May 8, 1909

LIB

John Gillanders Turriff

Liberal

Mr. TURRIFF.

No, not at the present, time; but if this Bill passes, not Canadian policy-holder can take action to have returned what has been deducted from his policy, while the American policy-holder can do so.

Topic:   ' COMMONS
Permalink
?

Some hon. MEMBERS

No, no.

Topic:   ' COMMONS
Permalink
LIB

John Gillanders Turriff

Liberal

Mr. TURRIFF.

I took legal advice on the matter, and I was informed that though this company is in Canada, when it issues policies in another country it must comply with the laws of that country. That has been decided in courts time and again. So, I say, there will be this difference in the position of the Canadian and American policy-holder. There is one very peculiar thing about it, and that is that, during the last fifteen years or so, as the profits of the policy-holders have gone down, the profits of the shareholders have gone up.

Topic:   ' COMMONS
Permalink
CON
LIB

John Gillanders Turriff

Liberal

Mr. TURRIFF.

Yes, and the salaries of the big men. That is one of the fears that exist in the minds of the policy-holders. As the Royal Commission said in its report, there is nothing to prevent this company increasing its dividends. And further-(in-this I am not quoting the report)-there is nothing to prevent them, when they get

this legislation, and have everything fixed up properly, fixing their salaries at double what they are now. There are four men, the president of the company, two of his relatives and the past manager, drawing $60,000 a year, only two of them working actually in the company. That $60,000 is almost fifty per cent annual dividend on the original $125,000 paid up capital of the company, and it is six per cent on the paid up capital of $1,000,000 to-day. What is there to hinder them from making these salaries $100,000 and taking ten or twelve per cent before they make the division? It is this fear which is abroad in the land that is making the policy-holders apprehensive for the future.

Topic:   ' COMMONS
Permalink
LIB

Henry Horton Miller

Liberal

Mr. MILLER.

May I ask the hon. member (Mr. Turriff) whether this Bill in any way affects the matter of salaries?

Topic:   ' COMMONS
Permalink
LIB

John Gillanders Turriff

Liberal

Mr. TURRIFF.

No, it does not affect the matter of salaries. But this is the one chance that is given to the policyholders to say to the company: 'You ought to be able to do so and so.' And. if the Bill is so good, and if all we are told by the promoter of the Bill-and I have great respect for that hon. gentleman's opinion and standing, and would like to believe what he has said-is correct, the company has nothirg to fear in waiting another six months for this legislation. This is_ not the year when the profits are to be divided.

Topic:   ' COMMONS
Permalink
LIB

Edward Walter Nesbitt

Liberal

Mr. NESBITT.

Is the hon. member (Mr. Turriff) sure about those salaries? I do not think he intends to misrepresent from whalj I know of him, but is he sure that four men draw $60,000?

Topic:   ' COMMONS
Permalink
LIB

John Gillanders Turriff

Liberal

Mr. TURRIFF.

The hon. member can find it in the report of the Royal Commission. I have a copy here, and I will send it over to him.

Topic:   ' COMMONS
Permalink
LIB

Edward Walter Nesbitt

Liberal

Mr. NESBITT.

I would not believe it if I saw it there, because I do not believe it is true. i "If

Topic:   ' COMMONS
Permalink
LIB

John Gillanders Turriff

Liberal

Mr. TURRIFF.

My hon. friend (Mr. Nesbitt) may be haggling over a technicality. One gentleman draws about $20,000 in commissions,-I was calling it all salaries. ! i! I.

Topic:   ' COMMONS
Permalink
LIB
LIB

John Gillanders Turriff

Liberal

Mr. TURRIFF.

I am not saying he does not. But the policy-holders have a fear that, in one way and another, their profits are still going to some others and not to them. But I would have you understand, Mr. Chairman, that there is a widespread fear in that respect. I have a letter here written by a gentleman who gave me liberty to use it. I have several other letters the writers of which do not give me that permission, so I will not even 192

refer to them further. But here is a letter written prior to the discussion of a week ago. It is addressed to Mr. John Hoskin, vice-president of the Canada Life Assurance Company:

Perth, Out., April 30, 1909. Dear Sir,-Replying to your inclosure of the 3flth inst. in re proposed amendments embodied under 'Bill 56' at present session of parliament, I must confess my surprise that a gentleman of your standing and reputation should endorse and support the action contemplated by the management of the Canada Life as proposed by this Bill.

I have been aware of the malignant influence manifest in the affairs of the Canada Life ever since the inception of the present management and the recklessness with which the funds of the company have been squandered. I can challenge you to assert honestly, or to particularize, any act of import affecting the funds of the company during that period which has not been to the substantial loss and detriment of the policyholders, or otherwise than to the aggrandizement and pecuniary advantage of the Hon. G. A. Cox, some member of his family, or the shareholders of the company, per se in conflict with the reasonable expectations and rights of the policy-holders.

I do not know whether it is of malice prepense with a view to the ruin of the company, as your management has in this part of the country ruined the enviable reputation the company formerly held. I can well recall the period when the Canada Life was a name to conjure with in securing the patronage of the insuring public, and the policy-holders constituted the best agents at the service of the company. Personally no one will invest a dollar in the company whom I can influence, until the company warrants a return of my confidence by a complete reversal of its present policy, of which the scope of the Bill now before parliament affords very small encouragement.

I am enlightened for the first time as to the fact, of which no reports I ever received advised the policy-holders, that the shareholders primarily appropriated the interest -earning power of the assets of the company upon their paid-up stock, a sauce piquante to whet their appetite for voting a 25 per cent dividend. Their honesty was most exemplary under $100,000 paid-up capital, in comparison with the present proposition under an augmented capital of $1,000,000, a totally uncalled for increase, except to satisfy the greed of shareholders in a larger exploitation of the funds for their benefit. ' And they are all honourable men.' I could go into details to show how consistent the policy of the present management has been, to enrich themselves at the expense of those whose trust has been shamelessly betrayed. But you know it as well as I do; if you plead ignorance I shall be happy to afford you a partial insight, as I believe I may unfortunately be incompletely informed.

However, assuming your communication is for the enlightenment of the policy-holders, you will doubtless be pleased to advise me.

1. As to the purport or advantage accruing to the company in assigning the annual meet-

Topic:   ' COMMONS
Permalink

F. MASON.


Then, in the letter inclosing that to me, he says: Dear Sir,-Thanking you for the stand you have taken in re ' Canada Life Bill' in op-san)®> I am persuaded three-fourths °* In® Canadian policy-holders will appreciate the efforts of the members opposed to it, and would show a united front in a strenuous opposition to it, if the Bill could be laid over for another session. I beg to inclose you a protest mailed to Jno. Hoskm, Esq., vice-president of the Canada Life, which has received the endorsation of every policy-holder here to whom it has been submitted. If desirable you are at liberty to make use of the same. I remain, yours truly,


FEED. MASON.


Now, Mr. Chairman, that gives you an idea of the feeling throughout the country. I believe myself that the policy-holders have not been getting a proper share of the profits. I have in my hand a policy that belongs to my father-in-law, which was taken out in the year 1860. He is 86 years of -age to-day. For 50 years-the policy is now in existence 50 years-he has been paying regularly his annual payments; I have been looking after it for him now for a number of years. His annual premium is $28.50, and 30 or 40 years ago that policy, when the company had practically no accumulation of profits, earned $25 or $26 a year. But ever since the present management came in the profits of that Mr. TURRIFF. policy have gone down, down, until during the last 15 years, it has earned $8 to $10 a year, never more than $10 a year in the last 15 years. I had a long talk the othgr day with the president of the company, who wanted to satisfy me that everything was right. I am anxious to be satisfied that everything is right. Tn order to do that, he sent to Toronto and got a statement of that policy and handed it to me in order to convince me. Well, it has confirmed my opinion more strongly than ever that that policy has not been getting all the profits that belong to it, and I will tell you why. But let me first read this telegram: Toronto, Ont., April 24, 1909. Hon. G. A. Cox, The Senate, Ottawa. Policy number thirty-one ninety, Wilson, age thirty-eight, one thousand dollars issued April, eighteen sixty. Premium twenty-eight fifty, bonus addition end nineteen hundred four, eight hundred forty-nine cash value same seven hundred forty-eight. Permanent reduction same two hundred eleven sixty-four. Applicable this year's premium. Total cash value policy fourteen hundred seventy-nine. That is to say, Mr. Chairman, that on this policy which I now hold in my hand, Mr. Wilson can go up to Toronto, and draw out on the profits of that policy $748. That $748 is cash lying there that he can draw out to-morrow; it has earned, ac cording to the statement of the company during the last year, $35.15. Ten per cent of that, which belongs to the shareholders of the company, is $3.51, leaving a balance that belongs to Mr. Wilson lying there in the Canada Life Company's hands, over and above the ten per cent to the company, of $31.64. In addition to that you must add what the original policy of $1,000 earns each year. Now that is what it i-s earning, and for 15 years back he has not got over $10 in any one year. That is what makes the policy-holders think something is not right. I am not going to say that everything is not right simply because I do not know. But if the company would leave this Bill over for six months, and if my hon. friend the member for Essex could have the Bill passed through next session in time to make the distribution, because under the quinquennial term it is not due until the end of this year, nothing would be lost. If that were done it would satisfy me, and it would satisfy hundreds and thousands of other policy-holders, and it would do the company, even if there was some reduction, less than one-tenth part of the harm that will be done by the action this House is taking to-day in shutting out the policy-holders from having any voice or right to come before the committee and before parliament and present their view of the case. As I stated on a former occasion, when you find hundreds and thousands of men thinking they have a grievance, thinking that a wrong has been done them, even if they are altogether mistaken in the matter, if you do not give them an opportunity to satisfy themselves and have the matter explained to them, those men for all time to come will believe that a wrong has been done them, and the company will suffer. There are a good many other things I had intended to mention, but the hour is getting late, and I know it is the wish of the committee to get through with this measure before six o'clock. In deference therefore to the wishes of my hon. friends I will take up no more time. I will only say again, and place my remarks on record, that in justice to the 40,000 policy-holders, in justice to their wives and children, the Bill should stand over, and you should give these policyholders an opportunity to come before this House, or before one of the committees of this House, and present their views of the case.


CON

Samuel Simpson Sharpe

Conservative (1867-1942)

Mr. S. SHARPE.

It is not my intention at this late hour to discuss the question at any length. I think the position of the policy-holders has been put before this House so well by the hon. member for Halton (Mr. Henderson); the hon. member for North Toronto (Mr. Foster), and the hon. member for Lincoln (Mr. Lancaster) as to leave little more to be said. I am sorry as a member of this House that the hon. member for South Essex (Mr. Clarke), speaking upon the merits of the Bill, did not attempt to reconcile the position he has taken to-day with the position he took in connection with the Cobalt Lake legislation. The substance of the complaint against Cobalt Lake legislation was that it was shutting the doors of the courts to people who believed that they had a grievance and that it was interfering with the inalienable right of every subject to have his grievance re dressed by the courts. The substance of the complaint made against this legislation is exactly the same. In essence this is exactly the same kind of legislation. It shuts the doors of the courts to policyholders who desire to have their rights construed by a competent tribunal. No speech made by any hon. gentleman of this House upon the Cobalt Lake legislation could be used to better advantage in the discussion of this question because it deals with the question of shutting the doors of the courts to the policy-holders.

i92i 1 111 CL*!

Topic:   FEED. MASON.
Permalink
LIB
CON

Samuel Simpson Sharpe

Conservative (1867-1942)

Mr. S. SHARPE.

That is not under discussion at the present time and I do not intend to express any opinion upon it. I desire to refer to the expressions of opinion that were given upon it by the hon. member for South Essex. That hon. gentleman said:

It may he good policy from a financial standpoint to take away the property of people in order to increase the revenues of the province; it is all very well for most people to look on complacently and see the government confiscate the property of certain individuals in order that they may share in the spoils, hut it is not much fun for the people whose property is thus taken away. It is not my intention to go into the merits of the case pro or con. What I say is that this company has been deprived by an Act of the legislature of Ontario, not only of what they say is their property, hut of their privilege which any citizen has to go into the courts and establish their right to that property.

If that language were used in reference to this legisation I think it would be most apropos, because, in substance and in essence, this legislation contains exactly what the hon. gentleman condemned in the Cobalt Lake legislation. We have the opinion of the Minister of Justice, who, in connection with the Cobalt Lake legislation, used these words:

It simply means, in my judgment, speaking as a voter of the province of Ontario, that our present provincial government, that our recent provincial legislature, have arrogated to themselves the right to say to any citizen of the province: 'You shall not litigate; it makes no difference how just you think your claim, we have the right to decide it and to deny you the open door of the courts; we have the right in this particular instance and we choose to exercise it.'

In my opinion the language employed by the Minister of Justice and the language employed by the hon. member for South Essex upon introducing the question of disallowance of the Cobalt Lake legislation is the strongest condemnation that we could possibly have of the present legislation. The Minister of Justice, discussing the question construed, as a qualified legal gentleman, the Act of 1879 in favour of the policy-holders, but he said that if a mistake had occurred it was the duty of parliament to rectify it, adding that it was a question of fact to be decided as any other question of fact, and that that question of fact had been decided by the Banking and Commerce Committee. I contend, Mr. Chairman, that the Banking and Com-

merce Committee was the worst tribunal before which such a question of fact, involving important rights and large interests, could be dealt with. What are the facts ? There was not a particle of evidence brought before the Banking and Commerce Committee. If they had wanted to decide judicially a question of fact of a very important nature and involving so many millions of dollars, it was their duty to have moved to refer it to a special committee with power to call evidence, to put witnesses on oath and allow them to be examined and cross-examined. The only evidence that was submitted before the Banking and Commerce Committee was the evidence of the Hon. G. A. Cox, who is the chief beneficiary of this legislation, and his counsel. That was the only evidence upon which the Banking and Commerce Committee found that there had been a mistake in the legislation of 1879. None of the directors at the time were called. The minutes of the directors' meeting authorizing the promoters to seek that legislation in 1879 were not produced. Surely the Banking and Commerce Committee did not have proper evidence upon which to find as a question of fact that there had been a mistake made in the legislation of 1879. I submit that this legislation does for the policy-holders of the Canada Life Assurance Company that which the hon. member for South Essex declared had been done by the Ontario legislature with reference to the Florence Mining Company, that is that it deprives them of their right to go to the courts. The question that this parliament should decide, according to the contention of the Minister of Justice, is, was there a manifest error in the legislation of 1879? A person reading that Act of 1879 can come to no other conclusion than that the language is so simple that there can be no possible question of an error. The language was the language of the promoters of the Bill. The Bill was drafted by the legal representatives of the company and it was adopted by the company. There were no changes 'made in the Bill before the committee and I submit that there has been no proper judicial determination of the fact that there was an error in the legislation of 1879. I venture to express the opinion that if the paid-up capital had remained at $125,000, as it originally was, this legislation would not have been sought for because 10 per cent on the _ entire profits of the company with a capital of $125,000 would have been a very large profit, whereas 10 per cent on $1,000,000 would be a measurably smaller profit. The promoters of the Bill should have adopted the suggestion made by the hon. Minister of Finance (Mr. Fielding), namely, that if they had paid up the balance of the $1,000,000, or, $875,000 under a mis-Mr. S. SHABPE.

take as to the facts, they were entitled to be repaid. That was a reasonable suggestion. If they paid up the balance of their stock under a mistake as to the facts or as to their rights it would have been proper for them to come and get legislation enabling them to reclaim their $875,000. The policy-holders had nothing to do with the Act of 1879 and if there was a mistake made it was the mistake of the shareholders and not of the policy-holders. If it had been a mutual mistake the position might have been different, but the alleged mistake was on one side only and the shareholders have now no right to come to parliament and ask to have it rectified. But, in addition, there is a far more serious question. Thousands of policyholders have obtained contracts and acquired vested interests in connection with their policies since the date of that mistake. What is to become of them ? Is parliament to violate the (vested interests of subsequent policy-holders, those who have come in since the alleged mistake took place? The question whether there was a mistake has never been judicially decided. The whole matter should be referred to a judge or to a' committee with judicial powers authorized to call witnesses, to put them on oath and to allow them to be examined and cross-examined and upon the report of that committee this parliament should act. The question that might be submitted to such a tribunal would be these: 'Was there a mistake and, if there was a mistake, what rights have since intervened?'

Now I desire to discuss the chief argument of the promoters of this legislation. They say that by this legislation the policyholders get ninety per cent of the profits on the money paid for stock. I do not think that is any injustice at all. That is a part of the charter of the company, that is a term, a condition upon which they do business and which they hold up as a special attraction to prospective policy-holders They get business on the strength of the fact that ninety per cent of the entire profits go to the policy-holders. Another argument was that the profits have always been distributed as provided by this Bill. I have a letter in my possession from a man interested in this legislation and he says that the profits have not always been distributed as provided for in this Bill. However, I contend that practice does not make legal any illegal distribution of profits. We have the instance of the New York Gas Company. The New York Gas Company for years had interprets ed their statute under which they were doing business wrongly and they had charged an excessive rate for gas to the gas users of New York city. Years after the gas users discovered what their rights were and sued for recovery for the price of gas which

they had paid in excess of what they were entitled to pay and judgment was given against the company. Consequently I do not think that it can be contended reasonably that the policy-holders slept upon their rights and agreed to this illegal distribution of profits. The books of the company are not open to the policy-holder, he does not know what his rights are, and he is not likely to go to the Act of incorporation of the company to find out exactly the liabilities of the company or his rights. Consequently the argument that the policyholders have slept upon their Tights should not prevail with this House. Another question was that lawsuits would entail the icompany in disaster. I submit that this parliament has nothing to do with the results to the company of the legislation of 1879. The business of this parliament is not to interpret, but to make laws. Inasmuch as there is -no precedent for this kind of legislation and it is dangerous class legislation, I venture to express the opinion that if any other person or company than the Hon. Geo. A. Cox came to this parliament asking a special Act of this kind, divesting policy-holders of hundreds of thousands of dollars of rights this parliament would refuse to grant such legislation.

The hon. member for Assiniboia (Mr. Turriff) also emphasized the important matter of differentiating the position of the Canadian policy-holders from that of the foreign policy-holders. If the foreign policy-holders' contracts are made in a foreign jurisdiction they will be governed by the law of that foreign jurisdiction and any legislation passed by this parliament will not affect the foreign policy-holders. But even if the contract were to be construed according to Canadian law, and even if this legislation did affect the foreign policy-holders, I say that there is danger of legislation of this kind leading to international complications. The United States policy-holders will not allow their vested interests to be taken away by this parliament without va strong protest to their government and that government may protest against this government passing legislation that would injure the vested rights of citizens of the United States.

I desire to quote a sentence from a letter I received from a policy-holder who says:

In these reports to policy-holders no mention is made of a double dividend to shareholders. Will parliament, elected to protect the people of Canada, set its sanction on this gross diversion of funds from the pockets of the insured to the coffers of the few rich shareholders ? When are citizens to believe in statements of public men and in the rights of private contract if parliament step in at the instigation of a rich corporation and annul agreements made in good faith under the law of the land at a time when the wrongrespectfully urge all interested in honest administration to reject the proposed amendments to the Canada Life charter.

Having made my protest I shall not delay the House longer. I gave notice of an amendment to strike out clause 2 in committee and I now beg to move that amendment.

Amendment negatived.

Section as amended agreed to.

Topic:   FEED. MASON.
Permalink

May 8, 1909