or debt; proceedings by way of execution, attachment, or garnishment; proceedings for the sale under or foreclosure of a mortgage on land or in satisfaction of any judgment or mechanic's lien; seizure or distress under an execution or under any lease or any tenancy howsoever created, lien, chattel mortgage, conditional sale agreements,

etc.

The period during which proceedings are prohibited in accordance with the act is not included in computing the time under any statutory limitations period. The board is directed and authorized to negotiate amicable arrangements between the resident debtor and his creditors. Saskatchewan and Manitoba have debt-adjustment acts very similar to the above provisions in Alberta, applying in the case of Saskatchewan to contracts where the original consideration arose prior to April 1, 1933, and in Manitoba prior to April 1, 1934.

Part III of the Alberta act contains special provisions as to farmers, among them being section 19, which stipulates that: "No chattel mortgage given by a resident farmer from and after the first day of May 1934, to secure any past indebtedness, shall have any force or effect whatsoever unless the same has been approved in writing by the debt adjustment board within 60 days after the date of execution thereof."

The Alberta Debt Adjustment Act was amended in 1938 (ch. 27) to extend protection to all resident debtors, and to grant the board power to prevent a debtor being deprived of crops or income that may be necessary for the maintenance of the debtor or for the continuance of his occupation. The board, after an investigation, may issue a certificate providing that a resident debtor may pay to the board a certain percentage of his crops or of his income for the benefit of his creditors, who, under such conditions, may not bring any court proceedings.

Other Alberta laws affecting debts include: An Act Respecting the Suspension of Proceedings Respecting Certain Kinds of Debts (ch. 25 of 1938) which, in general, grants a moratorium until March 1, 1939 (may be extended by Lieutenant Governor in Council), on private debts, owed to corporations, that were incurred prior to July 1, 1936; and an Act for the Security of Home Owners (ch. 29 of 1938) which prohibits any action against a farm home owner for the collection of a mortgage debt incurred prior to March 1, 1938 (applies only to home and 160 acres); and an action can be brought against an urban home owner (home and three adjacent lots) under similar circumstances only if the plaintiff deposits $2,000 in court for the benefit of the debtor in case he should lose his home.

Under the Alberta Limitations of Actions Amendment Act (ch. 28 of 1938), actions on debts contracted prior to July 1, 1936, must be brought before July 1, 1940, unless the debtor enters into a new agreement in writing. The effect of this act, together with the debt laws, is to outlaw all such debts, if the creditor does not obtain a new written arrangement with the debtor before July 1, 1940, or does not submit his claims to the jurisdiction of the debt adjustment board.

34 This Act disallowed by Governor General in Council on June 15, 1938.

COMPROMISES AND ARRANGEMENTS BETWEEN COMPANIES AND THEIR CREDITORS

Where a compromise or arrangement is proposed between a debtor company and its unsecured creditors, or secured creditors, or any class of them, the supreme court or superior court in the Provinces may, on the application in a summary way by the company or by any creditor or by the trustee in bankruptcy or liquidator of the company, order a meeting of the creditors or a class of creditors, and, if the court so determines, of the shareholders of the company, to be summoned in such manner as the court directs.35

If a majority in number representing three-fourths in value of the creditors, or class of creditors, present and voting either in person or by proxy at the meeting agree to any compromise or arrangement, the court may sanction such compromise, which is then binding on all the creditors or a class of creditors and on the company or on the liquidator or trustee.

"Debtor company" means any company which is bankrupt or insolvent or which has committed an act of bankruptcy within the meaning of the Bankruptcy Act or which is deemed insolvent within the meaning of the Winding-up Act, whether or not proceedings have been taken under either of these acts. The provisions of the Companies' Creditors Arrangement Act apply to Dominion or Provincial companies or foreign companies having assets or doing business in Canada, except banks, railway, telegraph, and insurance, trust and loan companies.

Dominion Companies' Creditors Arrangement Act, 1933, ch. 36.

COLLECTION AGENCIES

The Ontario Collection Agencies Act of 1933 provides for the licensing of every collection agency carrying on the business of collecting debts in Ontario.

A collection agency is defined as an individual, firm, or corporation, carrying on the business of collecting debts for other persons in consideration of the payment of a commission upon the amount collected or otherwise, or of taking assignments of debts and charging a fixed fee therefor, whether the principal or head office of such agency is in Canada or elsewhere, but does not include a solicitor collecting debts for his client, or any insurer, agent, or broker licensed under the Insurance Act to the extent of the business authorized by such license, or a trustee in bankruptcy or insolvency. The power of granting, refusing, suspending, or revoking a license is in the Ontario Securities Commission. The annual license fee for a collection agency carrying on business in Ontario which has its head office outside of Canada is $50, and for any other $2. Such agencies whose head office is outside the Province are required to deposit a bond of an approved surety company and in such amount as directed by the commission; local agencies also may be required to deposit a bond.

Money collected must be deposited in a trust account, and proper books of account must be kept which are subject at all times to inspection by the Securities Commission. The agency must account to the client for any money collected within 30 days after its receipt. Any agency which contravenes any provision of the act or regulations is liable to a fine ranging from $50 to $200; a similar fine may be imposed on every person who knowingly employs an unlicensed

agency.

Collection-agency licensing acts are also in force in British Columbia, New Brunswick, Nova Scotia, Quebec, and Saskatchewan, whose general scope and purpose are the same as those contained in the Ontario Act, but there are some variations, such as in the annual fees and bonding requirements. In Manitoba no person not admitted and duly qualified to act as attorney and solicitor may, on behalf of a creditor, write, publish, or send any card, letter, or notice threatening legal proceedings for the recovery of money or property or intimating that such proceedings will be taken, but such person may threaten or intimate that the matter will be handed to some duly qualified attorney or solicitor for legal proceedings.

BUSINESS TAXES IN CANADA

Under the British North America Act of 1867, the Dominion Government is given the power of "raising money by any mode or system of taxation" (sec. 91, No. 3), whereas the Provincial governments are limited to "direct taxation within the Province in order to the raising of a revenue for Provincial purposes" (sec. 92, No. 2). The Dominion Government, therefore, has the exclusive right of levying and collecting customs and excise duties. The municipalities which derive their taxing power from the Provinces are restricted in the raising of revenue to direct tax measures.

The term "direct taxation" is not defined by the British North America Act, but the Privy Council in its interpretations has followed John Stuart Mill's definition: "Direct tax-one which is demanded from the very persons who it is intended or desired should pay it; and indirect tax-one demanded from one person in the expectation and intention that he shall indemnify himself at the expense of another."

However, this theory was qualified to some extent by the decision of the Privy Council in the case of the City of Halifax v. Fairbanks 36 which held that: "The imposition of taxes on property and income, of death duties, and of municipal and local rates is, according to common understanding of the term, direct taxation just as the exaction of a customs or excise duty on commodities or of a percentage duty on services would ordinarily be regarded as indirect taxation; and although new forms of taxation may from time to time be added to one category or the other in accordance with Mill's formula, it would be wrong to use that formula as a ground for transferring a tax universally recognized as belonging to one class to a different class of taxation."

The principal sources of revenue for the Dominion Government are customs import duties, income-tax receipts, the sales tax, and excise duties on various commodities and transactions. The chief taxes levied by the Provincial governments are income and corporation taxes, inheritance taxes, gasoline and motor-vehicle taxes, and amusement taxes. The municipalities obtain most of their revenue from local rates on property.

In Canada as in the United States, the same income may be subject to both Dominion or Federal and Provincial or State taxation.

It is of interest to note that the courts in their decisions respecting the taxing powers under the British North America Act have applied an interpretation differing from the implied constitutional principle existing in the United States which prohibits the Federal and State Governments from taxing the agencies of the other.

City of Halifax v. Fairbanks (1928) A. C. 117.

71

Dominion income tax on the salary of a provincial officer has been held 37 by the courts to be intra vires the Dominion Parliament, and the right of a Province to tax the salaries of Dominion officials has also been upheld.38 The Special Income Tax Act of Manitoba, 1933, which taxes the earnings of every employee, was held by the Privy Council to apply to wages of Dominion employees, and this tax was not indirect because required to be collected by the employer for the benefit of the Government.39

Interest received by a company on war bonds purchased from the Dominion Government constituted "income" for the purposes of taxation under the Ontario Assessment Act (R. S. O. 1914 ch. 195). The courts in their decisions have pointed out that the respective governments could not tax a class specially so as to cripple the civil service of the other.41 Section 125 of the British North America Act provides that: "No lands or property belonging to Canada or any province shall be liable to taxation." This provision, however, does not mean that the interest of a private individual in Crown lands cannot be taxed.+2 The Dominion and Provincial income-tax acts specifically grant total exemption from income tax to any company, commission, or association of which not less than 90 percent of the stock or capital is owned by a Province or municipality.

37 Caron v. The King (1924) A. C. 999.

88 Abbott v. The City of St. John (1908) 40 S. C. R. 596.

30 Forbes V. Attorney General of Manitoba (1937) 1 D. L. R. 289.

40 Re. Massey-Harris & Toronto (1919) 48 D. L. R. 321.

41 The Law of the Taxing Power in Canada, Kennedy & Wells.

42 Smith v. Rural Municipality of Vermillion Hills (1916) A. C. 569; City of Montreal v. Attorney General for Canada (1923) A. C. 136.