government. For these reasons, their Lordships hold the tax to be direct taxation."

10

With this description of direct taxation may be compared that given by the same committee in an earlier case1 where Mills' definition was also relied on. It was held that a stamp duty on "exhibits" filed in the course of judicial proceedings is not direct taxation:

"Can it be said that a tax of this nature, a stamp duty in the nature of a fee payable upon a step of a proceeding in the administration of justice, is one which is demanded from the very persons who it is intended or desired should pay it? It must be paid in the course of the legal proceeding, whether that is of a friendly or of a litigious nature. It must, unless in the case of the last and final proceeding after judgment, be paid when the ultimate termination of those proceedings is uncertain; and from the very nature of such proceedings until they terminate, as a rule, and speaking generally, the ultimate incidence of such a payment cannot be ascertained. In many proceedings of a friendly character, the person who pays it may be a trustee, an administrator, a person who will have to be indemnified by somebody else afterwards. In most proceedings of a contentious character, the person who pays it is a litigant, expecting or hoping for success in the suit, and whether he or his adversary will have to pay it in the end must depend on the ultimate termination of the controversy between them. The legislature in imposing the tax cannot have in contemplation, one way or the other, the ultimate determination of the suit, or the final incidence of the burden, whether upon the person who had to pay it at the moment when it was exigible, or upon anyone else. Therefore it cannot be a tax demanded from the very persons who it is intended or desired should pay it; for, in truth, that is a matter of absolute indifference to the intention of the legislature. And, on the other hand, so far as relates to the knowledge which it is possible to have in a

19 Owing to the provision in the U. S. constitution that "no capitation or other direct tax shall be laid unless in proportion to the census," the authorities in the U. S. courts practically limit direct taxation to poll taxes and taxes on land, and are of little assistance in deciding what is direct taxation within the meaning of the B. N. A. Act. See Lefroy, 720 (n).

1Atty.-Gen. (Que.) v. Reed, 10 App. Cas. 141; 54 L. J. P. C. 12; 3 Cart. 190.

general way of the position of things at such a moment of time, it may be assumed that the person who pays it is in the expectation and intention that he may be indemnified; and the law which exacts it cannot assume that that expectation and intention may not be realized. As in all other cases of indirect taxation, in particular instances, by particular bargains and arrangements of individuals, that which is the generally presumable incidence may be altered. An importer may be himself a consumer. Where a stamp duty upon transactions of purchase and sale is payable, there may be special arrangements between the parties determining who shall bear it. The question whether it is a direct or indirect tax cannot depend upon those special events which may vary in particular cases; but the best general rule is to look to the time of payment; and if at the time the ultimate incidence is uncertain, then, as it appears to their Lordships, it cannot, in this view, be called direct taxation within the meaning of the second section of the ninety-second clause of the Act in question."

Provincial powers of taxation are not to be curtailed through fear of their injurious operation upon subjects committed to the Dominion parliament.2

Property within the province may be taxed without regard to the place of residence or domicile of the owner; and conversely, a person found within the province" may be lawfully taxed in respect or upon the basis of property situate without the province or of income derived from extra-provincial sources.*

2 Lambe's Case, ubi supra. This is but a particular instance of the general rule discussed, ante, pp. 198-9.

3

The expression is from Lambe's Case:

"Any person found within the province may be legally taxed there. This bank is found to be carrying on business there and on that ground alone it is taxed." As to provincial taxation of federal officers, see notes to No. 8 of s. 91, ante, p. 209.

This, it is submitted. is the correct deduction from the cases. See Lambe's Case, ubi supra: Nickle v. Douglas, 37 U. C. Q. B. at p. 62, per Burton, J.A.; and see also Colquhoun v. Brooks, 19 Q. B. D. 406; 21 Q. B. D. 65; 57 L. J. Q. B. 70, 439: and Lefroy, 760 (n), 769 (n). Of course, a provincial legislature cannot impose a lien or charge upon property beyond the province; the tax in such case would be enforcible only by process against the person taxed or against his property within the province. See, however, Leprohon v. Ottawa, 2 O. A. R. at p. 534, 1 Cart. at p. 605, where

There is no rule that taxation under the B. N. A. Act must be uniform or without discrimination.5

The only other class of section 92 expressly conferring power to tax is No. 9:-" Shop, saloon, auctioneer, and other licenses in order to the raising of a revenue for provincial, local, or municipal purposes;" and the license fees there authorized have been finally held to be direct taxation. And the weight of judicial opinion would seem to be that a provincial legislature cannot impose indirect taxation under any of the classes of section 92. The payment of provincial officers and the "maintenance" of certain provincial institutions and of provincial courts10 rest with the provinces; and the question has arisen as to the means open to a provincial legislature in providing funds for such maintenance. In the "exhibits" case above referred to1 the Privy Council declined to determine "whether, if a special fund had been created by a provincial Act for the maintenance of the administration of justice in the provincial courts, raised for that purpose, and not available as general revenue for general provincial purposes, in that case the limitation to direct taxation would still have been applicable."

Hagarty, C.J., expresses an opinion against provincial taxation based upon property without the province. On the general subject of extraterritorial legislation: see ante, p. 62 et seq.

5 See ante, p. 59.

Nos. 5 and 15 are the only other express revenue items.
'Brewers' License Case, (1897), A. C. 231; 66 L. J. P. C. 34.

See also the cases noted, post, p. 259.

Section 92, No. 4.

Ib., Nos. 6 and 7.

10 Ib., No. 14.

1 Atty.-Gen. v. Reed, 10 App. Cas. 141; 54 L. J. P. C. 12; 3 Cart. 190. See extract from this judgment, ante, p. 255.

2 In the same case in the Supreme Court of Canada (8 S. C. R. 408), Gwynne, J., had explicitly held that "the provincial legislatures cannot by an Act of theirs authorize the raising a revenue by any mode of taxation other than direct," citing Atty.-Gen. (Que.) v. Queen Ins. Co., (1878), 3 App. Cas. 1090; 1 Cart. 117; but the above extract would indicate that the P. C. did not in 1884 consider the question determined by any previous decision of the Board. See also per Wilson, J., in Reg. v. Taylor, 36 U. C. Q. B. 183, at p. 201. Mr. Lefroy (p. 733, et seq.) deduces a contrary rule from the

cases.

CAN. CON.-17

There is no subsequent direct pronouncement by the Board upon the question; but the decision of that tribunal that the powers which a provincial legislature can bestow upon a municipality must be limited to such powers as such a legislature itself possesses under the other classes of section 92, would seem to afford a strong argument that provincial power to raise funds for "maintenance" is limited to direct taxation under classes Nos. 2 and 9.

The question has, however, been much litigated in Manitoba. Following the judgment of the Privy Council the Court of Queen's Bench of that province held that the then existing provincial statutes requiring payment of fees by means of law stamps on proceedings in that court were ultra vires. Thereupon, acting upon the distinction suggested by the Committee, the Manitoba legislature passed an Act creating a special fund "solely for the maintenance of the administration of justice in the courts of this province," to which fund the fees payable in stamps upon legal proceedings were appropriated. This Act being impugned was upheld by Mr. Justice Dubuc, but, on appeal to the full court, this decision was reversed' and the statute pronounced ultra vires. In the opinion of the court, the only exception to the limitation laid down in this class No. 2 is that expressed in No. 9, but as the Privy Council has since held that license fees are direct taxation, the case may be taken as a decision that there is no exception to the rule laid down in this item No. 2. The Manitoba legislature surmounted the difficulty by declaring law stamps to be a direct tax and making good this declaration by enacting that such fees, so payable in stamps, are not to form any part of the costs of an action taxable between party

Under s. 92, No. 8:-" Municipal Institutions."

Local Prohibition Case, (1896), A. C. 348; 65 L. J. P. C. 26; 5 Cart. 295. And see notes to No. 8 of s. 92, post. In Lynch v. Canada N. W. Land Co.. 19 S. C. R. 204, Ritchie, C.J., speaks of the power of taxation as being essential to municipal institutions.

Plummer Wagon Co. v. Wilson, 3 Man. L. R. 68.

'Dulmage v. Douglas, 3 Man. L. R. 562; 4 ib. 495.
8 Ante, p. 257.

and party, but are to be borne once for all by the party actually paying them in the first instance. This Act was declared intra vires by the full court."

The following kinds of taxation have been held to be within the legislative competence of a provincial legislature: A tax, by way of license fee, upon brewers.10

An annual tax on ferrymen and ferry companies.1

A tax, by way of license fee, upon insurance agents.2
A tax on laundries."

A tax by way of license fee, on Canadian or foreign companies doing business in a province.*

A license tax on merchants, wholesale and retail."
A tax on mortgages held by a loan company."

A tax on physicians for the support of a college.

7

A license tax on "any trade, profession, occupation, or calling."

A stamp duty on sales of realty."

A provincial legislature cannot, however, under the guise of a license fee impose indirect taxation. For example: the

Crawford v. Duffield, 5 Man. L. R. 121.

10 Brewers' License Case, (1897), A. C. 231; 66 L. J. P. C. 34; Fortier v. Lambe, 25 S. C. R. 422; Reg. v. Halliday, 21 O. A. R. 42. Severn v. Reg., 2 S. C. R.. 70, may now be considered as finally overruled. See, however, per Gwynne, J., in Fortier v. Lambe, ubi supra, and in Molsons v. Lambe, 15 S. C. R. at p. 288-9.

1 Longueuil Nav. Co. v. Montreal, 15 S. C. R. 566.

2

English v. O'Neill, (1899), 4 Terr. L. R. 74.

3 Lee v. Montigny, 15 Que. S. C. 607; but see Reg. v. Mee Wah, 3 B. C. 403.

4 Halifax v. Western Ass'ce Co., 18 N. S. 387; Halifax v. Jones, 28 N. S. 452. In the earlier case the tax was upheld under No. 9 of s. 92, and the scope of No. 2 was limited in a way inconsistent with Dow v. Black, ubi supra.

Weiler v. Richards, (1890), 26 Can. Law Jour. 338 (B.C.). As to any supposed difference between wholesale and retail: see note ante, p. 204.

"The

Re Yorkshire Guarantee Corp., (1895), 4 B. C. 258. tax is not imposed on the dollars, but on the owners of the dollars:" per Drake, J.. at p. 274.

College de Médecins v. Brigham, (1888), 16 R. L. 283.

Ex p. Fairbairn, (1877), 18 N. B. 4; Jones v. Marshall, (1880). 20 N. B. 61; Ex p. Diblee, 25 N. B. 119.

❞ Choquette v. Lavergne, R. J. Q. 5 S. C. 108; (sub nom. Lamonde v. Lavergne), 3 Q. B. 303.