May 18, 1936

CON

John Ritchie MacNicol

Conservative (1867-1942)

Mr. MacNICOL:

Has the minister any

figures to give the committee indicating that the revenue lost as a result of lower duties under the trade agreement and under the budget will be recovered by the increase in the sales tax?

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LIB

Charles Avery Dunning (Minister of Finance and Receiver General)

Liberal

Mr. DUNNING:

I do not think my hon.

friend is serious in asking that question. If it is any comfort to him I may tell him that there has been no lessening in revenue due to the causes he indicates.

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CON

Richard Bedford Bennett (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. BENNETT:

There has been a decrease in customs duties but an increase in the value of imports. The rule laid down in the Sale of Goods Act of Ontario is as follows:

17. Where there is a contract for the sale of unascertained goods, no property in the goods is transferred to the buyer unless and until the goods are ascertained.

18. - (1) Where there is a contract for the sale of specific and ascertained goods, the property in them is transferred to the buyer at such time as the parties to the contract intend it to be transferred.

(2) For the purpose of ascertaining the intention of the parties regard shall be had to the terms of the contract, the conduct of the parties and the circumstances of the case.

19. Unless a different intention appears, the following are rules for ascertaining the intention of the parties as to the time at which the property in the goods is to pass to the buyer:-

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(a) Rule 1.-Where there is an unconditional contract for the sale of specific goods in a deliverable state, the property in the goods passes to the buyer when the contract is made and it is immaterial whether the time of payment or the time of delivery or both be postponed.

(b) Rule 2.-Where there is a contract for the sale of specific goods and the seller is bounds to do something to the goods for the purpose of putting them into a deliverable state, the property does not pass until such thing be done, and the buyer has notice thereof.

(c) Rule 3.-Where there is a contract for the sale of specific goods in a deliverable state, but the seller is bound to weigh, measure, test or do some other act or thing with reference to the goods for the purpose of ascertaining the price, the property does not pass until such act or thing be done and the buyer has notice thereof.

(d) Rule i.-When goods are delivered to the buyer on approval or "on sale or return" or other similar terms, the property therein passes to the buyer:

(i) When he signifies his approval or acceptance to the seller or does any other act adopting the transaction;

(ii) If he does not signify his approval or acceptance to the seller but retains the goods without giving notice of rejection, then if a time has been fixed for the return of the goods, on the expiration of such time, and, if no time has been fixed, on the expiration of a reasonable time. What is a reasonable time is a question of fact.

(e) Rule 5.- (i) Where there is a contract for the sale of unascertained or future goods by description, and goods of that description and in a deliverable state are unconditionally appropriated to the contract, either by the seller with the assent of the buyer, or by the buyer with the assent of the seller, the property in the goods thereupon passes to the buyer. Such assent may be expressed or implied, and may be given either before or after the appropriation is made.

(ii) Where, in pursuance of the contract, the seller delivers the goods to the buyer or to a carrier or other bailee (whether named by the buyer or not), for the purpose of transmission to the buyer, and does not reserve the right of disposal, he is deemed to have unconditionally appropriated the goods to the contract.

That is step number one. There is a section dealing with goods deliverable to order of seller, and then comes the section dealing with the performance of the contract. Section 26 reads:

26. It is the duty of the seller to deliver the goods and of the buyer to accept and pay for them in accordance with the terms of the contract of sale.

27. Unless otherwise agreed, delivery of the goods and payment of the price are concurrent conditions, that is to say, the seller must be ready and -willing to give possession of the goods to the buyer in exchange for the price, and the buyer must be ready and willing to pay the price in exchange for possession of the goods.

There are then, five rules laid down as to what constitutes delivery in the absence of a contract, where no time for delivery is fixed, where the goods are in possession of a third

person, and where there is a demand for or tender of delivery. It gets down to the simple, single point, as the minister 'has said, that the contract determines the principles of law to be applied. Section 31 reads:

31. (1) Where, in pursuance of a contract of sale, the seller is authorized or required to send the goods to the buyer, the delivery of the goods to a carrier whether named by the buyer or not, for the purpose of transmission to the buyer, is prima facie deemed to be a delivery of the goods to the buyer.

(2) Unless otherwise authorized by the buyer, the seller must make such contract with the carrier on behalf of the buyer as may be reasonable, having regard to the nature of the goods and the other circumstances of the ease. If the seller omits so to do, and the goods are lost or damaged in course of transit, the buyer may decline to treat the delivery to the carrier as a delivery to himself or may hold the seller responsible in damages.

Rules are then laid down as to examination. I mentioned a moment ago that I was a little uncertain in this regard. Section 33 reads:

33. (1) Where goods are delivered to the buyer which he has not previously examined, he is not deemed to have accepted them unless and until he has had a reasonable opportunity of examining them for the purpose of ascertaining whether they are in conformity with the contract.

(2) Unless otherwise agreed, when the seller tenders delivery of goods to the buyer, he is bound, on request, to afford the buyer a reasonable opportunity of examining the goods for the purpose of ascertaining whether they are in conformity with the contract.

Vendors' liens are covered by the statute. Section 37 reads:

37. (1) The seller of goods is deemed to be an "unpaid seller" .within the meaning of this act-

(a) when the whole of the price has not been paid or tendered;

(b) when a bill of exchange or negotiable instrument has been received as conditional payment, and the condition on which it was received has not been fulfilled by reason of the dishonour of the instrument or otherwise.

(2) In this part of this act the term "seller" includes any person who is in the position of a seller, as for instance, an agent of the seller to whom the bill of lading has been endorsed, or a consignor or agent who has himself paid or is directly responsible for the price.

I do not like to take up the time of the committee, but the next section deals with the rights of unpaid seller. It reads:

38. (1) Subject to the provisions of this act and any statute in that behalf, notwithstanding that the property in the goods may have passed to the buyer, the unpaid seller of goods, as such, has by implication of law-

(a) A lien on the goods or right to retain them for the price while he is in possession of them;

(b) In case of the insolvency of the buyer, a right of stopping the goods in transitu after he has parted with the possession of them;

(c) A right of resale as limited by this act.

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(2) Where the property in goods has not passed to the buyer the unpaid seller has, in addition to his other remedies, a right of *withholding delivery similar to and coextensive with the rights of lien and stoppage in transitu where the property has passed to the buyer.

The next section deals with unpaid seller's lien: I speak subject to correction, but I

recall that in connection with certain types of goods this difficulty arose and adjustments vere made, which it seems to me was but .[DOT]easonable. The terms of the contract govern md there is no analogy between the scaling iown or the lifting up of the sales tax. That does not affect the terms of the contract. If a person in Calgary bought a carload of sugar at the refinery in Vancouver and it was paid for on the basis of the six per cent sales tax, that is, entered in the books and settled on that basis, a certain set of conditions would arise. The carload of sugar might leave Vancouver and reach Calgary with the bill of lading and draft, including the six per cent tax, drawn upon the purchaser. The purchaser might accept and pay the draft on May 5, and it is a little difficult to see why he should be liable for another two per cent even though his goods had not been delivered. They were in the possession of the carrier which was his agent for the purpose of delivery, delivery being complete when the refinery loaded the goods on to the car for Calgary. I have been pressed to bring this point to the attention of the minister as strongly as I could, because it is felt that this would be unfair. For instance, the same condition of affairs would not arise in connection with the delivery of a carload of sugar from Montreal to Toronto.

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LIB

Charles Avery Dunning (Minister of Finance and Receiver General)

Liberal

Mr. DUNNING:

I have complaints in regard to that class of transaction.

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CON

Richard Bedford Bennett (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. BENNETT:

If a carload of sugar was ordered from Montreal by a merchant in Toronto on the 29 th day of April, and paid for, the goods would actually be in Toronto and the bill paid on the first of May, and that would be the end of it; but because of the long distance hauls in western Canada the purchaser would find himself in a different position. I am asking whether they have ever dealt with these matters in that way. I thought they had, but I may be entirely in error as to that. If they have, I think these are cases in which there would have to be an analysis of the auditors of the facts in each case, but I do recall one case in connection with sugar. The purchase had been completed and the goods appropriated to the contract and put away in a particular warehouse and paid for, including the sales tax, and I remember that the officers were clear that there was 12739-185

no further tax payable with respect to these goods that had been appropriated to that contract before the tax on sugar became effective.

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LIB

John James Kinley

Liberal

Mr. KINLEY:

Mr. Chairman, I take it that the minister or the department has decided that goods in transit are liable to the tax, and that that would apply to automobiles. It takes seven to fourteen days for an automobile to be carried to Nova Scotia by rail, and for the sake of clarity I would like an answer to the question I asked a moment ago. This is the selling season for automobiles; many have been sold, and dealers have made contracts with people in Nova Scotia to deliver automobiles at a certain price. In the meantime the sales tax has been increased to eight per cent. Does the imposition of that additional tax confer, independent of anything else, upon the vendor the right to collect the extra sales tax from the purchaser, notwithstanding anything contained in the contract?

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LIB

James Lorimer Ilsley (Minister of National Revenue)

Liberal

Mr. ILSLEY:

If the dealer has agreed to sell the automobile at a certain price he cannot go back later and charge the purchaser a higher price.

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CON

Richard Bedford Bennett (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. BENNETT:

He takes a chance.

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LIB

James Lorimer Ilsley (Minister of National Revenue)

Liberal

Mr. ILSLEY:

Yes.

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LIB

John James Kinley

Liberal

Mr. KINLEY:

Then it is clear that the automobile dealer must pay this tax, and not the person who buys the automobile?

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LIB

James Lorimer Ilsley (Minister of National Revenue)

Liberal

Mr. ILSLEY:

It is a matter between him and the manufacturer as to who bears the burden of the tax. The government looks to the manufacturer, not to the dealer, for the tax.

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LIB

John James Kinley

Liberal

Mr. KINLEY:

He has protected himself by sending out telegrams advising the bank not to deliver the bills of lading until he gets the extra two per cent.

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LIB

Joseph James Duffus

Liberal

Mr. DUFFUS:

I am inclined to agree with the views expressed by the hon. member for York-Sunbury (Mr. Clark) and the hon. member for Queens-Lunenburg (Mr. Kinley). I have had twenty-five years' experience selling automobiles, and I know that once a dealer takes a signed order from a customer it is absolutely impossible to get any further sum of money from him, no matter whether it is sales tax or anything else. I think this is going to be a decided hardship on the dealers who had made many bona fide sales before the extra two per cent sales tax went into effect. It will mean just the difference between success and failure for some of them this year. I think some arrangement should be made whereby such dealers will be prn-

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teeted. Perhaps the dealer might make an affidavit that these cars have been actually sold, and that as a result of the new tax he has sustained a loss, and he could be given a rebate. May I say that in all my experience, I have never known a dealer to collect an extra amount after the order had been signed.

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LIB

Donald MacLennan

Liberal

Mr. MacLENNAN:

I know cases in Sydney, Nova Scotia, where the dealer sent in an order to the manufacturers for a certain number of cars, and at that time the sales tax was six per cent. After he signed the order he went out on the highways and byways of Nova Scotia to sell those cars, by description, of course, naming a certain price. He sold them, but before they actually arrived in Sydney there was an increase in the sales tax. It is an easy matter for -a dealer who has not sold a car to add the two per cent tax, but many cars have been sold at a fixed price and delivered after the sales tax was increased, and as it is now if the dealer does not pay that extra two per cent he cannot make a sale. I think some arrangement should be made for compensating the dealer. I know the difficulties of the minister, but at the same time it is' very hard on some of the dealers in Sydney. They have taken orders for cars and made their bargains in the spring. I was told that one dealer in Sydney would go to the wall in consequence. Possibly that is an exaggeration, but at all events it does work a hardship, and I hope the minister will see his way clear to making some arrangement to avoid it.

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CON

James J. Donnelly

Conservative (1867-1942)

Mr. DONNELLY:

Nine out of ten sales of automobiles are just an exchange with an additional $100, $200 or $300 paid over. Does the department collect the sales tax on the old automobile?

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LIB

Charles Avery Dunning (Minister of Finance and Receiver General)

Liberal

Mr. DUNNING:

No.

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CON

James J. Donnelly

Conservative (1867-1942)

Mr. DONNELLY:

Then the old automobile is increased in value by the amount of-the sales tax. The man who sells his old automobile gets an increased price for it.

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Amendment agreed to. Paragraph as amended agreed to.


CON

Richard Bedford Bennett (Leader of the Official Opposition)

Conservative (1867-1942)

Mr. BENNETT:

Will the minister between now and the time the bill comes up in committee look into this matter? Everything that has been said by other members of the committee I should like also to have said in connection with the difficulties that are going to arise for the dealer. There must be a bill founded on this resolution, and between now and the committee stage of that bill the min-

ister will have an opportunity to look into it and see whether it is desirable, by any appropriate words, to provide against a situation which undoubtedly will work a very great hardship on a large number of people.

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LIB

James Lorimer Ilsley (Minister of National Revenue)

Liberal

Mr. ILSLEY:

Yes, I will agree to look into it.

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May 18, 1936