May 8, 1909

?

An hon. MEMBER.

No.

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David Henderson

Conservative (1867-1942)

Mr. HENDERSON.

If not, it must have been his father. But I am told that in southern Nova Scotia all the Killams have a high reputation for ability and integrity. Then we come to another gentleman, I would not expect to make a mistake. I refer to the Rt. Hon. Sir John A. Macdonald. He was satisfied that this statute was correctly drafted.

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William Stevens Fielding (Minister of Finance and Receiver General)

Liberal

Mr. FIELDING.

Are you quoting from ' Hansard '?

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William Stevens Fielding (Minister of Finance and Receiver General)

Liberal

Mr. FIELDING.

You will not find his speech there.

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David Henderson

Conservative (1867-1942)

Mr. HENDERSON.

I am not quoting his speech but I am giving my opinion of him as a legislator, capable of examining an Act of parliament and deciding whether it was in conformity with the petition and

proper legislation to pass. I do not feel disposed to sit in judgment on the actions of men like Sir John A. Macdonald or those others I have named. They were all men of high standing in whose judgment we ought to have confidence. I think I have fairly well established the fact that there was no mistake. Here is what the petition stated as presented in 1879 asking for an amendment of the Bill;

That the directors have heretofore allotted and divided among the assurers upon the participation scale seventy-five per cent of all the profits realized from the entire business of the company, and in view of the increases. business of the company it is deemed desirable that they should be empowered to increase the proportion of such profits which may be allotted to such assurers.

That is what they asked. Did not they get what they asked? They got it exactly; they asked for power to increase the allotment owing to the fact that the business has been increased, and, as they had more money, they were willing that the allotment to policy-holders should be increased from 75 per cent to 90 per cent, retaining not more than 10 per cent for themselves. For the twenty years previous to 1879, the capital of the company stood at $125,000. During that time, the dividends paid amounted to $690,625, an average of nearly 27 per cent. And the directors decided that they would be more liberal with the policy-holders, and, instead of taking 25 per cent for themselves, would take only 10 per cent, giving the policy-holders 90 per cent. Now, they say that all through this business the company credit the shareholders with the interest on capital and then divide the balance in the proportion of 90 to 10. I have here a statement of the Canada Life Assurance Company-I have similar statements for several years-showing the balance sheet as at December 31, 1899. If the company considers that the interest on capital was a liability, it ought to have put it in that statement and let the policy-holders know. But they did not do so. I, will read the liabilities, because I wish to get this on 'Hansard', for it shows that the company did not deal fairly with the policy-holders. If they ever charged the shareholders with this interest, they certainly kept the policyholders in the dark about it. I will undertake to say that no man ever went to an applicant for life insurance; and told him: The shareholders are first going to take the interest on their capital and then you will get 90 per cent of the balance. I never heard of a man who was canvassed in that way. On the contrary, the mode of canvass was to print leaflets and distribute them throughout the country-I have distributed many of them myself-in which appeared in large, black letters '90 per cent for the

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David Henderson

Conservative (1867-1942)

Mr. HENDERSON.

morning at ten o'clock. I have no doubt the hon. member for North Essex knows all about it. Here is the affidavit on which that application was based-and I am only going to read one clause of it-here is what the applicant said, being sworn testimony along the line I was referring to:

I had always supposed until recently that the business of the Canada Life Assurance Company was conducted in accordance with the Acts of parliament and the duty of directors in pursuance thereof, and I never had any suspicion that the directors had been taking double dividends as alleged in the particulars of claim, and I never had any notice or knowledge of any such use, taking or appropriation of the money of the policyholders until after the investigation into the subject of life insurance before the Royal Commission.

There is an affidavit made by a business man, a policy-holder to the extent of $35,000, a man who did not know but that he was getting his fair share of the profits of that company, a man who was lulled asleep, as we would be told by accounts published by his c.ompany, not being told that his rights were taken away. No man would suspect for a moment, from that statement of liabilities, that the shareholders were getting their interest first on their capital and then dividing the balance. I have no hesitation in calling it, to use a mild term, decidedly misleading. Now we are told that because the profits have been illegally taken away from us in the past by the shareholders, the practice should continue, that because the policyholders had slept on their rights for 30 years they have no right to redress now. I have shown you that they could not help but sleep on their rights, because they did not know that their rights had been taken from them. And forsooth, we are told that because they have not instituted an action to recover their rights at this late day they have no right to make a demand. ,

Now let me say here and now that the policy-holders to-day are not asking for anything, they are asking for nothing but justice. They come to this parliament and ask for nothing except to be let alone. The policy-holders of the Canada Life Assurance Company are satisfied with their contracts. They entered into those contracts in good faith, they paid their premiums in order to secure something that, at their death, would benefit their wives and children. They say: Let us alone,

we have made provision for our dependent ones, and we want you to let us alone, and when that policy matures pay the money; we are not troubling you. The policy-holders I believe as a rule think, X know X do, thst th6 C8.ns.d3. Xiifo Assurance Company is able in every respect

financially to pay every claim that will come against it. I believe the insurance reserve they have put aside would be sufficient, under proper management, to meet every claim that would ever be brought against the Canada Life Assurance Company, and I as a policy-holder, and other policy-holders, says : ' Let us

alone. We do not want to be troubled by you, we do not want you to come to parliament and get an Act declaring that the charter under which we made our contract means something different from what it says.' That is all they are asking. We say that these assurances, effected largely for the benefit of women and children, women and children who cannot appear here to defend their rights, women as well as men who were refused the right to appear before the Banking and Commerce Committee to state their grievance. Is it fair to take the bread, to take the widow's mite away simply because it is going to benefit a millionare? I cannot imagine how we can pass legislation of that kind. I respect the widow's mite. It may be small, but yet if it be only $100, if it be only $200, it belongs to her. Don't take it away. The other man has got an abundance, and far more than an abundance, more than he can ever make use of. Let the widow and the orphan have their little pittance, without trying to build up millionaires, making one man enormously wealthy in Canada at the expense of so many others.

I have said what I purposed saying about profits being wrongfully taken. It is alleged that because we had not put in our claim before to-day that we are debarred now. I think I have given you good reasons. I have given you the sworn testimony of one policy-holder, a large policy-holder, that until the Boyal Commission sat, and until this judgment, he was not aware of the fact that he was not getting his rights. After that he took proceedings, he has instituted an action which is pending in the court to-day, as other actions are, and* here we are asked to pass an Act of parliament to put that man out of court, to declare that his action cannot succeed. If we do that are we fit men to sit in judgment on Wilfrid Laurier's actipn in 1879, on Donald Guthrie's action in 1879, on Sir John Macdonald's action in 1879, on John Beverly Robinson's action in 1879? Are we fit men to review their opinions if we are capable of passing an Act of parliament to take away vested rights from helpless women and children in order to make one great millionaire in this country?

Another point I want to refer to, because I have no doubt that the argument will be advanced that other companies do this. I grant there may be a great deal of truth 191

in that. Other life insurance companies do just what the Canada Life has been wrongfully doing. But the other companies were doing what they have a right to do.

I challenge any hon. member to furnish me with the name of an insurance company organized as the Canada Life has been. At any rate if there is one I do not know it). I have searched among the records of Canadian insurance companies, of American insurance companies; I have inquired as to British insurance companies. I haye gone to the head of the insurance department of Canada, and the evidence I get is that there is not another company doing business in Canada who has a charter similar to that of the Canada Life, not another one that compels the company to divide all the profits arising from the entire business of the company.

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David Henderson

Conservative (1867-1942)

Mr. HENDERSON.

I do not know. It

makes no difference to me, because it was a voluntary act on the Lpart of the company to have their charter drawn in that way. They made the charter very attractive, giving policy-holders 90 per cent of all profits arising from the entire business of the company, no matter where it came from, no matter whether it came from interest or from profits on non-participating policies, it made no difference, because the policy-holders' contract was for 90 per cent on everything, and it is too late _ to say now that the Canada Life is giving something that no other company is giving. It has no bearing with me. Those who took out their policies since 1879 took them out under the charter of 1879, which was emphatic, which was plain, the purest Queen's English, no mistake in the words. Those men paid their money and are paying it now, they made this provision for their dependent ones, for their wives and children whom they leave after them, and I say it is no difference whether these profits were derived from interest, from nonparticipating policies or where they came from, the Canada Life Assurance Company contracted to give 90 per cent of these profits to every man insured on the participating plan. Why not make them fulfil their contract? I am not asking the Canada Life Assurance Company for anything except that they let us alone. Do not take away from us what we have. Leave the legislation of 1879 as it is and, as far as I am personally concerned-I do not speak for others I shall be satisfied. But, do not rob me of my rights. I am not accusing members of parliament. It is the company that come here and ask that our rights be taken

away. Do not take away what belongs to us. If you want to establish a grievance take away what we have as a right. Then, you will create a grievance. But, if you leave us alone the probability is that the majority of the policy-holders would leave the company alone even although they did make a mistake. If you take away from the policy-holders what rightfully and lawfully belongs to them and for which they have paid, you will create a great many grievances.

At one o'clock, committee took recess.

Committee resumed at three o'clock.

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David Henderson

Conservative (1867-1942)

Mr. HENDERSON.

In the few minutes allotted to me I propose to answer the challenge to name others than lawyers who adopted the legislation of 1879. I would name Messrs. Timothy Coughlin of Middlesex, William Elliott of Peel, William E. Hessan of Perth, James Trow of South Perth, William C. Little of Simcoe, Robert Hay of Toronto, Hugo Krantz of Berlin, Thomas Bain, our late Speaker, Joseph Rymal, Thomas Christie, Francois Bechard, George B. Baker, now Senator Baker, Alonzo Wright, Sir Leonard Tilley, John Costigan, Dr. Shultz, and Donald Alexander Smith, now Lord Strathcona. These are the men who agreed to that legislation. They knew what it meant when they passed it and why should we sit in judgment on those great men and tell them they made a mistake and did not know what they were doing? As to the interpretation of the legislation then passed, may I quote the legal opinion of Sir Robert B. Findlay, Attorney General of England, as to the rights of policy-holders which we are now asked to declare should be taken away from them? In giving his opinion Sir Robert Findlay said:

1. The policy-holders on the participation scale have koen since 1879 and are now on any division of profits entitled to at least 90 per cent of all the profits realized by the entire business of the company.

2. The payments of dividends to the shareholders since 1879 in excess of ten per cent of the profits from the business of the company have been ultra vires payments.

3. There is no ground for the contention that the shareholders are entitled to interest on capital and also to ten per cent of the profits or to a sufficient part thereof to make up $80,000 a year to be paid to them as dividends, but it is the duty of the directors to make up the accounts of all the profits realized from the entire business of the company, including the interest which may arise from the investment of the money paid in on account of the capital stock of the company and to limit the dividends to shareholders to ten per cent thereof.

And I may say here what every hon. member in this House knows that the highest legal authority in this House, the Min-Mr. HENDERSON.

ister of Justice, endorses that statement to the full. I contend then that we need not hesitate to dispose of this question, fearing that we may be wrong as to the interpretation of the Act of 1879. A judgment of the Privy Council of England could not be more convincing than the opinions that have been given to us.

What is the object of the legislation? The directors of the company themselves had come to the conclusion that they had not been interpreting the Act properly and that they had been taking profits wrongfully. The evidence of that is that they now ask for legislation to condone the offence. I need not argue that point further, it is admitted by the directors that they have been doing what they had no right to do. The proof of it is that they come here for legislation asking that the offence be condoned. In other words they ask us to state in this House, to use the well known words which I believe are taken from Holy Writ : ' Let him that is unjust be unjust still.' They want to continue doing -what they have done wrongfully for the last thirty years, and they ask us to condone their past offence and to give them the right to continue it for the future.

Here is the serious part of this question. A policy-holder who went into the Canada Life Assurance Company probably only two years ago in order to keep up his policy will have to continue paying his premium and if this Bill passes he will pay his premium knowing that the directors are going to take out of that yearly premium a sum of money which they have no right to take. Do you mean to tell me that is not a grievance? Fancy the feelings oi a policy-holder going to the agent to pay his premium knowing that a part of the money he is paying in is not to carry his policy, but to go into the pocket of some rich man who is not entitled to it. If we pass this Bill we simply perpetuate a grievance until every man who is now insured in the Canada Life Assurance Company passes off the scene, which may not be for forty or fifty years. As I said, I intended to discharge a duty which I feel incumbent on me; I feel that I should not retain my seat without making the strongest possible protest against the legislation now proposed. I have made that protest and the matter is now in the hands of the House to deal with.

I wash my hands clean of any attempt to take away from the widows and orphans of those assured in the Canada Life Assur-ence Company anything that properly belongs to them, that their husbands and fathers have paid for in perfect good faith, simply to hand it over to an association of wealthy men.

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Cyrias Roy

Liberal

Mr. CYRIAS ROY (Montmagny).

Translation). Mr. Speaker, before the discussion on this bill is carried any further.

I wish to have certain explanations made, not only for myself personally but for my constituents as well, many of whom are holders of policies in this Company. I did oppose all further progress with this Bill from the very start, and this was at the first meeting of the Select Committee on Standing Orders. This request was granted by the committee. Then the Bill came before the House and a motion was made to refer the Bill back to the Committee on Banking and Commerce. I shall here give a word of explanation. I consider for my part that they new notices having been given, the policy-holders were sufficiently notified that this Bill was before the House and that its object was to ascertain the proper powers vested in the company as between shareholders and policy-holders. That is the reason why I did not see fit to vote in favour of the further reference of the Bill to the Committee on Banking.

I consider in fact that the proper and legal proceedings to secure the discussion '*of a Bill is not by roundabout ways, but by the regular course before the House, and it seemed to me that the sending back again of this legislation before the Banking Committee was tantamount to the six month's hoist. Now, I must confess that I need information, first to satisfy the policy-holders in my county, who have requested me particularly to represent their views in this discussion before the House, and second for my own satisfaction. These explanations I hope willl undoubtedly be given me by the hon. member who is called upon to answer the objections raised by the hon. gentleman who has just sat down (Mr. Henderson). I am forced to say right now that in the event of such explanation failing to enlighten me, I shall vote against this Bill. I am a new member of this House and little conversant with its rules. True I am a lawyer, but I have been out of practice for nine years now, and I am acting as prothonotary of the Superior Court, in my district. In my official capacity, I am held down only to the recording of the decisions and opinions which may be held by the different solicitors before the Court. 1 am forced to admit that I am not sufficiently posted in order to give an accurate decision either for myself or for my constituents on the matter under discussion, until I get certain explanations on the legal aspect of this bill. I might be told that I did not take the trouble to seek the necessary information, but I will answer that a member of this House who has much patronage to look after, and many inquiries from his electors cannot possibly get acquainted with every document which is laid before the House.

The first information I want to have is this; Parliament is called upon to declare 191 i

that certain provisions of a Bill passed in 1879 are not those that were intended to be passed. In the second place, I want to know if subsequent to the law of 1879, that is in 1889, if I mistake not, under an amendment made to the charter of the company, saying that six policy-holders were entitled to sit as directors, I want to know, I say, if in the petition of this company which is now before the House, these six policyholders were consulted; if the request of the shareholders is fair, as alleged, or if the shareholders have had the co-operation of the directors representing the policy-holders who are called upon by law to sit on the board? Now, Mr. Speaker, one more question. This point has already been raised, but I would require for my personal satisfaction that more light be thrown on the subject, so that I might give equal justice both to the promoters of this Bill and to the policy-holders. I see by the preamble of the legislation of 1879, the object of which was to slightly alter the original charter granted to the Canada Life as far back as 1849.

That the directors have so far allotted and divided among the persons assured upon the participation scale 75 per cent of all the profits realized from the entire business of the company, and that in view of the increasing business of the company, it is, or may he desirable to vary the relative proportions in which such profits should be allotted and divided as between the shareholders and such persons assured, and in paragraph 1st of that statute of 1879, it is laid down in accordance with the preamble that the directors are hereby authorized in their discretion to vary or to amend the relative proportions" in which the profits realized from the entire business of the company were heretofore allotted as between the policy-holders under the allotment system, and the shareholders.

I particularly request your attention to the following proviso, Mr. Speaker and gentlemen of the committee, because it seems to me to have a very important bearing:

Provided always that the proportion of such profits allotted to such assured shall not be less than 90 per cent thereof, and the profit to the shareholders shall not exceed 10 per on t thereof.

It is thus evident, at least in my opinion, that up to 1879, the distribution of the profits of the company was made in such a way as to ensure 25 per cent of them to the shareholders and 75 per cent_ to the policy-holders, or assured. But in 1879, under the legislation the preamble of which I have just quoted, the directors of this company were authorized to increase this proportion in favour of the policy-holders, since the following proviso is there stated :

Provide always that the proportion of such profits allotted to such assured shall not be less than 90 per cent thereof, and the profit to the shareholders shall not exceed 10 per cent thereof.

For my part and unless satisfactory explanations to the contrary are given me, I hold that all the profits realized on the entire business of the company mean not only the profits accrued from the premiums of the policy-holders, but also the interest accrued on the capital paid up by the shareholders as well. That is what was being done prior to 1879 as is indicated by the preamble which I just read. It was alleged that the interest upon the capital paid up by the shareholders in the way of stock should be first taken before the rest was apportioned as annual profits. So far I have heard only the explanations given by the hon. Minister of Justice (Hon. Mr. Aylesworth), but I confess that I did not quite understand him, on account of my insufficient knowledge of the English language. I wish he would tell us under his responsibility as Minister of Justice whether or not the legislation of 1879 can be so amended by this Bill as not to interfere in any way with the rights of the policyholders.

There is, as I stated a moment ago, a point of law which arises out of this matter, and it is exactly the point on which I want some information. I am not an expert, and I want to be enlightened. According to me, the profits include everything, unless I am proved the contrary. If I understand aright, the law of 1879 included all profits realized on the entire business of the company, and these profits meant not only those that were realized on the premiums of the policyholders, but also the interest upon the capital itself paid up by the shareholders.

It is stated further that the business of the company having increased, the object of this Bill is to secure an amendment in favour of the policy-holders, but only those who are entitled to the accumulated profits under their policy are there concerned. Under the same statute of ' 1879, the policyholders are entitled to 90 per cent of the profits. That step was unquestionably taken to increase, if possible, the number of risks. It is stated that the business of the company has increased very largely, and that it bas piled up great profits from 1849 to 1879. Thus, in order to increase the number of policy-holders, it was decided to grant a larger proportion of the profits, that is from 75 to 90 per cent to the policyholders. _ Now, I would also like to have the opinion of an expert on the following question?

By section 92 of the British North America Act, provincial legislatures have the sole right to legislate on property and civil rights of the provinces. Well, I consider that since 1879, all those who got insured in this company-because everybody is supposed to know the law, and these policyholders are supposed to have taken cognizance of this amendment of 1879, saying that on all the profits realized by the com-Mr. ROY.

pany the policy-holders will share in the proportion of 90 per cent-I consider, I repeat, that according to section 92 of the British North America Act upon civil rights of individuals to which I have already alluded, that there is some doubt as to the legality of the request of the company in this Bill, and if it is adopted, would it not be possible for a policyholder tc bring this Bill before the courts in order to test its constitutionality.

I want to be informed before giving my vote, because section 92 says that provincial legislatures have the sole right to legislate upon civil rights. Since 1879 all the policyholders come under the amendment made in 1879 to the charter. It is a contract between them and the company, and under the terms of this contract it seems that this House could not decide that these parties have not the right to claim before a court the profits stipulated by the charter.

I am asking this information because I would like as far as possible to do justice to my constituents who have asked me to protect their rights, and because I would like equally to be fair to the promoters of the Bill. I understand very well that when certain parties come before this House to claim certain rights, it is because they believe that they are entitled to them. But, it very often happens that unnecessary and totally irrelevant objections to these requests are made in order to refuse them. This is what has been done in the recent discussion upon the Bill of the honourable member for Thunder Bay and Rainy River (Mr. Conmee). Great many amendments have been moved to that Bill; all the suggestions made by the gentlemen opposite were against the Bill; provincial rights have been mentioned; also the right of expropriation, and all sorts of things were discussed, except the Bill itself. I must say that the promoter of this Bill has accepted that treatment very patiently, in order to shorten as far as possible the long debates which have taken place, and which I, for one, think could have been very well suppressed All these objections, I repeat, had no sense. If the promoter of the Bill could not have acquired the right he was seeking, he was then in the position of being unable to exercise the rights which would have been granted to him by this parliament.

I am making these remarks simply in order to show to this House that I desire to give justice, not only to the policyholders, but also to the promoters of the Bill.

In principle, I must say that whenever somebody asks to this House some rights, and if the facts established before us justify the granting of them, I am ready to grant the request.

I would like, therefore, to have some explanations, and I will guide myself upon

them before giving my vote. But, if I am allowed, I will make a suggestion, not a motion, because I am too young a member for that. As I was saying a few minutes ago, I have seen in the statute, posterior to 1879, a clause giving to six policyholders the right to form a board of directors. I would like to know if these six directors have signed the request to bring this Bill before this House, in order to have us to declare something different to what was stated in the law of 1879. I have another suggestion to make. As some differences of opinion have existed between the shareholders and the policyholders of the_ company-I don't want to delay the passing of this Bill and if my suggestion is not granted I will submit myself-would it not be right tc let the board of directors, which is composed partly of shareholders and partly of policyholders, to discuss this question between themslves, in order to settle their difficulties before coming here? It seems to me that they could come to an agreement so that this House should not be obliged to take a decision which would be detrimental to the one or the others.

Therefore I suggest that this Bill should be read only in six months from this, inorder to give the directors and policyholders during the intervening months time to meet together and discuss the matter between themselves, in order to arrive at some agreement protecting the interests of all.

It has been said if this Bill was not passed at this session, the delay might bring the complete destruction of the company. If I was sure of that 1 would vote immediately in favour of the Bill, but I don't believe it.

The opponents of this Bill have contended that the policyholders have not been notified. For my part, I believe that the facts are >all to the contrary, but, nevertheless, I won't contradict. It seems to me that a legal and reasonable way of disposing of this Bill according to justice would be to postpone it to six months in ordeT to give an opportunity to the directors, both shareholders and policyholders, to discuss the matter between themselves, and to come to an equitable agreement for every one of them.

Next session we will be in better position to give a vote upon the question, and we will be discharged of heavy responsibility when we will be sure of safeguarding the interests of our constituents without doing any wrong to anybody. For my part, it is only a suggestion that I am making, and it is to get some enlightenment before voting on this question, that I have spoken upon this Bill.

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The Bight Hon. S@

(Translation.) Mr. Chairman, I may answer to one of the

questions of my hon. friend, member for Montmagny (Mr. Roy). The object of this legislation is to modify or rectify the amendment to the charter made in 1879. My hon. friend has stated very rightly, that the effect of this law was to divide the profits between the shareholders and policyholders in the following proportion: 25 per cent to shareholders and 75 per cent to policyholders. In putting this law into operation the board of directors of the company have always granted to the shareholders of the company the interest upon the capital itself of the company, though this capital, it is true, was very small, proportionately to the moneys contributed by the policyholders.

Mr. Ramsay, who was general manager at that time, a very competent man in these matters, always thought that the right course to pursue was to allot this interest upon the capital to the shareholders, before dividing the annual profits, the balance of which was divided, as I have said, in the proportion of 25 per cent to shareholders, and 75 per cent to policyholders. It is only after the interest had been paid to the shareholders on the capital invested that the division to which I have alluded is made.

The object of this Bill is to declare that the shareholders are entitled to this interest on their capital before making the distribution of the profits between the shareholders and the policyholders. This is the object of this Bill. There are some doubts and it is asked if under the law of 1879, the practice which has been followed by the company since has always been legal. It is in order to ratify this practice that this Bill has been introduced.

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CON

George Eulas Foster

Conservative (1867-1942)

Mr. FOSTER.

I desire to state in a few words the position I take on this Bill. I am very strongly opposed to ex post facto legislation. It requires in my mind a very strong case to justify a parliament legislating, after a period of ten or fifteen or twenty years, in a manner which takes away from tens of thousands of those who have made contracts with the company rights which under the law under which they made those contracts they possess. That is my first objection. An individual business man has to pay for the mistakes he makes, and it is a question in my mind whether it is not proper that a company should pay for its mistakes, instead of in order to remedy those mistakes trying to have ex parte legislation, to the exclusion of-' one party to the contract, and that party twenty thousand times multiplied, which does not assent to, has no voice in and can make no representations with regard to it. That is the case in this instance. If it had been proved to my satisfaction that there had been a per-

feet agreement between those who were policy-holders and those who were shareholders, resulting in the clause becoming law which did become law, then so far as all those policy-holders were concerned, they had no grievance. But that was not proved to the satisfaction of myself and a good many other members of the committee. But even if it had been absolutely proved, you have another party in the premises. You have the tens of thousands who have made contracts with this company from that time, who knew nothing of that alleged agreement, but who made their contracts under the law as it is to-day; and that very large class of policy-holders have been absolutely uncommunicated with in so far as to have been given an opportunity to signify their attitude towards this Bill. It is hard on the company if such was the agreement, and if by a mistake in legislation that agreement has not been put before those with whom the company has since made contracts. But companies as well as individuals have to bear the brunt of their own mistakes, and it is a great question with me whether, in passing legislation of this kind, we are not going far beyond what we as a legislature ought to do; and I think the promoters of this Bill would be well advised if they acknowledged consent to put this Bill over to another session, Seeing that the original notice was insufficient, and that although the subsequent notice was sufficient, the parties concerned have not had an opportunity to come before the ultimate legislative body and press their views upon it. It has been physically impossible for them to present their views in any shape or form. It may be that out of the multitude of policy-holders, there would not have been a great many to come forward, but you would at least have conformed to the forms of justice. As it is, by no combination of a few or by no knowledge possessed by the many has it been possible for these to get together and present their side of the case. Therefore, I say, though it may be a hardship for the shareholders of the company, yet if they have endured for all these years, they can surely endure for another year. I make a plea for the holding over of this Bill until another session in order that at least we might not contravene that explicit principle of parliament that before legislation is finally passed, all parties interested therein shall have the recognized notice, and the opportunities consequent on that notice for the presentation of their views. I know that the statement is made, but it is hardly an argument, that the same principle for the division of profits is followed in all the other insurance companies. I acknowledge that; but the point I make is that here was a plain article of the law under Mr. FOSTER.

which numberless contracts have been made, and therefore it seems wrong for us to pass legislation in the interest of the few to the absolute and almost necessary exclusion of the many, owing to the short notice that has been given.

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LIB

Alfred Henry Clarke

Liberal

Mr. A. H. CLARKE.

My hon. friend from North Toronto evidently was not here the other night when the House very fully discussed the question of allowing this Bill to go over for another year, and decided by a very emphatic vote that the Bill should proceed. My hon. friend admits as every other person does, that if the position which is being taken by the opponents of the Canada Life Company be maintained, a very great injustice and hardship will be committed upon the shareholders of the company. Has it occurred to my hon. friend that, however inconvenient it might be to them, much more inconvenient would it be to the policy-holders, if this matter were not dealt with before the next distribution of profits.

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CON
LIB

Alfred Henry Clarke

Liberal

Mr. A. H. CLARKE.

This year. What I pointed out the other night was that the directors are not bound to allot profits. That point was fully discussed in the Ontario courts, in a case with the Aetna Life Insurance Company some years ago. That case was decided in favour of the company in the first court and went to appeal; and in a carefully prepared judgment, the Court of Appeals decided that this question of profits is ji vague one, that the right of the policy-holder to profits is vague, and that in oTder to work out the purposes for which that right is given, the directors must have a free hand with regard to it. The policyholder in that case was Mr. John Bain, a prominent lawyer in Toronto and afterwards partner of Mr. Wm. Laidlaw, who is giving so much opposition to the Canada Life Company at present. The matter was discussed very fully. The Hon. Chancellor Boyd, with two other members of the court, gave the judgment, and according to that judgment:

The contract of insurance is of a vague character as to the division of profits, and for this reason such a construction must be given it as will promote and not frustrate the objects of the undertaking.

That is precisely what I have said. If what is desired by the opponents of this BilLbe accomplished, the very objects of the company would be frustrated instead of promoted. The very right of the policyholder to profits is bound up in the1 prosperity of the company. If the company in any way be prevented from carrying on a prosperous business, true the shareholders may not get as large dividends but the policy-holders will not get anything. To that extent the two are partners and their

interests identical. Because i! the shareholders prosper, to the same extent must the policy-holders benefit as regards the receipt of profits. But coming down to the policy itself, if there be anything in the contract between a policy-holder and the company, there is nothing whatever in the legislation proposed to prevent that contract being carried out. The present Bill does not seek in any way to interfere with the contract which the policy-holders have seen fit to enter into. If hon. gentlemen will look at the policy-and I have looked at mine., and I have two, to make certain- they will find that the company does not agree to pay profits to the policy-holders. It is not a mutual but a joint stock company. What the company say, however, is that if they do allot profits, as they have been doing every five years, then the proportions are established in which such profits are to be'allotted, namely 90 per cent to the policy-holders and 10 per cent to the shareholders.

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CON
LIB

Alfred Henry Clarke

Liberal

Mr. A. H. CLARKE.

No, all that it is intended to be done by this Bill is to confirm the construction which has been placed on the Act of 1879 by the ablest men in Canada, by judges, by astute businessmen, by every one who has had anything to do with it. It seems to me that insurance is something like the law of merchants. It has grown up, it is the outcome of custom, and has been framed by insurance men. Take the law on promissory notes, that grew up in time out of the customs of those who had to do with these notes, and was established by the general custom of business in the matter. So with insurance, you will not find an insurance man in all Canada who will say that the construction put by the Canada Life on the Act of 1879 is not the proper one. That is Jhe understanding of ali insurance men, and there is a good deal of support for it. If you will look at the Act of 1849, you will see that it is not part of the insurance business to invest the capital stock of any insurance company for the benefit of the policy-holders. The business of an insurance .company is to insure people and get profits from insuring them and not to get profits from the investing of their own money. If that were the object, those investing in insurance companies would instead put their money into loan companies. But we are dealing with an insurance business, and when an insurance company says it will distribute the profits of its business to its [policy-holders, it would be quite foreign to the general understanding and the practice of all companies doing insurance business in Canada that it should include in those profits interest on the investment of capital stock.

My hon. friend from Halton (Mr. Henderson) made a strange argument this morning. He said that the men who framed this Act in 1879 were competent men and ought to have known what they were doing. Well, everybody knows that there are imperfections in the English as in every other language, and the same words often convey opposite meanings to different people. But it is rather singular that Mr. Laidlaw should have crossed the ocean to get the opinion of a solicitor in England, not familiar with insurance practice in Canada. Surely we have men in this country, accustomed to our courts and versed in our jurisprudence, who could give just as good an opinion regarding the construction of a statute enacted by the Dominion parliament. Hon. members must not think that there is only one side to this matter. The Canada Life Company has been advised by one of the most eminent lawyers in Canada that, in his judgment, considering the practice of insurance companies, the construction which the directors have put on the Act of 1879 is quite correct.

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CON
LIB

Alfred Henry Clarke

Liberal

Mr. A. H. CLARKE.

The question put by my hon. friend is most pertinent. If it had not been fox the fact that a prominent lawyer in England had raised doubts, there -would be no necessity for this legislation at all. It was not until the doubts had been raised and an attempt made to do away with the practice accepted, not by shareholders alone, but by policy-holders as well, for sixty years since 1847 and for thirty years under the Act of 1879, that the company deemed it necessary to ask for this legislation; and in so doing they are taking a reasonable course, not only in the interests of the shareholders, but of the policy-holders as well. One thing is certain, and that is that, under the construction which the company has put on the Act of 1879, it has gone on prospering and the policy-holders have derived great benefit. What would happen if those who are opposed to this measure should succeed? In my judgment that would ruin the company, and instead of the policy-holders getting ample profits-because the profits given by the Canada Life will compare favourably with those distributed by any other company, mutual or otherwise; I have compared my policy with those of other companies and find I have got better profits even in later years when the profits were not so great-their possibilities of getting profits would disappear. Why is it that the mutual companies are not a success? Who is there in this House who, if he wanted to insure his life, would think of going into a mutual company? In those companies all the profits are divided, but the policy-holders do not get any, and frequently do not get the amounts for which they

were insured. How many sad experiences have there not been of people who have gone into mutual companies and not only have got no profit, but lost all the moneys they paid into them. If you want to have a successful company you must have able business men at its head, and you will not get business men of ability to invest their capital in a business unless they see some possibility of getting adequate returns compared with the hazardous nature of the undertaking. In 1847 the business of insurance companies was considered very hazardous. People were afraid to insure their lives because at that time many thought that life insurance meant sudden death. Since then the business has become profitable, but that is due to the character and ability and management of the men engaged in it. They put the business on such a basis that, with the safeguards thrown around it, any man who puts his money into an insurance policy is assured that whether he dies in ten years or fifty his heirs will get the amount of his policy.

My hon. friend from Halton has talked about the character of the men in parliament in those days, and rpentioned specially the names of Bruce, Burton and Kirkpatrick. But I do not think he quite appreciated the stigma he was placing on their characters by the speech he made. What he says is that the interpretation which has been put on the Act of 1879 by Mr. Laid-law is the interpretation which was intended by the men who were in parliament at that day. He says further that it was the interpretation which was intended by Mr. Bruce, their solicitor at that time, and the interpretation which was; intended by the directors of the Canada Life Assurance Company who applied for that legislation and who knew exactly what they meant. Suppose we accept that view of the caise. According to that, then, the directors of that day never intended, when they asked parliament to enact that Bill of 1879, to pay themselves and their fellow shareholders! interest on the capital stock before distri-1 buting profits. If that be so, then I think they are the most infamous set of men that Canada could produce. If you have a set of men coming to this parliament, misleading parliament, saying to parliament that they are not going to do a certain set of things, and, the very next year, turn around and do those very things, no words of reprobation are sufficient to stamp those menl as most perfidious wretches. That is what was intended by the Canada Life directors, we are told, yet ever since that time they have violated that intention and have kept on declaring the profits in a way parliament did not authorize. Now, who are the men who are such villains ?-and they are

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May 8, 1909