It is an evasion of the Act from which the Local Legislature derives its powers. The Local Legislature cannot, no more than private individuals, act as it were in fraud of the law, that is, do by indirect means what it cannot effect directly.

As to the question whether the Local Legislature has a right to force an Insurance Company to take a license, I am not called upon to express an opinion, and there is great difficulty in the question.

For the reasons stated I confine myself to saying that the duty imposed upon insurance companies is an indirect tax which the Local Legislature had no authority to impose.

In the Q. B.,-H. E. Taschereau, J., said: (Translation.)

By the Act of the Legislature of Quebec, 39 Vict. ch. 7, entitled "An Act to compel assurers to take out a License," it is enacted that "every assurer carrying on in the Province any business of assurance, other than that of marine assurance exclusively (or business of assurance against accidents, for a period less than 30 days-40 Vict. ch. 6) shall be bound to take out a license, in each year, from one of the revenue officers, the price of such license to consist in the payment to the Crown for the use of the Province, at the time of the issue or delivery of any policy of assurance, and at the time of the making or delivery of each premium, receipt or renewal, respecting such assurance, of a sum computed at the rate of three per cent. as to assurance against fire, or of one per cent. as to other assurances, for each hundred dollars, or fraction of one hundred dollars of the amount received as premium, or renewal of assurance, and such payment was to be made by means of adhesive stamps, equivalent in value to the amount required, to be affixed on the policy of assurance, receipt or renewal." Any person who shall not comply with the provisions of this Act is made liable for each contravention, to a penalty not exceeding fifty dollars, or in default of payment, unless the person be a corporation, to imprisonment not exceeding three months. The Act further declared that policies of assurance, premium receipts or renewals, not stamped as required by the Act, could not be invoked and were to have no effect in law, or in equity, before the Courts of this Province.

By the 122nd section of "The Quebec License Act," which is made applicable to the above Act, 39 Vict. ch. 7, by its 9th section, the Governor-in-Council may at any time, for sufficient cause, in his discretion, revoke and annul any license thus granted to any Insurance Company, and by the 124th section of the same Quebec License Act, a

fee of one dollar is payable to the revenue officer for every license given by him.

Had the Legislature of Quebec the power to pass this Statute? This is the abstract question, submitted for our decision in this cause, and the only matter in dispute between the parties.

In England, Parliament is omnipotent. Its power is absolute and supreme, and Hallam (Const. Hist., vol. 3, p. 193) has not hesitated to say that "the absolute power of the Legislature, in strictness, is as arbitrary in England as in Persia." In this country it is very different. Since Confederation, both the Federal Parliament and the Local Legislatures have limited powers.

It is true that the Federal Parliament has a quasi sovereignty. Its jurisdiction is far greater than that of the Local Legislatures, but there are subject matters over which it has no jurisdiction. They are those matters, which, by the British North America Act, are left, without any concurrent jurisdiction in the Federal Parliament, to the jurisdiction of the Local Legislatures.

The latter have only such powers as are specially assigned to them, and which are by exception taken from the Federal and given to the Local Legislatures.

Let us examine, therefore, whether, under the distribution of the legislative powers made by the Imperial Statute, the Legislature of Quebec could pass this Statute, imposing a tax on assurance companies and compelling them to take out a license?

The 91st section of the Imperial Act enacts that "It shall be lawful for the Queen, by and with the advice and consent of the Senate and House of Commons, to make laws for the peace, order and good government of Canada, in relation to all matters not coming within the classes of subjects, by this Act, exclusively assigned to the Legislatures of the Provinces; and for greater certainty, but not so as to restrict the generality of the foregoing terms of this section, it is hereby declared that (notwithstanding anything in this Act), the exclusive Legislative authority of the Parliament of Canada extends to all matters coming within the classes of subjects next hereinafter enumerated, that is to say" (inter alia):

§ 2. The regulation of trade and commerce. § 3. The raising of money by any system of taxation, " and any matter coming within any of the classes of subjects enumerated in this section shall not be deemed to come within the class of matters of a local or private nature comprised in the enumeration of the classes of subjects by this Act assigned

exclusively to the Legislatures of the Provinces." This refers to the Federal Parliament. In dealing with the powers of the Legislatures of the Provinces, the 92nd section declares that "In each Province the Legislature may exclusively make laws in relation to matters coming within the classes of subjects next hereinafter enumerated, that is to say (inter alia):

§ 2. Direct taxation within the Province in order to the raising of a revenue for Provincial purposes.

§ 9. shop and saloon, tavern, auctioneer and other licenses in order to the raising of a revenue for provincial, local or municipal purposes." The other parts of these sections have no bearing upon the present

case.

The determination of this question depends entirely on the construction to be put on sub-sections 2 and 9 of the above 92nd section of the Imperial Statute.

The Federal Parliament has the general power to make laws in relation to all matters, excepting only such matters as are by the 92nd sec. specially put under the control of the Local Legislatures. The Local Legislatures, on the contrary, have power to make laws only in relation to matters specifically and nominally put under their control by section 92. In order to ascertain whether any given subject matter is under the jurisdiction of one of the legislative bodies, created by the Imperial Statute, it is sufficient to refer to the 92nd section and see if by that section the subject matter is or is not put under the control of the Provincial power. If not it comes within the legislative authority of the Federal Parliament, even if not one of the classes of subjects specially enumerated as being specially reserved for that Parliament by the 91st section of the Act.

This proposition was not contested by the learned counsel whose duty it has been to contend in favor of the constitutionality of this Act, but it is on the 92nd section that he relies to prove that the Legislature of Quebec had the legislative authority to pass this Statute. He contended that it might be possible to consider the taxes imposed by 39 Vict. c. 7, as a direct tax. Then, under the 2nd sub-section of section 92, which gives the power of direct taxation to the Legislatures of the Provinces, this Act is unimpeachable. But should it be declared that the duties imposed were not a direct tax, then, he says, the Act is nevertheless constitutional, because it is authorized by the 9th sub

section, which gives to Local Legislatures the control of "Shop, saloon, auctioneer, tavern, and other licenses."

As to whether the duties imposed on these Companies constitute a direct or an indirect tax. I consider they constitute an indirect tax. It is a stamp duty, which has been imposed by the Legislature on policies of assurance and renewal receipts respecting such policies and nothing else. That it ought to be considered a stamp duty or a license does not make any difference as it is in both cases an indirect tax.

"On peut ranger sous deux chefs principaux (says J. B. Say, an author of great repute on Political Economy) les différentes manières qu'on emploie pour atteindre les revenus des contribuables. Ou bien on leur demande directement une portion du revenu qu'on leur suppose, c'est l'objet des contributions directes; ou bien on leur fait payer une somme quelconque sur certaines consommations qu'ils font avec leur revenu; c'est l'objet de ce qu'on nomme en France les contributions indirectes."

"Pour

After stating what are direct taxes, the same author says: asseoir les contributions indirectes et celles dont on veut frapper les consommations, on ne s'informe pas du nom du redevable, on ne s'attache qu'au produit. Tantôt, dès l'origine de ce produit, on réclame une part quelconque de sa valeur, comme on fait en France pour le sel. Tantôt cette demande est faite au moment où le produit franchit les frontières (les droits de douanes). Tantôt c'est au moment où le produit passe de la main du dernier producteur dans celle du consommateur qu'on fait contribuer celui-ci (en Angleterre par le stamp duty, en France par l'impôt sur les billets de spectacles). Tantôt le gouvernement exige que la marchandise porte une marque particulière, qu'il fait payer, comme le controle de l'argent, les timbres des journaux. Tantôt il frappe non la marchandise elle-même mais l'acquittement de son prix, comme il le fait par le timbre des quittances et des effets de comToutes ces manières de lever les contributions se rangent dans la classe des contributions indirectes parce que la demande n'en est addressée à personne directement, mais au produit ou à la marchandise frappée de l'impôt." [Say, Economie Politique, pp. 521, 523.]

merce.

All our text writers and jurists agree in giving the definition of indirect taxes in the same language as that I have just cited. I will only add two others-Favard de Langlade et Merlin. The former says: "On appelle contributions indirectes les contributions établies par la loi sur les choses dont l'usage est ordinaire dans les habitudes de la vie. Elles sont indirectes en ce qu'elles ne portent nominativement

sur aucun contribuable, qu'elles ne sont acquittées que par le consommateur, quel qu'il soit, ou celui qui veut user et qu'il suffit de ne pas consommer ou user pour n'y être pas assujetti. Ainsi, par exemple, celui qui ne se sert pas de papier timbré et n'use pas de tabac est sûr de ne payer aucune partie des droits établis pour le timbre et sur les tabacs. Il en est de même pour toutes les branches des contributions indirectes." [Favard de Langlade, Repert. V. Contributions Indirectes.]

And Merlin, Repert. V. Contributions Indirectes, says: "On distingue deux sortes de contributions, les contributions directes et les contributions indirectes. Les contributions directes sont établies directement sur les personnes. Les contributions indirectes sont, suivant la définition qu'en donne la loi en forme d'instruction du 8 janvier, 1790, tous les impôts assis sur la fabrication, la vente, le transport et l'introduction de plusieurs objets de commerce et de consommation, impôts dont le produit, ordinairement avancé par le fabricant, le marchand, ou le voiturier, est supporté et indirectement payé par le consommateur. C'est aussi à cette classe qu'appartiennent les droits sur les tabacs, sur les cartes à jouer, sur le sel, sur les boissons," &c., &c. See also Demeunier, Economie Politique, vol. 3, V. Impots.

There cannot be a shadow of a doubt that the duties imposed on the Assurance Companies by the Legislature of Quebec, let them be called licenses or stamp duties, come distinctly within the definition given by the French authors, and should be classed in the category of indirect

taxes.

If we now examine the English authors, it is impossible to declare that these duties on the Assurance Companies fall into the category of direct taxes.

"Taxes are either direct or indirect," says Mill. "A direct tax is one which is demanded from the very person who it is intended or desired should pay it. Indirect taxes are those which are demanded from one person in the expectation and intention that he shall indemnify himself at the expense of another, such as the excise or customs.

Most taxes on expenditures are indirect, but some are direct, being imposed not on the producer or seller of an article, but immediately on the consumer." (2 Mill, Pol. Econ. p. 415.) See also same volume, pp. 432, 458, 465, 466.

"A direct tax operates and takes effect independently of consumption or expenditure; while indirect taxes affect expenses or consumption, and the revenue arising from them is dependent thereon." 3 Smith's Wealth of Nations, pp. 3, 11 (10th Ed.). Taxes on operation, and those