April 17, 1905

CON

PRIVATE BILLS.

TITLE, GUARANTEE AND TRUST COMPANY.


House again in committee on Bill (No. 99) to incorporate the Title Guarantee and Trust Company.-Mr. Campbell.


CON

George Eulas Foster

Conservative (1867-1942)

Mr. FOSTER.

What is the position of that Bill ?

Topic:   PRIVATE BILLS.
Subtopic:   TITLE, GUARANTEE AND TRUST COMPANY.
Permalink
LIB

Archibald Campbell

Liberal

Mr. CAMPBELL.

In the discussion that took place on this Bill, the hon. member for North Toronto (Mr. Foster) objected to section 16 because he thought the securities the company were entitled to invest in were not of a kind that they should be allowed to invest in. I am prepared to move, as an amendment to that clause, to add after the word ' company ' the following words : ' which would be accepted by the Treasury Board as deposits from insurance companies under the Insurance Act.'

Topic:   PRIVATE BILLS.
Subtopic:   TITLE, GUARANTEE AND TRUST COMPANY.
Permalink
CON

George Eulas Foster

Conservative (1867-1942)

Mr. FOSTER.

That does not meet the strongest objections. Read section 16, and you will see how almost unlimited is the scope of investment.

The company may invest any money forming part of its own capital or reserve or accumulate the profit thereon in any of the securities mentioned in section 11 of this Act

That is all right. Those are really trust securities.

ror in the bonds or debentures of any incorporated building society or loan company-

Then the hon. gentleman's amendment provides for the sanction of the Treasury Board. That puts an additional guard on that part of it, so far as incorporated building societies or loan companies are concerned, but if you go a little further you will find it broader still :

or on the security of real estate in Canada

or iof any interest in such real estate-

That is an odd clause. There are interests and interests. Some interests would be a first mortgage which would affect the whole of the real estate, but if you are allowed to invest in even a thousandth part of any interest, that would be very dangerous. It will be very dangerous to point out to a board of directors that they can invest in such a security as that because it will tend to do away with their responsibility. They may say parliament has declared that this is a security in which you may invest, and therefore, we shall invest in it.

*

or on the security of the debentures, bonds,

stock and other securities of any chartered bank

They may be first, second or third class bonds, And here is the widest discretion of all :

or company incorporated by or under the

authority of the parliament of Canada

That is pretty stiff, because there can be almost anything incorporated in the parliament of Canada if it is properly taken hold of and insistently managed : "

*

or of the legislature of any former, present

or future province of Canada, as the directors deem expedient.

There are, we all know, all kinds of incorporations even in the most deliberate of deliberative assemblies. You will find companies incorporated which are certainly not very staunch or strong, and there will be no board of directors of any company incorporated in this country who will not be told that if they wish they can invest in such securities such as mining stocks or the stock of a company incorporated for the purpose of extracting gold from the sea or the air. All these would be perfectly safe investments, in the opinion of this parliament, for the capital funds of this company. The directors might invest in a dying machine company or a company which has patents under claims which may be found perfectly untenable.

Topic:   PRIVATE BILLS.
Subtopic:   TITLE, GUARANTEE AND TRUST COMPANY.
Permalink
LIB

Archibald Campbell

Liberal

Mr. CAMPBELL.

Of course I have no particular interest in this Bill and no desire to give this company any extraordinary powers. I understand it was copied from other Bills which have passed this House. There are to-day trust companies operating in Canada under provincial charters. There are three in active operation in Ontario with Dominion charters-the Trust A Loan Company, the Imperial Trust Company and. the Canada Trust Company. There are four charters also in Quebec, the companies holding which have the right to operate in Ontario, and I understand that the provisions of this Bill are exactly the same as those in other and similar charters. If the powers are too wide, you can amend them, but it seems to me you are drawing a very fine distinction. These powers are only given the company with reference to its own capital or its reserve or accumulated profits and we must suppose that intelligent business men will not invest their own funds In wild cat schemes.

Topic:   PRIVATE BILLS.
Subtopic:   TITLE, GUARANTEE AND TRUST COMPANY.
Permalink
LIB

William Stevens Fielding (Minister of Finance and Receiver General)

Liberal

Mr. FIELDING.

There is a distinction between the company's own money and its trust money. With regard to trust money, we need to be more particular ; but this clause does not refer to trust money, but to the company's own money, which is distinct from any trust fund. As to the investment on the security of real estate, it is the general provision in cases of this kind, because it may be an undivided interest which may be absolutely good security. As regards the investments in stocks and bonds or companies incorporated in Canada, that is a very general practice. In the Ontario Acts, the provisions are even more liberal. If those were trust funds, my hon. friend's

remarks would be justified, but not being trust money we are not called upon to be so severe in the way of restrictions.

Mr. FOSTER, After all these investments are the securities of the trust company ; and when a trust company goes out to make business, the first thing it points to is its paid-up capital, and this paid-up capital is the largest factor in the canvass for trust investments. The trust funds, of course, must be invested in a certain way. But I refer to the capital of the company, which is always looked upon as a part of the security and as adding to the safety of the trust fund investments. I would have less objection to the thing if no restriction were put upon the company at all in this respect; leave the directors free to invest their funds as they please. But in this clause you make a suggestion. A director is more apt to say : Well, parliament says these securities are good things to Invest in, and we can follow the law and escape responsibility. That is not done by the wisest or the most honest of men, but it is done at odd times, as we know, by some companies of almost every class.

There is another point to which I wish to refer-section 17. That section has been passed, but it may be worth while to mention the point. Section 17 provides :

Nothing in this Act shall he construed to authorize the company to issue any note payable to the bearer thereof.

It might be a question whether the company was debarred from issuing debentures. Now, no trust company in the province of Ontario is allowed to issue debentures, and I would like the promoter of this Bill, if he does not wish this company to have the power to issue debentures, to agree to amend this section so as to make it read ' nothing in this Act shall be construed to authorize the company to issue debentures or any note,' and so on. I do not say that there is any express provision authorizing them to issue debentures, but there is no prohibition. This point has been very carefully and constantly guarded against, so far as the provincial legislature of Ontario is concerned.

Topic:   PRIVATE BILLS.
Subtopic:   TITLE, GUARANTEE AND TRUST COMPANY.
Permalink
LIB

William Stevens Fielding (Minister of Finance and Receiver General)

Liberal

Mr. FIELDING.

Unless the power were expressly given the company they could not have it by inference. There are many things that it is not desirable that this company should do, yet we do not expressly forbid them-we merely take care not to give the company authority to do them. If there is anything in the Bill authorizing it to issue debentures, it should be considered ; but I am inclined to think it would not be wise merely to put in a lot of ' don'ts.'

Topic:   PRIVATE BILLS.
Subtopic:   TITLE, GUARANTEE AND TRUST COMPANY.
Permalink
CON

George Eulas Foster

Conservative (1867-1942)

Mr. FOSTER.

The well-founded and persistently carried out policy of the province is to expressly forbid the issuing of debentures by such companies as this. You are going to make this a competitive company with the others, and I do not see any rea-

son why this prohibition should not appear in the Bill.

Topic:   PRIVATE BILLS.
Subtopic:   TITLE, GUARANTEE AND TRUST COMPANY.
Permalink
LIB
LIB

Charles Marcil (Deputy Speaker and Chair of Committees of the Whole of the House of Commons)

Liberal

Mr. DEPUTY SPEAKER.

Shall section 16, as amended, pass ?

Topic:   PRIVATE BILLS.
Subtopic:   TITLE, GUARANTEE AND TRUST COMPANY.
Permalink
LIB

William Alfred Galliher

Liberal

Mr. GALLIHER.

There is one phrase in this section which, I think, should be amended, because as it stands it is too wide. The company is here authorized to invest on the security of any interest in real estate. It seems to me that these words should be struck out, leaving the company to invest on the security of real estate. 'Any interest' may mean the equity of redemption of land which may be valueless.

!Mr. STOCKTON. Or some reversionary interest that might amount to nothing.

Topic:   PRIVATE BILLS.
Subtopic:   TITLE, GUARANTEE AND TRUST COMPANY.
Permalink
LIB

William Stevens Fielding (Minister of Finance and Receiver General)

Liberal

Mr. FIELDING.

These words or their equivalent are to be found in the charters of other companies and in the General Insurance Act. They are meant to cover the case of an undivided interest. The .words in the Insurance Act are ' interest in real property in any province in Canada.'

Topic:   PRIVATE BILLS.
Subtopic:   TITLE, GUARANTEE AND TRUST COMPANY.
Permalink
CON

Robert Laird Borden (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. R. L. BORDEN.

I do not know that there is so very much objection to that, because a real estate security may be worthless-the company might loan on a piece of land of very little value. But the point mentioned by the hon. member for North Toronto (Mr. Foster), it seems to me, is more important. You could uardly give a wider scope of investment to these directors than to say that they may invest 'on the security of the debentures, bonds, stock and other securities of any chartered bank or company incorporated under the authority of the parliament of Canada, or of the legislature of any province of Canada.' If we look over the records of this parliament and of the local legislatures, I think we must be convinced that it would be better to leave the directors to their own discretion rather than to make a merely nominal restriction of this kind. We know that companies are incorporated for all sorts of purposes, including those of a most speculative character1, and that the securities of many of these companies are absolutely worthless.

Topic:   PRIVATE BILLS.
Subtopic:   TITLE, GUARANTEE AND TRUST COMPANY.
Permalink
LIB

William Stevens Fielding (Minister of Finance and Receiver General)

Liberal

Mr. FIELDING.

I cannot see that the directors are relieved of responsibility by the powers we give them. The directors' responsibility remains the same and while we give them power to invest in the stock, bond or debenture of any company, they still have on themselves the obligation to apply business principles to that investment. It is possible that the directors under this might invest in the common stock of a company which was worth little, but the chances of that being done are so slight that it is not worth guarding against, unless in the case of trust funds, in which case we should insist upon investment in gilt-edged securities only. But these are not Mr. FOSTER.

trust funds, they are the funds of the company, and I think we are bound to give them some latitude, relying on their exercising the ordinary business sagacity that a man will exercise in dealing with his own money.

Topic:   PRIVATE BILLS.
Subtopic:   TITLE, GUARANTEE AND TRUST COMPANY.
Permalink
CON

Robert Laird Borden (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. R. L. BORDEN.

Should you not specify or restrict them ?

Topic:   PRIVATE BILLS.
Subtopic:   TITLE, GUARANTEE AND TRUST COMPANY.
Permalink
LIB

William Stevens Fielding (Minister of Finance and Receiver General)

Liberal

Mr. FIELDING.

You still restrict them, because in some charters they are allowed to loan on the security of personal property which we do not permit here.

Topic:   PRIVATE BILLS.
Subtopic:   TITLE, GUARANTEE AND TRUST COMPANY.
Permalink
CON

Robert Laird Borden (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. R. L. BORDEN.

I am not sure if you do not make it worse if you leave it to the judgment of the directors. I think 1 would rather be a director making an investment under this, than in a case where there is a simple statutory direction.

Topic:   PRIVATE BILLS.
Subtopic:   TITLE, GUARANTEE AND TRUST COMPANY.
Permalink

April 17, 1905