Ex. Div.]

America; because, in the first place, no one complete transaction of business was ever effected by him; and also because the principal seat of business and the place at which alone the great bulk of the business of the firm was carried on was in New York. There are a variety of other cases arising under the County Court Acts, where the question has arisen as to where the corporations constituting the great railway companies of this kingdom reside. Where, for instance, do the Great Western and the London and North-Western Railway companies reside? Everybody who knows anything of these affairs would say, directly the question was asked, why, at Paddington and at Euston. And it has been held that the railway companies do reside there, because there is the principal seat of their business, and there their directors meet and exercise their powers; there their books are kept, and there or thence all their lines of railway emanate, and either begin or end I need refer to no other authority. There is none, nor the shadow of any quoted, which goes to show that the place in which the directors or governing body meet and the shareholders hold their general and special or extraordinary meetings and the power of transacting the business is exercised, is not the principal seat of business, and the place in which, in the language of the Act of Parliament, the company may be said to "reside." I am, therefore, clearly of opinion in this case, upon these principles, and for these reasons, that this joint-stock company resides at No. 4, St. Helen's-place, in the City of London. Now, it is said that the whole business is transacted in India, and that "nothing comes into the hands of the English directors excepting what is remitted from Calcutta from time to time to defray their necessary expenses; in addition to which, such proportion of the profits realised in India as is divisible amongst the shareholders in the United Kingdom by way of dividend, passes through their hands." All that is true; but every act which is done, the working of the mills, the realising of the profits, the transmission of the proportion of them to Englard, and the distribution of them in the form of dividends to the different shareholders, all that, if not done by the company directly in India is done by them indirectly, because it is done by the person whom they appoint and may recall at their pleasure, and who has no power to do a single act or any authority to interfere in any degree in the affairs of the company except the authority conferred upon him by the governing body at home. Then comes the other statement, after receiving such proportion of the profits as is mentioned in paragraph 11, all that then takes place in England is that the directors call a meeting of the shareholders, and declare the amount that is to be distributed by way of dividend amongst them for the then current year." And then the case gives a statement of the amount of the profits payable to the shareholders in the United Kingdom. Now it is quite true that all that they actually do in England with respect to the dividend is that, having received a certain proportion, about one-third, of the profits, they apportion it among the shareholders who are in England, and distribute and pay over to each of those shareholders the dividend to which he is entitled. But the payment of the dividends to the shareholders who are in India or elsewhere, though not actually MAG. CAS.-Vor X

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done by the hands of the governing body, is done under their authority; and, undoubtedly, at any time upon learning that 25,000l. was in the hands of their representative in India, and therefore to be distributed in dividends, they might direct that sum to be at once remitted to England; and if it was withheld by any person or banker into whose hands it had been paid, they might maintain an action against that banker for money had and received, and recover it against him. It is their money, and they are the persons who, in contemplation of law, are the possessors of it as of right; and it is only because it would be a very expensive and useless, and it might be, through the failure of agents and banks, sometimes a very hazardous proceeding to desire the acting director in India to remit the whole amount to the governing body in London for them to remit two-thirds of it back again to India for payment to the shareholders there, that that course is not adopted; they clearly have and might exercise that power if they chose so to do. I do not propose to refer particularly to any other of the statements in the case, because they will all be found to fall within the same principle and to be open to the same observation. Though the property is in India, and the whole capital invested there, and though the produce of the property is in India, and the whole of the money which the company are ever entitled to receive, whether as profits or in any other shape or way, or for any other purpose, is earned in India, yet it all belongs to the company, who might at any moment virtually take possession of it, and might bring ejectment against anybody in India who against their will and without their consent had taken possession of one of these mills, and to such an action there would be no defence. Everything, therefore, is the property of the company, and it is the company thus located in England that alone can deal or authorise the dealing with the property in any way whatever. That this is so appears clear also from the terms of the articles of association. The memorandum of association, after stating the name of the company, and that its registered office will be situate in England, goes on to state: "The objects for which the company is established are, first, the purchasing of the jute mills, land, business works, machinery, plant, and stock-in-trade of the present proprietors of the Ishera Jute Mills, Bengal, with all the rights, privileges, and appurtenances thereto belonging, the carrying on there of the trade or business of buying, selling, and manufacturing jute in all its branches, and the extending of the said business and works or either of them." Now, who is that purchaser ? Not the director who has been over there, nor the shareholders who are resident in India, but the company themselves in this country. Then what is to be done? Why, the carrying on in all branches of the trades or businesses of dealers in jute and other similar materials including their purchase, preparation, pressing, and so forth, and all this to be done, not by people in India, though it must be done of course by the hands chiefly of labourers in that country, but by the company or by persons authorised by them to do the acts in question in India. So with regard to the purchasing or otherwise acquiring of any total or partial or contingent interest in, or the taking out in Great Britain, British India, or elsewhere, and the working of letters patent or inven

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2 R

Ex. Div.]

tions which may be conducive to the advancement of the businesses aforesaid." No one but the company can do that. Indeed it, will be found that every single act which is to be done, from the beginning to the end, from the coming into existence down to the ultimate dissolution of the company, is to be done by the company, and by them alone, namely, by the governing body or by meetings of the shareholders, all in England and nowhere else. Then we come to this object, “the establishing of agencies for the purposes of the company either in the United Kingdom, British India, or elsewhere." Now there is the key to the whole of the proceedings on behalf of the company upon which the appellants rely. The learned counsel contended that all that is done in India is done by a director there, who may do as he pleases, and by certain persons under him who alone carry on the business of the company. How is that? It is under the last-mentioned article that the company authorised Mr. Struthers to go to India and to do this very act of establishing an agency in his person for carrying on the entire business of the company. But, as I have before said, his act is theirs, and it is they alone who do the acts which constitute the entire carrying on of the company's business. There is, then, a power to amalgamate the company, and so forth; and, finally, "the doing all such other things as are incidental or conducive to the attainment of the above objects.' All this, as before said, is done by the company alone. The next article I will refer to is the third: "Tne directors may, with the sanction of a resolution of the company previously given in general meeting, increase its capital by the issue of new shares," and then there is provision made for that. Now, that is one of the most important powers which can be conferred upon a company. If their capital be a million, they may increase it to two millions. Could they do that, or take any step towards such an act, in India? Clearly not, even by their authorised agent there. It could only be done by the directors here with the authority of a general meeting. Then comes the last of the series of provisions to which it is necessary to call attention, viz., as to the creation of shares; the company being constituted and having come into existence under the Joint Stock Companies' Acts, and the articles of association being the constitution of the company, the questions come, How is it to be set going, what is to be done, and who is to do it? Here, again, we find that the company and they alone, are to do it. By article 5 "The directors may allot and issue shares in the capital of the company to such persons, upon such terms, and at such times, as they may think fit; and any shares which may be allotted in payment or part payment for property transferred, goods or machinery supplied, or for services rendered to the company, may be issued and, if so issued, shall be deemed to be fully paid-up shares." Here, again, is what we may call really the creation of the entire company. The creation of shares which may pass into the hands of Indians, Frenchmen, Italians, and Englishmen also, is entirely and exclusively the act and under the sole authority o. the company. Before a singie share is issued or allotted to anyone they belong to the company, who may by such machinery or system as they think couvenient allot them to as many people, whether Englisi

[Ex. DIV.

men or the natives of any other country, as they think fit. I need go no further into the articles of association. Suffice it to say that there are provisions for general meetings and powers given as to the forfeiture of shares and for a great variety of other purposes, all of which powers are vested solely in the company. The only remaining question, therefore, is this. It is the case that every power which has to be exercised touching the property of the company or the carrying on of their business must be exercised by the directors, the general body of the the company, with or without the authority of a general meeting; the governing body, and these shareholders' meetings all being in England, where the "residing" is locally situated. Reliance was, no doubt, justly placed upon the fact that the whole carrying on of the business took place in India, but the carrying on of the business, the manufacture of the jute and the realisation of the funds, and the immediate and ultimate disposition of the funds, is wholly and exclusively under the authority of the general body in this country. And the language of the Act of Parliament is conclusive that the assessment shall be upon the company, "for and in respect of the annual profits or gains arising or accruing," and so forth, "from any kind of property whatever, whether it be in the United Kingdom or elsewhere, and for and in respect of the annual profits or gains arising or accruing from any profession, trade, employment, or occupation, whether the same shall respectively be carried on in the United Kingdom or else where." Is not this an assessment upon the company in relation to their property, although the property happens to be situated, in the language of the Act of Parliament, not in this country but in India, and in respect of profits which are earned and acquired, not in this country but in India? It appears to me, therefore, that the case is clearly and directly within the terms and meaning of the Act of Parliament, and that on this ground the Crown is, without any doubt, entitled to judgment. Before I conclude my observations on this case, I might say that in the first place the great principle of the law of England in relation to taxation is, that the tax shall only be imposed upon persons or things actually within this country. Here, undoubtedly, the question must be determined. Is this company, who are the persons, and is this property, which, under the Act of Parliament, is included in the same category as property actually in this country, are they or not, under the express terms of the statute, to be treated in the same way, with respect to the application of the principle of law, as if the property had been situated in an English county? It appears to me that the true principle of the law is that they are. Now, although it may seem to be an infringement of one of the principles upon which taxation is levied in any country that two-thirds of the earnings of this company made or arising from a business carried on out of England, and belonging to persons not resident in the United Kingdom, should be subject to taxation, yet the answer to that (and it is not for me to say whether or not it is a sufficient one) is that if a foreigner residing abroad, and having ro property or interest in and no connection with this country, thinks fit to invest his money here, and so to obtain the broad shield and protection of English law for his property, he must

Ex. Div.]

take the benefit with the burdens belonging to it. It may seem to be hard upon a foreigner, who may be never in his life set his foot upon English ground, and never intends to do so, to tax him upon his whole income, but nevertheless the law is so, and he must submit to it. On these grounds, therefore, I think that this assessment was well made. I might deal with the latter argument so ably urged by Mr. Matthews, which held that there may be cases in which persons in this country may be taxed in relation to property abroad, and that therefore there is something like a reciprocity of injustice, if injustice it be. I will not, however, dwell upon those cases, or upon that argument, because it is founded upon clauses in the Act which have no relation to the matter now before the court, which is as to the property and the gains or income of a joint-stock company. If the words "joint-stock company " had been introduced into those clauses which Mr. Matthews lastly referred to, his argument would have been entitled to much consideration; but I find nothing in the Act of Parliament, or in any one of the numerous authorities which have been cited, which interferes with the plain and direct operation of the clause to which I have called attention, and under which I hold that this company is liable to be assessed in respect of the whole amount of its annual profits. I will now proceed to deal with the other case of the Cesena Sulphur Company. It is not necessary to repeat the observations which I have already made as to the general principles of the law and their operation upon the cases now before the court. Like the Calcutta Jute Company, this company also was brought into existence under the Joint-stock Companies Acts. It appears that certain persons being possessed of some sulphur mines and plant and other property of considerable value at Cesena, in Italy, which they were desirous of parting with, sold the whole of it to a body of persons, seven in number, who were the first subscribers, and through whom the company was constituted and came into existence under the Joint Stock Companies Acts. They became the purchasers of the whole of this property and, like the company in the previous case, they were stationed (I will not use the word "resided ") in England, where they had an office, their whole property being within the kingdom of Italy. Again, upon looking at their articles of association, we find that the company was "formed for the purpose of developing and working the mines of sulphur at Ceset.a, and carrying on the business mentioned or included in the memorandum of association." Then comes a description of the business, as follows: "The business of the company shall include all the business mentioned in the memorandum of association, and all incidental matters; and the working of the mines will be commenced as soon as the board shall think fit, after the 1st Jan. 1872, and whether a part only or the whole of the capital of the company is subscribed." The very origin and commencement, and the first step taken in the creation of this business, which is clearly the act of the company, is "the working of the mines as soon as the board shall think fit." Then," the working of the company's mines, the mode of the disposal thereof, and the general business of the company shall be wholly under the order, direction, and management of the directors." Every. thing that is done, whether in England, in France,

[Ex. Div.

or in Italy, at Cesena itself, is to be done wholly under the order and management of the directors, subject only to the control of general meetings, as thereafter provided for. The general meetings are in England; the location or residence, as I may now call it, is in England, and the directors exercise their powers and authorities at their office in this country; and, except under their order, control, and management, not a single act of any kind whatever, in relation to the business or proceedings of the company, is or can be done. Again, "the company may undertake any operation or business mentioned or included in the memorandum of association, either singly or in connection with any other firm, corporation, or company in England or Italy, upon such terms as the directors may think fit. The directors shall have full power to register the company in Italy as a Société Anonyme,' and to do all necessary acts for that purpose." Now, although it is a registered company in Italy, that does not in the least degree injure its power, character, or nature in this country. And, as in the present case, "the directors may from time to time appoint and send any number, not exceeding three, of their board, to superintend or examine into the working and state of the company's mines and business at Cesena, and to remain there or in that locality for any period of time not exceeding one calendar month, and shall defray, out of the funds of the company, the travelling and hotel expenses of the director or directors who shall undertake such superintendence or examination;" and such director or directors shall make a written report of their proceedings and the state of the mines, their produce and prospects, with remarks and suggestions relative to the company's business as they shall consider proper. Then comes a provision that "no person except the directors shall have any authority to make, accept, or indorse any promissory note or bill of exchange on behalf of the company or otherwise to pledge the credit of the company. No person, except the directors and persons thereunto expressly mentioned by the board, and acting within the limits of the authority conferred on them by the board, shall have any authority to enter into any contract or engagement so as to impose thereby any liability on the company." And then comes a very important article (the 12th), which seems to me alone sufficient to dispose of this case in substance. It is as follows:-"All moneys payable to the company shall be received by the directors, or the bankers, or by some person authorised by the board, and shall be paid to the account of the company with the bankers.' When, therefore, the money constituting the annual profits or gains of the company, and in respect of which the present assessment was made, comes to be received, whose was that money, and to whom did it come? It came to the company, it was received by the directors, or the general body of the company, and came into their hands as constituting the profits of the company, and they, and they alone, have the power to dispose of it; and they alone are liable to the assessment. I have disposed of the question of residence, and therefore only refer to the 14th article because it is very short. It may not be immaterial, and it is as follows: "The office shall be at such place in London as the Board shall from time to time appoint."

Ex. Div.]

Then the first officers are mentioned, and there are also many clauses relating to the capital and its disposition; but in every case it is to be the capital of the company, and not a fraction of it can be touched or dealt with except under the company's authority. It is identical in that respect with the previous case. It is, indeed, open to the same complaint, and perhaps in a stronger form, because in the Calcutta case the shareholders in India are subjects of the Queen, and India itself is subject to the exercise of the legislatorial powers of this country. But that cannot be said of these Italian shareholders, whose case, therefore, if it be a hard one at all, is harder than that of the Indian shareholders. But it is open, as that case was, to the same observation, that if Italian investors think fit for any reason to come to this country, or by their agents who represent them, to become shareholders in a joint-stock company here, and receive a considerable income under the protection of English laws, I do nɔt know why they should not be subject to the obligation of paying a tax upon the incomes so received by them. Howsoever that may be, as a matter of opinion, it is clear that these gains are the gains of the company. A company cannot, as Mr. Matthews suggested might be done, be divided into two or three portions as a partnership consisting of two or three individuals can ; and it cannot be said that "so much of this money belongs to the Italian, so much to the French, and so much to the English shareholders; let them therefore only be assessed in respect of the portion belonging to the English shareholders." That cannot be done, and there is no instance of such a thing being attempted. The result consequently is that the whole of these gains, being the property of the company, and coming into the hands of the company, have to be divided in certain proportions amongst all the shareholders, both English and foreign; but until they are so divided they are the property of the company, and only pass into the hands of the shareholders when the dividends have been declared by and under the company's authority and according to the articles of their constitution. Under these circumstances I think that, in both these cases, our judgment must be for the Crown.

A cor

HUDDLESTON, B.-I am of the same opinion. The whole question turns, as has been agreed on all sides, upon the interpretation of the word "residence," as applicable to a company. The income tax is only imposed upon a "person who is resident in the United Kingdom," in respect of property which he has there, or which he receives from foreign sources. poration, for the purpose of paying income tax, is a "person," and then we have to see what interpretation we should give to the word "residence," as applied to a corporation. Now the definition of the word "residence" is founded upon the habits and relations of a natural man, and is, therefore, inapplicable to the artificial and legal "person which we call a "corporation." But for the purpose of giving effect to the words of the Legisla ture, an artificial "residence must be assigned to this artificial 66 person," and one formed on the analogy of natural persons." No great difficulty is found in defining what is the "residence of an individual. It is where he sleeps and lives. What is the residence of a natural person we understand perfectly well.

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[Ex. Div. Then what is the "residence" of this artificial person ?" All the learned counsel I think agreed here, the residence of an artificial person, such as a trading corporation, must be taken to be where his real trade and business is carried on. I adopt the powerful suggestion of Mr. Matthews, that the Income Tax Act of 15 & 16 Vict., when it speaks of a "residence" does not mean an artificial residence; and Mr. Matthews argued, therefore, that when dealing with a corporation the Act did not mean the place where they carry on the form or shadow of business, but the place where they really carry it on; and that seems to be a definition almost conceded by all the learned counsel. It is one perfectly understood by foreign jurists. There is a German word which is applicable to it, which means "the middle point" of the business carried on. The French term, adopted from Savigny, is "le centre de l'entreprise," the central point of the business, that is to say, the real place where it is carried on. Now all the cases which have been cited support that view. In The Keynsham Blue Lias Company v. Baker although the court held that Keynsham was the place of business, they did so because the real substantial business was carried on there, although the company had no office in London. In the case of Taylor v. The Crowland Gas Com pany the judgment of the court was put upon the question of the place where the corporation carried on its business. In Adams v. The Great Western Railway Company, for a similar reason it was held that the place where the company carried on its business was Paddington, and in Brown v. London and North-Western Railway Company that it was in London, and not in Chester. The same rule is applied in Shiels v. The Great Northern Railway Company. Then there is a very strong authority, namely, the case of The Aberystwith Promenade Pier Company v. Cooper, in which the place of the company's business was held to be in London, although the pier was built in Wales, and the tolls were there taken. Mr. Matthews, I think, satisfactorily distinguished the case of The Kilkenny and Great Southern and Western Railway Company v. Fielden (ubi sup.), which was cited by Sir H. James. The decision in the case of Sully v. The Attorney-General was to the same effect. And in the last case in this court, The Attorney-General v. Alexander and others the judgment of two at least of the learned judges (the Lord Chief Baron and Baron Amphlett) pointed out that Constantinople, where the company was incorporated (there being no charter of incorporation in England in that case) was the seat of business, that is to say, the place where it was carried on. The learned Attorney-General put a proposition which, with deference, I for one cannot assent to. He suggested that the registration o a company was conclusive of its "residence," and if a company were registered in England that it must be held to reside there. I think Sir Henry James gave a good answer to that when he said that "registra tion," like the birth of an individual, is a fact to be taken into consideration upon the question of "residence," because, if we find that a man was born in a place, and eats and drinks and lives in that place, it is a strong circumstance to show that it is his place of "residence;" but it is only a circumstance. The birth is not conclusive of "residence." Taking the analogy between a

Ex. Div.]

as

natural and an artificial person, in the case of a corporation we would say that its place of registration is its place of birth, but it is not because it is the place of its birth that its "residence must be there. It is a fact to be taken into consideration with all the other facts, and if it be found to be registered in a particular country, and acting and having its office and receiving dividends in that country, those are all acts, coupled with the registration, leading to the conclusion that that country is the seat of its business. Mr. Matthews, on a former occasion, I believe, in this court, quoted many American authorities applicable to the individual States; and yesterday he mentioned a case in Brockenbrough's Reports, The Bank of the United States v. Mackenzie, as to the difference between a corporation created merely by the act of a State and one created by an act of Congress. He pointed out also that it is not at all consistent with the English view of the subject, that a corporation cannot be a corporation except in a particular State, and he founded that on the authority of the case of Newby v. Van Oppen and Others (The Colt's Patent Firearms Company). The principle of law, therefore, is not, I think, in dispute, and we may take it for granted that the place of business is the sort of artificial residence which one would give to this artificial person to make him a "person resident" in this country, within the meaning of the Income Tax Act. And now comes the great difficulty which I have felt all along, and that is, in applying the facts of each individual case to the principle. I quite agree that the onus of proving the " residence" lies upon the Crown, as put by Cleasby B., in his judgment in The Attorney General v. Alexander, and that if the Crown fails to satisfy the court that the place of residence is within the jurisdiction, or within the area of taxation, it cannot be said that the company should be taxed. Admitting that, I have to ask myself where, in both these cases, was really the centre of the operations, the substantial and real place of business, "le centre de l'entreprise," or the middle point? I am afraid that I must answer that question, looki g at the facts in both these cases, by saying that it was in England. It is not necessary to go at any length into the facts, because they have in both cases been so minutely and elaborately examined and commented on by my Lord, but Sir H. James's argument with reference to the Cesena Company, was put in so captivating a form that until my attention had been carefully called by the Attorney-General to the articles of association, I confess I was, if I may use the expression, caught by it. I am not going through the various clauses of the case, but in substance, as was said by Sir H. James, they amount to this: the trading of the company is in Italy, their unrealized and their fixed property is in that country, and everything that is sold is sold there; no goods are ever sent to England, the majority of the shareholders are in either Italy or France and the small minority of them only in England, the original books are kept in Italy, the managing director is in Italy, where he resides; and therefore, said the learned counsel, we have almost everything-books, profits, manufactures, &c., in Italy. At first I thought it appeared that the centre of business was in Italy, but when I looked at the articles of association, and found that the

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[Ex. Div.

object of the memorandum was no doubt to purchase sulphur from a company or firm established at Cesena, but that they contemplated "taking concessions of any lands wherever sulphur is likely to be obtained," and that it is not confined to Italy, and that the general powers of the company are for "the selling, leasing, letting and disposing of any of the lands, mines, and property acquired by the company," it seemed clear, by the memorandum, at all events, that the operations of the company were not to be confined to Italy. Now, the very first article of association is that the company is formed for the purpose of developing and working the mines of sulphur at Cesena aforesaid, and carrying on the business mentioned or included in the memorandum of association;" that is, carrying on the business of a sulphur company wherever sulphur may be found. Then, on looking to see where the power is which is exercised by the directors, by the office in London, we find that the "board" is "a meeting of the directors duly called and constituted," and that "the working of the company's mines, the mode of disposal, working, and the general business of the company shall be wholly under the order, direction and management of the directors, subject only to such control of general meetings as is hereafter provided for." Then the directors have power (which they have exercised) to register the company in Italy, and to make promissory notes, and so on. "The office shall be at such place in London as the board shall from time to time appoint." A London bank is to be their "first and present bankers." True it is that they had a banker at Turin and one at Paris. They may invest their money in a reserve fund. General meetings are to be held, and those meetings which are described as ordinary or extraordinary, are to be held in London. There is the power given of adjourning from place to place no doubt. It is true that it is not said anywhere that the board meetings must be held in London; but it is obvious from the facts in the case, and from all the requirements of the articles of association, that the books must be kept at the office, and the office, according to the articles of association, must be in London, and thus, ir ferentially, we arrive at the conclusion, from the facts, and from the case, that the directors are to meet in London. Without going through the other different clauses of the articles, it appears that almost every act of the Cesena company connected with the administrative part of its business is to be done in London. No doubt the manufacturing part may be and was done in Italy; and so, supposing they found sulphur in some other part of the world, and carried on their business there, the manufacturing part of it would be carried on in that other place; but the administrative part of the business would be carried on at the place from which all the orders came, all the directions flowed, and where the appointments of the various officers were made and revoked, where agents were nominated and recalled, where the money was received and dividends were declared and were payable. We find all these acts performed in London, and I cannot help thinking that the main place of the company's business is in England, and that at Cesena is merely an agency as it were of the principal house, that agency being confined to the manufac ture and sale of sulphur, but under the direction