1882. TON BRANCH RAILWAY Co. v. It would have been more satisfactory if Mr. Greene had annexed a copy of his agreement with the company to his affida- THE CARLE vit, so that the Court could understand its terms. But at all events we have it alleged in the second section of the bill, that Mr. Greene was to complete the railway from St. Stephen to St. John, "in accordance with the Acts of Assembly," which would import that it was to be finished, on or before the 11th April, 1880. By the 7th clause of the agreement between the company and the Government, already referred to, the former agreed, "bona fide to commence, on or before the 30th December, 1876, the work of construction of the said line of railway, and to proceed with the same with all reasonable despatch, so as to have the same completed on or before the 11th day of April, which will be in the year, 1880, with power to the Lieutenant Governor in Council, by notice in writing to the said company, should they fail to make reasonable progress with the said work, to terminate the contract at the end of six calendar months from the service of such notice, unless the company give satisfactory proof to the Governor in Council that the work is proceeding, or likely to proceed, so as to be completed within the time aforesaid." On the 2nd December, 1878, an order in Council was passed, directing notice to be given to the Grand Southern Railway Company, under the 7th clause in their agreement, to determine that agreement in six months after such notice, unless satisfactory proof should be given to the Governor in Council, as therein provided for. On the same day a notice was prepared by the Provincial Secretary, in pursuance of such order in Council, for service on the Grand Southern; and service of such notice is acknowledged by the Company's Secretary, on 14th January, 1879. Copies of the agreement of 20th January, 1876, between the Company, and Her Majesty, taken from the Journals of the House of Assembly; and of the Order in Council of 2nd Dec., 1878, of the notice of the same date, and the acknowledgment of its receipt by the Secretary of the Company, taken from the same source, are annexed to the affidavit of Mr. J. Murray Kay, sworn on 7th July, 1880. And, in connection with the pro THE GRAND SOUTHERN RAILWAY CO. 1882. duction of these papers Mr. Kay swore, that, until very recently, THE CARLE little or no work had been done on the Grand Southern RailTON BRANCH RAILWAY Co. way for over two years, and that he believed the company was worthless in every way. v. THE GRAND Mr. Greene, in an affidavit in reply, sworn on 10th July, 1880, RAILWAY CO. whilst he does not deny Mr. Kay's statements that the company was worthless, and that the work on the road had been at a stand-still for two years, stated that before the agreement between the company and Her Majesty, of date 20th January, 1876, was executed, the Grand Southern Railway Company gave to the Governor in Council satisfactory evidence of their ability to construct, finish, and equip, the line of railway, which, by that agreement they undertook to construct; and that the Governor in Council upon such evidence, waived the notice given under the order in Council of 2nd Dec., 1878. I wish to be distinctly understood as repudiating the idea of imputing to Mr. Greene any intentional mis-statement, but unless he is himself the Grand Southern Railway, I am at a loss to understand how he can make such a positive statement as to the satisfactory character of the evidence furnished by it, to the Governor in Council, of its ability to construct and equip the railroad. And, more especially, in view of the undisputed facts about to be referred to, that all the property of the company, whether then existing, or thereafter to be acquired, had been transferred to trustees for the benefit of the bondholders; that the total amount of its subscribed stock never exceeded about $24,000, of which only about $1240 had been actually. paid. It was not until after the company should have made default-under the agreement of 20th January, 1876-should have failed to make reasonable progress with their work under it, that an Order in council was authorized to be made, and a notice given to determine that agreement. And it passes my understanding how any proof, however satisfactory, given not only before any default had been made, but before even the agreement itself had been executed, could furnish grounds for a waiver by the Governor in Council of a notice, given in pursuance of an Order in council, under the seventh clause of it nearly two years afterwards. At all events the company did not complete the construction THE CARLERAILWAY Co. TON BRANCH V. THE GRAND of the railroad before the 11th April, 1880, in pursuance of 1882. their contract, and in accordance with the provisions of their charter. And early in the Spring of that year, the Provincial Legislature being then in session, the company applied to it for an Act to amend its charter by extending the time for the SOUTHERN completion of the road, and the Legislature refused to pass such RAILWAY CO. an Act. What took place on that application is detailed in the affidavits of Mr. Howard D. McLeod, Mr. Murray Kay, and Mr. F. E. Barker. The statement of the latter being more circumstantial than any of the others, I give it verbatim. "Application," [Mr. Barker says,] "was made to the Legislature at its last Session, by and on behalf of the plaintiffs, for the passage of an Act extending the time for the construction of their road, which time was then about to expire; that the Legislature refused to pass such an Act after evidence had been given before a committee of the House of Assembly, appointed for that purpose. Amongst others who were then examined, under oath, were Mr. Barry, the President, and Mr. Ludgate, who had been Treasurer of the plaintiffs' company. And it was on that occasion sworn to by them, or one of them, that only about $24,000 of the capital stock of the plaintiff's company had been subscribed, and of that only a small percentage, amounting I think on the whole subscribed stock to $1240, had been paid in. It also appeared by the evidence given under oath by the speaker of the house, Mr. Stevenson, before the same committee, that he was a trustee for the bondholders, and that all the property existing and to be acquired, together with the right to any government subsidy, had been assigned to the said Stevenson and another. I have no doubt, whatever, that the Directors who executed the said lease set out in the bill, were well aware that the Legislature had refused to extend the time fixed for the completion of the road; and also that the plaintiff company was practically worthless, so far as any pecuniary responsibility is concerned." Mr. Greene, in his affidavit in reply, makes a correction in Mr. Barker's statement to the effect that Mr. Stevenson, in his evidence before the Committee, excepted "the whole of the subsidy granted by the Government," from the property, present and future, of the company, which he and another held in trust for the bondholders. I have no doubt that Mr. Greene is correct. I see by his former affidavit, that the whole of that subsidy had been assigned to himself at the time when he entered into the agreement with the Grand Southern to construct the road for them. With the exception of that correction, the whole of Mr. Barker's statement remains uncontradicted, as well with 1882. regard to the conduct of the Directors of the Carleton Branch THE CARLE Railroad, as also in relation to the financial standing of the TON BRANCH Grand Southern Railway Company. RAILWAY Co. V. THE GRAND Returning now to the discussion of the question arising out SOUTHERN of this Appeal, as I have said, the first question for us to consider RAILWAY Co. is, not whether the Grand Southern Railway Company is extinct, or had ceased to exist on 11th April, 1880. It certainly did not. By the Consol. Statutes, c. 98, section 3, its existence is prolonged for three years beyond that date; but only "for the purpose of prosecuting or defending suits by or against them; and of enabling them to settle and close their concerns, to dispose of, and convey their property, and to divide their capital stock." Nor is it necessary for us to hold, as Mr. Skinner contended it was, that the language of 35 Vict., chap. 27, sect. 12, is sufficient to create a forfeiture of the charter. A contract may be ultra vires, and yet the charter may not be forfeited. In In re The Albert Mining Co.,' this Court held that proceedings by quo warranto were inapplicable to the cases of private corporations. And in The Attorney General v. Great Eastern Railway Co., Lord Justice James recognized the possibility of an agreement being theoretically ultra vires, although the Attorney General would have no right to interfere on behalf of the public, His Lordship said: "So far as the first" (a company incorporated by special Act of Parliament for the purpose of making and working a railway) "has compulsory powers, it must not abuse them; so far as it has statutory duties it cannot delegate them; so far as it is under any statutory prohibition, or direction, it must not violate the one or neglect the other. But even in these cases, it is only when some public mischief is done, or where, in respect of something intended for the public protection, there is misfeasance or nonfeasance, that the Attorney General ought to interfere. If a particular land-owner has cause of complaint, it is for him to appeal to the tribunals. If as between the company and its shareholders there is a wrongful application of the capital, or a wrongful incurring of liabilities, it is for the shareholders to complain; if as between the company and any persons outside the company it is entering into contracts ultra vires, it is for such persons to take proper advice, and guard themselves from risks which they are free to avoid. I cannot myself see any principle on which the Attorney General is to interfere with a railway company's contracts, because they are ultra vires, any more than he would, on the like ground in- 1882. terfere with the contracts of any other incorporated joint stock company, THE CARLEcarrying on any other industrial enterprize." See Ashbury Railway TON BRANCH Carriage and Iron Company v. Riche.1 Our first inquiry then, must be, whether or not, on the 30th April, 1880, the date of the agreement which we are asked to confirm and declare to be obligatory, the Grand Southern Railway had power under their charter to enter into an agreement with a view, and for the purpose of completing the construction of their still unfinished road. Although there are no express prohibitory words in the 12th sect. (35 Vic., c. 27), is it not a necessary inference from the language of that section that the Legislature did not intend a contract for such a purpose to be entered into by the Grand Southern Railway Company, after the lapse of eight years from the date of passing its Act of Incorporation? That period of time would expire on the 10th April, 1880. And I think that the Legislature has expressed its intention to that effect, in plain and unambiguous language, when it provides that, to entitle the company to enjoy the privileges of their charter "the whole railroad must be completed within eight years from the passing of the Act." If so, a contract such as this, entered into by the company, after the expiration of that time, and providing for the subsequent completion of the road, must be ultra vires, and void. And we are asked to declare such a contract to be obligatory, directly in the face of the language of the Act of the Legislature. Vide Shrewsbury & Birmingham Ry. Co., v. The North Western Ry. Co. And see also Ashbury Carriage and Iron Co. v. Riche. And per Lord Blackburn, in the latter case, in the Exch. Ch. "I do not entertain any doubt that, if on the true construction of a Statute creating a corporation, it appears to be the intention of the Legislature, express or implied, that the corporation shall not enter into any particular contract, every Court, whether of Law or Equity, is bound to treat a contract entered into contrary to the enactment, as illegal, and therefore wholly void." If it is competent for any Court to pronounce a contract for the completion of the Grand Southern Railroad to be valid RAILWAY Co. v. THE GRAND SOUTHERN RAILWAY Co. 1L. R. 7 H. L. 658, 672. 26 H. L. Cas. 113, 137. 3L. R. 9 Exch. 224, 262. |