WALSH, J.:—This appeal is from a notice of re-assessment of income for the taxation year 1959 dated May 27, 1964, whereby $68,255.10 was added to Donald F. Farris’s taxable income previously reported in respect of alleged income from the sale by Donald F. Farris of 75,420 shares of Combined Estates Limited during the year. By further notice of re-assessment dated April 26, 1965, minor adjustments were made to deduct a share of legal and trust fees and the cost of the Combined Estates Limited shares sold, and this appeal is also from that re-assessment. As a result of the death of Donald F. Farris the appeal was continued by his executor and by order dated November 16, 1969, the style and cause in the action was changed from Donald
F. Farris v. The Minister of National Revenue to Lauch F. Farris, Executor of the Estate of Donald F. Farris v. The Minister of National Revenue.
By agreement between the attorneys for the parties the evidence of the witnesses John Earl White, Walter Potter, Joseph Weldon Graham, portions of the examination for discovery of Ian Montague Harford, and most of the exhibits filed in the record of this case subject to objections raised during the hearing and taken under advisement were read into the record of proceedings heard immediately following, being the appeal of Ralph
K. Farris v. M.N.R., relating to re-assessments of alleged income on an identical share disposal in which the parties were represented by the same attorneys.
The evidence given by Ralph K. Farris in the latter case and exhibits filed by him do not form part of the record of the present case, and the evidence of the witness Lauch F. Farris in the present case and such of the exhibits filed by him as relate only to it were not read into the record of the Ralph K. Farris ease. The written arguments submitted by the attorneys for the parties were by agreement applicable to both appeals, with the distinction between the two eases, where such a distinction existed, being pointed out in them.
I have this day given lengthy reasons for judgment and delivered judgment in the Ralph K. Farris v. M.N.R. case and it would be superfluous to repeat here the arguments and jurisprudence I considered in reaching the conclusions I did in that case. What must now be considered is whether there are any differences in the evidence as to the personal background and apparent intentions of the late Donald F. Farris which would jusify reaching a different conclusion in this case from that reached in the Ralph K. Farris case, since, as I stated in my reasons for judgment in that case, the profits on the sale of property for one taxpayer may not be taxable while the profits on the sale of identical property under similar circumstances by another taxpayer may be subject to tax as an adventure in the nature of trade depending on the apparent intentions of each taxpayer at the time of acquiring same, and the nature of his business background and usual occupation.
According to the Agreed Statement of Facts (paragraph 22), Donald F. Farris was in the period indicated president of Combined Estates Limited (Welfar Holdings Limited) ; B. C. Estates Limited; Farwest Mining Limited (previously known as Western Tungsten and Uranium Mines Limited) ; Western Beaver Lodge Mines Limited ; Northlodge Copper Mines Limited ; Beth- saida Copper Mines Limited; Utica Mines Limited (from 1961 to 1964) ; and World Finance Company Limited (from 1948 to 1958) and he ‘‘acting alone or with others on more than one occasion, caused the incorporation of a company, subscribed for treasury stock thereof prior to its being sold to the public, and later disposed of this treasury stock at a profit”.
His son and executor, Lauch F. Farris, testified that he has no personal knowledge of his late father’s affairs though he was aware in a general way of the directorships and offices he held.
Appellant’s counsel contended that the late Donald F. Farris was a mining executive whose major concern in the period was the operating affairs of the companies with which he was connected, including of course the raising of funds by these companies through stock issued to provide for exploration and development work. However, his subscribing to treasury stock before it was sold to the public and later disposing of the stock. at a profit, which is admitted, negates the argument that he was simply an executive and not a promoter and trader.
In Exhibit 3, being the affidavit of Ernest G. Fraser, manager of the Toronto-Dominion Bank, 560 West Hastings Street, Vancouver, B.C., with accompanying banking records attached, which was admitted after counsel for appellant withdrew his objection to same, we find in a memo by the manager dated March 31, 1953, the following statement :
Mr. Farris telephoned to advise that he had taken on the position of Manager of Western Tungsten and Copper Mines Ltd. and Beaver Lodge Uranium Mines, at an annual salary of $15,000 with an option to purchase certain Treasury shares. He said that while the salary, of course, was an item, it was not the prime object, but with a view to making some tax free money through capital gains which he feels he will be able to do.
And again, in a postscript :
. . . Farris said he may, or may not, need our assistance, but reiterated that if he did, it would only be for a short period and would be in connection with a quick deal other than the above- mentioned Mining Companies.
In an Application for Credit dated February 19, 1957, annexed to the said affidavit, we find the following statement;
Mr. Farris has requested that we increase the present credit by $5,000 in order that he may acquire additional securities from time to time, at favourable opportunities. The advance will, of course, fluctuate, as it is also his intention to dispose of his holdings on market appreciation, but will be fully margined at all times.
In a further Application for Credit dated July 22, 1958, relating to a request for an advance of: $35,000 to purchase 15,000 shares in Canadian Western Oils, putting up Bethlehem Copper as margin, it is stated:
The loan will be temporary, with repayment coming from the sale of Canadian Western Oils Ltd. on a rising market. Mr. Farris feels the stock is selling below its true value at the present time, and he looks for good appreciation in the near future.
In a letter to the bank manager on the letterhead of Beaver Lodge Uranium Mines Ltd. signed by D. F. Farris per LMG as president dated January 31, 1958, also annexed to the affidavit, it is stated :
. in view of the success that my associates and I have had with our local company, B.C. Estates Ltd., I have made some investi- gations and am making plans to open a company in Denver similar to B.C. Estates. ....
These are not the sort of statements one would expect from a man who is merely a mining executive, ‘and not at the same time a trader and promoter. ,
Counsel for respondent argued that the present appellant is in a weaker position than Ralph K. Farris in that, since Donald Farris could not testify, there is no evidence to the effect that his intention when he acquired the shares of Welfar Holdings Limited (Combined Estates Limited) was solely to treat them as an investment. As I indicated in my reasons for judgment in the Ralph K. Farris case, I do not consider such evidence to be of great significance in any event as it is the background and conduct of appellant and not his expressed intentions which must be examined, and therefore the fact that no evidence by way of direct testimony was available as to the intentions of the late Donald Farris does not affect his appeal to any great extent.
Counsel for appellant in the Ralph K. Farris case had argued that he did not take any active part in the management of Welfar Holdings Limited or B.C. Estates Limited, leaving the management to Whitelaw, nor in the reorganization of Welfar Holdings Limited and disposal of most of his shares in same, and while I did not accept this argument, holding that as a director he must be deemed to have been familiar with the operation of the business and could not claim he had not taken an active part, this argument could not even be raised in the case of the present appellant. Certainly as president of both companies the late Donald F. Farris must have been fully aware of every aspect of their operation, and of Whitelaw’s management, and the reports of Walter Potter and W. 8. Murray, and of necessity took an active part in the reorganization of Welfar Holdings Limited (Combined Estates Limited), and disposal through B.C. Estates Limited of the majority of the share holdings of himself and his associates. He certainly had an insider position throughout.
While it may well be that the late Donald F. Farris was more of a salaried executive and less of a promoter and trader than his brother Ralph K. Farris, there is not in my view sufficient difference in their background and activities to make a distinction between their respective intentions with respect to their acquisition and ultimate disposal at a substantial profit of their share holdings in Welfar Holdings Limited (Combined Estates Limited).
I consider this to have been an ‘‘adventure in the nature of trade’’ within the definition of Section 139(1) (e) of the Income Tax Act and hence the profits realized from same to be taxable by virtue of Sections 3 and 4 of that. Act.
The appeal from the Notice of Re-Assessment dated May 27, 1964, as amended by the Notice of Re-Assessment dated April 26, 1965, is therefore dismissed with costs.