ROBERTSON, C.J.O.:—This is an appeal, by way of Stated Case, from the decision of Judge Macdonell, of the County Court of the County of York, delivered on 27th July, 1945, whereby he confirmed the assessment of the appellant in respect of the sum of $55,000 of income received by it in 1939. There is no dispute that the appellant received the sum in question, and that that sum came to the appellant in the form of a dividend upon shares held by the appellant in another company, Tomlinson and Brodericks Limited. The question is whether the appellant, admittedly being liable to business assessment by the respondent under sec. 8 of the Assessment Act, was also liable to be assessed under sec. 9(1)(b) in respect of this sum of $55,000, as income not derived from the business in respect of which it was assessable under sec. 8.
The appellant carries on a general engineering and contracting business. It has wide powers that permit it, in carrying on its business, to enter into partnership or arrangements for sharing of profits, union of interests, co-operation, joint adventure with others, and to promote companies for taking over all or any of its property and liabilities, or for any other purpose that may seem calculated to benefit the appellant, directly or indirectly, and to hold shares in other companies with objects altogether or in part similar to those of the appellant, or carrying on any business capable of being conducted so as directly or indirectly to benefit the Company. I think it may be said safely that the appellant’s corporate powers were sufficient to have enabled it, either to do, itself, the work from which the $55,000 was derived, or to make the arrangements that in fact were made whereby the work was done by Tomlinson and Brodericks Limited in whatever relationship it shall be determined that the latter Company stood to the appellant under the arrangement hereinafter referred to.
The appellant, on 9th July, 1937, entered into a contract with the Hydro-Electric Power Commission of Ontario to execute, for the Commission, a work known as the Long Lac Diversion. The appellant in preparing and submitting its tender for the work, did so in association with two other Companies, Brodericks Contractors Limited and Broderick Brothers Limited, with the intention and the agreement with the Broderick Companies that in the event of the appellant being awarded the contract, the appellant and the two Broderick Companies would prosecute the work by joint effort.
To implement this intention and agreement a formal agreement was entered into on 5th October, 1937 between the appellant and the two Broderick Companies. By clause 1 of this formal agreement it was provided as follows :—
«(1) It is agreed that the prosecution of the work on Long Lac Diversion shall be done by ‘Tomlinson and Brodericks Limited, to which Corporation the said contract will be assigned by Tomlinson Construction Company Limited. ‘ ‘
When this agreement was made Tomlinson and Brodericks Limited was a company already incorporated, but under another name. When it was arranged to use that Company for the purpose of the contract with the Hydro Commission, the name of the Company was changed to Tomlinson and Brodericks Limited.
The agreement of 5th October, 1937 is of the first importance in the determination of this appeal. It is, however, much too long to quote in full, and I shall summarize only some of its more important provisions.
It was agreed that the Tomlinson Construction Company Limited, on the one hand, and the two Broderick Companies, on the other hand, should have equal representation on the Board of Directors of Tomlinson and Brodericks Limited, and should provide in equal amounts such funds as might be required for preliminary investigation of the work and site thereof, including all expenditures and commitments made to the date of the agreement, and to supply the working capital necessary to establish camps, transportation facilities, to pay for supplies and freight, labour and materials, and, in general, all costs of execution of the work, except as might be thereinafter noted, until contract progress estimate receipts made it self-sustaining.
The Tomlinson Construction Company Limited, on entering into the contract with the Commission had deposited its cheque for $103,106.25, being 10% of the tender price, and later had deposited with the Commission its further cheque for $343,- 687.50, in pursuance of a term of the contract with the Commission requiring that a cash payment of 50% of the amount of the contract price be deposited with the Commission. By the agreement of the 5th October the Tomlinson Construction Company Limited agreed to provide and maintain the cash or other security required by, and satisfactory to, the Commission, as stipulated in the contract. Both Tomlinson Construction Company Limited and the Broderick Companies agreed to supply plant and equipment for the prosecution of the work, as more particularly set out in the agreement, on the understanding that all plant and equipment items should, on the completion of their use on the contract, be returned to their Owners in good working order, subject to ordinary wear and tear. Costs of dismantling for car shipment, loading at point of origin and unloading, and intermediate handling and transport to the work, and similar items in outgoing return, on completion of the job were to be charged to the cost of the work under the contract. All costs of field and shop repairs required on the job to properly maintain the plant and equipment in good working condition were to be charged to the cost of the work, as were also any small tools and supplies furnished by the parties for the work. Any purchase of major plant and equipment items required specifically for this contract were to be determined on by agreement between the parties, and the cost of them was to be defrayed out of the working capital or receipts of the contract.
The agreement of the 5th October further provided that 100 shares of Tomlinson and Brodericks Limited should be issued as fully paid and non-assessable, 50% to the Tomlinson Construction Company Limited or its representatives, and 50% to Brodericks Contractors Limited or its representatives, "‘in consideration of working capital supplied and services rendered by the said latter Companies. ‘ ‘ The remaining 300 shares of Tomlinson and Brodericks Limited were to remain in the treasury of that Company subject to issue at the discretion of the full board of directors. The fact appears to be that there had already been issued 100 shares of the capital stock of Tomlinson and Brodericks Limited, which were held by W. S. Tomlinson, Sr., the President of the appellant Company. By arrangement he transferred 49 of these shares to W. B. Brodericks and one share to Frank Brodericks, and retained in trust for the appellant 49 shares in his own name, and one share in the name of another shareholder.
The last two clauses of the agreement of October 5th should be quoted in full. They are as follows :—
" ‘(14) In order that there may be a proper accounting record of the actual cost of the Long Lac Diversion work, there shall be a complete inventory made of the value of all equipment and supplies furnished for the work by the Companies represented by the parties hereto, at the time such items are delivered at Long Lac Station. For like purposes, accounts shall be rendered monthly, and set up in the cost records, showing the amount of actual interest charges on sercurities or monies supplied by the parties, and rentals for equipment supplied, at rates to be mutually agreed upon by the parties hereto. It is agreed, however, that there shall be no actual cash settlement of accounts for interest and plant rentals as such, but that compensation, if any, for these charges shall be included in the equal division between the parties hereto, of any cash surplus or profits from the work at its completion. Similarly, in case of loss on the contract, these accounts for interest and rentals shall be disregarded, and the actual cash loss borne equally by the said parties.
“ (15) The Broderick Companies agree to contribute one- half of any sum or sums of money which the Tomlinson Company may be called upon to pay by reason of it being primarily liable to the Hydro-Electric Power Commission of Ontario for the performance of the said contract dated the ninth day of July, 1937.”
The contract with the Hydro Commission was assigned on the 12th August, 1937 by the appellant to Tomlinson and Brodericks Limited. W. 8. Tomlinson, Sr., become President of Tomlinson and Brodericks Limited and W. B. Broderick become Vice-President. W. 8S. Tomlinson, Sr., was placed in control of the policy of Tomlinson and Brodericks Limited and made the final decisions. Frank Broderick became the working superintendent on the job, while W. B. Broderick did some supervising from time to time. No salary was paid to W. S. Tomlinson, Sr., or to W. B. Broderick, but Frank Broderick was paid a salary as superintendent.
Tomlinson and Brodericks Limited occupied a room at 21 King St. East in the building in which the appellant had its offices. Rent for this room was paid by Brodericks Contractors Limited, and in the final settlement of accounts a proportion of this rent and of the wages of a bookkeeper, were balanced against certain services that had been provided by the appellant.
The contract with the Hydro Commission was finished in October 1939, and in December of that year Tomlinson and Brodericks Limited declared a dividend, which resulted in the payment to the appellant of $55,000, being the sum in dispute.
The appellant was liable to business assessment for the year in which this sum was received, and was in fact actually assessed as a contractor under sec. 8 of the Assessment Act in respect of offices which it had at 21 King Street East, Toronto. Tomlinson and Brodericks Limited was assessed for business assessment in respect of a room rented by it at the same address. The appellant, being liable to business assessment, could be assessed only in respect of any income not derived from the business in respect of which it was assessable for business assessment under sec. 8. The question is, therefore, whether the $55,000 received by the appellant by way of dividend declared and paid by Tomlinson and Brodericks Limited, was income that was not derived from the business in respect of which the appellant was assessable for business assessment at its offices at 21 King St. East. The stated case says that this was the appellant’s head office, and was occupied and used by it for the purpose of carrying on its business.
It is plain, from the terms of sec. 9(1) (b) that it contemplates that a corporation may carry on a business within the meaning of sec. 8 and may occupy or use land for the purpose of that business, and may also be in receipt of income that is not derived from that business. While all the activities and transactions of a corporation within its corporate powers, may be broadly described as the business of the corporation, for the purposes of income assessment under sec. 9 of the Assessment Act, the sources of the corporation’s earnings or income may be capable of separation and classification, so that, for example, income derived from investments will be regarded as income not derived from the business carried on by the corporation at a particular place. This is illustrated by such cases as In re Toronto and John Northway & Son Limited (1923), 54 O.L.R. 81; In re Rogers Majestic Corporation Limited and Toronto, [1942] C.T.C. 239; [1943] C.T.C. 215; and Aluminum Co. of Canada v. Toronto, [1944] C.T.C. 1, and 155. It is not open to the appellant here to summarily conclude all argument by saying simply “We have only one business, that of general contractors, which our charter powers give us liberty to carry on or to engage in under many different arrangements and in different capacities or relationships, but it all comes within the description of the Company’s business.’’
On the other hand, it is not, necessarily, a conclusive argument on the part of the respondent to say that there is an express finding by the learned County Court Judge that the income in question was not derived from the business of the appellant company in respect of which it was assessable for business assessment under sec. 8, and that this is a finding of fact that this Court cannot review. No doubt, in Toronto v. Famous Players Canadian Corporation, [1985] O.R. 314; [1936] S.C.R. 141, the finding of the Ontario Munincipal Board as to the nature of the Company’s business was, in the circumstances of that case, regarded as a finding of fact and not to involve any question of law, and, consequently, the finding of the Municipal Board was not subject to review on appeal. As pointed out, however, by Masten, J.A. in his judgment in that ease, which was the judgment of the majority of the Court of Appeal, circumstances may exist where a question of law may be involved as well. That this is so is illustrated by the case of Rogers Majestic Corporation V. Toronto {supra),
I have referred to the foregoing propositions as they were raised in argument by the appellant and respondent respectively. A contention of the appellant based more particularly upon the special circumstances of this case, is that the income in question was derived from a contract executed by the appellant in cooperation with the two Broderick Companies, and that there was in fact a partnership existing into which the appellant had power to enter under the express terms of its Letters Patent. For the appellant it is further urged that even if there was not a partnership, there was, at least, a joint adventure on the part of the Companies that entered into the agreement of 5th October, 1937, and that under that agreement the execution of the work under contract with the Hydro Commission was done by Tomlinson and Brodericks Limited as the agent of the other Companies, and that the money paid them by way of dividend was, in truth, their own money, earned under the Hydro contract.
Whether income that a partner receives from the co-partnership business can, under any concievable circumstances, be regarded otherwise than as income not derived from a business that he carries on alone, and therefore assessable under sec. 9(1)(b) of the Assessment Act, is, I think, open to grave question. In my opinion the terms of the agreement of 5th October, 1937 are such that the question does not arise. The respective parties of the First and Second Parts in that agreement were neither of them making the other its agent in performing the contract with the Hydro Commission, as would be of the very essence of a partnership arrangement. Neither were they mak- ing Tomlinson and Brodericks Limited their agent for that purpose. The obligations they respectively undertook the one to the other, they defined in their agreement, and they avoided the undertaking of responsibility for any debts or liabilities to others that might arise in the execution of the work, except the obligations to the Hydro Commission, which, by reason of the contract and of the security that had been put up, were unavoidable. As to obligations to the Hydro Commission, express provision was made in the last clause of the agreement of 5th October, 1937, that the Broderick Companies would contribute one-half of any sum or sums of money that the Tomlinson Company might be called upon to pay by reason of it being primarily liable to the Hydro Commission for performance of the contract. The absence of any provision for contributing in respect of any other liabilities is significant of their understanding that they did not assume any others.
The assignment of the Hydro contract to Tomlinson and Brodericks Limited, with the agreement that the prosecution of the work on Long Lac Diversion should be done by it, the acceptance of shares in that Company, fully paid and nonassessable, in consideration of working capital supplied and services rendered by the other Companies, with the provision that no new shares should be issued except at the discretion of the full board of directors, the equal division of the issued shares between the Companies, and the provision for equal representation on the board of directors are all, to my mind, significant of an intention that Tomlinson and Brodericks Limited should become the principal, and not a mere agent, in the prosecution of the work under contract with the Hydro Commission, and that' the appellant and the two Broderick Companies should protect their interests and exercise control of Tomlinson and Brodericks Limited as its shareholders and directors, rather than as principals towards an agent. No doubt, there are a number of the provisions of the agreement of 5th October, 1937 that would be equally appropriate and useful whichever relationship it was intended should be created, but reading that agreement as a whole, I am of the opinion that the contract made with the Hydro Commission was assigned to Tomlinson and Brodericks Limited with the intention that the carrying out of that contract should be its business.
For these reasons I would answer the question asked in the Stated Case in the affirmative.
The respondent is entitled to its costs of the appeal.
GILLANDERS, J.A., Roach, J.A.:—I agree.