Bickford vs. The Grand Junction Railway Company.

answer to the enquiry before made seems included in. this statement of the powers of the Company. They have power under the general law of corporations to mortgage for any purpose in furtherance of the object of incorporation; the object of the incorporation being the construction of a railway for which iron rails were absolutely requisite, they had power to give a mortgage to secure the price of rails, and they have done no more than that in the present case. That they have given the mortgage as sureties for the contractor, and not as the direct purchasers of the iron, can make no difference; indirectly, they having given it to secure the price of the rails, and the secondary liability, to which they have subjected their property, is as much in furtherance of their undertaking as if no contractor had been interposed between them and the Appellants; in short, the Company were, in effect, the sub-purchasers from Brooks of the iron which the latter had purchased from the Appellants, and in order to obtain the property instead of paying money, they gave the mortgage to secure the original price.

Had the mortgage been given for any object foreign to or inconsistent with the purposes of of the incorporation, then, no doubt, it would have been ultra vires of the Company. A familiar instance of a Railway Company exceeding the limits of its undertaking, is afforded by a well known case, in which such a corporation added to its legitimate business that of a line of steamships. Had this mortgage been given in aid or furtherance of any similarly unauthorized. enterprise, it would, of course, have been ultra vires, but it is manifest that such was not the case here, and that the sole object of the corporation was to attain the end for which it had been created.

Bickford vs. The Grand Junction Railway Company.

There remains the further enquiry: Was this mortgage inconsistent with any statutory destination of the property of the Company subject to the mortgage? In this connection it must be borne in mind that the single question before the Court is that concerning the validity of the mortgage, and that it is premature to discuss the nature and extent of the remedies to which the Appellant may be entitled. We have only to recall the terms of the decree under which this contention has arisen, and which consist of a reference to ascertain the amount due, to be satisfied that the question of the Appellant's right to any particular remedy has been excluded by the decree, which expressly concedes the right to sell, if the money found due should not be paid within thirty days from the date of the Report. That the Appellant may have threatened and actually intended to offer for sale the franchises of the Railway Company is therefore immaterial in the consideration of this appeal; in short, it is not under the judicial notice of the Court. I apprehend the Respondents will not be precluded from enforcing any remedy which they may have ever possessed to restrain any illegal act, which the Appellant may purpose to commit under color of availing himself of his legal remedies to realize the money secured by his mortgage. But the question of what these remedies may consist is wholly beside the present controversy.

If the mortgage comprises any property which the Company were free to give in security, it can make no difference that it also includes other subjects, which were so impressed with a charge or trust in favour of the public, that it was beyond the power of the Company to deal with them.

The Court below have determined that this deed was

Bickfork vs. The Grand Junction Railway Company.

wholly void, but if it creates a good charge on any single parcel of land which it purports to affect, this cannot be the correct conclusion. The charge is on all the lands of the Company situate in the town of Belleville, and Villages of Sterling and Hastings, and in the several townships designated, and on the franchise and powers of the Railway between the town of Belleville and the Village of Hastings. Then are all the lands of a Railway Company so dedicated to public uses, or so impressed with a public trust that it is ultra vires of the Company to deal with them by way of mortgage? On the answer to this must depend the correctness of the decision appealed from. Assuming for the present purpose that the principles enunciated by the English Court of Chancery in the case of Gardener v. The London, Chatham & Dover Railway Company (1) are applicable to the permanent way, station houses, and station grounds actually required for the use and purposes of the Railway, it surely cannot be said that a Railway corporation, constituted as the Respondents' Company is, may not legally acquire and hold other lands, which it requires for no such uses. All practical experience demonstrates that a company of this kind, at the completion of its works, usually finds itself to have acquired property in land not required for the purposes of its working, lands which it may have been compelled to acquire as part of other property which it could not dispense with, or which, though purchased or taken as necessary for the use of the railway, have, in the event, been found to be superfluous. Is the Company, then, to be prohibited from dealing with such lands, the retention of which, in their hands, as so much unproductive stock, can subserve no possible purpose of public (1) L. R. 2 Ch., 201.

Bickford vs. The Grand Junction Railway Company.

utility? The answer to this enquiry in the negative would be obvious on general principles, even if a specific enactment did not afford it. But we have this answer embodied in the written text of the law itself, for by section 9 sub-section 2 of the General Railway Act (1), express power is conferred upon the Company to alienate, sell and dispose of lands which they may have acquired for the construction, maintenance, accommodation and use of the railway. This right of alienation includes lands acquired in the exercise of compulsory powers as well as those obtained by conventional purchase. That the words "alienate, sell or dispose" include a power to mortgage as well as that of absolute disposition, requires no demonstration.

Mr. Justice Ritchie has suggested how important a power of mortgaging surplus lands is in this country, for a reason which would have no existence in England. The practice has prevailed, in all the Provinces, of making large statutory grants of wild lands from the public domain in aid of the construction of railways, Were Railway Companies disabled from mortgaging, the use of such grants would be greatly diminished. The power of mortgaging lands so granted, has been expressly recognized as one of the ordinary powers of a Railway Company by the Supreme Court of the United States. Tucker v. Furgusson (2); Farnsworth v. Minnesota and Pacific Railway Co. (3).

For these reasons it is impossible to maintain the order of the Court of Appeal in the absence of evidence establishing the fact that the Company had no lands other than those required for the permanent way and

(1) Con. Stat. of Canada, cap. 66; (2) 22 Wall., 572; (3) 2 Otto.,

Bickford vs. The Grand Junction Railway Company.

station grounds, and otherwise for the efficient working of the railway. The mortgage cannot be pronounced wholly void on the ground now under consideration, unless this is shown. It lay upon the Respondents, who seek to avoid the mortgage, to prove this, but there is not the slightest evidence of it.

Therefore, conceding for the present that the mortgage, if confined to the franchise, and to the railway and its adjuncts, would have been void as being a charge on subjects extra commercium, it does not follow that it may not be a good charge on other lands over which the Company had power of free disposition, and for that reason alone the order of the Court below should be reversed.

It is proper, however, to guard against the supposition that we express any opinion as to whether, if this mortgage had been confined to the railway itself and its franchises, it would have been wholly void and inoperative. Speaking for myself alone, and without expressing any decisive opinion, I think there was much force in the argument that a Court of Equity would give effect to such an instrument, at least to the extent of treating it as a good equitable charge upon the net earnings of the railway, a view which would have been quite sufficient to have sustained this appeal.

Further, the use of the word "franchise" seems to have led to some confusion in considering the rights of mortgagees of railways in this country. Strictly, the expression is not accurate as applied to a corporation constituted by Act of Parliament; it should be confined to corporations created by Royal grant or charter, the word "franchise" meaning a privilege granted by the Crown in the exercise of the Royal prerogative (1). It has,

(1) Chitty on Prerogatives of the Crown, pp. 118, 119.