July 22, 1903

LIB

William Alfred Galliher

Liberal

Mr. GALLIHER.

Mr. Chairman, is it the purpose to deal with each of these proposed amendments as they affect different clauses to speak at this stage ?

Mr: DEPUTY SPEAKER. Yes.

Topic:   QUESTIONS.
Subtopic:   PRIVATE BILLS.
Sub-subtopic:   BROCKVILLE AND SAULT STE. MARIE RAILWAY COMPANY.
Permalink
LIB

William Alfred Galliher

Liberal

Mr. GALLIHER.

Because, if it is, I do not propose to speak at this stage.

Topic:   QUESTIONS.
Subtopic:   PRIVATE BILLS.
Sub-subtopic:   BROCKVILLE AND SAULT STE. MARIE RAILWAY COMPANY.
Permalink
CON

George Taylor (Chief Opposition Whip; Whip of the Conservative Party (1867-1942))

Conservative (1867-1942)

Mr. TAYLOR.

' Mr. DEPUTY SPEAKER. You are speaking now on the preamble. The clauses will come up in order and as each section is called the amencEment will be made to the section.

Topic:   QUESTIONS.
Subtopic:   PRIVATE BILLS.
Sub-subtopic:   BROCKVILLE AND SAULT STE. MARIE RAILWAY COMPANY.
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LIB

William Alfred Galliher

Liberal

Mr. GALLIHER.

I will only then state generally, speaking on the preamble, that I was a member of the sub-committee of the Railway Committee which sat on this Bill. The Bill having been referred to the subcommittee they met several times and discussed it. Finally the majority of the committee agreed to a report which was afterwards submitted to the Railway Committee and endorsed by the Railway Committee. That, for all practical purposes, I think, disposes of the question as to whether or not this Bill has been fully dealt with by the sub-committee and by the Railway Committee. The sub-committee, upon going into this matter, concluded that they would recommend that the other two Bills be not accepted and that this Bill in so far as ratifying the purchase of this road is concerned should be adopted. Further, it was agreed by all the members of the committee that the bonding privileges of $25,000 per mile asked for by the company should be cut down to $10,000 a mile. Two members of the committee, or what we may term the minority portion of the committee, wished to include it in a clause to the effect that the proceeds of these bonds should be expended upon the forty-five miles of railway already built. However, the majority of the committee agreed upon submitting the report as it now stands which was adopted by the Railway Committee and which does not contain that limitation. The sub-committee also recommended that the words * Sault Ste Marie ' be struck out and that the company should be named the Brockville, Westport and North-western Railway Company. The reason of that was that the extension asked for to Sault Ste. Marie was not granted by the committee and there was therefore no necessity for retaining the words ' Sault Ste. Marie ' and it was thought it would be more applicable to the road to call it the Brockville, Westport and North-western. That was agreed to, I think, I am safe in saying, by all the members of the committee. I do not remember that there was any objection to these words being submitted, from any members of the committee. This being done, that also was adopted by the Railway Committee when the report of the sub-committee was brought in. We also considered the question as to whether that sub-committee should deal with the claims of the creditors that were being pressed, and we came to the conclusion that we would not touch upon that question, that we were merely going to deal with the question of ratifying the sale to the present company, and with the question of giving them bonding powers to the extent of $10,-

000 per mile on the forty-five miles constructed, in order that they might be able to put the road in proper repair and also earn the remaining subsidy.

Topic:   QUESTIONS.
Subtopic:   PRIVATE BILLS.
Sub-subtopic:   BROCKVILLE AND SAULT STE. MARIE RAILWAY COMPANY.
Permalink
CON

Robert Abercrombie Pringle

Conservative (1867-1942)

Mr. PRINGLE.

I was not present at the final meeting of the sub-committee which considered this Bill, and therefore,

1 cannot speak with precision as to what

occurred. However, at the last meeting at which I was present there was a discussion as to the sub-committee recommending simply a Bill ratifying and confirming the purchase of the Brockville and Westport Railway by the applicants for the present Bill. The consensus of opinion was that if no arrangement could be arrived at between the conflicting interests that a Bill would be recommended simply ratifying and confirming the purchase. But, Sir, I find that the Bill which has been reported to the House goes very much further than that. This Bill gives to the applicants very large powers over and above ratifying and confirming the purchase. The position 1 take is this : That these applicants had a

perfect right to come to us under the Railway Act and ask for a Bill confirming their purchase, and they were entitled to receive that Bill subject to any rights acquired under existing legislation. But when they come to us and ask for the privileges which they have obtained in this Bill then I think we "have a right to say to them: Before

we give you these privileges you should do what is right and just by the people who have assisted in the construction of that road and have not been paid. I will briefly mention the history of this enterprise. The Brockville, Westport and Sault Ste. Marie Railway Company was chartered by an Act of the legislature of Ontario a good many years ago. That company entered into a contract with a man named Robert G. Hervey for the construction and equipment of that portion of the line from Brockville to Westport, being forty-five miles, and agreeing to pay for such construction and equipment (according to the schedule attached to the contract) all of the stocks, bonds and subsidies of the company. In pursuance of that contract work was begun and the line partially completed. The rails and fastenings and the wire for fences were purchased from Coojjer, Fairman & Company and the Dominion Wire Company, and I might say that a large portion of the material used in the construction of the railway, in the shape of ties and so on, was purchased from persons throughout the province of Ontario. For instance, the Rathbun Company furnished a large portion of the ties which went into the construction of this road. The Investment Company of Philadelphia furnished at different times certain sums of money upon notes made by the railway company and endorsed by R. G. Hervey, and with certain

bonds of the railway company as collateral security. The Investment Company were familiar with the condition and transactions of the railway company, and agreed to the assignment by the company of the Dominion subsidy for the purchase of the rails, fastenings and wires which were purchased from Cooper, Fairman & Company.

In July or August, 1892, an agreement was made between Hervey and the Investment Company for the assignment by Hervey of the construction contract to the Investment Company, and thereupon Hervey endorsed such transfer upon the original contract. The directors, who up to that time had been legally qualified by holding each the amount of stock specified in the charter, and having paid all calls thereon, resigned as such directors, and the Investment Company nominated a board of directors. It is important that we should consider that position. The Investment Company who took over all the bonds of this road under which the road was subsequently sold, took over this contract from Hervey-and I am reading now from the statement of Hervey which can be substantiated as I understand, by the records. The Investment Company agreed to assume these liabilities; the liabilities which we have been considering in the committee and in the sub-committee. Mr. Her-vey's object in making this agreement was that the railway might be completed and equipped and the construction liabilities paid by the Investment Company who became the contractors ; and the object of the Investment Company was stated to be that they might acquire a good title to the stock and bonds upon the completion of the contract. Now, just while I am on that point, one of the parties who came before the subcommittee was a Mr. Robinson. Mr. Robinson had had a contract for the construction of a certain portion of this road. He had a claim against this company of some $20,000, and he obtained judgment upon that claim, but as yet has never received a dollar. Now, Sir, I say that the Investment Company, when they took over that contract, assumed that liability. They agreed with Hervey that they would pay [DOT] the liabilities which then existed, and that they would go on and complete the construction of this portion of the road. The Investment Company received all that there was to be had, they received all the bonds, all the stock, all the assets of the road. There is nothing else that could be obtained and it is under these bonds that the Investment Company sold this road. I contend that the parties who have purchased it are really parties representing the Investment Company. However, instead of proceeding to complete and equip the railway in accordance with the terms of the contract which they then held, they failed, and refused to pay the construction debts ; and to complete such construction and equip-

ment, I am informed and believe that they attempted to repudiate the assignment of the Dominion subsidy to Cooper. The Dominion subsidy had been assigned to Cooper, Fail-man & Company as a security for their furnishing the rails and fastenings and they undertook to foreclose the deed of trust or mortgage securing the bonds. Several years of litigation ensued, during which time the directors of the railway company did not act, so I am informed, in the interests of the railway conjpany, and did not defend such foreclosure suit, as they should have done, and should have set up that the bonds held by the Investment Company should not draw interest until such contract was completed. By reason of the failure of the Investment Company to carry out in good faith the contract they had assumed, the subsidy of the Dominion government lapsed, or at least such portion of it as had not been paid, but was withheld by the government pending the completion and equipment of the line in accordance with the specifications. It has been contended, and I think it was a fair contention, that the securities held by the Investment Company should be charged with a lien for the payment of the construction debts, and the completion and equipment of the line according to the contract. If I am stating what is correct-and I am stating it upon the authority of Mr. Hervey, whose statement I have in my hand-when Mr. Hervey handed over his contract the Investment Company agreed to take his position and complete the road in consideration of their receiving the 'bonds, stock, &c. Now,, Sir, I was not opposed in the committee to granting to this company the same powers as the original Brockville," Westport and Sault Ste. Marie Railway Company had ; but I took this position, that if the applicants for that Bill wanted from us large privileges, then we had a right to say to them : When we grant you these privileges, we think you should do what is right and fair by the creditors of this company. I have a statement here which was directed a short time ago to the Hon. William Harty, the chairman of the sub-committee of the Railway Committee, and I do not know that I can do better than read this statement to you. I may explain to the House that the creditors felt that It was in their interest to apply for an Act authorizing them to construct a railway from the present terminus of this road, and they offered, if they obtained that Act, to place in the hands of the Minister of Railways and Canals the sum of $50,000 to be divided rateably among the creditors. That was Bill No. 67 ; then there was Bill No. 89, known as the Brockville and Sault Ste. Marie Bill ; and there was the present Bill. Messrs. Hutcheson & Fisher, who are acting for a large number of these creditors, state in this document:

Topic:   QUESTIONS.
Subtopic:   PRIVATE BILLS.
Sub-subtopic:   BROCKVILLE AND SAULT STE. MARIE RAILWAY COMPANY.
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CON

Robert Abercrombie Pringle

Conservative (1867-1942)

Mr. PRINGLE.

Re Brockville and Westport Railway Bills.

Sir.-We understand that of the three Bills referred to your committee by the main railway committee, regarding the Brockville and Westport Railway in this county, only two are being pressed in earnest, viz., the Brockville and Western Bill herein referred to as the Creditors Bill, number 67. and the Brockville and Northwestern Bill, herein referred to as the Syndicate's Bill, number 89, the other Bill, known as the Brockville and Sault Ste. Marie Rail-number 104, as stated by Mr. Barwick was applied for in order that the four gentlemen who are the applicants might be in a position to obtain a license from the Minister of Railways and Canals to operate the forty-five miles of railway now in use until a new charter is obtained.

On behalf of Mr. James Cooper, the Dominion Wire Manufacturing Company, Limited, W. J. Webster and certain other creditors of the Brockville, Westport and Sault Ste. Marie Railway Company, whose claims are for material and labour supplied in building the road, we ask you to report in favour of the first Bill named-The Brockville and Western Bill-and to report against the Brockville and Northwestern Bill. The Creditors' Bill you will notice has a clause providing for payment of fifty thousand dollars into bands of the Minister of Railways and Canals for distribution pro rata among creditors of the Westport Company within sixty days after the new company acquire the road.

We submit that the men whom we represent, are entitled to consideration at your hands. Because they are the men who actually supplied the material and labour which made tho railway, built it and made it available for traffic and for all these years their claims have remained due and owing. Mr. Cooper supplied rails, bolts and fastenings : tbe wire company the wire for fencing and Mr. Webster actually constructed a section of the road, built fences. &c. Your committee are fully aware of all tho circumstances under which the rails were supplied. A transfer of a part of the Dominion government subsidy was made to Cooper, Fair-man & Co., as security for the rails, but owing to the fact that the road was never completed to the government standard, the government engineer refused to accept it and some thirty-eight thousand dollars of this subsidy to -which Mr. Cooper was entitled, was never paid.

We say that parliament, the highest tribunal in our land, has the authority and power to ascertain if an undertaking such as a railway has paid its debts of construction and if it finds that construction debts are still owing that parliament has the right to enforce that lien which equity recognizes everywhere as Delonging to the man whoso labour and material has created the railway and undertaking in question. In a recent judgment in the United States Supreme Court Mr. Justice Brewer expressed the opinion in reference to foreclosures of mortgages om railways :

'This court long since recognized the fact that in the present condition of things other inquiries arise in railway foreclosure proceedings than the mere matter of the debt of the mortgagor to the mortgagee. We have held in a series of cases that the peculiar character and condition of railway property not only justifies but compels a court entertaining foreclosure proceedings to give to certain limited unsecured claims a priority over the debts secured by the mort-

gage. It may be and has often been said that this ruling implies a departure from the apparent priority in right secured by a contract, yet this court recognizing .that' a railway is not simply private property but also an instrument of public service has ruled that the character of its business and the public obligations which it assumes justifies a limited displacement of the contract and recorded liens on behalf of certain unsecured creditors.'

It is .contended by the promoters of the Syndicate Bill that this equity in favour of labourers and material men does not apply or attach in this case because the syndicate purchase this railway at a court sale. We submit that the equity does not apply because :-

The conditions of sale were unreasonable and on the face of them show that they were framed with the object in view of the large bondholders (who was also plaintiff and had conduct of the sale) becoming the buyer. No outsider had am-chance whatever of buying the undertaking at any price. Bonds could be turned In on the purchase money and the Philadelphia Company then held some ninety per cent of the total bond issue. They or their nominees would thus only have to provide in cash the remaining ten per cent of their purchase price and the costs of the 6uit. As Mr. Holm told your committee when he and his associates went to the sale with ninety per cent of the bonds in their pockets or under their control, they intended to come hack the owners of the road. They were thus in a position to outbid every one. For this reason we submit it is pertinent to this matter to inquire.

What this block of bonds-ninety per cent of the total issue-cost the promoters of the Syndicate's Bill ? It has mot yet appeared what price was paid the Philadelphia Company, although we have stated as a matter of report that the price was $90,000 and no one had denied it.

Mr. Cooper was offered the holdings of the Philadelphia Company at one time for $125,000, but owing to the death of his partner, Mr. Fairman, just at this time, be was unable to entertain it.

Inasmuch as ninety per cent of the purchase money at the sale was paid in bonds, we are entitled to bring before the committee all the circumstances in connection with the Philadelphia Company's holdings of these bonds. We do know that the construction contract to build the road was assigned by the contractor. R. G. Hervey, to this company. The Philadelphia Company accepted and acted on this transfer and took certain benefits under it and the contractor R. G. Hervey, says that before this transfer was made the Philadelphia Company agreed with him to satisfy the construction debts then outstanding, on which Hervey was then liable, and to complete the railway according to the contract.

That is the statement made by Mr. Hervey in writing, and It has not been contradicted ?

Topic:   QUESTIONS.
Subtopic:   PRIVATE BILLS.
Sub-subtopic:   BROCKVILLE AND SAULT STE. MARIE RAILWAY COMPANY.
Permalink
LIB

William Alfred Galliher

Liberal

Mr. GALLIHER.

Would the hon. gentleman not infer from what he has read that that is merely the assertion of some verbal understanding, which was not embodied in the agreement itself.

Topic:   QUESTIONS.
Subtopic:   PRIVATE BILLS.
Sub-subtopic:   BROCKVILLE AND SAULT STE. MARIE RAILWAY COMPANY.
Permalink
CON

Robert Abercrombie Pringle

Conservative (1867-1942)

Mr. PRINGLE.

I do not infer anything of the sort. The original contract was for the construction of a certain portion of that road. The consideration for that contract

was the bonds and the stock of that road. Mr. Hervey went on to construct the road and found some difficulty in financing. He then assigned the contract to an investment company, which took the consideration he was receiving, namely, the bonds and stock, and agreed to build the road, and released Mr. Hervey from all liability.

Topic:   QUESTIONS.
Subtopic:   PRIVATE BILLS.
Sub-subtopic:   BROCKVILLE AND SAULT STE. MARIE RAILWAY COMPANY.
Permalink
LIB

William Alfred Galliher

Liberal

Mr. GALLIHER.

Does he not say in that statement that before this assignment was made, he agreed to do that ?

Topic:   QUESTIONS.
Subtopic:   PRIVATE BILLS.
Sub-subtopic:   BROCKVILLE AND SAULT STE. MARIE RAILWAY COMPANY.
Permalink
CON

Robert Abercrombie Pringle

Conservative (1867-1942)

Mr. PRINGLE.

No, he says he assigned direct to the investment company. The only assets of that whole system were the bonds and stock, but these were received by the investment company. The investment company subsequently sold this road under a mortgage given to secure these bonds. Is it not most reasonable, even if Mr. Hervey did not say so, to assume that the investment company were to pay for the construction of the road ? They went on and: finished a portion of the road and paid for a certain portion, but at the time when Mr. Hervey abandoned this road, Cooper & Fair-man had been supplying the rails, the Rath-bun Company had been furnishing the ties, and Robertson had a contract for the construction of a number of piles on that road, which he went on and completed. Subsequently be bad: to sue the railway company and obtain judgment, and then he found that the bonds and stocks and everything were held by this investment company.

Topic:   QUESTIONS.
Subtopic:   PRIVATE BILLS.
Sub-subtopic:   BROCKVILLE AND SAULT STE. MARIE RAILWAY COMPANY.
Permalink
LIB

Lawrence Geoffrey Power (Speaker of the Senate)

Liberal

Mr. SPEAKER.

The hour for private Bills has expired.

Topic:   QUESTIONS.
Subtopic:   PRIVATE BILLS.
Sub-subtopic:   BROCKVILLE AND SAULT STE. MARIE RAILWAY COMPANY.
Permalink

STEAMER. 'SCOTIA '-CLAIM RE SALVAGE.


The POSTMASTER GENERAL (Hon. Sir William Mulock) moved that the House again go into Committee of Supply.


CON

Edmund Boyd Osler

Conservative (1867-1942)

Mr. E. B. OSLER (West Toronto).

A few days ago I saw a report in one of the newspapers of the decision of the Privy Council in the case of the Anchor Line Steamer ' Fur-nessia' which rescued the government steamer ' Scotia.' The Privy Council decided that judgment could not be recovered against: the King, but the Lord Chief Justice expressed the hope that notwithstanding this decision the Dominion government would compensate this Anchor Line steamship, because, if not, tbe effect would be that steamers would avoid in future going to the rescue of Dominion government boats in distress. It struck me that that recommendation of tbe chief justice would have been accepted without question, but I am sorry to see to-nigbt in a despatch quoted from London ' Truth,' that tbe Canadian government have resisted the claims for compensation, and ' Truth ' says : ' Tbe natural outcome of this meanness will be that no ship will come to the assistance of any government vessel in distress.' I do not want to make any comments, but

sincerely hope that the report is not correct and that the Dominion government have not refused compensation. To do so would be false economy.

Topic:   QUESTIONS.
Subtopic:   STEAMER. 'SCOTIA '-CLAIM RE SALVAGE.
Permalink
?

The POSTMASTER GENERAL.

I am glad the hon. gentleman has brought the matter to the attention of the House. 1 regret that the hon. Minister of Justice is absent as he would be able to answer the inquiry more fully. However, speaking from such knowledge as I possess, and which I think is quite correct, I will say that the defense raised by the crown was not with the intention of ultimately refusing to compensate this Anchor Company at all. In fact, I think the Anchor Company quite understand that the defence was raised because of some question arising, I think growing out of insurance contracts. But it is the full intention of the Crown to do all that is proper under the circumstances quite irrespective of the judgment. It has always been their intention to do so; but it was necessary, out of consideration of the rights of other parties, to allow the case to proceed through the courts.

Topic:   QUESTIONS.
Subtopic:   STEAMER. 'SCOTIA '-CLAIM RE SALVAGE.
Permalink
CON

Edmund Boyd Osler

Conservative (1867-1942)

Mr. OSLER.

I think the government were quite right in that, but I hope prominence will be given to the statement made by the Postmaster General. While I quite agree that it was wise on the part of the government to resist when they did. yet, evidently the idea has gone abroad through the English newspapers that application had been made to the government and the government had resisted. I think steps should be taken to, correct that false impression very soon.

Topic:   QUESTIONS.
Subtopic:   STEAMER. 'SCOTIA '-CLAIM RE SALVAGE.
Permalink

Motion agreed to, and House went into Committee of Supply. 'Civil Government-Department of Labour-Salaries, the whole or any portion of which may be paid notwithstanding anything in the Civil Service Act, $15,300. '


?

The POSTMASTER GENERAL (Hon. Sir W illiam Mulock).

There is a net increase here of $1,450. The increases with regard to salaries include one new appointment at a salary of $1,400, Mr. W. W. Edgar; two statutory increases of $50 each to Mr. Ardouin; and increase of salary to Mr. Frank Plant, who received $1,000, and whose salary has been increased to $1,200: an increase for Mr. Gibbons from $S00 to $850: an increase to Mr. Andrews from $000 to $650; and an increase to Mr. Lapointe from $600 to $650.

Topic:   QUESTIONS.
Subtopic:   STEAMER. 'SCOTIA '-CLAIM RE SALVAGE.
Permalink
CON

Thomas Simpson Sproule

Conservative (1867-1942)

Mr. SPROULE.

The new apopintment is Mr. Edgar?

Topic:   QUESTIONS.
Subtopic:   STEAMER. 'SCOTIA '-CLAIM RE SALVAGE.
Permalink
?

The POSTMASTER GENERAL.

Yes, he was a clerk in the library of parliament. His salary in the library was $1,100, and he received also $450 a year as secretary to the Speaker, a total of $1,550. He was transferred to the Department of Labour at $1,400, which is $300 more than his fixed Mr. OSLER.

salary, but $150 less than his two salaries combined. Mr. Edgar is a very scholarly man and has made a specialty of economic questions; and the services of a gentleman of his attainments are very necessary in the department.

Topic:   QUESTIONS.
Subtopic:   STEAMER. 'SCOTIA '-CLAIM RE SALVAGE.
Permalink

July 22, 1903