United Kingdom of Great Britain and Ireland called England.
"8. That at the time of the death of the said George H. Lovitt, the said deposit receipt was in his possession at Yarmouth aforesaid, in the Province of Nova Scotia aforesaid.
"9. That a portion of the real property of the said George H. Lovitt consists of a lot of land and premises at Carleton, in the Province of New Brunswick. The said lot of land was appraised at the sum of $2,000, and was devised specifically to Frank Lovitt, the son of testator.
"10. That the manager of the said bank at St. John aforesaid, refused to pay to the said executors the said amount, unless and until they took out ancillary probate as hereinafter mentioned, whereupon the defendants took out ancillary probate of the said last will and testament of George H. Lovitt in New Brunswick. Said ancillary probate was granted to the said defendants by the judge of probate for the City and County of St. John, in the Province of New Brunswick, where- upon the said executors were paid by the said manager of the Bank of British North America at St. John, the amount of the aforesaid deposit receipts.
"The plaintiff claims and the defendants deny that the defendants should pay succession duty in respect to the said sum of $90,351.75, so deposited in the branch of the Bank of British North America at Saint John aforesaid.
"The question for the decision of the court is, whether the said defendants or said estate, or the devisees, or any and which of them, are liable to pay succession duty in respect to the said sum of $90,351.75, the amount of the said deposit receipts issued by the said Bank of British North America, and if so, what amount to the Province of New Brunswick, and in determining the question the court may refer to and construe the statutes of Nova Scotia the same as if they had been proved before the court.
"If the judgment of the court upon the question raised herein is that the same be answered in the affirmative, judgment of the court may be entered for the plaintiff for the amount found by the court to be due, without costs, and if the said questions be answered in the negative, judgment may be entered for the defendants without costs.
"Dated this 16th day of February, A.D. 1905.
"(Signed) J. W. Longley,
Attorney- General,
Nova Scotia.
William Pugsley,
Attorney-General,
New Brunswick." The above specifies all the provisions of the will annexed thereto as stated in the first paragraph which are material to the present appeal.
The executors appeal from the decision of the Supreme Court of New Brunswick, holding the estate liable for succession duties on the sum deposited in the Bank of British North America.
Newcombe K.C. for the appellants. A bank and its branches are one concern: Bain v. Torrance [2]; and this debt was payable by the Bank of British North America, not by its branch in St. John, which is not an entity.
The imposition of this duty would be indirect taxation; Bank of Toronto v. Lambe[3]; Attorney-General of Quebec v. Queen Ins. Co.[4]; Attorney-General of Quebec v. Reed[5]; Brewers and Maltsters Assoc. v. Attorney-General of Ontario[6].
In case of a devise or legacy to be acquired in the future the imposition of the duty must be postponed. Attorney-General of Ontario v. Toronto General Trusts Corp.[7], and this proceeding is, therefore, premature.
And it cannot be imposed on the residuary estate without express provision therefor in the will. In re Botsford[8].
Hazen K.C., Attorney-General of New Brunswick, for the respondent. For purposes such as those in question here the branch of a bank is distinct entity. Woodland v. Fear[9]; County of Wentworth v. Smith[10]; Prince v. Oriental Bank Corp.[11].
Succession duty is based upon administration: Attorney-General of Ontario v. Newman[12] and the appellants in taking out probate of the will in New Brunswick alleged that this money was "property within the province," and are now estopped from denying it.
If it is "property within the province" the fact that the testator had his domicile in Nova Scotia does not prevent the duty from attaching. Harding v. Commissioners of Stamps for Queensland[13].
Newcombe K.C. for the appellants.
Hazen K.C., Attorney-General of New Brunswick, for the respondent.
The Chief Justice.—The facts out of which this appeal arises are fully stated in the opinion of Mr. Justice Anglin.
That portion of the testator's movable wealth upon which the respondent seeks to levy succession duty was not property which passed either by will or intestacy within the Province of New Brunswick. The debts evidenced by the two deposit receipts were due by the Bank of British North America, an English corporation having its head office at London, England, and the situs of these debts was at the domicile of the testator in Nova Scotia. The amount of the bank's indebtedness passed by Lovitt's will to his executors in the province where the will was admitted to probate and the succession devolved. Subsequently, however, to the devolution of the succession in Nova Scotia and in the course of the liquidation of the assets of the estate, the bank at the request of the executors paid the amount of its liability to them in the Province of New Brunswick after they had obtained ancillary letters of probate. Such payment by the bank cannot be said to be a devise or a transfer of property to a person or persons residing within the province within the meaning of the New Brunswick statute. I am of opinion that the amount of the bank's indebtedness to Lovitt was, in the terms of the proviso to the fifth section of the "Succession Duties Act of New Brunswick," property outside of the Province of New Brunswick owned at the time of his death by a person not then domiciled within that province, and that the New Brunswick Act cannot constitutionally have effect to impose a tax upon persons domiciled and resident in Nova Scotia in respect of a succession coming to them under the laws of Nova Scotia.
I would allow the appeal with costs.
Girouard J.—I am inclined to apply to this case the principle of international law recognized in nearly all the systems of law of the different civilized nations and laid down in article 6 of the Civil Code of Lower Canada, viz., that moveable or personal property is governed by the law of the domicile of the owner, and if I understand correctly the recent decision of the House of Lords in Winans v. The Attorney-General[14] the law is the same in England. The laws of New Brunswick have not imposed a succession duty upon the specific property claimed by the estate Lovitt, and consequently being personal it is governed by the law of the domicile of the late Mr. Lovitt, which was in Yarmouth, N.S., and not by the laws of New Brunswick. Being a mere contract debt, it cannot be contended that it is situated in New Brunswick; but even if it was it cannot be denied that it was personal property. I have therefore no hesitation in coming to the conclusion that the appeal must be allowed with costs.
Davies J.—The question we have to decide in this appeal is whether or not a simple contract debt due by the Bank of British North America to the testator, Lovitt, at the time of his death, was subject and liable in the hands of the executors of the estate to the succession duties imposed and made payable by the statute of the Province of New Brunswick (R.S. vol. 1, ch. 17, sec. 5).
There is no dispute about the facts which are submitted to us in the form of a stated case.
Stated briefly, and so far as they are necessary for the conclusion I have reached, these facts are that the testator Lovitt was domiciled in Yarmouth, Nova Scotia, and died there, having first made his will and appointed the appellants his executors. That some time before his death testator deposited with the Bank of British North America at its branch in St. John, N.B., the sum of $90,351.75, which monies remained with the bank until withdrawn by the executors. That when making the deposit testator received a receipt for the same which specified that "the amount would be accounted for by the Bank of British North America on surrender of this receipt"; that it would bear interest at 3%; that fifteen days' notice was to be given of its withdrawal, and that no interest would be paid unless the money remained in the bank for three months.
The executors took out probate of the will in Yarmouth, Nova Scotia, on the testator's death, and afterwards demanded payment of the debt and interest from the bank at its St. John agency, but the manager there required the executors to take out ancillary letters of probate in New Brunswick before paying them the money, which letters were taken out.
The deposit receipt, the evidence of the debt owing by the bank to Lovitt was with him at his domicile, Yarmouth, when he died.
The then Chief Justice, Tuck, with whom Landry J. concurred, reached the conclusion, as he says, "with much doubt," that the debt was liable to pay succession duty in New Brunswick relying upon the authority of Attorney-General v. Newman[15].
Barker J., now Chief Justice, with whom the other members of the court concurred, reached the same conclusion, resting his judgment upon the construction of the New Brunswick statute respecting succession duties, which he held was substantially the same as that upon which Attorney-General v. Newman15 was decided, and upon the statement of Lord Hobhouse in the case of Harding v. Commissioners of Stamps for Queensland[16], who, speaking for the Judicial Committee at page 775, says, that if the amendment to the "Queensland Succession Duty Act" declaring
that upon the issue of any grant of probate or administration in Queensland succession duty is chargeable in respect of all property within Queensland, although the testator may not have had his domicile in Queensland,
was retrospective and applicable to the case before the Committee, it would be conclusive in favour of the liability of the property there in question to pay the tax. It may be possible that this Ontario case of Newman's on which the learned judge in the court below so much relied can be distinguished at least in part from this appeal, and I think it very clear that Lord Hobhouse's dictum does not support the judgment here appealed against. The decision in Newman's Case[17] appears, from the official report of the decision in the appeal court, to have been based upon the propositions that succession duty is payable upon any property in Ontario which can properly be administered only there, and that as the payment of the debts there in question could only be enforced in Ontario and only properly administered there, that settled the question.
The opinions of the learned judges who decided that ease in the appeal court of Ontario leave no doubt as to those propositions being the reasons for their judgment, and the decision is not authority for anything beyond that. But if, as I gather from the appeal case, the facts were that some of the deposit receipts in that case were in the same words substantially as those in this appeal, and were given by branches of banks having their head offices outside of Ontario, then, construing those receipts as I do, I would feel myself obliged to dissent from that case so far as it related to those receipts. That decision is, of course, not binding on us, but I desire not to be understood as expressing any opinion upon it beyond what is necessary for the decision of this appeal.
The debt in this appeal was a simple contract debt payable by the bank, a British corporation, with its head office in London, to Lovitt, a person domiciled in Nova Scotia. In my opinion payment of the amount could be enforced against the bank by Lovitt, or his executors after his death, either in London, Eng., where the head office was, or in Montreal, where, so far as Canada was concerned, our "Bank Act" declared it to be, or in Nova Scotia, where the creditor was domiciled at his death, and where probate of his will was taken out. Whether .the money could be recovered without first giving fifteen days' notice or whether failure to give this notice operated simply to put an end to interest for that time is not necessary to decide and does not in my opinion affect this case.
By no reasonable construction of the deposit receipt can the liability of the bank to pay be limited to St. John only. The St. John agency might be closed at any time. It was the Bank of British North America, the corporate body, not the St. John agency, which had no corporate existence or entity that accepted the deposit, created the debt by so doing and became liable for the amount. The bank declared in the receipt given by its agent that the "amount would be accounted for by the Bank of British North America," not by the agency in St. John of the bank, nor by the bank at that agency. No words of any kind are in this receipt evidencing a contract only to pay in St. John or in New Brunswick, nor is there any statement in the case respecting any bank usage or custom which could justify any such finding or conclusion; on the contrary, the liability of the bank is expressed in the broadest terms and without any limiting words beyond possibly those requiring fifteen days' notice to be given of its withdrawal. That notice could surely be given, and properly given, at the head office of the bank either in London or Montreal, and when so given the bank was liable to be sued for payment as well in Great Britain or in Nova Scotia, where the creditor resided, as in New Brunswick.
If that statement of the law and construction of the contract is correct the case of Newman on my understanding of its facts has no application.
Then with respect to the dictum of Lord Hobhouse when speaking for the Judicial Committee in the above cited case of Harding v. Commissioners of Stamps for Queensland[18], it should be remembered that he was speaking with reference to the facts of the case before him. Two of the debts there in question " were secured by mortgages in land, stock and goods in Queensland/' while the third debt consisted of "3,000 shares in the Royal Bank of Queensland." And as Lord Hobhouse said: "As regards locality it is clear that the assets now in question have locality in Queensland; but that does not affect the beneficial interest to which succession duty is attached and which devolves according to the law of the owner's domicile." He followed that statement up with the dictum relied on which I am discussing, namely, that if the amendment there in question had retrospective action "it was calculated to meet such cases as the present one, and would be conclusive" on the there respondents, that is, speaking with regard to debts and property such as those in question in that case secured by mortgage on lands and goods in Queensland and shares in the Queensland bank.
But their Lordships held that, in the absence of the specific words of the amendment declaring "succession duty chargeable in respect of all property within Queensland, although the testator or intestate may not have had his domicile in Queensland," the statute imposing the succession duty, broad and comprehensive as its language was, must be held to include only persons who became entitled by the laws of Queensland, and must be confined to such persons. In other words, that in construing succession duty Acts, unless the language was specific to the contrary the principle of the maxim mobilia sequuntur personam should apply and the law of the domicile prevail over that of situation. The words of the section above quoted to which such a ruling was applied, were as broad and as general as one could suppose language could be made to be.
Now turning to the New Brunswick Act it cannot but be admitted that the words of the main section are as broad as they possibly could be made. They are, however, restricted by a proviso subsequently added declaring:
The provisions of this section are not intended to apply, and shall not apply to property outside this province, owned at the time of his death by a person not then domiciled within the province, except so much thereof as may be devised or transferred to a person or persons residing within the province.
In. construing this section and sub-section it is manifest that some limitations must be introduced because of the fundamental limitation contained in the "British North America Act, 1867," sec. 92, limiting the power of the provinces as regards taxation to "direct taxation within the province," etc. If the money, $90,325.75, here in dispute, was "property outside of the province" owned at the time of his death by the testator whose domicile was in Nova Scotia and had not been devised "to any person residing in the province," then it would come within the express proviso of the sub-section. It had not been so devised, and the single question remained, whether it was or was not property within the province. Construing this sub-section in the light of the rules laid down by Mr. Dicey in his book on the Conflict of Laws (2 ed.), pages 754 to 760, which rules I find fully supported by the authorities, and which govern in the construction of succession duty statutes, I should have no hesitation whatever on my construction, of the deposit receipt in holding this debt to be property "outside the Province" of New Brunswick at the time of the testator's death, and not, therefore, subject to the succession duty. It certainly being a simple contract debt was not physically within that province whether the situs of the debt was the domicile of the testator or that of the bank, the debtor, it was alike outside of New Brunswick and the forum to administer the property was clearly that of the domicile of the testator. Attorney-General v. Campbell[19].
To my mind the proceedings subsequent to the testator's death, namely, the demand by the executors for the money at the branch of the bank in St. John; the refusal to pay until ancillary probate was taken out; the taking of such probate with the accompanying proceedings, in no wise affects the construction of the statute in question here.
The liability of the debt to pay succession duties in New Brunswick depends upon the conditions existing on the day of testator's death. No subsequent proceedings or acts of the executors could operate either to impose or impair such liability.
The whole subject of succession duties, the distinction which exists between them and estate and probate duties, and the rules which the courts in a long succession of judgments have found it necessary to lay down respecting the construction of statutes imposing them are authoritatively reviewed in a late case in the House of Lords, Winans v. Attorney-General[20], at page 29. These rules are to be found restated with great clearness in the speeches of the law lords who decided that case, and foremost among the rules or principles is one that unless the statute being construed forbids such a construction the maxim mobilia sequuntur personam will be applied and its application will
bring constructively the property within or carry it without the reach of the taxing statutes according as the domicile of its deceased owner is withki or without the realm, colony or dominion as the case may be.
Of course all such rules based as Lord Atkinson in his speech in the case just quoted, page 34, says they are on convenience and springing "from the necessity of avoiding the difficulties almost insuperable," which would arise from their being ignored, must yield to the clearly expressed language overruling them, of a statute passed by a legislature competent to enact it. The questions before us are whether or not with respect to this simple contract debt the legislature of New Brunswick was so competent, and secondly, if competent, has it so clearly expressed itself as to make this debt liable to the succession duties. In the view I take of the facts and of the meaning and effect of the deposit receipt I have concluded that this debt was, to use the language of the sub-section, "outside of the province" and not within it at the time of the testator's death; that the subsequent action of the executors in taking out ancillary probate in New Brunswick and withdrawing the money from the agency of the testator's debtor in St. John did not and could not have the effect of bringing within the scope of the succession duties property which at the time of testator's death was not subject to them, and that consequently the appeal must be allowed and the judgment below reversed.
It is not necessary for me to say anything beyond what is necessary to reach this conclusion, and I desire on this difficult question of succession duties and the constitutional problems which in Canada surround it, to be understood as not expressing any opinion beyond the concrete case we have before us in this appeal. The extent to which the "British North America Act" imposes restrictions upon the taxing powers of the provincial legislatures ; the liability to the tax in dispute which might have followed had this been a specialty debt charged upon lands and goods within the province or consisted of shares in a provincial company as was the case in the Queensland appeal before the Privy Council; or had even the debt been a debt recoverable only in New Brunswick and not elsewhere, are none of them questions which in my view of the facts necessarily arise for decision here, and I purposely refrain from expressing any opinion upon them.
The debt in question being a simple contract debt recoverable against the bank debtor elsewhere than in New Brunswick, and owing to a testator domiciled in Nova Scotia when it was created and when he died was outside the Province of New Brunswick, and the forum to administer it was that of the domicile.
Appeal should be allowed with costs.
Idington J. (dissenting).—The late George H. Lovitt deposited in the Bank of British North America two sums of money aggregating $90,351.75, and received for one sum a deposit receipt in the following form: Deposit Receipt.
Incorporated. Royal Charter.
Bank of British North America.
St. John, N.B., 30th December, 1898.
Received from George H. Lovitt the sum of eighty-six thousand, seven hundred and seventy-five dollars and 92-100 dollars, which amount will be accounted for by the Bank of British North America on surrender of this receipt, and will bear interest until further notice at the rate of three per cent. per annum. Fifteen days' notice to be given of its withdrawal, and no interest to be paid unless the money remains in the bank three months.
For the Bank of British North America,
$86,775.92. (Sgd.) H. A. Harvey, Manager.
Entd. O. H. Sharp,
Accountant.
He received for the other sum a similar deposit receipt. After Mr. Lovitt's death in Nova Scotia, where he resided, the bank refused to pay his executors these moneys unless and until they had obtained ancillary letters of probate from the Probate Court of New Brunswick.
Thereupon the executors applied for and obtained such ancillary letters of probate and by virtue thereof obtained payment of the moneys secured by said receipts.
The respondent thereupon claimed succession duties had become payable by virtue of the New Brunswick Act known as the "Succession Duty Act."
The executors resisted this claim on the grounds that their testator having been domiciled in Nova Scotia, the right to such succession duties was not within the purview of the said Act, and even if so the Act in such regard was ultra vires.
The question raised by the latter ground must be resolved by the construction we put upon the "British North America Act," and the former by the construction put upon the above mentioned provincial Act. The "British North America Act" assigns by section 92, sub-section 2, as one of the exclusive powers of the Provincial Legislature that of
direct taxation within the province in order to the raising of a revenue for provincial purposes.
It is not disputed that the said Act imposing the succession duties it does is intended to be, and speaking generally is, a rightful exercise of this power of taxation.
It is claimed, however, that these debts due by the bank were within the maxim mobilia sequunter personam, and must in law be taken to have been at the death of the testator in Nova Scotia, and therefore beyond the legislative jurisdiction of the Province of New Brunswick.
What was the nature of the contract the testator made? What was the nature of the property evidenced or created thereby? Was it taxable and where?
On the face of it the contract was entirely made in New Brunswick. And the fair construction of it having regard to what is common knowledge must be that the notice it provides to be given should be given at St. John in that province and payment be made there.
It is quite irrelevant to consider what might have happened and what the legal rights of the parties might have become had things happened which have not; just as much so as if a horse or carriage held under bailment and liable to taxation in the province had been, after levy, wrongfully removed beyond it, and so remained and questions raised then as to original validity of the imposition being affected thereby.
In the latter case the rights and remedies of the bailor might have changed their character and incidentally the possibility of actual power to enforce the tax might have vanished.
I submit we obscure the issue by complicating it with possibilities that have not arrived.
The simple question is whether or not such a contract as this which was entirely created within the province had become taxable. Can there be any question now that income is held taxable by a province? And if all the varieties of sources of income we have become accustomed to see so taxed are rightly so taxed can it be that the income derivable from such a contract as this is not? If that derivable therefrom can be taxed, how can the thing itself escape taxation if that more obviously direct method were adopted?
The incomes from somewhat similar sources of investment were declared assessable by the Ontario Legislature and the claim upheld in the case of Re North of Scotland Canadian Mortgage Company[21]—so long ago as 1881.
The company's head office and home was in Scotland. Its business was to lend money on real estate or public securities and act as financial agents.
The assessment was for interest on its investments payable to its agents at Toronto or "at the credit of the company at a bank or being moneys lying at the credit of the company in a bank for investment." The shareholders receiving dividends were subject to income tax in Great Britain. Of course this decision is not binding upon us, but is of long standing and illustrative of what, I submit, may be legally done, whether wisely or not.
No one would dispute the liability to assessment of a bag of gold received from a non-resident for which a receipt had been given by any one entrusted with it. Can the accompaniment of such deposit of gold by terms and conditions varying the legal liability to account therefor make it less assessable?
The case of The Attorney-General of Quebec v. Queen Ins. Co.[22], shews that the business transaction itself, that is, the mere lending or act of acquisition cannot be taxed, as doing so would be indirect and not direct taxation.
The case of Bank of Toronto v. Lambe[23] seems to go further by reason of its comprehensiveness than needed to maintain the right to tax the thing itself in question here, that is, the property in the debt of which the receipt is merely the evidence.
Perhaps this mode of presentation and analysis of the right may, the more one elaborates it, obscure the consideration of the real question to be solved here.
That has been well considered and presented in the case- of The Attorney-General v. Newman[24], where the statute under consideration was in effect identical with and apparently that from which the New Brunswick statute before us was taken.
I agree generally in the reasoning of the opinion judgments in that case supporting the right to maintain the tax upon substantially the same element of fact as herein.
I need not repeat or refer to the authorities therein and on the argument herein dealt with.
There is, as result of argument here, another view presented to my mind, and I proceed to state it. Section 25 of the New Brunswick "Succession Duty Act" enacts as follows:
Any administrator, executor, or trustee having in charge or trust, any estate, legacy or property subject to the said duty, shall deduct therefrom, or collect the duty thereon, upon the appraised value thereof, from the person entitled to such property, and he shall not deliver any property subject to duty to any person until he has collected the duty thereon. 59 Vict. ch. 42, sec. 16.
Having regard to the terms of this statute which the executors solemnly undertook to obey upon obtaining the ancillary letters granted them by the probate court of New Brunswick, preceded by all that that grant implies it seems to me that there is an obligation resting upon them by force of the statute and the proceedings upon which the ancillary letters were got which can only be discharged by the payment of the duties claimed.
The Act provides, among other things, the giving of the bond for the express purpose of procuring the payment of these very duties.
It is to be presumed that was done. It does not appear as part of the stated case. It does not appear either whether we are at liberty to draw inferences in that regard or not.
The parties desire a decision upon the point of the liability to taxation, and if I am at liberty on this stated case to presume these things to have been done that should have been done by virtue of the "Probate Courts Act" and the "Succession Duty Act," then it seems to me it would be a travesty upon justice to permit any one to obtain possession of the proceeds of a debt receivable by them only by virtue of ancillary letters granted upon the faith of their engagement, such as must have been entered into herein, and upon the faith of their representations including, it is possible, an oath implying that this property now in question was within the Province of New Brunswick. I assume that the parties to this litigation desire to have the opinion of the court upon no narrow construction of the case submitted, but upon one which would take account of the circumstances and presumptions no doubt existing and which must exist in every such case when the question to be solved herein arises. I have no doubt that the executors assuming duties such as I have assumed the executors in this case assumed in the statute just quoted, are answerable upon that statute as well as upon any undertaking they may have given pursuant to its other provisions. I have just one word to add as to the view ingeniously presented that the ultimate beneficiaries under the will in question upon whom must ultimately fall the burthen of paying duties such as that in question lived beyond the province and that it is upon them and their receipt of their legacies that the tax is in effect imposed and hence ultra vires as an indirect tax as well as of property beyond the province.
If I understand the argument aright it is sought to be inferred from this that the proper construction of the "Succession Duty Act" was that the tax in such cases was not intended and should only be imposed upon legatees if within the Province of New Brunswick, and that others should escape therefrom. I can not think that any of such constructions was within the contemplation of the framers of the Act. The provisions above referred. to seem conclusively to shew the intention at least to collect such a tax.
I think the appeal should be dismissed with costs. Duff J. (dissenting).—The question raised by this appeal is whether the executors of the deceased George H. Lovitt are accountable for succession duties under the "Succession Duties Act" of New Brunswick, ch. 17, C.S.N.B., in respect of certain sums deposited by the deceased with the Bank of British North America at its branch at St. John. These deposits were acknowledged by deposit receipts in the ordinary form and under the authority of ancillary letters of probate granted by the probate court of New Brunswick were paid out at St. John to the executors of the deceased, who at the time of his death was domiciled and resident in Nova Scotia. The points in controversy are: First, were these deposits chargeable with succession duties by the terms of the statute; and secondly, if so, was the enactment in so far as it imposed a duty upon such deposits within the competence of the legislature?
The statute after exempting certain property and estates from the operation of it declares in broad terms (section 5) that all property ("whether situated in New Brunswick or elsewhere other than property being in the United Kingdom of Great Britain and Ireland and subject to duty whether the deceased person owning or entitled thereto had a fixed place of abode in or without New Brunswick at the time of his death") passing either by will or intestacy shall be subject to a succession duty to be levied, where the aggregate value of property exceeds $200,000, on the whole property, and in other cases upon the share in the distributable surplus passing to the respective beneficiaries according to a scale varying with the degree of relationship borne by the beneficiaries to the deceased.
This broad declaration is, however, qualified in an important way by sub-section 2 of the same section, which is in the following terms:
(2) The provisions of this section are not intended to apply, and shall not apply to property outside this province, owned at the time of his death by a person not then domiciled within the province, except so much thereof as may be devised or transferred to a person or persons residing within the province.
The effect of the section read as a whole seems to be that as regards persons domiciled at the time of their death in New Brunswick, the duty is leviable in respect of the whole of their property; and as regards persons not domiciled at the time of their death in that province, the duties provided for by the Act are payable in respect of all property not "outside the province" within the terms of sub-section 2. But there is a further and necessary limitation, that, namely, which is imposed by section 92, sub-section