Parliament of Canada, dealing with a matter which was not entrusted under sec. 92 to the provincial legislature" (c).

Their Lordships also said in this case "But the expression, civil rights in the province" cannot be so interpreted (i.e., literally), and it must be regarded as excluding cases expressly dealt with elsewhere in the two sections, notwithstanding the generality of the words. If this be so then the power of legislating with reference to the incorporation of companies with other than provincial objects, must belong exclusively to the Dominion Parliament. For the matter is one "not coming within the classes of subjects assigned exclusively to the Legislatures of the Provinces," within the meaning of the initial words of sec. 91, and may be properly regarded as a matter affecting the Dominion generally and covered by the expression "the peace, order and good government of Canada" (d). But their Lordships pointed out in Re Insurance Act 1910 (e) that the above general authority to make laws for the peace, order and good government of Canada "does not, unless the subject-matter of legislation falls within some one of the enumerated heads which follow, enable the Dominion Parliament to trench on the subjectmatters entrusted to the provincial legislatures by the enumeration in sec. 92."

The decision of the Privy Council in the case of Re Companies Incorporation is short, as their Lordships state that some of the questions therein propounded were disposed of by their judgments delivered in the cases of John Deere Plow Coy. vs. Wharton; the Bonanza Creek Company Case and the Insurance Act Reference. Also their Lordships point out in their decision the paramount importance of abstaining as far as possible from deciding abstract questions until they come up in actual litigation about concrete disputes.

Even a casual perusal of the Bonanza Creek Case will disclose at once that it profoundly modifies the prevailing conception of our law of companies incorporated by letters patent.

The chief point to be borne in mind concerning this Privy Council decision in its relation to the doctrine of ultra

(c)

(d)

(1915) A.C. p. 343.

See also in Citizens v. Parsons, 7 App. Cas. at p. 117.

vires is the fact that it completely upsets all previous notions existing in this country as to the effect of incorporation by letters patent. It has been universally accepted in Canada that the Companies Acts incorporating by letters patent provide for the constitution of a purely statutory company. Such legislation was regarded as a delegation by the Legislature of its power to incorporate, and companies incorporated thereunder as statutory companies, and it was so argued by Mr. Newcombe, the Deputy Minister of Justice. Now the Privy Council in the Bonanza Creek Case at one blow literally smashes this all-prevailing conception of our law and declares that to some extent at least our companies incorporated by letters patent derive their existence from the executive power of the Sovereign, and not merely from the words of the regulating statute.

Lord Haldane, in respect of the Bonanza Creek Company, incorporated under the Ontario Companies Act, said: "The company purports to derive its existence from the act of the Sovereign and not merely from the words of the regulating statute."

said:

Again, in respect of Dominion companies, his Lordship

"The Sovereign, through the medium of the Governor-General, in this way delegates the power of incorporation, subject to restrictions on its exercise, to the Secretary of State, and it is by the exercise of the executive power of the Sovereign that the company is brought into existence."

Also, respecting the Ontario Act:

"So that, subject to the express restrictions in the statute, it is by the grant under the Great Seal and not by the words of the statute, which merely restrict the cases in which such a grant can be made, that the vitality of the corporation is to be measured."

Their Lordships apparently found an obstacle to their view in the phrase "as if incorporated by a special Act" which occurred in the Canadian statute of 1864. Their Lordships construe this provision as an enabling one, and not as intended to restrict the existence of the company to

from the letters patent granted in accordance with its provisions.

Possibly this phrase, as it originally occurred, was inserted to emphasize the incorporateness of the corporation, because under the English Letters Patent Act (9), the letters patent did not incorporate (h). But it is to be noted that this phrase may not have the same interpretation in the present Dominion Act, for it is contained in sec. 29 of that Act under the heading "General Powers and Duties of the Company," followed by the additional words "embodying the provisions of this part and of the letters patent and supplementary letters patent issued to such company."

Lord Haldane said, in dealing with the doctrine of ultra vires: "The doctrine means simply that it is wrong in answering the question what powers the corporation possesses when incorporated exclusively by statute, to start by assuming that the Legislature meant to create a company with a capacity resembling that of a natural person, such as a corporation created by charter would have at common law, and then ask whether there are words in the statute which take away the incidents of such a corporation. . Such a creature (corporation), where its entire existence is derived from the statute, will have the incidents which the common law would attach, if, but only if, the statute has by its language gone on to attach them. In the absence of such language they are excluded, and if the corporation attempts to act as though they were not, it is doing what is ultra vires and so prohibited as lying outside its existence in contemplation of law."

In Canada, hitherto, the doctrine of ultra vires has, without exception, been applied to the interpretation of the charters of letters patent companies, as if such companies were incorporated exclusively by statute, viz., what the letters patent did not grant expressly or by implication was deemed to be prohibited. For instance, in the recent Supreme Court Case of Union Bank of Canada vs. McKillop and Sons () Idington, J., construing the powers of a company incorporated under the Ontario (letters patent) Companies Act, said: "The powers of the incorporated company must be measured by the express powers given by the Act

of incorporation and such necessarily implied powers as the general purview of the statute demonstrates were intended to be covered by the expressions used in the statute." Again at p. 522: "I think the corporation not only has no powers beyond that so given it, but must assert such power as it may have been given by the method through and by which it is enabled to act, and when going beyond such limits its acts are ultra vires and void." Duff, J., said (i): "The contract upon which the action is brought is not within the objects defined by the letters patent either expressly or by implication."

The fundamental difference between chartered companies and others is thus pointed out in Palmer's Company Law, 6th Edit., p. 5: "There still, however, subsists a difference of a fundamental character between a chartered company and a company formed under a special Act or registered under the Companies Acts, and it is this: at common law a corporation created by the King's charter has power, as was determined in the Sutton Hospital Case (k), to deal with its property, to bind itself by contracts, and to do all such acts as an ordinary person can do, and so complete is this corporate autonomy that it is unaffected even by a direction contained in the creating charter in limitation of the corporate powers. For the common law has always held that such a direction of the Crown-though it may give the Crown a right to annul the charter if the direction is disregarded-cannot derogate from that plenary capacity with which the common law endorses the company, even though the limitation is an essential part of the so-called bargain between the Crown and the corporation (1). This feature -the unrestricted corporate capacity of the chartered company-is in marked contrast to the strict delimitation by the Legislature and the Courts of the statutory or registered company to its defined objects."

Mr. Machen points out (m) that though in England in modern times, the notion has obtained credence that a corporation incorporated by Royal charter is bound by all its contracts, even though ultra vires, to the same extent as an individual would be, subject to its being dissolved at the

(j) At p. 524.

(k) 10 Rep. 13.

(1) See judgment of Bowen L.J. in Baroness Wenlock v. River Dee Co. 36 Ch. D. 685 and of Blackburn J. in Riche v. Ashbury Rail. Co. L.R. 9 Ex. p. 263.

suit of the Attorney-General, if it engages in ultra vires transactions (citing Palmer, inter alia)-yet there is very little, if anything, in the decisions to support such a contention.

It is pointed out by Mr. Machen that in the Sutton Hospital Case (n) there was nothing to indicate that a contract wholly beyond the scope of the purposes of the charter would have been binding.

In 1851, in Copper Mines Co. vs. Fox (0), where the company was incorporated by charter of the Crown to trade in copper, it was held that the corporation could not maintain an action of assumpsit on a parol contract for sale of iron. The case turned upon the question of contracts under seal and parol contracts, but Lord Campbell stated "It is unnecessary for us to consider whether the company could sue or be sued in this case, even if the contract had been by deed."

In the case of Ayers vs. South Australian Banking Co. (p), decided in 1871, a few years before the doctrine of ultra vires was finally established in Ashbury Rly. Co. vs. Riche (1874), the charter contained a clause which said it shall not be lawful for the bank to make advances on merchandise. In alluding to that clause, Lord Justice Mellish said (a): "Now, unquestionably, a great many questions might be raised on the effect of that clause in the charter which may be of very great importance, but which also being of difficulty, their Lordships do not think it necessary to give any opinion upon. There may be a considerable question as to what are the transactions which come really within the clause, and whether this particular case does come within it. There may be also a question whether, under any circumstances, the effect of violating such a provision is more than this, that the Crown may take advantage of it as a forfeiture of the charter; but the point which it appears to their Lordships is necessary to be determined in the present case is this, that whatever effect such a clause may have, it does not prevent property passing, either in goods or in lands, under a conveyance or instrument which under the ordinary circumstances of the law would pass it."

L.R. 3 P.C. 548, 40 L.J.P.C. 22.