FARMERS' CREDITORS ACT

[Stage Direction]
Hon. E. N. RHODES (Minister of Finance) moved for leave to introduce Bill No. 114 relating to the application of the Farmers' Creditors Arrangement Act, 1934, in the province of British Columbia.
Some hon. MEMBERS:: Explain.


Mr. RHODES:: Mr. Speaker, the objects sought to be attained in the passing of the Farmers' Creditors Arrangement Act are well known to the house. In a word the main object was to try to compose the debt structure of a farmer to the point where he could meet his obligations and remain upon the land as a producer.
I think it is fair to say that the act has met with a remarkably favourable reception throughout the country. I desire to pay tribute to the provincial governments for their cordial cooperation, in the main, with the Department of Finance in endeavouring to administer the act. Every province, with the exception of British Columbia-and I will refer to that province in a moment-has cooperated not only to the point of facilitating the operation of the act in every way through contact with its several officials but has made contributions in the way of reductions in fees, and no province has taken any exception to the general terms of the act in its application to provincial obligations. That statement is true as far as the province of British Columbia is concerned from the inception of the act in November until the month of May. During the month of May the board of review sat on a case concerning one Copeland, and it is fair to assume that the province did not object to the jurisdiction of the board because it was represented there by the attorney general. In the Copeland case the board of review made the following finding with regard to the claim of the province of British Columbia for arrears of taxes upon the land:
-that all interest due thereon, with penalties be written off



Fanners' Creditors Act-Mr. Mackenzie
I interpret that to mean that the decision was that the interest upon arrears of taxes should be written off.
-and that the amount payable be allowed and fixed at the sum of $1,408.03 (which is inclusive of the taxes assessed and payable in 1935); and that the said sum shall be payable in three equal annual instalments of $469.34, each, without interest, on the 31st day of October in the years 1936, 1937 and 1938 respectively; and the board directs that no tax enforcement proceeding shall be taken against the debtor in respect of these payments until after October 31, 1939,	The
debtor shall pay all current taxes payable to the province in the year 1936 and subsequent years until and including the year 1940, regularly and in accordance with the provisions of the statute in that behalf.
In May it was announced by the attorney general of that province that the province proposed to challenge the legality of the act.
The premier of the province said that it created an invasion of provincial rights, and he proposed to fight- it all along the line. As a result of the finding in the case I have just indicated the province appeared before the court and asked' for a declaration-
1.	(a) That the defendants purporting to act as a "Board of review for the province of British Columbia" under the provisions of the Farmers' Creditors Arrangement Act. being chapter 53 of the statutes of Canada. 1934, and amending acts and the rules and regulations passed thereunder, are acting without lawful authority, as the said act is ultra vires the parliament of Canada.
(b) Alternatively, that the board of review is acting without lawful authority in assuming jurisdiction under the said act to formulate proposals and to make directions by virtue of which contracts and taxation powers and rights of the crown in the right of the province of British Columbia in relation to farmer debtors are in whole or in part abrogated and set aside.
2.	The plaintiff further claims an injunction to restrain the defendants from purporting to formulate proposals or to give directions or to make orders involving contracts by the crown n11 *"?[DOT] r'sht _ of the province of British Columbia and its farmer debtors in relation to amounts owing under such contracts to the said province and' in relation to moneys due or to become due from farmer debtors to the crown in the right of the said province in respect of any form of taxes, fees, rates or duties.
An interim restraining order was granted on June 15, the motion to continue the injunction being returnable on June 27.
In coming to its decision to introduce this bill the government has had in mind the fact that since the inception of the act there have been, up to the end of May, 57.610 interviews, 10,942 proposals, and 4,602 settlements. These are formal settlements effected by the receivers. In addition there have been 1,250 settlements effected as a result 
of decisions of boards of review. Of that number only 58 occurred in the province of British Columbia as a result of settlements effected by the receivers and I believe only six or seven as a result of decisions by boards of review.
In an interview reported in the press of to-day, or possibly yesterday, the premier of British Columbia said that he was quite content that the act should be applicable so long as it does not apply to the province of British Columbia. In other words, he is quite content that contributions shall be made by loan companies, by trust companies, by banks, by insurance companies and by private debtors, but the province itself should be immune. It will stand on the letter of the law and it will exact its pound of flesh.
It is not for me to quarrel with the decision of the province. It is within the rights of the provincial government to take the attitude it may desire to take, but in making my statement I am stating the blunt facts. There are two things to be said. One is that we have the right to assume that the government of British Columbia speaks for the province of British Columbia, and by its attitude it has said, "We do not wish this act applicable to the province of British Columbia." But the second and more important consideration is this. While we are advised by the Department of Justice that this law is intra vires of this parliament, what a court of law might do is another matter. And inasmuch as the law has been accepted as applicable to the other eight provinces of Canada I submit that we would be derelict in our duties if we were to imperil its existence and the benefits which flow from its operation in the other eight provinces if we allowed the act to continue in British Columbia, with the results which might flow from the action which has been taken in the courts by that province. In these circumstances we have felt that we have no alternative but that of introducing this measure.


Mr. IAN MACKENZIE (Vancouver Centre):: Mr. Speaker, I regret very much that the Minister of Finance (Mr. Rhodes) has departed from the customary courtesies extended on the occasion of the first reading of a bill, and has sought to make a detailed explanation which would have been more proper on second reading. I would say to the minister that he has raised some very controversial arguments. I am not here to defend or to protest against action which may be taken by the provincial government of the province of British Columbia. I am personally in favour, and have so expressed myself

Canada-Poland Trade Treaty
repeatedly, of the provisions of the Farmers' Creditors Arrangement Act in the province of British Columbia. My right hon. friend, the leader of the opposition, very definitely expressed himself as being in favour of the provisions of the bill when it was discussed in the house.
I must protest most emphatically however against the Minister of Finance, at this time and at this stage of debate, namely, upon the introduction of a bill which we have not yet seen, to the consideration of this house, imputing motives to any provincial government, whether it be Liberal or Conservative, I do not care which. I am certainly disposed to object to this bill; I may say frankly to the minister that I am in favour of the application of the provisions of the act to the province of British Columbia. I have spoken in favour of it, and so has the hon. member for New Westminster (Mr. Reid), upon many occasions in British Columbia. For these reasons I say it is entirely unbecoming in the minister, when he seeks leave of the house to introduce the bill, to impute motives when the full facts are not in possession of the house.


Edgar Nelson Rhodes: I think it is due to me that I be given the opportunity to say that if the bon. member would do me the courtesy of reading what I have said he could not take exception to a single statement I have made when introducing the bill. In doing more than stating in simple terms what the bill sought to do I was merely being courteous to the house at this stage so that hon. members might be fully aware of the motives which have caused the government to introduce the bill. I must say however that I did not impute any motives to the province of British Columbia. I confined my observations entirely to a statement of facts, and only a limited number of those facts at that, from official documents. I believe when the hon. member reads what I have said he will realize that the last thing I attempted to do or had in mind, or that the government had in mind, was to show any partisanship, because I was at pains to pay tribute to the other provinces in Canada, without regard to their political affiliations, for having cooperated so loyally with the federal government in the administration of the act. After all, the chief motive is to serve the agricultural population of Canada, and I believe we may forget the political phase of it.


Ian Alistair Mackenzie: I wish you had.


Mr. FRASER (Cariboo):: That is all you are thinking about.
Motion agreed to and bill read the first time.



PENSIONS FOR THE BLIND

[Stage Direction]
On the orders of the day:
Mr. A. A. HEAPS (Winnipeg North):: May I ask the Prime Minister if it is the intention of the government to introduce this session legislation dealing with pensions for the blind?


Right Hon. R. B. BENNETT (Prime Minister) :: I cannot answer that question at the moment. I was not present at council this morning but I am advised that I shall be in a position to give an answer on Monday.
FARMERS' CREDITORS ACT On the orders of the day:


Mr. G. G. COOTE (Macleod):: Might I
ask the Prime Minister whether the government woulld consider introducing legislation dealing with the jurisdiction of the Farmers' Creditors Arrangement Act in respect to indebtedness for school lands? If the Prime Minister is not in a position to give an answer at the moment, perhaps he might consider the question and give an answer on Monday.


Richard Bedford Bennett: I am bound to say that I was not
aware of the difficulty to which the hon. gentleman refers. I shall, however, look into it. The dominion is no longer concerned about school lands, being only the trustees; the school lands are now beyond question the property of the province. But there are limitations with respect to investments, and I believe it would not be competent for us to do more than confer with the province as to what action shall be taken. I will look into the matter and be able to make a more definite statement on Monday.
OANADA-POLAND TRADE TREATY On the orders of the day:


Mr. S. W. JACOBS (Cartier):: In the
absence of the Minister of Trade and Commerce (Mr. Hanson) I wonder if the Prime Minister could give us any information as to the present status of the negotiations looking to a trade treaty between this country and the republic of Poland.


Richard Bedford Bennett: We did carry on negotiations with
the republic of Poland and arrived at the
National Government

basis of an agreement before I was ill, and it was readly for signature, but certain difficulties arose in connection with another branch of government altogether, and certain suggestions were made that one Should be dependent on the other. Without going into details in any sense, which the hon. gentleman will not expect, I am afraid that as matters now stand we are not entitled' to yield! the point that has been suggested with respect to another matter of government altogether, and so the trade agreement will probably have to stand for the moment. That is as far as my present advices' go.
NATIONAL GOVERNMENT On the orders of the day:


Mr. J. S. WOODSWORTH (Winnipeg North Centre):: Mr. Speaker, according to this morning's Montreal Gazette, in his convocation address at Bishop's College Chief Justice Greenshields urged the formation of a national coalition government to bring us through the depression. The chief justice was aware that he was touching upon a controversial matter and might be subject to criticism. I would like to ask, in view of the fact that there is a definite political movement towards a national coalition government today, whether it is appropriate that a judge should1 enter the political field1 and meddle with political matters.


Richard Bedford Bennett: I think, Mr. Speaker, it is easy for
me to say that the government is of the opinion that neither the chief justice of the superior court of Quebec nor the chief justice of Ontario should indulge in party politics, and we very much regret that any chief justice should do so. We feel quite certain that any observations that were made were not intended to be of a political char acter but rather were indicating the private opinion of one who at the time he spoke was occupying the position of chancellor of the university over which he presides.


Samuel William Jacobs: Was he not speaking from
the standpoint of the patriot rather than in a party sense?


Mr. GARLAND (Bow River):: I wonder
how the Prime Minister distinguishes a private statement of opinion from a public statement of opinion?
DISABLED PENSIONERS AT WINNIPEG On the orders of the day:


Hon. J. L. RALSTON (Shelburne-Yar-mouth):: Mr. Speaker just before this sitting

commenced I had a telegram from Winnipeg concerning which I telephoned my hon. friend the Minister of Pensions and National Health and I rise now to make inquiry from him with regard to the situation which apparently has developed in Winnipeg among the disabled pensioners there. Apparently the complaint is that the Department of Pensions and National Health is not complying with a regulation which these men assert has been made whereby a five-dollar allowance was to be exempted from any deduction which is to be made in connection with the relief grant. There are about 400 pensioners now camped in the grounds of Deer Lodge hospital and they threaten to stay there until the regulations are complied with. Can the minister make a statement in regard to this matter?


Hon. D. M. SUTHERLAND (Minister of Pensions and National Health):: Mr. Speaker, the general principle that is applied in the granting of relief is that the department supplements the amount that is given to small pensioners to bring it up to the amount that is granted by the muncipalities to civilians on relief.
Some little time ago the municipal council of Winnipeg decided to allow an exemption of S5 to imperial pensioners who had come to this country since 1924. When they were estimating the amount of relief which a man might receive they said, "We will not count $5 of your pension as income." The result was that such an imperial pensioner would receive $5 more in relief. This organization sent several telegrams to the department claiming that they should also have $5 more in relief but I could not see that they were entitled to this. These exemptions were not made in connection with civilian relief and these men were telegraphed to to the effect that no decision would be given at the time as the Hyndman commission had made several recommendations with regard to relief which were under consideration. In spite of that reply a certain number went to the hospital at Deer Lodge and intimated that they intended to stay until their demands were granted. I believe about forty spent last night on the grounds under canvas.


James Layton Ralston: Is it the intention of the department to give this matter further consideration or does the department consider it at an end?


Donald Matheson Sutherland: The department is
always willing to consider anything.

Companies Act Amendment



B. C. RELIEF CAMP STRIKERS

[Stage Direction]
On the orders of the day.
Samuel William Jacobs: Mr. Speaker, I should like to inquire of the Minister of Railways and Canals (Mr. Manion) if our guest marchers have arrived from the west, if they are properly housed and when will negotiations be opened?


Hon. R. J. MANION (Minister of Railways and Canals):: So far as I know they
have arrived, in fact one of them telephoned me this morning to tell me that they had arrived. I have not investigated their housing but I imagine it is rather good. They told me where they were and it seemed to .me to be a very respectable place. As to the meeting, I hope that we can arrange to meet them tomorrow morning but that has not been definitely decided.



VICTORIA BRIDGE TOLLS

[Stage Direction]
On the orders of the day.
Mr. VINCENT DUPUIS (Laprairie-Napier-ville):: I should like to ask the Minister of
Railways (Mr. Manion) if he has received the decision of the Canadian National Railways in connection with tolls on the Victoria bridge and, if not, is he able to tell us if a report will be made before the end of the session?


Robert James Manion: I asked the Canadian
National Railways for a report on the statements made by the committee. They report that some of the statements were not correct and I have asked them to meet the committee in association with the harbour commission, which controls the other bridge at Montreal. As to when they are to meet or other details of that kind, I know nothing and I cannot give any further information at the present time.


Vincent Dupuis: Is it not the duty of the
government rather than the Canadian National Railways to decide what tolls shall be charged on the Victoria bridge?


Robert James Manion: No. It is the duty of the Canadian National Railways to decide and the government then approves or disapproves of the tolls which the railway company has decided to charge.



COMPANIES ACT, 1934, AMENDMENT

[Stage Direction]
The house resumed from Friday, June 14, consideration in committee of Bill No. 85, to amend the Companies Act, 1934-Mr. Cahan- Mr. Smith (Cumberland) in the chair.
Section 1 agreed to.
On section 2-Incorporation only for objects and powers to 'be actively pursued.
Mr. BOTHWELL:: Does the minister think that this section makes any real alteration in the act as it is at the present time?


Mr. CAHAN:: I believe the hon. gentleman could give an opinion on that just as well as I. This section was drafted to carry out the recommendations of the commission and I think it does so. In actual practice I do not think it will make very much difference with a great many companies as in any case they would operate entirely within this section. This section will restrict the activities of a oompany to the purposes and objects stated in the application for letters patent and in the letters patent as granted.


Charles Edward Bothwell: In making an application for letters patent is it not usual to set out all the objects which the company believes they will want to make use of? The powers granted are usually very broad and as I see it this section would restrict those powers.


Charles Hazlitt Cahan: As far as my memory goes, years ago when a company applied for letters patent they proposed very broad powers but that has not been the practice in recent years. In recent years the companies have limited their applications to certain specific objects, and then there are other implied powers incidental thereto. The real difference of opinion which arises in the courts is brought about by another issue. A company may be restricted to its objects and powers as expressed in its charter, but those dealing with the company may rely to a certain extent upon its having the particular powers which it holds itself out to have. In connection with the Obligations of a company to its creditors and to those who have made contracts with it, there is a tendency in the court decisions to assume that the company as a company is responsible for the holding out by its officers of the possession of certain powers. I think the provisions of this section are very strict and that they will carry out the purposes which the commission had in mind when making the report it did with regard to this particular matter.


Charles Edward Bothwell: Am I correct in assuming that it is the minister's opinion that this section will have the effect of curtailing the operations of a company and preventing it from carrying on any business which may be conducive to the main object for which it is incorporated?


Charles Hazlitt Cahan: I do not think the hon. member should assume that at all. That is a very
Companies Act Amendment

broad issue and I certainly cannot give my adherence to any such suggestion. The powers which are conducive to the interests of a company offer a much wider field than those which are merely incidental.


James Layton Ralston: The provision is that if a company carries on business contrary to or exceeds the powers it shall be liable to be wound up as if it had become insolvent. I point out that the Winding-up Act expressly provides that a company shall be liable to be wound up in any event in which, according to the Companies Act, it is to be dissolved; so that there is no need! to provide that a company shall be wound up as if it were insolvent. All that is necessary-and it makes the procedure much more simple-is to provide that such companies shall be liable to be dissolved if they do the things enumerated, and the Winding-up Act comes in and declares that this is one of the cases in which the company may be wound up. I wonder what the draftsman had in mind when he proposed to have the company wound up as if it were insolvent. In that event a great many things would have to be done with .regard to the creditors, procedure and matters of that sort which might be avoided if this section simply provided that in the events mentioned the company is liable to be dissolved!


Charles Hazlitt Cahan: The drafting is not mine
the section was drafted by the officials of the Department of Justice. My own personal .opinion concurs largely in the suggestion of my hon. friend, that if a company is liable to be dissolved it is liable to be dissolved under the provisions of the Winding-up Act, and under that act any company which is insolvent may be wound up. I suppose the draftsman regarded this as being an assertion in more particular language of the *very position which the hon. gentleman has taken. If the hon. gentleman wishes to move such an amendment I do not think there need be much controversy.


James Layton Ralston: I have not got it written out, but my motion would be that the words "wound up" in line 30 be struck out and the words, in lines 31 and 32 "as if it had become insolvent" be also struck out and the word "dissolved" be inserted after the words "to be" in line 30, so that the provision would read:
such company shall be liable to be dissolved under the provisions of the Winding-up Act, and the attorney general of Canada may, upon receipt of a certificate of the Secretary of State setting forth his opinion as in this section provided, apply to a court of competent jurisdiction for an order that the company be wound up.


Charles Hazlitt Cahan: In the thirtieth line the hon. member would strike out the words "wound up" and insert in lieu thereof the word "dissolved."


James Layton Ralston: That is right.


Charles Hazlitt Cahan: And in lines 31 and 32 the words "as if it. had become insolvent" would be struck out and the rest of the section would remain the same.


James Layton Ralston: Yes.


Charles Hazlitt Cahan: I believe it has the same
effect.


[Stage Direction]
Amendment agreed to.
Section as amended agreed to.
Section 3 agreed to.
On section 4-Shares to be allotted for consideration fixed by board of directors.
Charles Edward Bothwell: Attention was drawn
on Friday last to the continuance of no par shares and distributable surplus. I am assuming that the minister has not changed his mind in that regard. I will not press the point brought to his attention last year and this year again.


Charles Hazlitt Cahan: In all my long experience I have always found that fixing the par values at $100 or a proportion thereof enabled one to carry out the purposes of the company quite fully. That is my own experience with respect to those matters which have been brought before me in my professional capacity. I am prepared to lay on the table of the house a long list of scores of companies, among the most active in our commercial and industrial life, which have no par value shares and which are now operating. Whatever parliament may do in future revisions, at the present time to abolish no par value shares would be to compel scores of these companies to reconstruct at a time of great distress and difficulty, and I do not think the time is opportune.
Mr. BOTHWEiLL: Might it not be well to stop other incorporations in the future from issuing no par shares, even if the old companies were left?


Charles Hazlitt Cahan: Another parliament might be in a clearer frame of mind to consider that question. In all cases that have come before me, and there have been many in the last five years, I have not seen one in which no par value shares were used as a means of stock-watering. Under the system of accounting we now have, every statement of a company must show clearly the value of

Companies Act Amendment
these nio par value shares, and this improved accounting system is excluding water where water was brought iu under previous conditions of organization. No doubt from time to time the Companies Act must be revised to meet real difficulties, to overcome real objections and- to abolish evils as they creep up, but at the present time these companies are all objecting to the possibility of their organization being crippled and their effective recovery being postponed for a considerable time.


Mr. CASGRAIN:: Was not that one of the promises in the reform program outlined in the radio addresses?


Richard Bedford Bennett: It certainly was; and what is more, I said that if the price spreads commission recommended the abolition of no par shares I would vote for it. I will vote for it to-day if there is a motion to that effect.


Mr.   C ATT AN@: It is true as well that the price spreads commission in its wisdom did not recommend it. .


Joseph Philippe Baby Casgrain: We were not given to understand in the radio speeches that the Prime Minister would be governed by what the price spreads commission might recommend.


Richard Bedford Bennett: I referred to that also.


Joseph Philippe Baby Casgrain: No.


Richard Bedford Bennett: I beg your pardon,


Joseph Philippe Baby Casgrain: In January the addresses were to the effect that so and so would be done, and among other things it was indicated that no par value shares would be done away with. May I ask the Secretary of State what he thinks personally about it. Was he of the opinion that they should be abolished?


Richard Bedford Bennett: I also said that the
recommendations of the price spreads commission would be given effect to. I assumed, as I said the other day, that they would be within the law, and to the extent that we are advised they are we have endeavoured to give effect to them. The commission put no par value shares in the alternative. Had they suggested, as 1 understood the views of many of the commission were, that they should be abolished, certainly it would have been so found.


Mr. ILSLEY:: The only answer is that the government has not carried out the alternative.


Richard Bedford Bennett: Oh yes.


James Lorimer Ilsley: The commission recommended that no par value shares be abolished or that there be no distributable surplus. The government has not carried out that recommendation.


Charles Hazlitt Cahan: That is quite different. I have no wish to discuss such a very fine point as that, but under this bill there could be no distributable surplus created out of capital.


James Lorimer Ilsley: That is what I mean.


Charles Hazlitt Cahan: By this bill there can be none.


James Lorimer Ilsley: I do not think that is the effect of the bill. That is only as it applies to capital paid in before the passing of this legislation. It is possible under this legislation for part of the capital to be carried to distributable surplus.


Charles Hazlitt Cahan: No. I think I can assure my hon. friend that the process, which has been carried on whereby from time to time directors, with the approval of a majority of the shareholders-I think it is a three-quarter majority-can set aside as distributable surplus that which has been received as capital, is abolished.


James Lorimer Ilsley: Section 2 commencing at line 15 on page 2 of the bill reads:
And in fixing the amount of such consideration, the board, subject to the provisions of this part, may provide in the contract of subscription for such shares that the consideration received therefor shall be deemed to be capital, excepting a part, if any, not exceeding twenty-five per centum thereon, which shall be set aside as distributable surplus.


Charles Hazlitt Cahan: It is not then received as capital at all. Under this bill if it becomes law, it will be impossible for a company to set aside as distributable surplus anything which it has received as capital; but in the initial subscription it may make a contract with its subscriber as to what part of the consideration shall apply to capital, and that a certain percentage may apply as distributable surplus, not necessarily for dividends but for carrying on the company without impairment of its capital, because this percentage is no longer capital. I think this bill under the circumstances goes very far in the way of reform. We have abolished this practice which has been going on with regard to setting aside from time to time a certain portion of the capital of the company as distributable surplus.
In early times I believe there were certain fixed assets that were set aside as distribut-
Companies Act Amendment

able surplus, but under the regulations which have prevailed in the department for a number of years now, nothing can be set aside as distributable surplus except it be a portion of the liquid, realizable assets. I think we have gone a long way in reform by providing that if a shareholder wishes to put up, in addition to his subscription to capital, a certain sum as distributable surplus to ensure the stability of the company, we will not prohibit him. I douibt if we could. I think that, if I am a shareholder of a company, it would be very difficult to prohibit me from making a contribution to its treasury to enable it to carry on whether the company called that contribution distributable surplus or anything else. I think the hon. gentleman will find we are going a very long way to meet the views of the commission.


[Stage Direction]
Section agreed to.
On section-Consideration for any shares allotted must be adequate.
Charles Hazlitt Cahan: In reading over this clause,
1	think the word "less" in line 36 on page
2	should be "more." How it got in in that form I do not know. I think the clause should read:
In no case shall any shares, whether common or preferred, or whether with or without nominal or par value, be issued and allotted as fully or partly paid up for more than what may justly be deemed to be-
I fancy in an early draft, that was drafted in another way and the word "less" was retained inadvertently. I suggest that the change I have indicated should be made.


James Lorimer Ilsley: I think the word should be "less."


Charles Edward Bothwell: I cannot agree with the minister. The clause reads:
In no case shall any shares, whether common or preferred, or whether with or without nominal or par value, be issued and allotted as fully or partly paid up for less than what may justly be deemed in all the circumstances of the case adequate consideration therefor.
As it reads now, it means that the company is not able to issue shares unless they have been paid for. According to my interpretation the word should be "less" instead of "more."


Charles Hazlitt Cahan: Allow me to read the clause again because it was an hon. member who drew my attention to it. Yes, I think the hon. member is right; I was mistaken.


Charles Edward Bothwell: There is just one other question in connection with the section. It reads:
[Mr Cahan.]
For less than what may justly be deemed in all the circumstances of the case adequate consideration therefor in cash, property or services.
Then in section 96B, under section 15 of the bill at page 9 these words are used:
It shall not be lawful for the directors or promoters of a company to authorize the issue and allotment of any shares of the capital stock of the company as fully paid up unless the company receives, or is to receive what may justly be deemed, in all the circumstances of the case, adequate consideration therefor in cash, property or services.
Just taking those two sections together, I am wondering whether, under section 5 when reference is made to adequate consideration in services, that may be services to be rendered as referred to in the new section 96B, because it seems to me that section 96B will have to be changed, as under the section as I read it no company is able to issue shares for services to be rendered in futurity.


Richard Bedford Bennett: Why not add a word
to make it clear that that is for something past and not in the future?


Charles Edward Bothwell: Section 5 may be clear so far as it is concerned if we alter section 96B when we come to it, but I wanted to bring the matter to the attention of the minister now.


Charles Hazlitt Cahan: In regard to the matter
to which I referred before, simply to show that I was speaking inadvertently, I was sent through a member of the house a short memorandum from the Dominion Association of Chartered Accountants as follows:
If the proposed section (9) of this act is to remain, should not the word "less" in the third line read "more"?
As this came from such an important body, I thought there could not possibly be a mistake, but the suggestion that any change should be made has now been entirely withdrawn.


James Layton Ralston: My difficulty with this
section is what I conceive to be its absolute unworkability and the uncertainty which it is going to create among people who happen to buy shares. I may be wrong about this, but the effect of this section appears to be this. It means that if a company is incorporated under the Dominion Companies Act, and for instance I am an officer of it, I agree to serve the company for $100 a month plus ten shares, doing that because I know the company is in hard circumstances and the directors think it is a good thing to take me on because it means I have an interest in the progress of the company; in other words,

Companies Act Amendment
if I make a success of the company my shares will be worth something. I sell my shares to someone else. Five years afterwards, the company gets into financial difficulties and is wound uip. Mr. X, the man to whom I sold the shares, is put on the list of contributories of the company. He asks why? He is told that it is because of the fact that as regards those shares, although issued fully paid up, the consideration, that is Ralston's services, did not represent adequate consideration for the shares. He is told "you are liable to pay the difference between the real value of Ralston's services and the par value of the shares." I think that is the effect of this section. I think it means that no man can buy the shares of a dominion company without the fear that at some later date a liquidator may put him on the list of contributors and say to the judge, "We want you to project your mind back to the time these shares were issued, to find out if in all the circumstances adequate consideration therefor was given in cash, property or services."
I take that illustration about salary because X happen to know of a case which is all finished with now, so I can speak of it quite freely. It was the subject of considerable discussion in another city. A managing director was given certain shares in addition to his salary; he cut his salary about in two and took shares in place of part of it. That man is getting those shares to-day. This act does not apply to him, so there can be no trouble about it, but if that had happened after this act came into force it w-ould seem that a person who might buy shares from him would face the possibility of some liquidator or creditor coming in and saying that man's services were not worth the number of shares given to him, and the holder of the shares might be required to pay the balance.
That is the situation from the point of view of the shareholder. The point of view of the adviser is just the reverse. Somebody is asked to advise whether these shares were fully paid up. They are marked paid up on their face, but that is not enough. Were they actually issued for less than what -might justly be deemed, "in all the circumstances of the case, adequate consideration therefor in cash, property or services." I do not know of any legal or business adviser who can forecast the mind of a judge having to decide ten years hence what the circumstances were at the time the shares were issued. On that ground, therefore, it seems to me that the section is unworkable and dangerous. I am fully in accord with the idea of not having shares issued for fictitious considerations. As the Secretary of State knows, under the English act there was a provision .whereby, if shares are issued for anything else than cash, the agreement must be filed showing exactly what was the consideration for those shares, so that anyone buying shares may know that the company did not receive cash for them but something in place of cash.


Richard Bedford Bennett: The prospectus will
show that.


James Layton Ralston: Quite right. Under the amendments of last year there was required to be stated in the prospectus itself what was the consideration for the shares. That is, you cannot just say so many dollars; you must specify the property or the thing for which the shares were issued.


Richard Bedford Bennett: Services or contemplated services.


James Layton Ralston: Or, in my case, service for so -many years as a portion of the salary, So the shareholder knows exactly the sort of consideration that was given and the extent of that consideration, and it is up to him to put a value on those services and decide whether or not they represented adequate consideration. But it seems to me to impose on what might be innocent holders, the liability of facing a law-suit to decide the question of the adequacy of the consideration at the time the shares were issued to the original allottee and it seems to me that is going to make it very inadvisable to incorporate under the Dominion Companies Act. It is not fair to the investor; I do not think it is fair to the business public, nor is it fair to the companies themselves, because in these times shares are issued for considerations other than cash, and perfectly good considerations too, which are just as valuable to the company as cash and for which people will accept shares in order that the cash position of the company may not be impaired. I suggest that the Secretary of State consider the matter further before this section passes in its present form.


Charles Hazlitt Cahan: The difficulty which the hon. gentleman has mentioned is obvious, but I think he forgets a decision of the Supreme Court of Canada in the early days, when I think Chief Justice Ritchie was presiding- and that decision never has been modified-in which it was held that if a company issues shares as fully paid and those shares are subsequently transferred from the first allottee to others, the third parties being without notice that the shares have not been fully paid when the certificate of the company shows that they are fully paid, are not liable either to the company or to a creditor. The
Companies Act Amendment

first purchaser of the shares, or perhaps it is better to say the first allottee of the shares, remains liable if the shares were issued for an inadequate consideration, but the third party does not. I have had very strong representations made, in regard to this section, that we should incorporate in it a provision of the English act under which the question of the inadequacy of the consideration, if raised, must be raised within a period of two years.


Richard Bedford Bennett: That is by other than
the allotee?


Charles Hazlitt Cahan: 
James Lorimer Ilsley: I think this subject is worthy of clarification. We have section 15 of the bill which contains a proposed enactment of section 96B of the statute, and which deals with the subject of adequate consideration.


Charles Hazlitt Cahan: The new section 96B is a
penalty clause.


James Lorimer Ilsley: Yes, that is right. It imposes a penalty upon directors, among others, for doing what is forbidden by section 5. When I say it needs clarification I do not mean that I can clarify it to any great extent, but I am speaking in the presence of some able company lawyers, and perhaps they will be able to do so. I have had veiy little experience with the Dominion Companies Act-practically none. In the province of Nova Scotia where I have incorporated companies we have used the old English provision whereby an agreement is filed when property is transferred to the company and shares taken in consideration of the property.


Richard Bedford Bennett: The adequacy of consideration does not arise.


James Lorimer Ilsley: No. We never considered
that the adequacy of the consideration arose, at all. No matter how insignificant the property turned in, if we had an agreement covering it, that was sufficient.

Companies Act Amendment


Charles Hazlitt Cahan: I am afraid the hon. member is under a misapprehension as to the effect of the agreement in case the consideration is entirely inadequate.


James Lorimer Ilsley: In the light of some decisions which have been brought to my attention I think probably we did take too much for granted.


Richard Bedford Bennett: Nevertheless, it was quite a general practice.


James Lorimer Ilsley: Yes. We never had any
trouble incorporating companies in that way. I am not sure what the effect of the Dominion Companies Act would be. To begin with, there is no section in the Dominion Companies Act at the present time which states specifically that shares are issued subject to being paid for in full. The section which has the nearest application is section 45 of the act.


Richard Bedford Bennett: Is there not one respecting discounts?


James Lorimer Ilsley: Subsection 2 of section 45 states:
The liability of a shareholder in respect of any share held by him in the company in respect of which he is liable as a shareholder shall be limited (a) in the case of a share with nominal or par value to the amount unpaid thereon and (b) in the case of a share without nominal or par value to the amount of the consideration for which the share was issued by the company which is unpaid thereon.
Before the passing of that section last year there was a section in the previous act which appeared positively to impose a liability upon a shareholder to pay to the liquidator-


Charles Hazlitt Cahan: What was that section?


James Lorimer Ilsley: I am sorry I cannot give the number, but the section gave a creditor the right of action. It may have been merely procedure.


Charles Hazlitt Cahan: Quite so. The bon. member is dealing with the section which gave a creditor the right of personal action. If he will allow me to say so, we repealed that section, because it led to notorious inequalities. It was an old section adopted from early times from some New England statutes before we had a Winding-up Act or an Insolvency Act, and which1 enabled a creditor who had obtained a judgment against a company to proceed by scire facias against an individual shareholder. The result was that cases arose in Canada in which such proceedings were taken, and in which one creditor by proceeding independently got full compensation from shareholders who had not paid up, while
other creditors were left without any share in that consideration and without any possibility of recovering.
After the most careful discussion with the lawyers throughout the country we came to the conclusion that that process led to such gross inequalities that it should be repealed so that under the Winding-Up Act or under the Bankruptcy Act such assets as there were should be distributed equally. Now any creditor who has a claim of S500 against a company, which is not paid, may not recover individually, but he may take necessary proceedings for the winding up of a company and the equitable distribution of its assets, or he may proceed under the insolvency and achieve the same end. That is the reason that section was repealed.


James Lorimer Ilsley: Whatever the reason may be, the view has been expressed to me that the joint effect of section 45 and section 5 and that part of section 15 of the bill enacting section 96B is to do away with the rule that shares cannot be issued at a discount.


Charles Hazlitt Cahan: I differ from my hon. friend. I believe I have heard that suggestion elsewhere. Directors under our law as administered in all the English provinces, and as administered1 under the civil law in Quebec where they follow the English decisions, are deemed to be trustees, and are liable as such in respect of the administration of their office. I prefer that equity law which obtains in the English provinces and the civil law of Quebec as a means of enforcing the directors liability rather than any provisions in express terms such as the hon. member has suggested. There is no statutory provision under the English law, although since 1929 they have abolished this provision with regard to filing agreements disclosing the consideration received for the issues of shares. They preferred to abolish the filing of agreements under the English companies act and leave it to the courts of England to determine the trustees liabilities and obligations.


James Lorimer Ilsley: There may be some difference between the English companies which are incorporated by memorandum of association and these companies which are governed by the Bonanza case.


Charles Hazlitt Cahan: Not as to thie liability of
shareholders.


James Lorimer Ilsley: I d!o not know about that.
I do not put my views forward1 with very much confidence but that suggestion has been made. Let me try to make clear what
Companies Act Amendment

I have in my mind. If we pass these sections it is nowhere stated in the act that the shares have to be paid for in full. Section 45 says that the liability is limited to the amount unpaid on the shares, and this says that that consideration for the shares must be adequate.


Charles Hazlitt Cahan: Up to the par value.


James Lorimer Ilsley: If it stated that it would
probably do away with the difficulty, but the view has been advanced by persons who have some knowledge of company law that with these two sections, with section 45 merely imposing a negative limitation on the liability-not stating that they must be paid up in full, that they cannot be issued at a discount-and this section which says that the consideration for the shares must be adequate, that is the property, cash or service consideration, then by implication it is possible to issue shares at a discount under this bill as it is drafted, and that of course is undesirable. The sections have a different object altogether. It is to prevent the issuing of shares for less than adequate consideration. I suppose-the minister will correct me if I am wrong-that the desirable thing is that if the shares are shares having a nominal or par value everything should be done to assure that the allottee of the shares shall pay for them in full, whether he pays $100 cash for a SlOO-share or whether he gives $100 worth of property. That is the objective we are working towards. In the case of no par value shares the value placed on the books of the no par value shares shall be deemed to be the par value of the shares, and that- amount shall actually go into the company as the capital of the company. That I think is what is desired. I got in touch with Mr. Wegenast to find out what he had to say about this and he sent me this telegram which I am authorized' to read:
Ee proposed section 96B would undoubtedly make more difficult to bring home responsibility for stock watering. Present law requires consideration to be not merely adequate in all circumstances but to be equivalent of par value or issue price of stock although in some cases courts have shown reluctance to go behind honest decision of directors, see authorities collected page four ninety-four of my book. Simplest statement can make is that few if any cases I know that have succeeded against directors or promoters for stock watering would have succeeded under provisions like 96B.
I asked him how he would correct it in the act and I will send over to the minister his suggestions.
[Mr. Ilsley.l


Charles Hazlitt Cahan: I have read Mr. Wegenast's book and his citations of such cases. If the hon. gentleman has any amendment to suggest, let him suggest it. Let us get down to the heart of the thing.


James Lorimer Ilsley: I will finish what I have
to say. It is suggested under 96B which we have not yet reached-


Charles Hazlitt Cahan: Would my hon. friend allow me one moment to explain? Section 96iB is an entirely different section with an entirely different purport and intent from the section which we have under consideration, which is section 5. Section 5 deals with the person subscribing for shares paying adequate consideration therefor, but sections 96A, and 96B do not refer to subscribers for shares but impose penalities upon directors if they issue shares without adequate consideration. So the purposes in view are entirely different.


James Lorimer Ilsley: They are both directed to the same end.


Richard Bedford Bennett: One is complementary to the other.


James Lorimer Ilsley: Yes.


Charles Hazlitt Cahan: One is an imposition of penalties on directors and the other has to do with the civil liability of the shareholders.


James Lorimer Ilsley: I realize that, but the adequacy referred to in these sections should be related to the par value or the issue price of the shares. But there is nothing to relate the adequacy of the consideration to the par value or the issue price of the shares.


Charles Hazlitt Cahan: What else could it relate to?


James Lorimer Ilsley: Well, whatever the court thinks under all the circumstances the shares are worth. That is what it says-"what may justly be deemed in all the circumstances of the case adequate consideration therefor." My hon. friend from Shelburne-Yarmouth suggests that section 45 does it but I am saying that perhaps it does not. It merely fixes an upper limit. It does not state there is a liability to pay up to the full value at all. There should be a section of the act reading like this:
Every shareholder shall, until the whole of the par value or the issue price as the case may be. of his shares shall have been paid up, be liable to pay to the company or to its liquidator or to the trustee in bankruptcy of its estate any amount unpaid on such shares.
That is a positive imposition of liability which does away with any implication such as I have suggested. I am going to suggest that section 96B, which is complementary, so

Companies Act Amendment
I do not think there can be any objection to discussing it now, be amended by adding this clause:
Nothing in this section shall have the effect of relieving any director or promoter from any liability to which he would have been subject at common law or the civil law before the passing of this section, or of preventing any suit or proceeding in respect of any such liability.
With these amendments I do not see any objection to these sections as they are drafted, but without them I suggest that they may not do their work.


Charles Hazlitt Cahan: If the hon. member will move his amendment and it is approved, it will be adopted of course, but where I do disagree entirely with the suggestion of the hon. gentleman and with the suggestion of Mr. Wegenast is this:	If we are to continue
the common law liability and the civil law liability, let us do so. It proves adequate in my experience. I have certainly in connection with one railway company made scores of shareholders pay up because the consideration paid was inadequate, as my hon. friend may read in the reports of the supreme court of Nova Scotia. There is no doubt as to what the liability is if you apply the law of trusts and trustees, which applies in all the English provinces, or if you have recourse to the civil law of the province of Quebec, but why render a statute complex by attaching to it the common law or the civil law. Let us have one liability or the other. This section 5 as drawn, in the opinion of the Department of Justice which drew it, covers the recommendation and the very terms of the recommendation of the commission. I suggest that the commission of which my hon. friend was a member in making that recommendation should have studied the matter more closely and taken one alternative or the other. So far as I am personally concerned I am ready to take any alternative which this committee accepts, but we cannot accept both.


James Lorimer Ilsley: The commission was not a
commission of lawyers or draftsmen; it was a commission making certain recommendations which it was expected would be put into proper form by the draftsmen. The language of the recommendations was general and the language has been greatly changed. I do not say the change has been for the worse. The language used by the commission could not have been put in statutory form and it was not intended as such. I do not think it is correct for the minister to say that we should have drafted this at the time we made our report.


Charles Hazlitt Cahan: You should have decided as between statute law and common law. That is all that I am suggesting.


Richard Bedford Bennett: I confess that it has
been a matter of concern to me to know just how to cure the difficulties to which the hon. member and other hon. members have referred. I wonder if we said something about the shares not being sold at a discount, or fixed an amount which could not be exceeded, would we not meet some of the difficulties? The English statute in the terms in which the minister has just read it represents the statute as it was finally settled at the instance of Mr. Asquith. At that time difficulties arose in England in connection with the inadequate value of properties being turned over to companies for large numbers of shares, in the days of the great promotions. This resulted in a commission being appointed under the chairmanship of Mr. Frank Crisp, an eminent solicitor who was made a baronet for his services. He prepared the statute which was put through the English house, assisted by others. I recall very vividly the disoussion which took place as to how one might overcome the difficulties to which attention has been directed this afternoon. The different provincial legislatures have endeavoured to deal with this matter and I sent out and got a case which I recalled being before the supreme court. This was an Alberta case, and as the minister has said, the court had to draw a very clear distinction between those who were the original beneficiaries of the stock watering and those who acquired the shares for valuable consideration after they had been issued fully paid. That distinction has been carried through all the cases. When we get down to having a declaration of the consideration in cash or services or property I find it very difficult to accommodate my mind to the thought that those points are not so elastic as to permit of almost anything.
That is my difficulty. Should we do something in the way of deciding the discounts at which the shares should be issued, or providing that they could not be issued as fully paid up at a discount of more than so much? When I buy a share in a company I assume that one hundred cents in the dollar is being paid into the treasury, and when I discover that because of property or services which have been exchanged for shares, the shares have a value of only twenty-five cents on the dollar I find my investment rather bad. How are we going to cure this? I am curious to hear the amendment which has been suggested by Mr. Wegenast. I have been informed that when the Department of Justice
Companies Act Amendment

were considering these sections they gave considerable thought to them and the difficulty of arriving at any single conclusion was just as great then as it has been here this afternoon. We all would like to see this done, but how are we going to do it? Is there anything in the statute as it now stands in connection with the sale of shares at a discount? I confess that this afternoon my mind is not working sufficiently to remember that.


Charles Hazlitt Cahan: If its par value represents
one hundred cents on the dollar, nothing can be adequate as compensation for that share unless it is adequate to the extent of one hundred cents on the dollar. There is no doubt of that in my mind.


Richard Bedford Bennett: And the test of that?


Charles Hazlitt Cahan: The test of that rests with the courts. We can go on and provide, as they have provided by section 47 of the English act, that it shall be lawful for a company to issue at a discount shares in the company of a class already issued. When you are first issuing shares having par value they must represent one hundred cents on the dollar of par value although there is no express provision in the 1929 English act to that effect.


Richard Bedford Bennett: They overcome that by the provision in connection with the commission on sales.


Charles Hazlitt Cahan: In order to allow a company, the value of whose assets has depreciated, to secure new capital at a discount, section 47 of 'the English act provides that the issue of shares at a discount must be authorized by a resolution passed at a general meeting of the company and must be sanctioned !by the count in practically the same way as a compromise arrangement. The resolution must specify the maximum rate of discount at which shares are to be issued. But the English act assumes that when you so provide for a discount there must be compensation paid for the shares and in respect of shares with par value, that compensation must be the par value less the rate of discount. I have heard a suggestion to that effect made from time to time and if the hon. member for Kings-Hanfs wishes to move that amendment we will consider it.


James Lorimer Ilsley: This would not be an amendment to this section, it would be a new section. I move:
That the following section be inserted between sections 45 and 4-6 of the act:
45A. Every shareholder shall, until the whole of the par value or the issue price, as

the case may be, of his shares shall have been paid up, be liable to pay to the company or to its liquidator or to the trustee in bankruptcy of its estate any amount unpaid on such shares.


James Layton Ralston: As the Prime Minister has pointed out, this section 45 is an important one and I think further consideration of the verbiage of the section would be justified. The Secretary of State has referred to the liability of a shareholder who is not an allottee.


Richard Bedford Bennett: A purchaser for value without notice.


James Layton Ralston: I am not sure that the case to which he referred would apply, as apparently by this section the whole transaction is made illegal. The section reads:
In no case shall any shares, whether common or preferred, or whether with or without nominal or par value, be issued and allotted as fully or partly paid' up for less than what may justly be deemed in all the circumstances of the case adequate consideration therefor-
Where a share was, contrary to this provision, wrongfully or illegally issued as fully paid up, that share might be tainted in the hands of anyone who might obtain it from then on.


Richard Bedford Bennett: That is just what they held in the case from Alberta.


James Layton Ralston: That is my fear there. This brings me to the point made by the Secretary of State. It may be possible that a time limit could be imposed such as that contained in section 41 of the English act. I think that section applies to the time limit within which an allottee of shares may revoke his allotment and reject his subscription on the grounds of fraud and misrepresentation. The same idea could be made apply here so that one who bought shares could feel that the bars were up and no action could be brought. Section 157 of the English act provides a time limit; anyone who has parted with his shares for one year is not longer liable. But I realize that that does not apply to the case in point.


Richard Bedford Bennett: The last English act.


James Layton Ralston: That still leaves the present holder of the shares liable, if my theory is right, that he is holding shares illegally issued. Thirdly, with regard to what my hon. friend from Hants-Kings has said, with respect to the effect of Section 45, it is true it is only in terms a section which limits liability. I do not know whether it is correct to say it, but I have always had the idea that if a per-

Companies Act Amendment
son were a member of a company and the liability were not limited by statute he might be in the position of a partner and liable to the full extent of the liabilities of the company.


Charles Hazlitt Cahan: That is the law.


James Layton Ralston: If that is the case you would not need a statute imposing liability, such as my hon. friend has suggested, because the fact that a person is a member of a company, whether his holding is to the extent of $4 or $4,000, makes him a partner and he is liable.


Richard Bedford Bennett: Recent authorities do not go quite so far. They pare down that theory and hold that the liability is limited by the value of the shares.


James Layton Ralston: That may be.


Richard Bedford Bennett: There has been an effort to do that.


James Layton Ralston: My hon. friend from Hants-Kings suggests that the theory is limited to companies incorporated by memorandum of association, because they are contractual as compared with charter companies incorporated under this act. I had the idea that if it were not for the fact that the provision of the statute limits liability, the liability would be unlimited. However, my hon. friend feels that he wants to go the other way about it and put in a positive section imposing liability. Section 157 of the English act does. I am not sure that we are talking by the book, because it may be that the Winding-up Act does it.


Richard Bedford Bennett: The Winding-up Act defines the measure of liability but it does not make it unlimited. I am speaking from memory, but I do not think it does.


James Layton Ralston: The English act imposes a positive liability on the shareholder, which my hon. friend says is not contained in section 45 as it stands. Coming back to section 5 again, I suggest to the Secretary of State that it would be worth while if he allowed the section to stand. May I refer however to subsection (10), which prohibits what have come to be known as management or control shares. I have received several representations with regard to this matter to the effect that there does not seem to be any point in making this subsection apply to what we know as private companies, that is, companies whose shares are not subscribed for by the public, the transfer of whose shares 92582-246
is restricted, and companies the number of whose shareholders is limited. I understand that there are companies owned largely by foreigners which pay some revenue to this country, composed of people who live outside Canada and who hold shares which represent the equity. They have another class of shares which control the management?


Charles Hazlitt Cahan: Would it not be sufficient to strike out, at the top of page 3, the word "the" in the first line, and to insert in place thereof "a public company," so as to read "in no case shall shares of a public company of any class"-


Richard Bedford Bennett: It is the public company aimed at, because of difficulties that arose in consequence of financial control, I will not say by exploiters but by houses that took properties and dealt with them for the purpose of controlling them.


James Layton Ralston: Groups.


Charles Hazlitt Cahan: Yesterday, the hon. -member for Bast Kootenay (Mr. Stevens), referring to myself, said:
The minister who introduced this legislation stated in one part of his remarks that if he were in private practice he would like nothing better than to be briefed to contest the very measures he was introducing.
That statement is entirely inaccurate and misleading. I did make reference to one subsection, and one subsection only, this subsection 10. I said I did not regard it as adequate to prevent shareholders, iby private arrangement, obtaining -control of a company and so control of the management of -the company. One of the things most to be desired is to obtain continuity of management, and in many public companies this is not obtained by management shares. I have never incorporated a company with management shares; but I have found several ways whereby, by consent and cooperation or by agreement on the part of a majority of the shareholders, continuity of management could be maintained. That is all I had in -mind at the time.


Richard Bedford Bennett: That is done now by the directors retiring from year to year; they do not all retire the same year.


Charles Hazlitt Cahan: I certainly was not making reference to the whole act, as the hon. member for East Kootenay improperly stated.


Richard Bedford Bennett: I think the sectior
might stand.

Companies Act Amendment


James Lorimer Ilsley: The amendment I propose
comes in at this stage. The amendment would be, in form, 5 (a) to this act, and would propose section 45 (a) to the main act. I am willing to have the amendment stand.


Richard Bedford Bennett: They can stand together.
Section stands.
On section 6-Bylaw for consolidation, reduction, increase, etc., of share capital.


Charles Hazlitt Cahan: There is something here that should be considered. In line 12, paragraph
(b), the words appear:
-consolidate all shares with par value.
And in line 15, paragraph (c), there are the words:
-consolidate all shares without par value.
I suggest that the word "all" should be changed to the word "any". My attention has been drawn by some lawyers to the fact that you could not consolidate the preferred without consolidating all the common, or consolidate the common without consolidating the preferred. My amendment, therefore, is to change the word "all" to the word "any" in line 12 and to change the word "all" to the word "any" in line 15.


[Stage Direction]
Amendment agreed to.
Section as amended agreed to.
On section 7-Creation or conversion of preferred shares, etc., by bylaw.
Charles Hazlitt Cahan: Some of the lawyers have made certain verbal suggestions in connection with this section. They suggest that in paragraph (a), line 40, we should insert the word "the" after the word "for" and the word "of" after the word "issuing" in the same line-"for the creating and issuing of any."
Mr. BOTHWEiLL: In this particular section, what exactly is the object of doing away with the deferred shares?


Charles Hazlitt Cahan: I do not know; I have no idea what was in the mind of the commission who recommended it. Perhaps the hon. member for Hants-Kings can inform us. Deferred shares, in practice, do not usually come into the first organization of a company, in my experience at any rate; but we have had during the past four years many compromises as between shareholders and creditors representing different interests in which eferred shares are authorized and my hon. friend knows that such compromise arrangements

are permitted under the act with the approval of the court. Under the supervision of a judge of the superior court of the province in which the head office of the company is, and in considering such compromise arrangements I have frequently found provisions that some of the ordinary shareholders should become deferred shareholders in order that a more equitable arrangement might be reached. I have not seen this in our Canadian practice except as arising out of such compromises.


Charles Edward Bothwell: I have been informed that this is a very useful manner of financing a company; that is, some shareholders, particularly in mining companies, are quite willing that dividends should be deferred to them until the company is in a position to pay the deferred dividends. I am not well enough versed in thie matter to be able to argue the point, and I shall leave it to others.


James Lorimer Ilsley: It apparently devolves upon me to justify this recommendation. In a general way I think the members of the price spreads commission felt there should be a simplification of share issues and the placing upon the market of a number of different classes of shares was confusing to the general public and led to people buying shares of a different class from the ones they felt they were buying. That, generally speaking, was what was in the minds of the commission. I am very doubtful whether our attention was specifically directed to deferred shares; I do not think it was. There was no intention to cut out deferred shares as such, but it was felt it was desirable not to have too many classes or types of shares. That is the basis of the recommendation.


Charles Hazlitt Cahan: I would suggest that we
pass the section as it stands and leave the question of deferred shares for future consideration or for another parliament because to change it now it going to lead to controversy.


Richard Bedford Bennett: I think the minister might look at section 48 again. I think he will find that to consolidate all shares with par value-


Charles Hazlitt Cahan: We have changed that.


Richard Bedford Bennett: But that does not convey the meaning the minister wants to convey because it takes part of the shares; my hon. friend intends that it shall take them all.


Charles Hazlitt Cahan: It reads:
Consolidate any shares with par value, whether common or preferred.

Companies Act Amendment


Richard Bedford Bennett: The minister has changed it now. I think what they had in mind was properly expressed.


Charles Hazlitt Cahan: I can make it read:
Consolidate all common and/or preferred shares with par value.
And leave out "whether common or preferred." I have had under consideration the suggestions made both ways.


Richard Bedford Bennett: I think the last suggestion would cover the point.


Charles Hazlitt Cahan: It would read: .
(b) Consolidate all common and/or preferred shares with par value-
And leave out the underlined words "whether common or preferred" and then continue:
-into shares of larger par value not exceeding the par value of $100 each.
Then in the next line:
(c) Consolidate all common and/or preferred shares without par value-
Leaving out the words "whether common or preferred."
-so that the authorized number of such common and/or preferred shares is reduced.
That will make it clearer.


Richard Bedford Bennett: That makes it clear
beyond peradventure.


Charles Edward Bothwell: Why not use the term "of the same class"? You are dealing with shares of a particular class, common shares and preferred shares:
Consolidate shares of the same class with par value, whether common or preferred.


Charles Hazlitt Cahan: I would be willing to take it that way.


James Layton Ralston: Let me register my
solemn and uncompromising opposition to the use of the words "and/or" in a statute. I have seen this in charter parties and it is becoming more common in legal documents; I do not think it is good English.


Richard Bedford Bennett: It has been in recent
English statutes for the first time, within I think the last five years.


James Layton Ralston: I insist it is not Canadian English.


The CHAIRMAN (Mr. Smith, Cuirfber-land):: Shall the amendment carry?


Richard Bedford Bennett: I do not want to waste
too much time on this, but when I heard the 92582-246}
minister reading it I turned it up again to refresh my memory and I think the original section covers it:
Consolidate all shares with par value of any class into shares of larger par value not exceeding the par value of $100 each.
Because we have now agreed that there shall be only two classes, namely, common and preferred therefore I think the original section covers it.


Charles Hazlitt Cahan: Then it will be:
Consolidate all shares with par value of any class into shares of larger par value not exceeding the par value of $100 each.


Richard Bedford Bennett: Quite so.


James Layton Ralston: It was not intended to
consolidate common and preferred?


Richard Bedford Bennett: No. The recommendation is limited to a class.


Charles Hazlitt Cahan: Then it will be paragraphs
(lb) and (c) of the existing act as they appear on the page opposite section 6. I suggest that amendment.


Charles Edward Bothwell: The amendment now
is just to use paragraphs (b) and (c) as set forth on the opposite page?


Charles Hazlitt Cahan: Quite so, if my hon. friend will move that.


Charles Edward Bothwell: I so move.


[Stage Direction]
Amendment agreed to.
Section as amended agreed to.
On setetion 7-Creation or conversion of preferred shares, etcetera, by by-law.
Charles Hazlitt Cahan: I suggest that in line 40
instead of the words "for creating and issuing" there be inserted the words "for the creating and issuing of." I think that makes it clearer.


[Stage Direction]
Amendment agreed to.
Section as amended agreed to.
Sections 8 and 9 agreed to.
On section 10-Prospectus to be filed before issue to public.
James Layton Ralston: Something has been
called to my attention on page 7, in regard to the time limit within which notice of the exercise of the right of rescission shall be given. Subsection 3, at the top of page 7, about half way through the section, contains these words:
-provided that written notice of the exercise of such right of rescission shall have been served on the company within thirty days from
Companies Act Amendment

the date of receipt of notice of allotment or of issuance of the securities as the case may be, or within thirty days from the date of delivery or mailing to such applicant of a copy of the prospectus filed with the Secretary of State in respect of the securities, whichever shall be the longer period.
In the first place I suggest that the words "the date of receipt of notice of allotment or of issuance of the securities" are dangerously ambiguous.


Richard Bedford Bennett: Which line is that?


James Layton Ralston: That is in line 9. I
think it means the date of the receipt of the notice of allotment or from the date of issuance. I do not think the word "notice" refers to the issuance, and it seems to me that it should be made clear. I believe the words "from the date" should be inserted after the word "or" and before the words "of issuance."


Charles Hazlitt Cahan: I think that clarifies it.


James Layton Ralston: Then I submit that instead of the words "the longer period" in line 13 it should be "the shorter period" and I will tell you why. It seems to me possible that there might be no notice of allotment but simply the issuance of the security. M that is the case and a man has thirty days from the receipt of the notice of allotment or from the date of issuance, whichever shall be the longer, it seems to me that he can wait for ever for a notice of allotment and say "My thirty days is not up." In other words, no one will be able to feel that a notice of rescission can be avoided until he has actually sent notice of allotment. It seems to me it is quite sufficient if I get a notice of allotment of shares and give my notice of rescission within that time. If I get no notice of allotment, but if the shares are issued, or if a copy of the prospectus is filed and I give my notice of rescission within thirty days, that would seem quite sufficient, instead of making it possible that the right to give a notice of rescission may never be foreclosed by reason of the fact that no notice of allotment is ever received.


Charles Hazlitt Cahan: I have no objection to those amendments. I have been in the habit, as I am sure the Prime Minister has, when providing for sending a notice of allotment to make provision for the issue of the shares with it. However, I think the suggestion of the hon. member for Shelbume-Yarmouth meets the difficulty, and I accept it.
[Mr Ralston.]


James Layton Ralston: The amendment is to
substitute the word "shorter" for the word "longer" in line 13 and to insert the words "from the date" after the word "or" in line 9.


[Stage Direction]
Amendment agreed to.
Section as amended agreed to.
On section 11-Distributable surplus.
Charles Edward Bothwell: I should like to ask the Secretary of State the reason for omitting the words in italics on the opposite page, as follows:
-and the amount per share of the consideration to be received for any such shares comprised in the offer proposed to be set aside as such distributable surplus.


Charles Hazlitt Cahan: There was a provision of the former act, which enabled the directors at any time to set aside a distributable surplus, out of part of the capital, without the unanimous consent of the shareholders. Now that whole method is abrogated and repealed, and this limited setting aside is restricted to the provisions of subsection (7) of section 12 of the act, which restricts it very much. I have limited it to what is expressly authorized in that subsection.


Charles Edward Bothwell: Then after this act goes through how is it going to be possible to arrive at the price of the no par value shares? This was one method by which the issue price of no par value shares was fixed, and I should like to know how it is going to be possible to arrive at that price now.


Charles Hazlitt Cahan: The issue price of no par value shares hitherto has been fixed at the time of the allotment and subscription, but the amount that could be set aside as distributable surplus might be fixed at any time, one, two, three or four years aiter that. We have abolished all that; and in drafting this section, for which I am responsible, I simply reverted to the new subsection (7) of section 12 and restricted such setting aside to that only. All this other manoeuvering goes by the board and is prohibited.


[Stage Direction]
Section agreed to.
On section 12-No dividends when company insolvent.
James Layton Ralston: I was going to ask the Secretary of State if he would consider an amendment which would restrict the effect of this section to a so called write up made within three years of the date of the declaration. The section prohibits the declaration of a dividend when the company is insolvent,

Companies Act Amendment
and it says that in determining the solvency of the company no account shall be taken of any increase in the surplus or reserves of the company resulting merely from the write up of the values of the assets of the company I think that is a good principle, but it seems to me that write ups may have occurred long before the declaration of the dividend which is attacked, and that it would be well to insert some time limit. Since three years is not an unusual time limit under the English act I suggest that.


Richard Bedford Bennett: What would be the effect of that?


James Layton Ralston: The effect would be that in determining the solvency of a company you would not be precluded from taking into consideration write ups made .more than three years before the declaration of the dividend.
The clause to be added would read:
-if such writing up has been done within three years preceding the date of such declaration.


Charles Hazlitt Cahan: I think we might have a
limit. I have no doubt the hon. member for Shelbume-Yarmouth has received from various accountancy firms and associations suggestions such as I have received, namely that, in respect of companies which have had long careers, from time to time appraisements writing up assets have been made and from time to time very considerable amounts of revenue have been set aside for depreciation. The records are of such doubtful accuracy that you cannot go back through the whole history of the company and determine just what the write up has been. You write up and you write down, and it seems to me a term of three years is short.


James Layton Ralston: I have no great preference in the matter; like the Secretary of State, I have received letters from about six different people in which my attention has been called to different sections. It seems to me there ought to be provision so that if a write up has been made at a sufficiently remote date it would be effective for the purpose of determining the solvency of a company at a later date. I believe five years would be as good as three.


Richard Bedford Bennett: Five years would probably be in the best interests of the shareholders themselves.


Charles Hazlitt Cahan: I should think so. And
further than that, through the ordinary changes in directorships a director would not
of his own knowledge know about write ups for more than five years anterior. He would have to accept the statements of the auditors.


James Lorimer Ilsley: When he introduced the
bill, or upon second reading-I am not sure which-I believe the minister stated that this was the law, anyway, and that no enactment
was necessary.


Richard Bedford Bennett: It would be, up to the addition of the words about determining the solvency of the company. That is the law, up to that point. These new words were not the law.


James Lorimer Ilsley: I believe that is correct.


Richard Bedford Bennett: I think that is what the minister had in mind. I believe the suggestion of the hon. member for Shelboime-Yarmouth should be acted upon.


Charles Hazlitt Cahan: I suggested that with regard to the latter part it might be limited. The only question is as to what would be a reasonable limit.


James Layton Ralston: I have asked the same
question the Secretary of State has asked, namely, as to the possibility of determining when the write up had been made.


Charles Hazlitt Cahan: Would there be any objection to having a term of five years?


Richard Bedford Bennett: I imagine the injury
aimed at arises through the appraisal companies-


James Layton Ralston: -appraising every shingle nail and every brick.


Richard Bedford Bennett: Yes. I saw one set,
showing reproduction costs less depreciation, and when they finished it the property was worth about five times what it stood at in the books of the enterprise.


James Layton Ralston: And about five times
what it cost when it was built.


Richard Bedford Bennett: Yes, I believe that is
true, too, because of the difference in cost now as compared with the costs at the time of building. The only question seems to be that of deciding whether it should be three or five years, or some other time. I believe there should undoubtedly be some time limit.


James Layton Ralston: I believe five years would be fair.


Richard Bedford Bennett: Because, as the minister has said, there is a continuous reduction by depreciation allowance.


Ernest D'Israeli Smith: Shall the amendment carry?
Companies Act Amendment


Richard Bedford Bennett: How would it read; we
want to make the section clear.


Ernest D'Israeli Smith: I have it in this way:
That there be added to section 12 the following words: "if such writing up has been done within five years preceding the date of such declaration."


Richard Bedford Bennett: I think that is all right.


James Layton Ralston: Would the committee prefer this wording: "unless such writing up has been done more than five years preceding"?


Richard Bedford Bennett: That would be better.


Charles Hazlitt Cahan: I would suggest "shall have been made" rather than "done."


James Layton Ralston: With my suggestion it would read: "more than five years before the date of such declaration."


Ernest D'Israeli Smith: The suggested change would be, including the various suggestions, "unless such writing up shall have been made more than five years before the date of such declaration."


[Stage Direction]
Amendment agreed to.
Section as amended agreed to.
Sections 13 and 14 agreed to.
On section 15-Statement by director of personal account.
Charles Hazlitt Cahan: I believe this section most certainly should apply only to public companies. I refer to section 96A of the act. The shareholders are limited. I was going to suggest that section 96A (1) should read: "Every director of a public company" shall do so and so. Then in subsection (2) it would read: "No director of a public company shall speculate" and so on,

because the shares of a private company are not listed on the stock exchange.


James Layton Ralston: The same change would be made in subsection (4).


Richard Bedford Bennett: And in subsection (5). I should think those changes would be desirable.


Charles Hazlitt Cahan: Yes, the suggestions have come from many sources. Then, if those changes are agreeable I should like to ask that similar amendments be adopted with regard to section 96B.


[Stage Direction]
Amendment agreed to.
James Layton Ralston: In connection with section 96A I should like to make another suggestion. I believe there is a chance for misunderstand-
[The Chairman.]
ing or misapprehension in connection with the time of delivery of shares. In subsection (3) the word "speculate" is defined as "trading in securities in the course of successive and continuous acts; selling a security where the director does not own the security sold, or, if owning the security, does not deliver it against such sale within twenty days thereafter, or does not deliver the same within five days after such sale by depositing it in the mails or other usual channels of transportation." It seems to me that there is a question as to whether or not those two provisions are limited to five days instead of twenty days. I would suggest that the delay for depositing in the mail be the same as the delay for delivery against sale. I do not know what reason there can be for the difference. In other words, the word "five" should be changed to "twenty."


Ernest D'Israeli Smith: The hon. member refers to the word "five" in line eighteen of the section?


James Layton Ralston: Yes.


Ernest D'Israeli Smith: And suggests that it be changed to "twenty"?


Charles Hazlitt Cahan: I have no objection.


Richard Bedford Bennett: Does the hon. member realize what is meant?


James Layton Ralston: No.


Richard Bedford Bennett: I -believe it means that twenty days are allowed against it, but that he shall put it in the mails within five days of the twenty. That is, there are twenty days in which to perform a transaction, but it must be mailed. If the change would make it clearer it would not be objectionable. It was not intended that the time be limited to five days.


James Layton Ralston: The Prime Minister thinks that five days are part of the twenty days?


Richard Bedford Bennett: Yes, he has to put it in the mail. He must put it in the mail or the usual channel of transportation within five days. He must complete the sale within twenty days, and must begin- the process of completion within five days by putting it in the mail or some other method of transportation. I believe that is the ride of the stock exchanges in connection with some of these matters. That is, he must put it in the mail within five days of the date of the sale, but it must be completed within twenty days. Is that not the real meaning of the section?

Companies Act Amendment


Charles Hazlitt Cahan: Yes, I had that in mind. If he actually delivered the security^ himself, he could take twenty days to do it-that is, if it were delivered by physical delivery. But if he were delivering it by mail, by express or through other channels of transportation then at least he ought to deliver it into the mail or to the express company in the five days, no matter what time it might reach its ultimate destination.


James Layton Ralston: If I may be permitted to use a slang expression, I would say that that is pretty snappy.


Richard Bedford Bennett: Yes, I think perhaps it is. Five days would be a limited time, if a holiday or a Sunday intervened.


James Layton Ralston: The stock has to be transferred, he has to have a new certificate and whip it into the mails, or he would be a speculator.


Mr. OASGRAIN:: Yes, give him a chance.


Richard Bedford Bennett: I scarcely think it means that he has to complete it; I think it means that he has to have it properly endorsed and in the mail. But even five days would be a very short space of time if the stock exchange closed on a Friday and Saturday and Sunday intervened.
Mr. RAlLSTON: And if Monday happened to be the King's birthday.


Charles Hazlitt Cahan: If he sells he must deliver within a reasonable time; that is the point that has to be protected.


Richard Bedford Bennett: You might say within a reasonable time, without undertaking to define it. You might leave out the question of the mails altogether and let him take his chances on putting it in the mail or other means of transportation.


James Layton Ralston: Is delivery in the mail good delivery? I do not know what the . rules of the stock exchange are, whether it would be regarded as good delivery. I like the alternative which the Secretary of State provided, that a man might put it in the post office and say: There, I have made my delivery.


Richard Bedford Bennett: I frankly think it would not be regarded as good delivery to put it in the mail. The trust companies that act as transfer agents, if my memory is correct, require someone to appear in person with the documents, and that is the reason you see so many clerks going around in the morning making deliveries. I speak subject to correction on that but my own experience is that they require someone physically to deliver them, that if I have a transfer to make I have to send it to some friend of mine who is in a business way and he sends his clerk up to the trust company to have the transfer made. Any reference to the mails might complicate it. This is a tremendously harsh section in many ways. You perhaps might say, "deliver against such sale within twenty days thereafter," and leave out the rest.


James Layton Ralston: I do not know enough about it to know whether there is any case in which you could not actually make physical delivery. It might be impossible in some cases. I think it would be as well to allow it to be dropped in the post office. You might say: Fifteen days in the mail or twenty days delivery. That would give five days to cover the time mentioned by the Secretary of State in which it is in transit to the transferee.


Charles Hazlitt Cahan: Suppose you are making delivery in London; of course, twenty days in the ordinary case would be sufficient, but one who is trying to escape this penalty might reasonably argue that if he has delivered the same to the express company or to the mail within a certain limited time, such as five or six or seven days, he would thereby be relieved of the penalty.


Richard Bedford Bennett: My difficulty is how you can prove what is in the envelope when you put it in the mail.


Charles Hazlitt Cahan: It is the same when you prove the contents of a registered letter in the mail. I suggest, Mr. Chairman, that we change the word "twenty" in line seventeen to "thirty", that a semicolon be put after the word thereafter in the same line, and that we strike out the words "or does not deliver the same within five days after such sale by depositing it in the mails nr other usual channels of transportation."


[Stage Direction]
Amendment agreed to.
Richard Bedford Bennett: Something should be done about giving publicity to this at the very earliest possible moment because there may be innocent people, directors of companies, for instance, who have no idea how stringent the provisions of this law are.


Charles Hazlitt Cahan: I have had that called to my attention especially with regard to sections dealing with accounting, and it has been suggested that we should have the usual clause for bringing this bill into force by one or more proclamations, that we might bring
Companies Act Amendment

the whole act into force at once with the exception of certain clauses which might require sixty days' notice.


Richard Bedford Bennett: I would fix a date and say this section comes into force on the first day of

month in

year.


James Layton Ralston: Could you not make the whole act come into force at some particular time, some time to get by the accounting period, say the first of September?


Richard Bedford Bennett: Reading this section it
struck me that it is a section of extreme severity. When I first saw it and discussed it with the Secretary of State I wondered whether it was capable of being actually put into force. Looking it over since I see that it is, but there will be a lot of people who will be violating a law who think that they are violating none. I have frequently come across directors who were buying shares and thought that they were not doing wrong. This section is very severe. Perhaps we should say that the whole act will come into force at a given date, the first of July, August or September.


Charles Hazlitt Cahan: I have discussed that with a number of those interested, some of the stock exchange people, and the suggestion was that we should insert a new section at the end as to the act coming into force in whole or in part, and then we could fix a particular time for certain sections that involved drastic penalties.


Richard Bedford Bennett: I think the first of September for the whole act might be all right.


Mr. BRADETTE:: I want to refer to section 96B which speaks of "adequate consideration in cash, property or services." Cash payments are always a tangible thing, and the same applies to property, but it is often hard to arrive at an accurate conclusion as to services. It is in that connection that most of the abuses have arisen in my section of the country, leaving mining aside altogether. I think it would not be beyond the power of this committee to establish a certain rate for services. The Secretary of State may not be aware of it, but in certain cases the services for the promotion of certain Companies are obtained on a cash paid basis and also on the basis of the actual value of the property.
I think the purposes of this bill will be defeated unless we find it possible to remedy that situation.
I do not think anyone in the country will quarrel with the principle of this bill as it is a step forward in the remedying of the evils of monopolies. Both the Secretary of State

and the committee are aware of the single liability of promoters in stock companies. This is one of the great causes of abuse in this country. The small store-keeper, the small mill owner or the small business man who is forced into bankruptcy may lose all his assets while the man who has invested his money in a limited stock company is responsible only for the amount he has paid in. We have a double liability provision in connection with shareholders in banks and I believe it would be a step in the right direction to provide that shareholders in stock companies shall have at least a double liability. This would be one of the best means of remedying the abuses of monopolies. The small store-keeper may lose even his personal belongings while the man who has invested in the limited company is responsible only for what he has paid in.
I notice the mining companies are not included and I believe this is due to certain provincial laws, more particularly the blue sky laws of Ontario. When those laws are carried out it is practically impossible to have anything but proper promotion of companies. I should like the Secretary of State to consider a more definite description of the services to be rendered and consider also the putting into effect of a double liability in connection with shareholders.


Charles Edward Bothwell: Would it not be
possible to delete the words "or is to receive" in line 44? The section would then read:
It shall not be lawful for the directors or promoters of a company to authorize the issue and allotment of any shares of the capital stock of the company as fully paid up unless the company receives what may justly be deemed,-


Charles Hazlitt Cahan: Shares may be allotted payable ten per cent on allotment and then the rest payable on call within a certain definite time. The allotment is for full consideration find although only part payment is received there is a contract to pay upon call. The words "or is to receive" mean that the company is entitled to receive.


Charles Edward Bothwell: This section provides authorization for the issue and allotment of shares and it provides for the payment by services. According to the construction I put upon it, it means that the directors of a company could issue shares as fully paid up for services to be rendered some time in the future.


Charles Hazlitt Cahan: It was not intended that future services might be part of the consideration.

Companies Act Amendment


Charles Edward Bothwell: We should not make it possible for directors to issue shares for services some time in the future.
Mr. CAHA'N: I do not think that should be done.


Charles Edward Bothwell: That appears to me to be the interpretation of the section and I believe those words should come out. In this connection I should like to refer to the case of the Toronto Finance Corporation Limited and Cook versus Banking Service Corporation Limited, reported in 69 Ontario Law Reports, in which Mr. Justice Hodgins used these words:
I can find no case where personal services to be rendered in future were held to be a proper consideration for the payment up of shares.
He then proceeds to quote the opinion of judges in England to the same effect and argues throughout that it would not be advisable under any circumstances to permit a company to issue shares for services to be rendered.


Charles Hazlitt Cahan: I quite agree with that.


Charles Edward Bothwell: Is that not the interpretation to be placed on this clause? It reads that way to me.


Charles Hazlitt Cahan: I might be engaged as a manager of a company at a salary of $4,000. It would be quite possible to make a collateral agreement under which I would have the right to take shares in the future by paying cash from time to time.


Charles Edward Bothwell: But the shares would be issued.


Charles Hazlitt Cahan: This section does not refer to the actual issuing of shares it refers to the authorization for such an issue. That is, you cannot pass your resolution or by-law to authorize the issue or allotment of any shares unless the company then receives or is thereafter entitled to receive the full consideration therefor. Does the hon. gentleman think that that is not positive enough?


Charles Edward Bothwell: I think we should leave out the words "or is to receive." In connection with receiving goods or services, Cairns, L. J., used these words:
Goods might not be supplied at all, or they might be supplied of such a quality that they ought to be rejected', and the remedies against the shareholder might be unavailable, while the other shareholders had all along been paying in cash. If the agreement was ultra vires of the directors, then, since it must be taken as a whole, the question falls to the ground.
The late Sir Francis Gore-Browne in his work on companies referred to this case as
establishing that an agreement to accept the supply of goods at a future time against calls is not valid, for that is to contract that future calls may be satisfied by damages for a breach of contract to supply the goods. The same reasoning will hold in connection with services, whether on the part of the promoter or manager of the company, or in whatever capacity such person may act. The services might not be satisfactory and the shareholders would simply be left to an action for damages instead of actually getting redress.


Charles Hazlitt Cahan: I am perfectly willing to
leave out those words.


Charles Edward Bothwell: Then I move that these words be struck out.


James Layton Ralston: They will never have
received consideration when the authorization was given. The case will never happen where a company has actually received consideration at the time the authorization is given. Every case in which consideration will be received by the company will be after authorization, and therefore, it seems to me, the words are absolutely essential.


Charles Hazlitt Cahan: Perhaps it might read, "or
shall receive."


James Layton Ralston: With reference to the
case referred to by my hon. friend, as I understand it this does not overrule that case in the slightest; it merely declares that you cannot penalize the director for authorizing something unless the company is not to receive proper consideration. The authorization may be wholly illegal so far as enforcing the contract is concerned.


Charles Edward Bothwell: Why, then, should not the directors be penalized in that case?


James Layton Ralston: I would not penalize the directors for not having actually received consideration before authorization; I would not penalize them for not insisting on consideration before authorizing. The directors meet and say, "We authorize the issue of ten shares of stock to Jim Jones, the bookkeeper of the company, after his first six months, and we luthorize the president and the secretary to ssue these shares when the service is completed." After the authorization is given the services are to be performed.


Joseph-Arthur Bradette: Under this act they are to be illegal.


James Layton Ralston: No, because the issue
would not actually take place until the services were performed. This is only the authorization, not the issue.
Companies Act Amendment


Joseph-Arthur Bradette: They cannot be called paid up shares then.


James Layton Ralston: They will be paid up
shares when they are issued.


Charles Hazlitt Cahan: The directors are liable
jointly and severally to make good to the company the amount by which the consideration actually received by the company for any shares so issued and allotted is found by the court, after full inquiry into the circumstances of the transaction, to be less than the amount of the consideration which the company ought to have received for such shares. As to the passing of the resolution, they stall not pass the resolution unless the company is to receive consideration.


James Layton Ralston: I suggest that this section ought to stand with section 5 because the same term is used.


James Lorimer Ilsley: I wish to move the amendment I read some time ago.


Charles Hazlitt Cahan: We will let it stand. Personally I think it is going too far. Let us have a statutory obligation and duty or else let us rely on the common law; but the mixing of the two obligations might lead to endless complications.


Joseph-Arthur Bradette: What machinery will be set in motion to arrive at the value of the services rendered?


Charles Hazlitt Cahan: It is not for the Secretary of State to decide that.


Joseph-Arthur Bradette: But the minister must know what machinery will be used.


Charles Hazlitt Cahan: The Secretary of State does not control resolutions passed by ten thousand companies of which he has no knowledge. But if complaint is made, the Secretary of State may have expert accountants examine into these matters. Hereafter the Secretary of State will be relieved to a large extent of that duty because be can at once refer it to the new board for investigation.
Section stands.
On section 16-Voting rights.


James Layton Ralston: What is the purpose of inserting this section? It seems perfectly proper to have one share one vote, unless the bylaws prescribe otherwise. It is a new section; why?


Charles Hazlitt Cahan: It was drafted by the
Department of Justice to carry out some recommendation of the commission.


Charles Edward Bothwell: Possibly it is the outcome of some of the cases drawn to the attention of the price spreads commission. For instance,, the dairy case that arose in Winnipeg was brought to the attention of the house. There a certain class of shareholders were able to overrule another class; men who had put their money into the concern had no rights at all. This provision, apparently, is inserted to give to people who invest money in a company the right to have some say in the management of it.


James Layton Ralston: It would mean this, unless the bylaws changed it, that if there were a $50 preferred share and a $100 common share, for every $100 of preferred shares there would be two votes to one for every $100 of common stock, and the company would be controlled by people with only one-third of the total capital investment.


Richard Bedford Bennett: That is the real difficulty in the section, that it does not provide for shares at different par values but gives equal voting power to shares, Whether of $5 or $100.


James Lorimer Ilsley: The intention of the commission was to recommend that persons with equal investment should have equal voting power in the company, whatever the bylaws might say. It seems to me, therefore, that there are two things wrong with the section: it does not make provision for equal voting power for equal investment, inasmuch as it equalizes the voting power of shares which may represent unequal investments; and it makes it all subject to the provisions of the bylaws, which may nullify the whole thing.


Richard Bedford Bennett: It would be unfair to leave the section as it is.


James Layton Ralston: If it* is subject to the provisions of the bylaws-


Richard Bedford Bennett: Being subject to the
provisions of the bylaws will not overcome that difficulty, because the bylaws must be in every sense consistent with the provisions of the statute.


Charles Hazlitt Cahan: Hereafter no by-law of that kind can be passed; it has to be approved by the Secretary of State. The Secretary of State has absolute control for the future; but take companies in which there has been a difference of voting power and voting power has been given to preferred shareholders and not to common, or to common and not to preferred; are we going to wipe that out by this section? As to the future the situation is pretty clear, but as to the past are we to

Companies Act Amendment
wipe out rights now existing and by-laws passed under them? That is not my ground; that is the ground of the Department of Justice.


Richard Bedford Bennett: I am sure that section should not be passed in its present form.


James Layton Ralston: I thought by the introductory words you could change the voting power by by-law.


Richard Bedford Bennett: I did at first, but if you remember the new provisions of the law you will realize the situation.


James Layton Ralston: I have not the provisions in. mind particularly. I had in mind the old section 108, I think it is, which prescribed the subjects on which by-laws might be passed. I thought you could make by-laws on any of those subjects and thereby take the shares of the particular company out from under the provisions of this section. I think we ought to consider it a little further before we pass it in its present form.
Section stands.
On section 17-Details of balance sheet.


Charles Hazlitt Cahan: At the top of page 11 in the first line where it reads "other debts owing by the company," it should be "other debts owing to the company." Then in line 9 the word "the," the next word to the end of the line, should be "their," so that the paragraph would read:
Investments and securities, if any, stating their nature.
I would suggest those changes.


[Stage Direction]
Amendments agreed to.
Charles Hazlitt Cahan: It has been suggested to me by a member who was unable to be present this afternoon that paragraph (e) on page 11 should be amended to read:
Investments and securities, if any, stating their nature and showing the market value of marketable securities and separately the book value of other securities.
M-r. BENNETT: I think that is a great improvement.


Charles Hazlitt Cahan: I promised the hon. member I would bring that suggestion to the attention of the committee. He said that there was often great difficulty in ascertaining the market value and this should provide for showing the market value of marketable securities and separately the book value of other securities. I make that suggestion to the committee.


Richard Bedford Bennett: I think that is highly desirable, for a reason that must commend itself to the members of the committee. Some securities have no market value. That is pointed out in another part of the section. In other words, they have no .ready market value; they cannot be sold, and therefore the balance sheet should show what they cost the company.
On the next page at the top where it reads:
There shall be stated under separate headings in the balance sheet of the company, so far as they are not written off-*
That "of" should be "off." When those particulars have been stated in. a balance sheet he who runs may read. I do not think there is any chance of anybody being misled. I think the suggestion made by the minister as to showing the book value of securities when they have no market value is desirable.


[Stage Direction]
Amendment agreed to.
Richard Bedford Bennett: At the top of page 12, as I said, that word "of" should be "off."


[Stage Direction]
Amendment agreed to.
Section as amended agreed to.
On section 18-Amounts paid to directors to appear in statements.
Charles Hazlitt Cahan: This section fulfils all the recommendations of the price spreads report.


Joseph-Arthur Bradette: As regards lines 27 to 31 on page 12, with reference to the amounts paid to a managing director and so forth, those amounts should be included in the statement.


Charles Hazlitt Cahan: They fall under subsection 2.


Joseph-Arthur Bradette: Commencing at line 27 the section reads:
Exclusive of the amounts paid to a managing director, if any, or any other director who holds any salaried employment or office in the company and who devotes substantially the whole of his time to the business of the company or its subsidiaries.


Charles Hazlitt Cahan: If the hon. gentleman will allow me, simply to make the matter clear? We ptovide in the first subsection as to the amount that is paid to a director qua director but in the second subsection we have provided in line 36 that all salaries shall be shown including that of the managing director, if any, of the company, so we have that included, but the first subsection merely deals with fees of directors qua directors. As regards the officers the statement must show
Companies Act Amendment

what all directors who are officers, receive by way of salaries, fees, et cetera, in any other capacity. I think that makes it clear.


[Stage Direction]
Section agreed to.
On section *19-Copies of financial statements to be sent.
Charles Hazlitt Cahan: There has been a printer's mistake. To carry out fully the purport of the report, the section should read:
In the case of a company, not being a private company (a) -
There should be that "(a)" there so as to indicate a new paragraph. Then I propose to insert another paragraph (b) at the bottom:
That any holder of debentures of the company shall be entitled to be furnished by the company on demand without charge with a copy of such balance sheet and the statements as aforesaid which have been laid before the company at the last annual meeting.
By some misadventure this last paragraph was left out.
I would suggest that in this section at line 11 after the words "be mailed" the words "together with the notice of such annual meeting" be left out. There is no objection to sending out the statement, but they should not be liable to a penalty if they do not put the twio documents in the same envelope.


[Stage Direction]
Amendments agreed to.
Section as amended agreed to.
Charles Hazlitt Cahan: We will hold section 20 because renumbering may have to be done.
Progress reported.


Mr. MACKENZIE KING:: What will be the business to-night, if I may a^k?


Richard Bedford Bennett: We will finish the divorce bills on the order paper, and I thought perhaps after that we might adjoum, because there is nothing except this bill and the other one to finish. One clause which we discussed this afternoon will take some little time to consider.


William Lyon Mackenzie King: Could we not take up -the housing bill?


Richard Bedford Bennett: If it is desired.



HAMILTON LIFE INSURANCE

Mr. T. L. CHURCH (East Toronto) moved:: That pursuant to special order of the house made on the sixth instant Bill Letter U2 of the Senate, intituled an act respecting the Ham-

ilton Life Insurance Company, be now read a first and second time and referred to the standing committee on banking and commerce.


[Stage Direction]
Motion agreed to.
At six o'clock the house took recess.
After Recess
The house resumed at eight o'clock.


[Stage Direction]
Bill No. 89, for the relief of Muriel Mabel Muttart.-Mr. Myers.
Bill No. 90, for the relief of Emile Fossion. -Mr. Bell (St. Antoine).
Bill No. 91, for the relief of Eva Bennett. -Mr. Bell (St. Antoine).
Bill No. 92, for the relief of Helen Gertrude Bryant Wilson-Mr. Factor.
Bill No. 93, for the relief of Gladys Sarah Jenkinson Weeks.-Mr. Factor.
Bill No. 94, for the relief of Mary Elizabeth Taylor Nicholson.-Mr, White (Mount Royal).
Bill No. 102, for the relief of Jean Taggart Harfield- Mr. Vallance.
Bill No. 103, for the relief of Lily Usheroff Bruiker.-Mr. Vallance.
Bill No. 104, for the relief of Hilda High de Boissiere.-Mr. Bell (St. Antoine).
Bill No. Ill, to incorporate The Community, General Hospital, Alms House and Seminary of Learning of the Sisters of Charity at Ottawa, Canada.-Mr. Gagnon.

[Stage Direction]
The house in committee on Bill No. 11, to amend the Interest Act-Mr. Coote-Mr. Smith (Cumberland) in the chair.
On section 1-Interest on contracts and agreements restricted to seven per cent.
George Gibson Coote: Mr. Chairman, this Bill
No. 11 was originally introduced early in the session and it was some time before it was reported on by the committee. Only one of the sections, which is the important one of the bill as introduced, was in the bill as finally passed by the committee and reported to the house. The bill as introduced called for a limitation on the rate of interest on all mortgages, whether now existing or to be made in the future, to four per cent, but as amended in the committee that limitation would apply only to existing mortgages, and the cut-off date has been fixed in the bill as January 1, 1935. So the bill now before the house would

Interest Act Amendment
limit the rate of interest which -might be collected on any mortgage on real estate issued prior to January, 1935, to six per cent per annum. Speaking for myself I would be quite willing to have it apply to all mortgages, but in our own province so far as I am aware there are very feiw new mortgages being made.
The interest rate on existing mortgages is the important question for us, and I would just like to take a few minutes to bring to the attention of the committee a few facts to show that undoubtedly there is need of legislation to deal with this question of interest rates. I will deal first with the interest rate on farm mortgages.
The cash income of all the farms in Canada for the years 1926, 1927, 1928 and 1929, before the depression years, was 4,012 million dollars, and for the years 1931, 1932, 1933 and 1934, that is the depression years, the cash income of all the farms in Canada was 1,744 million dollars, or only 43 per cent in those last four years of the income in the previous four years mentioned. In other words, there was a drop in the last four years of 2,268 million dollars in farm income or an average of over 550 million dollars for each one of those years. In the -face of that drop in revenue, which amounts on -the average for the four years to $3,136 per farm, I think hon. members can see the need for some legislation to relieve the farmers who are now -paying rates of interest as high as seven, eight and nine per cent. This drop in income per farm of $3,136 in the last four years would have been sufficient to pay off every farmer's debt in Canada and leave about $1,000 for every farm over and above the amount of the debt.
The drop in farm revenue is, of course, due to the drop in price levels. It is not due, as some people may think, to a drop in production. I have previously put figures on Hansard to show that it is nearly all due to the drop in price levels, a factor over which the farmer himself had no control and n-o possibility of control.
The rate at present charged in western Canada, at least in Alberta, is generally eight per cent, although there are some mortgages at nine per cent. A case recently came before the board of review operating under the Farmers' Creditors Arrangement Act in the province of Alberta of a real estate mortgage carrying a rate of interest of twenty per cent. I have that statement in a letter from one of the members of the board of review. There are also a good -many private loans at ten per cent. I do not think it is necessary for me
to say anything more for hon. members of this committee to see the need of some legislation -to limit the rate of interest which can be collected on these mortgages.
The board of review under the Farmers' Creditors Arrangement Act in Alberta have in the majority of instances been setting the rate of interest on farm mortgages by mortgage companies at seven per cent, which I think is much too high, but the chairman of the board persists in stating, I believe, that it is the duty of parliament to set a lower rate. The rate of seven per cent is mentioned in one of the sections of the Farmers' Creditors Arrangement Act. In Manitoba I believe the board in the last few weeks has been setting a maximum rate of six per cent on farm mortgages. In Quebec I am told that in some cases the rate on farm mortgages has been placed as low as four per cent by the board of review operating in that province.
The Alberta board has heard about three hundred cases to date. It has been sitting five days a week and working very hard, but it is going to take them some yea-rs to clear up all the cases that come before them unless something is done to fix by law a -maximum rate of interest. I think this bill is fixing the rate quite high enough when it sets it at six per cent. If a six per cent maximum rate were established by law I believe that the majority of farmers in the province of Alberta would not need to go to the board of review. The only way to get a lower rate of interest -than eight per cent in Alberta is to go before the board of review, and if the board of review establishes as a matter of practice a rate of seven per cent the mortgage companies naturally will not care to make a voluntary reduction to anything lower -than seven per cent.
I want to place on Hansard for the benefit of this committee a statement in regard to the payments made by one farmer at Brant, Alberta. I mentioned this case in the banking committee, where the figures were challenged by several members. They said they could not possibly be correct. I afterwards wrote to the chairman of the banking committee and asked him to have the -clerk or someone else inquire into the case. The books of the company that made the loan were examined and I have here a copy of the memorandum which was sent to the finance minister by Mr. Finlayson, the superintendent of insurance, who investigated the case. I shall not take time to put the whole of his statement on Hansard, but will simply say that the loan was made in February, 1912, for $1,500 at a rate
Interest Act Amendment

of eight per cent. By 1928, according to this statement, the farmer had paid $3,587.28, and $708 of that amount was subsequently paid out by the company for taxes, so that the net amount which the farmer paid was $2,878.32. This was all for interest and charges, including fire insurance, $61.50; inspection fee, $37.50; solicitors' fees, $57.03. In 1933 this mortgage was foreclosed. I am quoting these figures simply for the purpose of impressing on the committee just how much money it would require from the farmers' operations to meet these charges. Over a period Of twenty years he paid $2,878, and when the loan was foreclosed the amount that he still owed was approximately $1,500. If we could have had in Canada a six per cent interest rate, and the other two per cent which was charged could have been used to amortize the loan, it would have been entirely paid off and the farmer would still be in possession of his farm.
Just a word or two in regard to urban mortgages. I have had brought to my attention the case of a mortgage on a house in the city of Calgary at the rate of ten per cent, and I have a letter under my hand from a notary in one of the cities of Ontario in which he says:
I can number mortgagors among my clients, whose total indebtedness is well over $100,000, upon which they are paying from eight per cent to ten per cent interest.
As an alderman of the city I am pleased at the thought that our tax arrears will be paid up now that interest charges on properties are reduced.
That is from an alderman in an Ontario city. He is a little premature in thinking that the interest charges are already reduced. I had a visit a few days ago from some gentlemen representing the landlords' protective association of Montreal and they assured me that there are many real estate mortgages in that city which bear interest rates of seven and eight per cent and second mortgages bearing interest rates of nine and ten per cent. In some cases the mortgage may show upon its face only a rate of seven or eight per cent but a very heavy discount is sometimes made when the loan is granted. An alderman in one city in Canada told me that he believed in certain -cases the rate actually collected was as high as twenty per cent, taking into account the discounts made when the loan was granted.
I anticipate that the question of constitutionality will be raised, that it will be stated that the Dominion of Canada has not the power to lower the rate of interest on exist-

ing obligations, but if I remember correctly, a year or two ago the attorneys general of the provinces agreed that this power rested in the dominion government. In these days when the government is passing reform measures which heretofore might have been considered as unconstitutional I do not think we would be running much risk in passing this bill. The only way in which to find out whether it is constitutional is to try it.
I anticipate also that some question will be raised as to this action affecting our credit in outside countries, particularly Great Britain. I would remind the committee that Great Britain recently notified the United States that she did not intend to make certain payments which were due about this time. I think for the last two or three years Great Britain has been making token payments. The United States itself changed the terms of the contract when they stated that a promise to pay in gold need not be honoured in the term in which it was taken, that payment in legal tender or paper currency will be sufficient to discharge the debt. I shall not labour this point; it has been discussed before.
I would remind the committee that nearly every country in the world has taken some action along the lines which I suggest in this bill. Australia, South Africa, I believe New Zealand, and many other countries have taken action to limit the rates of interest which can be collected regardless of what might be stated in the mortgages. When I offered an amendment to the Farmers' Creditors Arrangement Act to limit the rates of interest charged on farm mortgages, the Minister of Finance (Mr. Rhodes) said that the proper way to deal with that matter would be through Bill No. 11. He said:
My hon. friend speaks for the farmer who is not going to come under the Farmers' Creditors Arrangement Act. That farmer will get such protection as this house may decide to accord him when it deals with Bill No. 11, which covers all mortgages.
According to that statement this will be the only occasion upon which we will have an opportunity to deal with this very important question.
There is a crying need for this bill; I would not have introduced it had I not felt there was such a need. The fall in price levels which I mentioned earlier in my remarks is something over which the farmer had no control. He had no reason to anticipate such a fall and he entered into his obligations in good faith. In the great majority of cases the farmers are doing their best to discharge their

Franchise Act Amendment
obligations. The company or individual collecting eight or nine per cent in interest charges is receiving a purchasing power far in excess of what was anticipated. It would be nothing less than justice to reduce the rate of interest to six per cent; even at that rate the majority of mortgages would secure in purchasing power just as much as they did ten years ago when the mortgages were made. For this and many other reasons I hope that the committee will see fit to accept this bill. I know it is near the end of the session but I introduced the bill early in the session but for some weeks I could not. get the banking committee to meet.


Richard Bedford Bennett: I move that the committee rise. In doing so I have only to point out-


Ian Alistair Mackenzie: Is this
motion debatable?


Richard Bedford Bennett: No.


Edward Joseph Garland: This kills
the bill, of course.
Motion agreed to: yeas, 35; nays, 18.


Mr. SPENCER:: I was paired with the
hon. member for Lethbridge (Mr. Stewart). Had I voted, I would have voted against the motion.


Mr. NEILL:: I was paired with the hon.
member for East Edmonton (Mr. Bury). Had I voted, I would have voted against the motion.



DOMINION FRANCHISE ACT


[Stage Direction]
The house resumed from Tuesday, June 18, consideration in committee of Bill No. 109, to amend the Dominion Franchise Act-
Mr. CAHAN-Mr. Smith (Cumberland) in the chair.
On section 1-Judge may not rescind final ruling of registrar.
Charles Hazlitt Cahan: With regard to the amendment suggested by the hon. member for Shelbume-Yarmouth (Mr. Ralston), 1 would remind the house that this bill is simply a declaratory act; it declares the intention of the house with respect to the meaning and intent of the subsection referred to. This bill was introduced at the suggestion of the Dominion franchise commissioner and was approved by him. He did not approve of it because it related to the electoral list in
the electoral district which I have the honour to represent, but, unless the bill is carried into effect, he fears that as a result a very considerable number of appeals throughout Canada will be taken to the judges having jurisdiction in the several constiuencies. This bill is in entire accord with his understanding of the meaning and intent of the sections now proposed to be amended. The bill is entirely consistent and conforms with the instructions he has given to each registrar of electors throughout the dominion. From one end of the country to the other, in respect of each electoral district, the registrars have acted in accordance with his instructions in carrying out the real intent and purpose of the act as expressed in this bill. Therefore, if utter confusion is to be avoided, he thinks the house should make this declaration.
Perhaps the other day I referred at too great length to what had occurred in my own constituency, but I do say here that so far as the registrar acted in that electoral district he acted under the specific instructions of the dominion franchise commissioner, who is the sole person under the act entitled to give him instructions. It is not necessary for me to add that so far as the commissioner gave his instructions under section 7 of the existing act he did so without consulting me as the minister to whom he reports; and, so far as the registrar in the electoral district of St. Lawrence-St. George carried out those instructions, he carried them out without communication with me directly or indirectly, because I have had no personal communication with him from the day he was appointed up to the present time-and he was appointed, as all registrars were appointed, many months ago. The government therefore is of opinion under the circumstances that to avoid confusion throughout the whole country it cannot accept the amendment suggested by the hon. member for Shelburne-Yarmouth.


Joseph Philippe Baby Casgrain: I have listened with great care to the remarks made by the hon. member for St. Lawrence-St. George (Mr. Cahan); I also listened to the debate that took place in this house some days ago regarding this bill, and as well to the statements made by the hon. member who has taken his seat, with reference to the fact that this is only a declaratory bill. The house will remember that when the bill was introduced the hon. gentleman, in introducing it, discussed a judgment of Mr. Justice Greenshields, who gave a decision in this matter. We have heard differences of opinion expressed by the hon. gentleman with respect to the contents
Franchise Act Amendment

of that judgment in relation to the provisions and the regulations under the act. In justice to the judge who rendered judgment in this matter and who cannot defend himself, who gave judgment in accordance with the provisions of the law; and in view of the high office he occupies in the country at the present time and the fact that before he went to the bench he was one of the most eminent jurists of our province and one of the leading legal lights of the country, being still considered one of the best judges on our judiciary, I think it is only fair for me to say a few words with reference to the grounds on which the learned judge based his judgment and the considerations which he indicated in coming to his conclusion. I think it is only proper that I should discuss the matter from that point of view in order to find out whether we are justified now in proceeding with this bill which the hon. gentleman has introduced.
I have in my hand what purports to be a copy of the judgment rendered on the 4th day of June in the city of Montreal in this very matter:
Province of Quebec.
District of Montreal.
Superior Court
Under The Dominion Franchise Act Electoral Division St. Lawrence and St. George
Daniel McKeegan
Appellant
and
Rudolph Bernard Registrar & Revising Officer and
W. K. Prowse
Objector
This is an appeal from the ruling or order of the registrar under section 32 of the Dominion Franchise Act. That section provides, in part, as follows:
I will leave out section 32, which refers to the right of appeal and is contained in the act. The judgment proceeds:
On the 22nd of May, 1935, the registrar and revising officer. Mr. Rudolph Bernard, struck from the official list of electors the names of two hundred persons appearing on the regular official list of voters for the electoral division of St. Lawrence and St. George, and particularly on polls Nos. 17, 18, 19 and 31. These names all appeared in the notice of appeal entered by Daniel McKeegan, a duly qualified elector of the electoral division of St. Lawrence and St. George.
The names of these electors were so struck from the official list of voters upon an objection made to them by one, W. R. Prowse.
With the exception of the statement concerning a few of the two hundred, the unique and sole objection was, that they had removed from the electoral division, or at least, the poll in which their names were entered.

It may be here stated, that after the notice of appeal was served on the registrar, the objector, Prowse, desisted from his objection, and purported to desist from the order given by the registrar striking the names of twenty-three out of the two hundred. The registrar decided that notwithstanding the withdrawal of the objection by the objector, and the declaration of his willingness to desist from the order striking the electors' names, he was unable to replace their names on the list. The appeal with respect to these twenty-three must be maintained, and acte is granted of the objector's declaration that he withdraws his objection, and the order goes to the registrar, to place these names on the voters' list as they appeared before the order of striking, and in the respective polls in which they appeared.
With respect to the remaining one hundred and' seventy-seven, I now proceed to consider their appeals.
The names objected to all appeared on the official voters' list before the registrar or revising officer. Each one is entitled to exercise the franchise and is entitled to vote, unless and until it is affirmatively shown, either that he never possessed that right, or that he has forfeited the right. In other words, the presumption of law is, that each one of these electors is properly and legally on the list of voters, and in consequence, is entitled to exercise his franchise. The rule of law is expressed in the Roman maxim: "Omnia prae-sum-unter rite et solleniter esse acta."
The objector seeks to destroy the right of these electors to exercise the franchise, on the ground that they hqve lost their right by reason of a change of residence or domicile. Section 28 of the act deals with the proceedings before the revision court:
I will not put on the record this section, which is the procedure of the registrar and the revisal courts. The judge then goes on:
I propose to deal with these appeals in the light of and under the provisions of this section, and I observe, firstly, that the registrar must deal with each objection separately, and he must deal with the merits of the objection as disclosed by the examination under oath of the objector, and the person against whom the objection is made, always provided, I take it, that both are present.	I next observe that the person
against whom an objection is made, and who has received a notice under section 21, is not bound to attend, and his failure to attend does not relieve the objector from substantiating the existence of the fact upon which his objection is based. Moreover, the presumption in favour of the person against whom the objection is made is recognized in the statute. Such elector is under no obligation to adduce proof that his name is properly on the list. Again, it must be observed, and even emphasized, that the objector must offer proof substantiating a prima facie case by evidence, which, in the absence of rebuttal, is considered by the registrar sufficient to establish the fact, not a presumption, but the actual fact, that the person objected to is improperly on the list.
I now deal with the proceedings before the registrar, on the twenty-second of May, as disclosed before me. In the first place Prowse

Franchise Act Amendment
was the objector in all the two hundred cases. From his own testimony it appears that he did not know, personally, one of the two hundred against whom he made an objection. In the second place, he never saw one of these electors against whom he made these objections. What he did appears by his testimony. He went to the residence, as shown on the official voters' list. In some cases he found a vacant house, or a house into which he could not obtain entrance. How long that house had been vacant he has no idea. He therefore asked somebody for information, and' somebody, whom he had never seen before, and whom he does not know, informed him, that the house was vacant: that the former tenant had moved away. This statement covers a comparatively few of the names objected to. In the great majority of the names the objector Prowse, found someone in the house. Again, he did not know that person, but asked that person if the elector lived there, and was told by that person, no, and Prowse testified to what	he	had heard before	the registrar.He was	never asked	for	the	name of hisinformant, and if he had, he could not have given the name. At the hearing of the appeal I expressed the opinion, that this in itself was not prima facie evidence sufficient to establish the fact that the name of the person objected	to	was, to	use	the	words of thestatute, improperly on the list. In other words, it was not prima facie evidence that the elector	objected	to	was	no longer a
resident within the limits of the polling division in which his name appeared. But the registrar says that registered letters sent by him to each of the persons whose names are objected to. were returned and were not delivered. Why. he does not know, and no one, so far as the record shows, can tell it.
In addition to this, a lady by the name of Ruth Clark obtained information from someone that an elector, whose name appears on poll No. 17 no longer resided at a certain number. How she discovered that is not disclosed. But she concludes by the statement, that she is credibly informed and verily believes, that the elector is no longer a qualified elector.
These affidavits I may state at once, the registrar admits, he never read. They never should have been read by him, and, as a matter of fact, they are not part of the proof made before the registrar. The registrar did state that he had read one perhaps of the two hundred, but he does admit that his ruling was not based upon these affidavits. The section of the act does not contemplate the making of proof before the registrar by ex parte affidavits. The act is silent on the matter of the use of affidavits. The act contemplates proof being made before the registrar by witnesses. Says the act:
"The registrar shall deal with each objection separately disclosed by examination on oath of the person making the objection, the person against whom the objection is made and the witnesses present on their respective behalf." It does not contemplate the production of affidavits purporting to support or substantiate the statement of fact made by the objector without any opportunity of the signers of the affidavit to be cross-examined as to their truth by the person against whom they are sought to be used.
I conclude that the registrar had not a scintilla of legal proof to make even a prima 92582-247
facie case, much less to establish the fact that any of these two hundred electors were improperly on the list and should be struck therefrom.
It was urged that one or two of the two hundred was dead. Fortunately for the dead person, there is no proof of death, and so far as the registrar is concerned and the proof made he is alive. I maintain the appeal in all the two hundred cases, and I order and direct the registrar to replace their names upon the official voters' list at the different polls in the electoral division of St. Lawrence and St. George as they appeared before being struck therefrom.
R. A. E. Greenshields,

We have before the committee at the present time the fact upon which is based the act and the amendment to the act that we are now considering. Mr. Justice Greenshields based his decision upon the sections of the act just quoted and upon the evidence that was adduced before him. When I heard the other day the hon. member who is sponsoring the bill state that no evidence was made before Mr. Justice Greenshields, as regards the kind of statements signed before witnesses that he was talking about as evidence, there is no proof that such statements were submitted to Mr. Justice Greenshields. He had to revise the decision of the registrar in this ease. If we look at the evidence that was given at a certain time before Mr. Justice Greenshields, we find that he decided this case on its very merits; and also by the evidence that was adduced before the registrar, in some instances by questions that were put, and by the way he directed the evidence to be given, the proof is there that he acted within the meaning of the act and in order to try as far as possible to give justice to all parties concerned.
For instance, at page 42 of the examination of Mr. Bernard, the registrar, the court asks this question:
Q. I suppose he did not tell you from whom he had obtained the information?
The answer is:
From somebody, some neighbour. In the case where the house was vacant, or the tenement was vacant, from the neighbour, and sometimes from the janitor.
By the court:
Q. In other words, all the information or assistance you got from Mr. Doyle-
Mr. Doyle was supposed to be a witness produced to corroborate what Mr. Prowse had stated.

was, from what somebody told him, and he offered you what somebody told him, is that it?
A. Yes, sir, in most cases.

Franchise Act Amendment

By the court:
Q. And it is true of Prowse, and it is true of Doyle?
A. Yes, sir.
By Mr. Manni:
Who was representing the interests of the hon. member who is sponsoring this bill.
Q. Let us see how true it is of Doyle. Is it not a fact that in many cases Doyle got the information direct from the person whose name was on the voters' list? Was not that evidence produced before you?
A. It is possible. I don't remember offhand.
By the court:
Q. Tell me now of one where that is true, and I will maintain your striking-tell me one elector who told Doyle that he had moved. Can you remember one of the two hundred?
A. I cannot at the present.


Charles Hazlitt Cahan: Who is making these answers?


Joseph Philippe Baby Casgrain: Mr. Bernard. I have before me the whole evidence. I would not like to weary the committee by putting into the record all the answers that were given by the witnesses that were produced before the registrar. Mr. Bernard and Mr. Prowse were the two witnesses who appear to have been cross-examined at length by counsel on both sides. I intend to place before the committee more particularly the part of the evidence which shows exactly what kind of evidence Mr. Justice Greenshields wanted to have, and which I think he was entitled in law and in equity to have before he could strike these names from the list. He inquired from the registrar if such evidence had been adduced and presented, and the registrar admitted that it had not. It is also shown in the proceedings that the registrar stated that in some cases the letter that was sent by registered mail was returned, but the judge stated that this was not prima facie proof that the person was not there. Everyone knows that a registered letter can be sent to an address, and if it is not signed for by the person receiving it at that house no one can say that the person duly received the [DOT] letter. I remember a recent case dealt with by the court of king's bench in the province of Quebec, in which I happened to be representing certain interested parties. It was the case of O'Shea and Michel, decided April 30, 1935. That case was decided on that very point; a registered letter had been sent but direct proof had not been produced that a receipt had been signed showing that the letter had been received by him, and the case was lost on that very ground. Apparently there is a method provided by the Post Office Department-and the Postmaster General might correct me if I am wrong-by which you may secure a proper certificate 
that a registered letter reached the person for whom it was intended. You pay an extra amount of some twenty or twenty-five cents and the person who receives the letter is bound to acknowledge receipt under his own signature. In these cases the only fact that appeared to have been proved was that registered letters had been sent, but the letters had been returned.
The other day the hon. gentleman stated that the registrar had been very diligent and had been very observant of the law in doing what had been done in putting into force the franchise act. I have no fault to find with this gentleman in the discharge of his duties. I happen to know Mr. Bernard very well; he is a member of the legal profession. I should like to place on record, however, a letter issued by the franchise commissioner, Colonel John Thompson, with reference to this matter, in which he gave to persons who were inquiring from him the following information:
May 21, 1935.
Thomas G. Ireland, Esq.,
Treasurer,
Liberal Association of St. Lawrence &
St. George,
252 Dorchester West,
Montreal Que.
Dear Sir:
Receipt is herewith acknowledged of your communication of the eighteenth instant, the contents of which have been carefully noted, and I quite concur in your observations.
The word "removal" in the statute does not mean the removal from one polling division to another in ' the same electoral district. "Removal" means removal from one electoral district to another.
While any person, during the month of April, might object to any and all persons on the list of an electoral district, nevertheless the objector must prove to the satisfaction of the registrar that the person or persons objected to have removed from the electoral district in which they are registered, to another electoral district.
The mere fact a person has left the dwelling in which he was originally registered does not in itself warrant the deletion of his name from the list of electors for that electoral district. The objector, as stated above, must prove that the person objected to has left the electoral district.
If an elector has moved from one polling division to another in the same electoral district, the proper procedure is to delete his name from the list of the polling division wherein he did reside and add it to the list he is presently residing.
Then the last paragraph:
The failure of the person objected to to appear at the court of revision in response to the registered notice of objection is not in itself sufficient to shift the onus for proving his entitlement on the person objected to.
Yours very truly,
(Sgd.) John Thompson, Dominion Franchise Commissioner.

Franchise Act Amendment
So here we have a document emanating from the dominion franchise commissioner, who is in charge of the act that was passed last year, giving information as to the manner in which these proceedings should be carried out. That information, it seems to me, is not quite consistent with the objections that have been taken by those supporting the bill now under consideration, who have taken exception to the rulings handed down by Mr. Justice Greenshields in the superior court of the province of Quebec.
During the course of the debate the other day the hon. gentleman who is sponsoring this bill stated that Mr. Bernard had done his best to administer the law fairly and within the provisions of the act. I do not know if my information is correct; I give it subject to correction, but I hold in my hand a copy of the instructions issued by the franchise commissioner, and at page 86 I find the following:
Grounds for Disqualification Which May he Set Out in the Affidavit
(1)	"Is dead."
(2)	"Is not qualified because he (or she)
has not attained the full age of twenty-one years."	.
(3)	"Is not qualified because he (or she) is not a British subject by birth or naturalization."
(4)	"Is not qualified because he (or she) has not resided in Canada during the last twelve months."
(5)	"Is not qualified because he (or she) was not resident in this electoral district on the" (naming the day three months prior to the sittings of the revising officer).
(6)	"Is disqualified from voting because he (or she) is" (naming the class of disqualified persons to which the person objected to belongs, as e.g. "a judge appointed by the government of Canada," "an Indian resident on an Indian reservation who did not serve in the naval, military or air forces of Canada in the year 1914-1918." or as the case may be: see section 4 of the Dominion Franchise Act).
(7)	"Has to my knowledge, been included in
the preliminary list of electors prepared for polling division No.	, in which he (or
she) resides."


Charles Hazlitt Cahan: The hon. gentleman must
see that this whole form refers to section 17, schedule A, rule 19. Section 17 does not apply to urban lists at all; it refers to rural lists, as the hon. gentleman will see by looking at page 62, which contains these various rules. My hon. friend is dealing now with an entirely different situation, concerning rural constituencies.


Joseph Philippe Baby Casgrain: My hon. friend may be right, but my information is that after this revision was commenced it was suggested to the franchise commissioner that a new set of 92582-2471
forms should be printed in which this extra clause should appear:
That the person has removed from and is no longer a resident of the electoral division.
Under that clause objection could be taken to practically all the names in the list for the electoral division. Another complaint that has been made with regard to the revision of these lists is this: A protest was filed in the case of one H. Dixon, 1441 Drummond street, poll 35, list 89, to the effect that Mr. Dixon had moved away from the above address. Objection was made because proof was offered that he was still living at the Y.M.CA., where the hearings were being held. Consequently protest was refused. Then we have Mr. F. L. Delaney, poll 35, list 89; James Ogilvy, poll 35, list 201; J. W. PowelT, poll 35, list 213; David Scott, poll 35, list 237; L. Villeneuve, poll 35, list 263, all of whom lived at 1441 Drummond street. It was found by the registrar that all these people were still living at this address, in spite of the fact that protests had been issued claiming they were not qualified to vote, due to the fact that they had moved from this division. The people representing the interests of those who wanted these names to remain on the list had great difficulty in having the names placed thereon. Finally the registrar maintained them. The same applies to Alexander Pigeon-


Charles Hazlitt Cahan: That was proper, after rebuttal1 evidence had been put in before the registrar to show that these people were living at the Y.M.C.A. It was perfectly proper that they should not be struck off, and they were not struck off.


Joseph Philippe Baby Casgrain: They were all struck off before.


Charles Hazlitt Cahan: No, they were not.


Joseph Philippe Baby Casgrain: They were objected to.


Charles Hazlitt Cahan: Yes, but that is not striking them off.


Joseph Philippe Baby Casgrain: They had to be reinstated.


Charles Hazlitt Cahan: 
Joseph Philippe Baby Casgrain: The same applies to C. A. Singer, W. V. Smith and F. Spanger. We have in these circumstances a most unusual case. A law was passed last year to which reference was made when discussion of this bill first took place. Apparently the law passed last year was a compromise by all parties in the house, and showed a desire to have a franchise act suitable for the accommodation of all parties. Persons who were placed on the lists in the urban district to which reference has been made were, as happened in other urban divisions, placed on those lists with the consent of two enumerators, one from each of the official parties.


Charles Hazlitt Cahan: That was many months ago.


Joseph Philippe Baby Casgrain: Yes, I grant you that. Those people had a right to be there until it was proved officially, legally, in a proper form and a proper manner-


Charles Hazlitt Cahan: A prima facie case was
made out.


Joseph Philippe Baby Casgrain: You must make a prima facie case with legal evidence. The minister is an eminent lawyer of the province of Quebec; he is widely known and I have great respect for him. I respect him as a politician, as a lawyer, as a member of the bar and, I would1 say, as a statesman. I know that he must know what kind' of evidence should! be presented. The minister knows that if he had been the judge he would not have admitted certain kinds of evidenoe which indicated that someone had told so and so that so and so had happened.


Charles Hazlitt Cahan: That is not so in this instance.


Joseph Philippe Baby Casgrain: He would not have
done it.


Charles Hazlitt Cahan: I believe I should correct
the hon. member in some of his statements. There were not two hundred cases before Mr. Justice Greenshields, as the hon. member has said; I am afraid he is dealing in general terms. In connection with the question of removal there were only 105 cases. Before the registrar in respect of each of those 105 cases the new addresses were ascertained. Statements were taken from these people to the effect that they had removed, and the new addresses were ascertained as being outside the constituency of St. Law-rence-St. George. That was the condition with all except 16, which could not be ascertained.


Joseph Philippe Baby Casgrain: That may all be true.
However, I have read to the committee the whole of the judgment of Mr. Justice Green-shields. His judgment is based upon the evidence I have before me.


Charles Hazlitt Cahan: No, it is not.


Joseph Philippe Baby Casgrain: If the minister and the committee wish me to do so I will read it, but there are 68 pages and I should not like to weary the house. However I must say that the judgment of Mr. Justice Green-shields is based upon one fact. When he questioned the registrar Bernard he said, "Name me one case where a person who has removed has told you so, and I will strike that man from the list-and any evidence similar to that which you may have. But I cannot take the evidence which you have collected to disfranchise that man, when you state that some elector or some person has told you certain things." Certain affidavits which were supposed to have been tendered were produced but were not used by the registrar. The statement is made in the evidence that they were not read, and1 that the judgment was given solely on the fact that someone had testified that he had gone to an address and had not found a person, or that the house was empty.


Charles Hazlitt Cahan: Just a minute. I should
like to reply to that. As I have indicated in the cases I read, that is not so. I could have read more of them. The declarations were signed by the persons objected to in the presence of two witneses, one of whom was the investigator. Those declarations in each case were to the effect that a certain person had moved from a certain address in a certain polling division in St. Lawrence-St. George to another address in an entirely different electoral district. Those changes of address were shown in respect of 105 cases in which changes of address were considered. In all these cases, with the exception of 16, they could not be found anywhere, in that or any other district.
I am not entering into a detailed discussion of the point, but I must add that Mr. Justice Greenshields called before him the judge of the registrar's court a subpoena was issued, for which there was no authority; it was issued illegally. The registrar was brought to court suddenly, without papers and without being asked to bring papers. This registrar, having dealt with a great many cases, was asked to state what he remembered respecting each. That was not the proper way to secure evidence of what had taken place. The evidence with regard to what had taken place

Franchise Act Amendment
was available from Prowse, and others, who were pfepared to go before the judge and give the same evidence as that they .had given before the registrar. But the chief justice did not ask them for their evidence in particular cases. He did not refer to the facts, to which reference has been made, relating to the vice consul of France. He did not refer to case after case in which Prowse had sought out the new electors at new addresses. However I am not going into that, because it was not in the discretion of Chief Justice Greenshields to decide what should constitute prima facie proof. As soon as the registrar decided that in his opinion a prima facie case had been made out and called upon the other side for rebuttal, and no rebuttal being produced, then the registrar was entitled to say that a prima facie case had been made out, and thereafter on any appeal only rebuttal evidence could be received before the judge, in this case Chief Justice Greenshields. But not one scintilla of rebuttal evidence was produced either before the registrar or before Chief Justice Greenshields.


Joseph Philippe Baby Casgrain: I am most surprised at the attitude the minister takes. He had there to represent him one of the most eminent lawyers of the city of Montreal.


Charles Hazlitt Cahan: I was not represented in
any way, shape or form.


Joseph Philippe Baby Casgrain: I stand corrected. If he was not representing the minister he was representing the people who wished to have names struck from the list. If it was so, as my hon. friend states, that a subpoena had been issued to the registrar to compel his appearance before the court, these people would have objected. They would have pleaded before the judge that it was not fair to proceed with the examination without having all the documents before Mr. Justice Greenshields. I hold in my hand the proces verbal, and the evidence that was given by all the witnesses that appeared before Mr. Justice Greenshields, duly certified by E. W. Bush, official court reporter.


Charles Hazlitt Cahan: My learned friend has that
report of the evidence, but there is not one scintilla of evidence in that by way of rebuttal to show that a single person of the 103 resided still in the electoral district of St. Lawrence-St. George.


Joseph Philippe Baby Casgrain: That is not the point.
The point is this. If this registrar was called before the judge as the hon. gentleman states, surely there was somebody there to represent his interests and to protest and to ask
for an adjournment of the case, which the judge would have granted. He would have said: Bring all your papers with you next time. But that was not done. There is nothing to prove that that was done, and I am willing to leave this document before the house for hon. gentlemen to read it for themselves. They proceeded with the case as it was before the court. The judge asked the registrar if he had kept records, and he said: "No, I could not keep records because there were too many people coming before me. I remember a Mr. Prowse came in and a Mr. Doyle," and they said exactly what is stated there, that they had their information from some janitor or next-door neighbour. The registrar also said that he had the evidence of a returned registered letter, and that was all.


Charles Hazlitt Cahan: He says also that he had
statements from him concerning some of the new addresses of those who had moved out of the constituency who had been interviewed by him.


Joseph Philippe Baby Casgrain: The only thing that
appears in the evidence is that certain affidavits were sought to be produced before the judge, but the lawyers on the other side, Mr. Merrill and Mr. Cook, objected to the production of these documents, and the registrar himself said that he never read these affidavits.


Charles Hazlitt Cahan: He took oral evidence instead.
Mr. 'CASGRAIN: And as to all the documents that my hon. friend referred to the other day in his speech, those documents that purported to be signed by one person before two witnesses, the registrar does not mention one word as to his having received them. He j-ust says in his evidence that he had two witnesses, Prowse and Doyle, come to him and testify as I have already stated, but he does not state that they produced written documents signed before witnesses as mentioned by the Secretary of State on Tuesday last. He said that about fifteen or twenty persons had signed documents. But no lawyer produced that evidence before the judge.


Charles Hazlitt Cahan: Why should he?


Joseph Philippe Baby Casgrain: It has not been produced. Now section 32 of the Dominion Franchise Act, which is sought to be amended by this bill, provides this regarding appeals made before a judge:
Such appeals shall be heard at such time and place as the judge may fix. They shall be heard and determined in such summary manner as the judge shall deem proper.
Franchise Act Amendment

What else could Mr. Justice Greenshields say when the registrar was brought before him? He asked him what kind of evidence he had upon which to strike certain names from the list. He asked the registrar if he had documents and records before him, and the registrar said that he did not keep any. He said that he remembered that two persons objected to certain names being on the list, but he does not remember the rest. He remembers that letters were returned. But he does not say one word about the documents which the Secretary of State placed on record on Tuesday last. When affidavits were shown to him he said that he remembered there was a question of affidavits but he did not look at them at all, and regarding the production of these affidavits there is not a scintilla of proof warranting the registrar or any official issuing affidavits in the proceedings according to the franchise act that was enacted into law last session.
Now, Mr. Chairman, we have this most unfortunate situation to-day. The franchise act has been administered by the franchise commissioner, who is highly qualified to administer the act and for whom everybody in this house and in the country has nothing but praise. But it develops that in only one constituency, the constituency of St. Law-rence-St. George, there was apparently some trouble in the revision of the list, because we have heard of no trouble at all in any other part of Canada. It may be that my learned friend is very cautious and his men want to make very sure that he will be reelected next time, and the people there who look after the whole matter for him worked so hard that they thought they would have a case against everybody on the list who they thought would vote against the hon. member, to see that they were not on the list.


Charles Hazlitt Cahan: That is an unfair insinuation and it is absolutely untrue.


Joseph Philippe Baby Casgrain: I did not say the hon. member himself did it. I said that those who were looking after his election were doing so much work for him that they did not want the fruits of their work thrown away, and they were mad when they were not able to get what they wanted. We are not sitting here in this House of Commons, Mr. Chairman, as a court of review over any judgment that has been given in accordance with the provisions of any act passed by this parliament. We decided rightly or wrongly that the chief justice of any province should be the sole

arbiter and sole judge of any difficulty that might arise in any proceedings beware the registrar regarding the striking off or putting on of names. But to-day we have this most unfortunate situation. The hon. member for St. Lawrence-St. George says that there are four thousand objections in his constituency and that at the present time only two hundred of them have been dealt with. Twenty-three were not in doubt and the rest, 177, had to be dealt with by the judge. At the present time there are many other cases in this very constituency of St. Lawrence-St. George that depend on the decision that is to be rendered by this parliament by this bill if it becomes law.
I was very much struck the other day by the observations that were made by the Prime Minister (Mr. Bennett) when dealing with conditions which affect the judiciary in our country. The very next day after the Secretary of State had introduced this bill, he received this condemnation at the hands of his leader. The Prime Minister, speaking in this house on June 19, 1935, as reported on page 3810 of Hansard, was saying that we should respect the judgments of the privy council, and that therefore we could not go too far in this new order and with these new reforms that the government was bringing in. These were his words:
That is why I have said that in the ultimate analysis we always have to depend upon the conclusions and decisions of the courts. That is why in the end, if we are a law abiding people who believe in reform and not in revolution, we must proceed precept by precept, line upon line, to the end that in an orderly and legal manner we may accomplish the ends we have in mind.
Here we have a condemnation by the leader of the government of the proceedings of the Secretary of State in introducing his bill, which strikes at the very root of our judicial institutions. Again, speaking in this house on June 20, 1935, the Prime Minister said, as reported at pages 3820 and 3821 of Hansard- he was referring to the capital structure of the Canadian National Railways:
I desire on that ground to make it clear why I do not desire until this litigation is disposed of any disturbance in the capital structure.
He was referring to the capital structure of the Canadian National Railways and he wanted us to refrain from doing anything while the litigation was before the privy council. Certain matters have been dealt with in accordance with the legislation enacted last year and because Chief Justice

Marketing Act-Mr. Weir (Meljort)
Greensliields has decided contrary to the wishes of friends of the hon. gentleman we are being asked to remedy this supposed grievance. I think if we did that we would be going beyond the powers of this parliament; we would 'be undermining our institutions and our judiciary. We would be going against the courts for which the right hon. gentleman who leads the government has so much respect. I think the hon. gentleman, should have remembered that when a judgment is rendered there is always forty-eight hours in which to criticize or, if I may use the expression, damn the judge. He should have let it go at that; he should have remained quiet and taken his licking in good humour. That is the only way in which the hon. gentleman should have acted.
When one has a following in a riding it is very difficult not to yield to their demands and requests. Should this bill pass, the hands of the judge would be tied and he would not be able to render a decision as the law now provides it should be rendered. If this bill is passed the general effect will be that the chief justice will be deprived of the right to comment upon the evidence which the registrar has accepted as sufficient. If this bill becomes law we may have every reason to expect that after June 29 the registrar will again adopt his old practice and will strike off the names of a large number of electors upon grounds which the chief justice has already declared to be insufficient. This action will be taken without any possible means of redress by the electors concerned.
This bill is obviously designed to meet a case which has arisen in the particular riding represented by the hon. member for St. Law-rence-St. George. In this riding the names Objected to number 4,000 while the total number of electors is about 24,000. If the hon. gentleman and his friends have their way, one-sixth of the electors in this constituency will be disqualified from voting. I think in this case we would do well to follow the example set by the right hon. gentleman in his speeches of June 19 and 20 when he said that it would be better to abide by the conclusions and decisions of the court. He said that we should leave the matter at that because that was the only way in which we could obtain and accomplish what we had in mind in an ordinary and legal manner.
I think the amendment proposed by the hon. member for Shelburne-Yarmouth (Mr. Ralston) should be accepted, as it makes it clear that the legislation sponsored by the hon. member for St. Lawrence-St. George
would not affect the present cases which are awaiting the decision of Chief Justice Green-shields.
Amendment (Mr. Ralston) negatived on division.
Section as amended agreed to.
Section 2 agreed to.
Bill reported.
On motion of Mr. Bennett the house adjourned at 9.30 p.m.
Monday, June 24, 1935