ed at the head office. With my own company the contract is completed really when the policy comes to be delivered. There is on all our policies what we call a countersigning, which is the evidence of the premium being paid, and the policy is really not a delivered policy until that has been countersigned by the agency through whom it is passed to the insured. Then again, with regard to the payments, I think it has been held that we are liable to pay, for example, on a policy issued on the life of a person residing in the Province of Manitoba or in the Province of Quebec, and that we are liable to be sued in those places, and as a matter of fact in all these places we have to appoint by formal appointment someone to represent the companies so that they may have papers served upon them and anything that may be necessary in a legal way, so that you see in that way the contract is really not a contract entirely with the head office because we are liable to be compelled to pay it may be in Manitoba, in Winnipeg, or Montreal or some other place in an outside Province.

Mr. JUSTICE MACMAHON Say I gave an agent in Hamilton an application for iife insurance in your company; it comes down here; you say there is no contract at all until you assent to it by the issuing of a policy. The policy being countersigned by your agent in Hamilton, by whom it is sent, is merely evidence that the company is entrusting that policy to its agent to take the premium for it, and he must not d liver it until the premium is paid, but the contract is virtually concluded as far as it can be concluded when you accept the application and it passes through the medical director, and is assented to by the Board; isn't that the way?

Mr. MACDONALD: The contract for my company is that so soon as the application has been approved by my directors or a majority of the directors, from that moment the Company is on the risk, but it is not very often the case that premiums are paid in advance, so that as a matter of protection we have to arrange it in such a way that the Company shall have the benefit of the protection, and consequently many of the applications have a note to them over the signature of the applicant that this shall not be a binding contract until such and such-until the premium is paid, etc.

Mr. JUSTICE MACMAHON : Of course there is no necessity of sending in the receipt with the policy, but in the subsequent payments that are made, if you transmit the receipts to the local agent he countersigns them and as soon as delivery of the receipt takes place the payment is completed and the contract is completed.

Mr. MACDONALD: Within the time, yes. Then there is another matter to which I was going to allude, but it has really been conceded by Mr. Fullerton, and that is the question brought out by the Chairman or Justice MacMahon as to the right of other provinces to tax; and the fact that they do tax and impose a tax such as was imposed formerly by the City of Toronto is double taxation.

Mr. FULLERTON: Is that so?

Mr. MACDONALD: I was just going to point out this to you, that already in one Province of the Dominion that is the case; I expect the others are likely to follow in the same direction, if anything was done here, in the way of enacting a law similar to your Revenue Act; but in British Columbia the companies are assessed there on the interest arising from investments. It is only within a week that I sent off a return certifying the list of our loans in British Columbia, and we have to pay taxes on that.

Mr. FULLERTON: There is a decision in the Supreme Court which revised a taxation in one of the lower Provinces because the head office was not there.

Mr. MACDONALD: I am not aware of that, but we have already one of the Provinces in the west taxing us on our investments in the way in which the city of Toronto formerly taxed us, and to make a law that would place the tax back where it was before the Revenue Act was passed would, so far as the city of Toronto is concerned, be double taxation.

Mr. THOMAS: One thing strikes me after hearing this discussion, agreat deal of which is certainly new to me, that if life insurance companies are to be taxed, the only way to do it fairly and equitably and to avoid a possibility of a double taxation, is to tax the policy holder, and I do not see any reason why they should not be taxed just as well as for me to be taxed on any other class of security.

Mr. JUSTICE MACMAHON: That would be a very simple way of taxation.

Mr. THOMAS: Yes, and it does not matter how it is taxed or how it is paid to the company so long as they know beforehand. The companies do not pay it, after all, the

policy holders pay it.

Mr. JUSTICE MACMAHON: I am sure that will receive the assent of all the com

panies.

Mr. FLEMING: Could you not make the company agents for the municipalities to tax by that means?

Mr. JUSTICE MACMAHON: Perhaps so.

Mr. MACDONALD: We certainly do not want, in behalf of the companies, to have double taxation, that is revenue tax of one per cent. and then the other.

Mr. JUSTICE MACMAHON: There ought not, to be double taxation.

Mr. FULLERTON: My recollection is, though speaking with hesitation, that Peters vs. St. John, 21 Supreme Court, 674 ; prevented double taxation but I may be wrong in my idea that that is the case.

Mr. MACKELCAN: I understand this to be the last meeting of the Commission, and I desire on behalf of myself and those who have been associated with me to express to the members of the Commission our thanks for the close attention with which they have listened to our arguments, sometimes possibly tedious and uninteresting, the uniform courtesy with which they have always listened to all we have had to say, and on my own behalf to say that I have enjoyed very much the discussions that have taken place here, and I think that they have been in very many respects useful and instructive, and those of us who have been here will always look back with pleasant recollections to the days that we have spent in attending this Commission.

Mr. FULLERTON: If the members of the Board will not think it out of place to express my feelings on the same subject, I would like to say that in the experience I have had in addressing courts and dealing with judges I have always thought the courtesy of a judge was best tested by the care he extended to the weaker members of the bar, and I may say it was with the greatest pleasure that I watched the manner in which this Board handled those who came from a distance and those who needed assistance in being able to get before the Commission what was their trouble; and I desire to say that so far as I am concerned, and so far as my observation is concerned, I have never been before any body or board where all persons were treated with more courtesy.

Mr. FLEMING: So say we all.

Mr. HUTTON: I was just going to say that the two gentlemen who have spoken are lawyers, and of course are more accustomed to addressing gentlemen such as you are, but for the laymen who have spoken here I may say that we have received a great deal of help from the questions that have been put by the Board in bringing out the various facts, and I can only regret that more of the Assessment departments of Ontario were not represented at this meeting, because I am sure if they were they would have had a much clearer conception of the Act than they have at present.

The CHAIRMAN: I may say on behalf of the Commission that we are very much obliged to the gentlemen who have just spoken for the good opinion which they have expressed of the manner in which we have endeavoured to discharge our duty, and to say also that we are very much indebted to all the gentlemen who have appeared before us from time to time, for the assistance which they have given us and the pains they have taken to prepare themselves to give that assistance. I only hope that we will be able to make use of the assistance which has been so freely and so fully given to us in preparing and making the report which we will have to make in this very difficult and complicated question. I think I understood you to say, Mr. Kingstone, that you would desire at some future time to be heard before us?

Mr. KINGSTONE: Yes, if you will allow me to speak before you, or I will put in a written statement.

The CHAIRMAN: We are very desirous of hearing every thing that can possibly be suggested in relation to any of the subjects that have been discussed, and we will endeavour to give you an opportunity of appearing before us some time or other. We will let you know.

Adjourned at 5 p.m., sine die.

1

TWENTIETH DAY-WEDNESDAY, JAN. 9th, 1901,

Commission met at 11 a.m, Mr. JUSTICE MACMAHON presiding in the absence through illness of Mr. JUSTICE MACLENNAN.

Mr. F. W. KINGSTONE, representing the Edinburgh Life Assurance Co. said: I wish to say on behalf of the Edinburgh Life that their position is slightly different from that of the other life insurance companies that have been presented before you. The Edinburgh life used to do life insurance business in Toronto and in Canada generally several years ago, but it withdrew from that business and is now only collecting the premiums of old policies. Mr. David Higgins is the agent for that purpose, and has nothing to do with the investments. The object I have in coming before you is to state the case of the company so far as taxation on their investments is concerned. They have little or no interest in the question of premiums on policies, which are very small at present, and which are getting smaller every year, or even on loans on policies, which are very small. The whole question in which they are interested is the question of the taxation of the income derived by them from their mortgages, and especially in this case from mortgages in the City of Toronto. They have not been taxed until the last year or so for any income derived from their investments, as a matter of fact, but about five years ago they decided to invest money in this Province, and then the board sent out the manager and two directors, and they decided to make investments in this country in the following manner :-Any applications for investments have to be sent to me as their agent or solicitor of the company, and I send them home to Edinburgh after first consulting three gentlemen who are upon the advisory committee. It is ultimately a question for the board there as to whether they will accept these or not, and at least in one case they have rejected them. When they decide to accept them, they cable out to me that they have accepted it, and I proceed to draw the mortgages and proceed with the investment. The usual way was till quite recently to draw on them for the amount and gave the draft to the borrower who cashed it at his own expense; and then the principal and interest, as I can show you by the old mortgages, were payable in Edinburgh by drafts on London. That was the way until recently, when at the request of some borrowers it was arranged to have an account in the Bank of Commerce, so that whenever money was required we drew upon them for the amount and gave them a cheque here and allowed the principal and interest to be repaid here. When they were assessing for next year, we were assessed for $19,600. I appealed on behalf of the company, and the matter came up before Judge McDougall, who gave a judgment in the matter and decided, as I understand his judgment, that we should not be assessed on income here, as there was no branch or agency of the company in this country for the purpose of investments, but that because we had deposited $14,000 during the year in the Canadian Bank of Commerce, for that reason—and as I understand, for that reason alone he decided that the city was entitled to assess the company for that $14,000; and that, of course, I suppose stands as law until it is held otherwise. But, assuming that to be the case, then I would say that it is unjust that that law should be allowed to prevail, for several reasons--and that, I suppose, is the only question you will take up, as to whether it is just or unjust, or whether it is equitable or advisable. In the first place the company, as I understand it, would then be paying taxes three times over on the same income. They pay taxes to the Province under the supplementary Revenue Act. They pay also in Edinburgh on the Income Tax; that' I will refer to again. I may say that at the last meeting of this commission which I attended, I stated that I understood that to be the case, and I wrote over in order to ascertain with more correctness what the exact state of the matter was, and I got a cablegram which I must confess I did not understand, and which I can only understand now by supposing that in consequence of the manager (who has been manager for a great number of years) having left, and another man being appointed, he was not acquainted with the exact state of the facts. However, I had better read it just as I received it :"Tax though not payable here on interest retained in Canada may shortly be exacted. Ontario Provincial Tax payable." Then evidently they found they had made a mistake, for on 31st December they cabled me again :-"Tax now charged "-from which I inferred-of course there had been no letter at that date—that they have to pay an income tax on the revenues which they received in Toronto. In that case they would pay the

income tax three times over on the same income-one to the Province of Ontario, another to the Government in Great Britain, and a third to the City of Toronto. Then I claim that assuming the decision of Judge McDougall to be correct it will really be a senseless proceeding to attempt to carry that out, for the result of that would be that the company would simply add the amount of the tax to the rate of interest, and thereby the borrowers would have to pay the extra rate of interest. As a matter of fact they will have to do so now if they insist upon it, because of the terms of our mortgage there is an express provision that any taxes which the company have to pay in respect to these mortgages, whether municipal or otherwise, must be paid by the borrowers, so that in that case the borrowers here would have to pay not merely the fall tax on the amount they have mortgaged, but they would also have to pay an extra tax which the city would impɔse upon them. Then I say we have received and would receive no benefit whatever from any taxes imposed by the city. We have no buildings or offices here. We have nothing here which can be any way benefited by a tax. The borrowers of course get a benefit from it, but the borrowers pay the full taxes on their loan. Then again I would object that it is very inadvisable to do anything which would in any way prevent money coming into the country at a low rate of interest. The Edinburgh Life does not interfere materially with the loan companies or other parties who lend in small sums to ordinary borrowers. Their loans are nearly all made to merchants in large sums. They will not entertain any loan of a smaller sum than $10,000 on business property, or less than $5,000 on private residence, and most of their loans are large ones, the benefit of which the city is now receiving. I do not suppose it would be advisabie for me to refer to individual cases, but I may say that to my knowledge several of the large buildings recently put up in Toronto have been put up in one of two ways; either by a party borrowing on his other property and spending the money in building, as there is one going on at present, or in ascertaining from the Edinburgh Life that they could get money at a low rate when the building was finished and then going on the faith of that, and the money being loaned when the building was finished and occupied. If this proposed arrangement of the municipality charging the company on the income should be allowed, the result would be that it would discourage the Edinburgh Life from bringing money out here and lending it at a low rate, and the company would suffer and the city would suffer in consequence. I do not think I need say much more, but I have some of those mortgages here, which would explain how they are payable in that way.

Mr. JUSTICE MACMAHON: Your statement is all that is required.

It

Mr. KINGSTONE: They are payable in the old country, and they would only be all made payable in the same way, and if made payable in that way the result would be that the city would get nothing according to the decision of Judge McDougall, because they would be sent over by draft to England, or the draft would be sent to us and we would send it over to England, and there would be no money paid into the bank. seems to me absurd that because money is paid into the bank, and sent away perhaps the next day, that for that reason the city should be entitled to charge us with income tax on that money. Suppose it was a promissory note that was being sent out here for collection, and collected here and sent back to Edinburgh, it would seem absurd that because the money was paid in in the morning and sent off in the afternoon that the city should be entitled to charge on that money as personal property.

Mr. WILKIE: Of course you could do business if the policy of the company was altered; you have all the machinery, I suppose-all the permits and licenses and everything else?

Mr. KINGSTONE: We have authority, of course, from the Province to do so, and we can proceed to lend money, and are lending money at the present time.

Mr. WILKIE: And doing insurance business at the same time?

Mr. KINGSTONE: No.

Mr. WILKIE: You are at liberty to re-commence.

Mr. KINGSTONE: We would have to put up new deposits and all that sort of thing. We retired thirty years ago from lending money. We are simply collecting the premiums on the old policies, which are diminishing every year, and no new policies are being granted, I think, no new applications being taken for policies in this country at all.

Mr. WILKIE: Does the same state of affairs exist in regard to any other company that you are aware of, or is yours an isolated case?

Mr. KINGSTONE: I am not aware that there is any other company exactly in our position. I think all the other companies that I know of are doing a life insurance business here. I think our company is the only one that is exactly in that position, I am not sure about the Star Life, whether they are doing business or not.

Mr. JUSTICE MACMAHON: I imagine they are, because they have recently put up a very handsome building in Ottawa.

Mr. KINGSTONE: I was not aware of that. The Edinburgh Life is the only case of that kind, except one case which is somewhat similar, and which I represent in this country, but they have no Advisory Board, and we have not yet been charged an income on it, and I don't want to bring the question up. but it only 'does a very small business any, way on investments.

Mr. PRATT: You think, then, although you do business in Toronto you should pay no taxes in Toronto? We understand you in that way?

Mr. KINGSTONE: I think we ought not to pay any taxes here, because the business is done in Edinburgh. No loan can be accepted in this country; we are simply a feeder in Toronto for the business in Edinburgh. The head office is in Edinburgh; no loans can be accepted by anybody here, no matter whether the Advisory Board recommend it or not.

Mr. PRATT: You are carrying on a business in Toronto ?

Mr. KINGSTONE: We are in one sense carrying it on, but not in another sense. We have no branch office here.

Mr. JUSTICE MACMAHON: When a loan is accepted it is accepted here? Mr. KINGTONE: No, it is accepted in Edinburgh; the cablegram comes out. Mr. JUSTICE MACMAHON: They merely formulate the acceptance there. The acceptance is communicated through your office here to the borrower.

Mr. KINGSTONE: Yes, but the application is sent to Edinburgh, and accepted or rejected in Edinburgh. It cannot be accepted or rejected in this country. We have no means of telling, until the Board meets there, whether it will be accepted or rejected. Mr. JUSTICE MACMAHON: There is no means of communication to the borrower that the offer has been accepted until the acceptance reaches here?

Mr. KINGSTONE: No.

Mr. JUSTICE MACMAHON: And it is communicated to the borrower through the agent of the company, at least through its solicitor?

Mr. KINGSTONE: Through the solicitor of the company, yes, that is the position of the matter.

Mr. WILKIE: Did your company object to being taxed by the Provincial Government on the same ground?

Mr. KINGSTONE: Not on the same grounds. We did attack that, and we had rather a fight there in the matter; and I discussed it with Mr. Christopher Robinson, and I drafted an Act which would be acceptable to us, which Act has been practically accepted by the Government and passed at the last session. I attended several times, and we were going to dispute the right there, but as it is now they have essented to that view. The Act as it now stands is practically, as far as the Edinburgh Life is concerned, the case that they assented to, and we pay a revenue tax on the investments. At that time what our company objected to was that they had to pay on debentures. Well, all the debentures we had were on outside municipalities, and it was a serious matter to pay interest on debentures many of which were purchased in the Old Country without reference to me, and it was claimed by the Government that they should pay revenue on the interest that they derived from those debentures. That has now been got over, and it is simply a question of income on the ordinary investments.

Mr. PRATT: Do you loan money in Montreal ?

Mr. KINGSTONE: No, we don't lend anything outside of this Province, except in Winnipeg. They do there, but they don't do it through me.

Mr. PRATT: Do they pay a tax on it in Winnipeg?

Mr. KINGSTONE: I don't know. I have nothing to do with it. They have their own firm of solicitors there, and attend to the business there.

Mr. JUSTICE MACMAHON Mr. Caswell, do you wish to say anything?

Mr. THOS. CASWELL (Solicitor of the Corporation of the City of Toronto): Judge McDougall sets out all the facts in his judgment in connection with the Edinburgh Life