REPORTS OF CASES

DECIDED IN

The Court of Queen's Bench for Manitoba.

THE CANADIAN PACIFIC RAILWAY COMPANY V. THE RURAL MUNICIPALITY OF CORNWALLIS.

Before TAYLOR, C.J., DUBUC AND KILL M, JJ.

Sale of land for taxes-Construction of C. P. R. Contract-Voluntary pay

ment.

The Canadian Pacific Railway Company by its contract with the Crown was entitled to a grant of certain lands upon completion of certain portions of the railroad, and these lands were exempted from taxation for 20 years from the grant thereof from the Crown, unless sooner sold or occupied. This contract was ratified by statute. After the making of said contract, but before the patent for the lands had been issued, the defendant municipality, within which the lands in question lay, assumed to tax certain parcels of the said lands, and afterwards sold them for taxes. The judge at the trial found that the Railway Company had performed its part of the contract, entitling it to a grant of said lands before the sale was held. Shortly before the time for redemption expired, the Railway Company paid the taxes to the municipality under protest to avoid tax deeds being issued, and afterwards brought an action to recover the money.

Held, 1. (KILLAM, J., dissenting.) That the plaintiff was entitled to recover. 2. (KILLAM, J., dubitante.) That the plaintiff had an interest in the lands prior to patent issuing.

3. (KILLAM, J., dissenting.) That under the terms of the contract, the lands were exempt from taxation from the date of the contract until 20 years after the issue of the patent unless sooner sold or occupied. 4. (KILLAM, J., dissenting.) That the money was not paid voluntarily and might be recovered back.

Canadian Pacific Railway v. Burnett, 5 M. R. 395, followed and approved.

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Per KILLAM, J.-1. That the exemption from taxation was limited to a period of 20 years, running from the Crown grant, and did not apply to the interval between the date of contract and the issue of the patent.

2. That if the plaintiff had an interest in the land prior to patent, that interest was taxable, and if not, the payment was voluntary, in either event, the money could not be recovered back.

ARGUED: July 16th, 1890.

DECIDED: October 14th, 1890.

Statement. THE Canadian Pacific Railway Company entered into a contract with the Government of Canada, by which they were to build, equip, and work a railway, and to receive a land grant upon certain terms set out in the contract. This contract was ratified by and set out as a schedule to 44 Vic. c. 1, (D. 1881.)

By the said contract it was provided inter alia, that the "lands of the company in the North West Territories until they are either sold or occupied, shall be free from taxation for twenty years from the grant thereof from the Crown." The lands in question were in the North West Territories at the time the contract was made and the Act of Parliament passed ratifying the same. Afterwards, in 1881, the boundaries of the Province of Manitoba were extended and these lands were included within the territory so added to Manitoba. Both the Dominion and the Provincial Statutes of 1881 for the enlargement of the Province provided, that the added territory should be subject to "all such provisions as may have been enacted respecting the Canadian Pacific Railway and the lands to be granted in aid thereof." The added territory was divided into municipalities by an Act of the Provincial Legislature, and the lands in question were situate within the defendant municipality, which was created by that Act. The learned judge who tried the case found that the Railway Company had, under the terms of the contract, earned these parcels of land and become entitled to a grant thereof from the Crown in 1886, if not earlier, but the patents were not actually issued until February, 1890. The defendant municipality assumed to tax these lands for the years 1882 to 1888 inclusive, and in the year 1887 it sold

them for arrears of taxes, and they were bought in by the municipality at the tax sale. Shortly before the time for redemption expired, the Railway Company paid the moneys necessary to redeem these lands, and also paid the taxes for the years 1887 and 1888. At the time of paying these moneys the Company served upon the treasurer of the municipality a notice stating that the money was paid to prevent complications arising through the issue of tax deeds, and was not in any way an admission of the right to sell or receive the money, and was paid under protest, and that the Company expressly reserved all its rights to take whatever measure it should see fit for recovering the money paid or setting aside the sales or recovering damages.

The Railway Company then brought an action at law to recover back the moneys so paid.

The action came on for trial before Bain, J., without a jury, at Winnipeg, on 2nd day of April, 1890, when a verdict was entered for the plaintiff for the full amount of the claim.

The defendant moved against this verdict to have a nonsuit entered, or to have a verdict entered for the defendant, upon the following amongst other grounds:

1. The Act of the Parliament of Canada under which the plaintiff claims that its lands are exempt from taxation, applied only to lands which were in the North West Territories at the time the taxation was imposed.

2. At the time when the plaintiff company earned the lands in question, and first became entitled thereto, these lands were in the Province of Manitoba, and not in the North West Territories.

3. There was no evidence that at the time when the taxes were imposed upon the lands, they were the property of the plaintiff company, and the plaintiff had no locus standi.

4. The payment was a voluntary one, and if the land was not liable to taxation, the plaintiffs would suffer no injury.

5. The evidence showed that the land was vested in the Crown at the time of the alleged sale, and at the time of

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Statement.

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the payment of the money, and this action was not brought for the benefit of the Crown.

6. The lands were occupied within the meaning of the statute, and the right of occupation was lost to the plaintiff, and the lands thus became liable to taxation.

Hon. J. Martin, Attorney-General, for defendant. The writ was issued on 11th March, 1889, the plaintiffs were not the owners, nor had they any interest in the lands until 21st February, 1890, when the patent issued. By clause 16 of the contract between the Dominion Government and the C. P. R., the lands were exempt from taxation for 20 years after the grant; the C. P. R. had no interest in any particular lands until they were granted. There was no exemption except for 20 years after the grant, not from any other time. However illegal the defendant's acts might be, the C. P. R. had no locus standi to complain. Look to the wording of the exemption in clause 16 of the contract. The conjunction of the word "sold" with "occupied," shows the Legislature did not intend the lands should continue exempt until conveyed; it was natural to suppose the Company would sell on time. If lands once liable to taxation, they would continue so. If lands were leased and lessee went into possession, the lands would continue subject to taxation. Lands to be exempt must be in N. W. T., the C. P. R. had no lands in N. W. T. at the time of the contract. Taxation should be equal, and exemptions strictly construed. Payment by plaintiffs was a voluntary payment, so cannot be recovered. The C. P. R. had no claim to the land until 21st February, 1890, when patent issued. Marriott v. Hampton, Smith's L. C., vol. 2, 421. The judge at the trial relied on Street v. Simcoe, 12 U.C.C.P. 284, but that was not good law. Leake on Contracts, 100. Even if plaintiffs owned the land, they could not recover back the payments made under the circumstances shown in this case. The lands had been contracted to be sold by plaintiffs, but the purchasers never took possession, and the agreements were cancelled. The right to recover back money is only where it is against good

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faith to retain same. Lamborn v. Dickinson County Commissioners, 97 U. S. 181; Railroad Co. v. Commissioners, Argument. 98 U. S. 541. As to a portion of the taxes, the school tax and the Judicial District rate, the defendants were merely agents in receiving same. Even in cases of recovering voluntary payments, there must be some duress or danger to party paying, or his property. Here, a deed, even if issued, would be no cloud, for the title was in the Crown. B. N. A. Act, s. 125, and s. 91, s-s. 1. The Legislature of Manitoba could not tax lands so long as they were vested in the Crown. The Dominion and Local Acts of 1881 both make the territory added to Manitoba, subject to clause 16 of the contract between Dominion Government and C. P. R. The powers of Manitoba were derived from the Manitoba Act. Imperial Act of 1871, c. 28. No power was given to the Province of Manitoba to agree to the exemptions. When the territory was added, it became fully subject to the authority.

J. S. Ewart, Q.C., and F. H. Phippen, for plaintiffs. The payment made was an involuntary one; the treasurer says if it had not been made the day it was, the certificate would have issued; and that would have been a cloud on the title if registered. As to what injury would induce a court to interfere. C. P. R. v. Calgary, 5 M. R. 37. An action may be brought to recover money back. Boulton v. York, 25 U. C. R. 21; Benjamin v. Elgin, 26 U. C. R. 660; Robertson v. Wellington, 27 U. C. R. 336; Bain v. City of Montreal, 8 S. C. R. 252. Here the money was kept in reserve in consequence of plaintiff's protest. There may be pressure in the case of real estate. Close v. Phipps, 7 M. & G. 586; Fraser v. Pendlebury, 31 L. J. C. P. 1; Parker v. G. W. R., 7 M. & G. 253, 292. As to recovering back part of a larger amount. Hirst v. Tolson, 19 L. J. Ch. 441; Astle v. Wright, 23 Beav. 77; De Vaux v. Conolly, 8 C. B. 640. The school tax and the Judicial District Board tax should be recovered, they were paid before the plaintiffs paid their amount, so the payments were not made out of plaintiff's money. The C. P.