The Courts and the Development of Trade in Upper Canada, 1830-1860 Author(S): Peter George and Philip Sworden Source: the Business History Review, Vol

The President and Fellows of Harvard College

The Courts and the Development of Trade in Upper Canada, 1830-1860 Author(s): Peter George and Philip Sworden Source: The Business History Review, Vol. 60, No. 2 (Summer, 1986), pp. 258-280 Published by: The President and Fellows of Harvard College Stable URL: http://www.jstor.org/stable/3115309 Accessed: 10-02-2017 14:35 UTC

REFERENCES Linked references are available on JSTOR for this article: http://www.jstor.org/stable/3115309?seq=1&cid=pdf-reference#references_tab_contents You may need to log in to JSTOR to access the linked references.

JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range of content in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new forms of scholarship. For more information about JSTOR, please contact [email protected].

Your use of the JSTOR archive indicates your acceptance of the Terms & Conditions of Use, available at http://about.jstor.org/terms

The President and Fellows of Harvard College is collaborating with JSTOR to digitize, preserve and extend access to The Business History Review

This content downloaded from 129.100.49.67 on Fri, 10 Feb 2017 14:35:48 UTC All use subject to http://about.jstor.org/terms The Courts and the Development of Trade in Upper Canada, 1830-1860

PETER GEORGE AND PHILIP SWORDEN

? The centrality of transportation improvements andfinancial institutions to the economic development of Upper Canada in thefirst half of the nineteenth century is well known. In this article, Professor George and Mr. Sworden argue that the evolving legal system and legal institutions also played an important role as part of the infrastructure contributing to increased economic efficiency. In support of their thesis, they draw on court decisions on contract and property law, primarily from the judicial career of Sir John Beverley Robinson, chiefjustice of the Court of Queens Bench for Upper Canada from 1829 to 1862.

Economic historians readily acknowledge the importance of social overhead capital in providing a framework within which directly productive investments can take place. They portray such infrastructural investments as "enabling" conditions in the growth process, often valuable for their own private profitability, but more commonly for the significant externalities that they generate. The role of infrastructural investments in the economic development of Upper Canada (Canada West after the Act of Union in 1841, renamed Ontario at Confederation in 1867) has generally been limited to analyses of transportation and financial institutions. The economic history of Upper Canada is still typically interpreted within the staples approach, with most emphasis being placed on timber, wheat, and flour as the leading export sectors propelling the colonial economy.1 Transportation improvement-first in the road and canal networks, and after 1850 in the development of the railway grid-lowered the real costs of moving commodities. Development of transportation fa- cilities is therefore seen as a precondition for investment in staple pro-

PETER GEORGE is dean of social sciences and professor of economics at McMaster University; PHILIP SWORDEN is a lawyer practicing in Hamilton, Ontario.

The authors have benefited greatly from Douglas McCalla's knowledge of the conduct of nineteenth- century business. They would like to thank F. T. Denton, Richard S. Tedlow, and two anonymous referees of the Business History Review for their helpful comments. An earlier version of this paper was presented at the annual meeting of the Social Science History Association, October 1984.

A recent contribution is John McCallum, Unequal Beginnings: Agriculture and Economic Develop- ment in Quebec and Ontario Until 1870 (Toronto, 1980). For a more skeptical assessment of the staples model, see Douglas McCalla and Peter George, "Measurement, Myth, and Reality: Reflections on Ap- proaches to the Economic History of Nineteenth-Century Ontario," Research Program for Quantitative Studies in Economics and Populatioh Working Paper No. 138, McMaster University (July 1985): 2-6.

Business History Review 60 (Summer 1986). ? 1986 bv The President and Fellows of Harvard College.

This content downloaded from 129.100.49.67 on Fri, 10 Feb 2017 14:35:48 UTC All use subject to http://about.jstor.org/terms GEORGE and SWORDEN: CANADIAN COURTS AND TRADE 259 duction and, consequently, as an important element in expanding the area from which staple commodities were drawn into the commercial system of the St. Lawrence. The establishment of financial institutions has also been credited with an important role in expanding the reach of the colonial economy; by lowering the real costs and risks of capital mobilization and lending, they facilitated the flow of capital and contributed to the growth of trade. The legal system and legal institutions represent the authoritative context within which business is conducted, and as such they have had a significant, but much less explored, impact on the economics of trade in Canada. The adoption by Upper Canada of the basic principles of British contract and property law and their subsequent refinement to meet local conditions, and the establishment and evolution of legal institutions, particularly the courts, to enforce the law, led to reduc- tions in risk and in transaction costs (that is, costs of doing business) for people engaged in business.2 The law and its enforcement consti- tuted important infrastructural elements contributing to increased economic efficiency in Upper Canada in the mid-nineteenth century.3 The relationship between the law and economic development has been a rapidly expanding area of study in the United States.4 Relatively little work, however, has been done in Canada, with the exception of a fine series of articles on the law and economy of Canada West, 1841- 67, by R. C. B. Risk.5 According to Risk, by 1860 a comprehensive public philosophy had emerged in Canada West that regarded economic progress, especially resource exploitation, as a public good, to be achieved primarily by private initiative facilitated where possible

2 In the conduct of business, real resources are employed in obtaining information and enforcing contracts. Much of the economics of allocative efficiency is predicated on the assumption that transactions are costless, and that information about costs and prices is freely available. In fact, transaction costs are positive and represent an impediment to the working of competitive markets and the achievement of economic efficiency-hence, the recent upsurge of interest in transaction cost economics. The most interesting application, from the perspective of a business historian, is Oliver E. Williamson's examination of the bases of vertical integration. See, in particular, Markets and Hierarchies: Analysis and Antitrust Implications (New York, 1975) and "The Modern Corporation: Origins, Evolution, Attributes," Journal of Economic Literature 19 (1981): 1537-68. 3 When resources are being employed where their value is highest, they are being employed efficiently; they are producing the largest possible output. Transaction costs are sources of inefficiency. 4 See, among others, Morton J. Horwitz, The Transformation of American Law 1780-1860 (Cam- bridge, Mass., 1977) and James Willard Hurst, Law and Markets in United States History (Madison, Wis., 1982). Richard A. Posner, Economic Analysis of Law, 2d ed. (Boston, 1977) provides an excellent standard treatment of the relationship between the law and economic reasoning. 5 R. C. B. Risk, "The Nineteenth-Century Foundations of the Business Corporation in Ontario," University of Toronto Law Journal 23 (1973): 270-306; "The Golden Age: The Law about the Market in Nineteenth-Century Ontario," ibid. 26 (1976): 307-46; "The Last Golden Age: Property and the Alloca- tion of Losses in Ontario in the Nineteenth Century," ibid. 27 (1977): 199-239; "The Law and the Econ- omy in Mid-nineteenth Century Ontario: A Perspective," ibid.: 403-38. More recently, David Flaherty has provided a comprehensive assessment of the state of Canadian legal history, including some pointed comments on the legal history of Upper Canada in particular. See David H. Flaherty, ed., Essays in the History of Canadian Law (Toronto, 1981), 1:3-42.

This content downloaded from 129.100.49.67 on Fri, 10 Feb 2017 14:35:48 UTC All use subject to http://about.jstor.org/terms 260 BUSINESS HISTORY REVIEW

SIR JOHN BEVERLEY ROBINSON Shown here during the 1850s, Robinson served as chiefjustice of the Upper Canada Court of Queen's Bench from 1829 to 1862. Deeply concerned with the commercial prosperity of the colony, he presided over many court cases involving contract and property disputes. (Photograph reproduced from C. W. Robinson, Life of Sir John Beverley Robinson [Toronto, 1904].)

This content downloaded from 129.100.49.67 on Fri, 10 Feb 2017 14:35:48 UTC All use subject to http://about.jstor.org/terms GEORGE and SWORDEN: CANADIAN COURTS AND TRADE 261 by government support. Although the Legislative Assembly was ag- gressive in promoting economic change, Risk concluded that the Ca- nadian courts, based in the English common law, were content to ac- cept and apply settled law favorably for commerce when possible, but were reluctant to promote change in the law to encourage economic development.6 Without questioning this conclusion, it is important to examine the way in which contemporaneous court decisions reflected basic economic principles of resource allocation; these decisions can then be evaluated in terms of their consistency with the goal of increasing economic efficiency. These issues are examined here by focusing on the judicial career and decisions of Sir John Beverley Robinson. Born in 1791 into a Loy- alist family whose members were refugees from the American Revo- lution, Robinson had a remarkable career.7 Fatherless at seven, he became attorney general of Upper Canada when he was only twenty-one, before he was even called to the bar; he was named solicitor general in 1815, and reappointed attorney general from 1818 to 1829. In 1821 he was elected a member of the Provincial Assembly for York. In 1829, Robinson became chief justice of the Court of King's (later Queen's) Bench for Upper Canada-then the youngest chief justice ever to sit in a British court of law-where he presided until 1862. As Risk has noted, since Upper Canada was a newly developing territory where there were no tribunals or administrative boards, few large corpora- tions capable of making far-reaching economic decisions, and no rou- tine standards for contracts and other legal forms in the province, Rob- inson was in a position to influence the economy through his legal decisions in a way perhaps not possible today. He wrote the majority of the decisions, and his judgments reflected an awareness of the need to settle important issues relating to trade. Robinson believed that commercial prosperity was the cornerstone of social progress. During his tenure on the bench, he did much to help Upper Canadian commerce run smoothly in conjunction with the wider needs of the St. Lawrence system as a whole.

6 Risk, "The Law and the Economy," 420; Risk's view supports the Hurstian notion that the law is essentially responsive to social and economic needs and serves to legitimate changes that are initiated outside the law, and denies Horwitz's emphasis on "instrumentalism" whereby legal institutions were adapted consciously to expedite the process of economic change. A persuasive attack on "instrumentalism" is John Griffiths, "Is Law Important?" New York University Law Review 54 (1979): 339-74. 7 Little has been written about Robinson. Most recent is Patrick Brode, SirJohn Beverley Robinson: Bone and Sinew of the Compact (Toronto, 1984). Also see C. W. Robinson, Life of Sir ohn Beverley Robinson (Edinburgh, 1904); the chapter on Robinson in D. B. Read, The Lives of the Judges of Upper Canada and Ontario (Toronto, 1888); and Julia Jarvis, Three Centuries of Robinsons: The Story of a Family (Don Mills, Ont., 1967). T. Cook, "John Beverlev Robinson and the Conservative Blueprint for the Upper Canadian Community," Ontario History 64 (1972): 79-99, is an interesting account of Robin- son's social and political views.

This content downloaded from 129.100.49.67 on Fri, 10 Feb 2017 14:35:48 UTC All use subject to http://about.jstor.org/terms 262 BUSINESS HISTORY REVIEW

SHAPING THE COLONIAL ECONOMIC AND LEGAL SYSTEM

The broad contours of the economic development of the St. Law- rence basin during the pre-Confederation era can be reviewed briefly. Upper Canada received its first influx of European population in the early 1780s with the migration of British Loyalists from the United States. Fed by subsequent immigration from the United States and Great Britain, the population grew, haltingly at first to reach 60,000 in 1810, and then rapidly to 1.4 million by 1860. The colony was initially part of Quebec, which was divided into Upper and Lower Canada by the Constitutional Act of 1791. Agriculture was the cornerstone of the economy, and land under cultivation to wheat and mixed crops increased apace with settlement. Wheat exports are reported as early as 1801-2, but the major expansion of wheat and flour exports occurred in the 1840s and 1850s, when they were significant contributors to farm cash incomes. After 1800, timber exports were stimulated by the Brit- ish government's enactment of differential duties favoring colonial timber, which then became a major source of income in Upper Canada. Since wheat and timber were produced mainly for markets in Lower Canada and Great Britain, both staples stimulated the development of transportation and financial infrastructures, as well as induced the growth of domestic industry. Merchant groups and elected and ap- pointed officials alike concerned themselves with questions of transportation and commercial policy designed in the main to speed the flow of local, intercolonial, and international commerce.8 For businesspeople in Upper Canada, progress on two basic issues was of the utmost importance. The avoidance of risk was a critical in- gredient in the successful conduct of nineteenth-century business. Risks were high primarily because people lacked concrete information upon which to base sound business decisions, and also because institutional rigidities helped convert minor liquidity problems into wide- spread commercial crises. Economic vulnerability to the vagaries of world markets was exacerbated by the chain of long-term credit-from British suppliers of manufactured goods, to wholesale merchants, to retail merchants, and on to their customers in rural and small-town Upper Canada. Risks were kept to a tolerable level by judicious selec- tion of partners, agents, and employees, often drawn from the mer-

8 See Donald Creighton, The Empire of the St. Lawrence (Toronto, 1956), G. N. Tucker, The Cana- dian Commercial Revolution, 1847-1851 (Toronto, 1964), and G. J. J. Tulchinskv, The River Barons: Montreal Businessmen and the Growth of Industry and Transportation, 1837-53 (Toronto, 1977). The initial period of economic development after the first Loyalist migration is captured in Douglas McCalla, "The 'Loyalist' Economy of Upper Canada, 1784-1806," Histoire Sociale/Social History 16 (1983): 279- 304. The most persuasive statement of the wheat staple's importance is McCallum, Unequal Beginnings, chaps. 1, 2.

This content downloaded from 129.100.49.67 on Fri, 10 Feb 2017 14:35:48 UTC All use subject to http://about.jstor.org/terms GEORGE and SWORDEN: CANADIAN COURTS AND TRADE 263 chant's extended family. Yet the system remained fraught with error.9 The necessity of relying on family or personal relationships can be re- duced by the availability of social institutions to enforce private contracts, including ready access to legal remedies. Such institutions provide substitutes for the authority, assurances, and sanctions identified with family-centered transactions, and increase the likelihood of exchange over a wider range of trading parties.10 Increasing the efficiency of enterprise by reducing the costs of doing business, thereby increasing the likelihood of profits, was the second basic concern of Upper Canadian businesspeople during this period. Here, they could look to the state for assistance. According to Douglass North, the state has fundamental responsibility for defining the "rules of the economic game" by establishing basic rules of competition and cooperation, and by producing "a set of public goods and services designed to lower the costs of specifying, negotiating, and enforcing contracts which underlie economic exchange." Such public goods include a system of uniform weights and measures, property rights to encourage trade and production, a judicial system to settle disputes, and a procedure for enforcing contracts." The two primary agencies that deal with such matters are the legislature and the courts. The role of legislatures in the evolution of property rights is the more straightforward, since governments are expected to respond to public pressure for economic advancement. Two examples come readily to mind. In the area of commercial policy, both the Canadian Leg- islative Assembly and the British government responded to public needs by passing various Canada Trade and Canada Corn Acts from the 1820s to the 1840s to complement the British Corn Laws, while steering carefully between the contending views of merchants and ag- riculturists.12 The institutional innovation of the corporate form during the 1840s ahd 1850s, first by individual statute and then by general statute, was a response to perceived needs for larger, more ambitious transportation, banking, mining, and manufacturing firms. 13 Most economic legislation in pre-Confederation Upper Canada concerned transportation and natural resources.

9 This nexus is neatly described in Douglas McCalla, The Upper Canada Trade 1834-1872: A Study of the Buchanans' Business (Toronto, 1979). McCalla reminds us that the general store was the fundamental economic institution in Canada at the foot of the long-credit pyramid, selling all forms of imported merchandise, acting as a conduit for export commodities, and serving as the principal source of local credit. A review of the Buchanans' agents and partners testifies to the uses of family. 10 An interesting analysis of the role of family affiliation in reducing transaction costs and stimulating trade is Yoram Ben-Porath, "The F-Connection: Families, Friends, and Firms and the Organization of Exchange," Population and Development Review 6 (1980): 1-30. 11 Douglass C. North, Structure and Change in Economic History (New York, 1981), 24, 43. 12 Creighton, Empire of the St. Lawrence; Tucker, Canadian Commercial Revolution. 13 Risk, "Foundations of the Business Corporation."

This content downloaded from 129.100.49.67 on Fri, 10 Feb 2017 14:35:48 UTC All use subject to http://about.jstor.org/terms 264 BUSINESS HISTORY REVIEW

The performance of the courts is more complicated to explain, however, and that of individual justices even more so. In 1792, Upper Canada adopted English law, and two years later established the Court of King's Bench as its superior court with both civil and criminal jurisdiction. A Court of Chancery to deal with matters of equity was established in 1837, and King's Bench was renamed Queen's Bench in 1839. The legislative union of 1841 did not include a corresponding amal- gamation of the Upper and Lower Canadian courts. Under the judicial reforms of 1849, a second superior court, the Court of Common Pleas, was established to have equal jurisdiction with the Court of Queen's Bench. Nevertheless, Queen's Bench retained its primacy throughout the 1850s.14 The common law of Upper Canada was essentially copied from En- glish law for reasons of constitutional obligation, loyalty, habit, and convenience.15 In cases where English rulings were available or En- glish precedent was clear, a decision was invariably made without reference to other jurisdictions. On the other hand, where no appropriate English case law existed or where English conditions were markedly different from those in Canada, the experience of American courts was occasionally considered. Canadian environmental conditions, notably geographic factors such as distance and natural resources, also influenced the law. The development of doctrine on the navigability of rivers presents a prime example. In general, the application of English law was affected by Up- per Canadian conditions, but not strongly enough, according to Risk, to warrant a "frontier" thesis of Canadian law. An environmentalist approach must therefore be tempered by a recognition that legislation rather than the common law was the normal route for the accommo- dation of distinctive Canadian geographic characteristics.16 A third factor bearing on judicial decisions was the personal background and character of the judges themselves. Risk has pointed out that many judges in Upper Canada were members of powerful interest groups; many were Loyalists who had attended school and practiced law in Upper Canada, and more than half had been involved in politics. Mid-nineteenth-century Canadian judges were steeped in knowledge about the workings of the economy, and their decisions reflected their familiarity with commercial transactions and organizations, particularly in the grain trade and land dealings.17 John Beverley Robinson was cast in this mold.

14 See Margaret A. Banks, "Evolution of the Ontario Courts 1788-1981," in Essays in the History of Canadian Law, ed. David H. Flahertv (Toronto, 1983), 2: 492-572. 15 Risk, "Last Golden Age," 237. 16 Ibid., 239. 17 Risk, "The Law and the Economy," 407.

This content downloaded from 129.100.49.67 on Fri, 10 Feb 2017 14:35:48 UTC All use subject to http://about.jstor.org/terms GEORGE and SWORDEN: CANADIAN COURTS AND TRADE 265

As a Loyalist, a prominent member of the Family Compact, and chief justice, Robinson's avowed purpose was to help maintain a politically and economically independent British-based society on the bor- ders of America.'8 His preoccupation with the economic environment and its interrelationship with social and political affairs is clearly expressed in his letters and public writings.19 He feared the threat to Canada posed by America and offered prescriptions for the continuing security of Canada within the British Empire. He believed that Can- ada's future within the empire depended upon providing a stable and secure environment for the British enterprise, capital, and emigration which were essential for social and economic progress in Canada. But, he argued, Upper Canada was a viable British colony only with British support; independence was impracticable because Canada could not survive as a sovereign power on an American continent.20 Robinson acknowledged the necessity for the division of the Canadas in 1791 because of the sheer size of the territory and the French "problem," but he insisted that it was a mistake not to have removed Mon- treal from Lower Canada and attached it to Upper Canada. Strongly opposed to Union, Robinson would have preferred to extend the boundaries of Upper Canada to include the island of Montreal, thereby giving Upper Canada a seaport and providing a source of revenues for Upper Canada to improve the St. Lawrence system. If instead of Union the boundary line were revised, Robinson concluded, Upper Canada would be able "to regulate its Import and Export trade," "to increase her Revenue," "to carry through the improvement of the Riv- ers St. Lawrence and Ottawa, in such a manner as to be highly advan- tageous to the Trade of both Provinces, and to the interests of the Mother Country." In sum, "It would give them the encouraging pros- pect of becoming rapidly a prosperous people, and would leave them nothing to desire or to regret-and nothing to envy in the condition of any other Country."2' For Robinson, a British future for Upper Canada was predicated on a political settlement in 1841 that would promote the rapid return of commercial prosperity. As a private citizen, Robinson was an active participant in and en-

18 The Family Compact was a Loyalist elite who shared a common background and ideology: they were pro-British, anti-American, and held conservative political, social, and economic views. See R. E. Saunders, "What Was the Family Compact?" Ontario History 49 (1957): 173-78, for a brief review. 19 The most significant surviving documents are John Beverley Robinson, "A letter to the Right Hon. Earl Bathurst, K. G. on the Policy of Uniting the British North-American Colonies" (London, 1825), reprinted in Four Early Pamphlets on the Subject of Confederation and Union of the Canadas (Toronto, 1967); three letters from Robinson to the Right Hon. the Marquis of Normanby, Her Majesty's Secretary of State for Colonies, 23 Feb., 9, 29 March 1839, MS 4, reel no. 5, Robinson Papers, Public Archives of Ontario; and Robinson's Canada and the Canada Bill ([1840], New York, 1967). 20 Robinson, The Canada Bill, 21. 21 Robinson, letter to Normanbv, 9 March 1839, fol. 32; The Canada Bill, 136; Robinson, letter to Normanby, 9 March 1839, fols. 45-47.

This content downloaded from 129.100.49.67 on Fri, 10 Feb 2017 14:35:48 UTC All use subject to http://about.jstor.org/terms 266 BUSINESS HISTORY REVIEW

; I' _ r i A DOCKSIDE AUCTION, 1867 J. G. Shipway, auctioneer, is shown here conducting an auction on the docks of Mon- treal. As the leading port on the St. Lawrence, Montreal was the center of English- Canadian commercial activity during the nineteenth century. (Photograph courtesy of the Notman Photographic Archives, McCord Museum, McGill University, Montreal.) thusiastic supporter of many of the major entrepreneurial ventures of the day. He was a strong proponent of efforts to develop the Welland Canal in the mid-1820s and coauthored a report on internal navigation that advocated a program of canal-building; he invested personally in the Welland Canal Company, and he proposed the construction of a colony-wide highway in 1828.2 He was quick to acknowledge the importance for commercial growth of the telegraph and the railway, as some of his later decisions attest; indeed, his apparent leniency toward J. G. Bowes, mayor of Toronto, in a celebrated conflict of interest case in the mid-1850s has been interpreted as the product of his anxiety that Toronto's economic position was endangered by delays in the construction of the Northern Railroad.23 Robinson had extensive real es-

22 Brode, Sir John Beverley Robinson, 120-21, 153; C. W. Robinson, Life, 329-31. 23 See Peter A. Baskerville, "Enterpreneurship and the Family Compact: York-Toronto, 1822-1855," Urban History Review 9 (1981): 15-34. For a different view, see Paul Romney, "'The Ten Thousand Pound Job': Political Corruption, Equitable Jurisdiction, and the Public Interest in Upper Canada 1852-6," in Flaherty, Essays, 2: 143-99.

This content downloaded from 129.100.49.67 on Fri, 10 Feb 2017 14:35:48 UTC All use subject to http://about.jstor.org/terms GEORGE and SWORDEN: CANADIAN COURTS AND TRADE 267 tate holdings; he owned a large property in the southern part of To- ronto Township where his tenants were wheat growers, and his family had substantial holdings in Simcoe County. He was also one of the founders, in 1837, of the Upper Canada Club, where members of the gentry and the merchant class could fraternize and discuss the issues of the day.24 As a public figure, Robinson believed that economic, social, and political progress were inextricably intertwined. Privately, he was at- tuned to the business affairs of the day, and his financial fate and that of his family were bound up in the land market and the wheat trade. The Court of King's (Queen's) Bench for Upper Canada had jurisdiction over the fastest growing part of Canada and one of Canada's richest areas. Upper Canada occupied an important place in the St. Lawrence commercial system: many businessmen and settlers were participants in a classic staple economy, producing natural resource products and transporting them to outside markets, particularly to Lower Canada and to Britain. The growing standardization of commercial transactions and the gradual adaptation of contract law to reflect local business conditions by justices familiar with the local economy contributed to increased efficiency in the Upper Canadian economy by reducing transaction costs. The following sections examine the evolving relationship between the law and the economy, using illustrative cases.25

CONTRACT LAW AND ECONOMIC EFFICIENCY

Exchange is the process whereby resources are reallocated from lower- to higher-valued uses. According to basic economic principles, exchange is voluntary, predicated on the conception of man as a ra- tional maximizer of self-interest: parties to exchange act from mutual advantage. The basic functions of the law of contracts are to facilitate, and to minimize breakdowns in, the process of exchange. The law es- tablishes the normal terms of conducting business and eliminates the need for the parties to negotiate terms specifically, thereby reducing the complexity of contracting. The system needs an occasional prod in the form of legal sanctions that can be applied to parties who fail to carry out the terms of their agreement. Without formal contracts and

24 See David Gagan, Hopeful Travellers: Families, Land, and Social Change in Mid-Victorian Peel County, Canada West (Toronto, 1981), 26-29, and Brode, SirJohn Beverley Robinson, 240-41. Romney, "'The Ten Thousand Pound Job."' 181-82, points out that Robinson's motives in the Bowes case may not have been entirely selfless, since the construction of the Northern was bound to increase the value of the Robinson family's holdings in Simcoe County. Brode, Sir John Beverley Robinson, 188-89. 25 The cases cited are drawn mainly from the Court of Queen's Bench under Chief Justice Robinson. A heavy reliance on these decisions in inescapable since Queen's Bench was the principal superior court and since Robinson dominated the Court and wrote the majority of its decisions during his long career.

This content downloaded from 129.100.49.67 on Fri, 10 Feb 2017 14:35:48 UTC All use subject to http://about.jstor.org/terms 268 BUSINESS HISTORY REVIEW

COBURG, 1840 Coburg was typical of many small ports along the north shore of Lake Ontario that shipped wheat, flour, and timber down the St. Lawrence system to markets in Lower Canada and Great Britain and across the lake to American ports. (From a drawing by W. H. Bartlett in N. P. Willis, Canadian Scenery Illustrated in a Series of Views by W. H. Bartlett [London, 1842].) recourse to legal action, exchanges would be riskier and more costly, because greater uncertainty would adversely impinge upon the efficiency of exchange by increasing transaction costs.26 The emphasis in the staple trades on transportation and marketing of basic commodities meant that the principles of contract law were very important. The law of contracts, as transferred from England to Upper Canada, had fewer precedents to bind the courts than did property law, and consequently judges were able to allow for local business conditions and practices in their decisions. Increased commercial activity after 1830 led to greater reliance on contracts. In the United States the emergence of a national commodities market in the nineteenth century, as Morton Horwitz has noted, implied that "the function of contracts . . . shifted from that of simply transferring title to a

26 Posner, Economic Analysis of Law, 67-69.

This content downloaded from 129.100.49.67 on Fri, 10 Feb 2017 14:35:48 UTC All use subject to http://about.jstor.org/terms GEORGE and SWORDEN: CANADIAN COURTS AND TRADE 269 specific item to that of ensuring an expected return."27 Courts then, for the first time, were becoming conscious of the need to stress cer- tainty of performance as a goal for contract law, so that merchants marketing their goods by contract could expect with some confidence the results for which they had bargained. The impact of many court decisions in Upper Canada was to clarify the obligation of businesspeople to represent accurately the quality of their products, hence reducing uncertainties and information costs to their customers. Against the broad background of the grain trade, for example, the significance of decisions regarding a miller's responsibility for accurate labeling of his flour for market is clear. In Bunnel v. Whitlaw, a miller in Paris sold his flour to a flour dealer in Brantford, who in turn sold it to a purchaser in the United States, guaranteeing it to be "Victoria Extra" in quality. When an inspector at Buffalo concluded that the flour was only low grade, superfine flour, and not extra superfine, the dealer in Brantford had to compensate the purchaser, and claimed damages against the miller in Paris. The Court held for the dealer, Justice Robinson commenting:

. . .when parcels of flour are passed from one to another among merchants, the use of such words as descriptive of the article sold does not make the vendor liable as upon a warranty. The vendor is understood to sell the lot according to the designation by which he has received it; and where no description is used he is not considered liable for any deficiency in quality, unless indeed he has given an undertaking that it shall pass inspection as of the quality mentioned in the brand, or shall in truth be of that quality. But it is different in the case of a person buying from one who manufactures the article, because the quality of the article, and the use of the brand, are under his control. 28

Similarly, in Bain v. Gooderham, a miller near Toronto sold flour to be shipped down the St. Lawrence to Montreal, guaranteeing it to be "No. 1 Superfine," normally understood in the trade to be sweet flour. However, although the flour was "No. 1 Superfine" in grade, it was sour, and in Robinson's opinion, when flour was guaranteed to inspect at a particular grade, the guarantee also implied that the flour would be sweet. To Robinson, the "common sense of the thing" and its effect on commerce generally were the important matters. In Chisholm v. Proudfoot, Robinson again held that a miller who manufactures flour and labels it of particular quality has given a warranty of that quality. In fact, he took pains to state the pleadings and evidence "because the

27 Brode, Sir John Beverley Robinson, 240-41; Morton J. Horwitz, "The Historical Foundations of Modern Contract Law," Harvard Law Review 87 (1974): 918. 28 (1856), 14 Upper Canada Court of Queen's Bench [hereafter, Q. B.], 248. See also George v. Glass (1857), 14 Q.B., 514.

This content downloaded from 129.100.49.67 on Fri, 10 Feb 2017 14:35:48 UTC All use subject to http://about.jstor.org/terms 270 BUSINESS HISTORY REVIEW

questions presented in such cases are so important to persons engaged in this branch of trade that the ground on which we decide them ought to be clearly understood."29 The written form of contract was emphasized, and parol evidence (oral testimony qualifying or contradicting the terms of a contract) was flatly rejected. In Bradbury v. Oliver, Robinson held in a short judgment that "there is no principle of law more clearly established than the one which prohibits the terms of a written instrument adopted by the contracting parties from being changed or qualified by parol testimony where no fraud exists."30 The Court was worried about perjury and possible undermining of the Statute of Frauds. The Court's deep- seated reluctance to allow parol evidence-except to explain ambigu- ous terms and enforcement of independent agreements-was made explicit by Robinson in The Bank of Upper Canada v. Boulton: "I do not refer to any authority, for the general principle that the terms of a written contract are not to be varied or controlled by parol testimony, for there is no point that stands more clear or is sustained by more numerous decisions. . ."31 Yet oral rather than written contracts were undoubtedly the norm throughout much of this period. Tradition and custom were still fundamental to the actual conduct of business, and the usual form of transaction was recorded in trade account books rather than in formal contracts. But when difficulties arose during recessions or the collapse of particular markets, businesspeople were likely to seek recourse to legally specified forms for securing debts; then opportunities were most ripe for tidying up many of the legal loose ends in trade. The Upper Canadian grain trade is a probable case in point. Many grain cases were referred to the court in and after 1857. The collapse of grain prices in 1856 must have posed serious difficulties for merchants with futures contracts, and they appear to have sought means of avoiding fulfilling ruinous contracts that required them to take delivery at much higher prices than prevailed by the time the grain actually arrived. Unexpected events arising after a contract was made often led to nonperformance of the contract and to litigation. Three such cases involving the shipment of produce, for example, were decided by Rob- inson from 1853 to 1856. In Wilmot v. Wadsworth, Wilmot purchased 1,100 bushels of flour from Wadsworth, subject to its being delivered in good condition. The shipment to Wilmot became soaked by rain, so

29 (1857), 15 Q.B., 33; (1857), 15 Q.B., 210. 30 (1848), 5 Q.B. (O.S.), 704. 31 (1850), 7 Q.B., 244. See also McQueen v. McQueen (1852), 9 Q.B., 538, where Robinson notes ". .. the wisdom of the rule which does not allow the terms of a written instrument to be contradicted bv parol evidence of something else being intended than was expressed. " Also, Mason v. Brunskill (1857), 15 Q.B., 300; Logan v. Stranahan (1854), 12 Q.B., 15.

This content downloaded from 129.100.49.67 on Fri, 10 Feb 2017 14:35:48 UTC All use subject to http://about.jstor.org/terms GEORGE and SWORDEN: CANADIAN COURTS AND TRADE 271 that Wilmot received it in a damaged state. Wilmot sought to recover damages and succeeded. In Gooderham v. Marlatt, Gooderham advanced money to Marlatt, who was to ship wheat to Gooderham in Oswego. The wheat was lost in passage, and Marlatt was required to refund the sum advanced to him, for Robinson held that the wheat was still his property.32 In the third case, Jarvis v. Dalrymple, subcontrac- tors for the Great Western Railway unexpectedly refused to abide by an express condition in their contract to be paid according to the estimate of the railway company's engineer. They were held liable for their default, Robinson feeling strongly that "it is of consequence that parties should be held to the terms of their contract, or no one would be able to proceed with confidence in executing the works which are now in progress, and which are so important to the community."33 Hadley v. Baxendale, an English precedent decided in 1854, provided the general rule that not all losses would be compensated, but only those reasonably expected to arise from breach of contract.34 In Stevenson v. The Montreal Telegraph Co., Stevenson brought an action for negligence against the telegraph company for not sending with care and due promptness a message by telegraph from Hamilton to New York City, whereby Stevenson lost the advantage of having his flour sold at a profit. Holding that the telegraph company could not be responsible for delays beyond its own lines, Robinson concluded that the telegraph company was not liable because "these were damages not reasonably to be supposed to have been within the contemplation of the parties in transacting the business in question ..." Important too was Robinson's desire to protect the usefulness of telegraph companies, and not to burden them with costly lawsuits. Hence, in King- horne v. The Montreal Telegraph Co., Robinson held that no damages could be awarded the plaintiff, stating that it was unjust to allow a thirty-cent lhessage, delivered carelessly, to "swallow up the profits [of the company] for years."35 Contemporary judges were aware of the broader workings of the St. Lawrence trading network, and Robinson often took judicial notice of the "general usage of trade" to support his judgments.36 More generally, when a judge upholds the customary practices of a particular trade

32 (1853), 10 Q.B., 594. Robinson said, ". .. it was the duty of the defendants, who had engaged to deliver the flour on board in good condition at their own charge, to take care that it was either not taken from the warehouse sooner than was necessary, or that it should be protected against injury from the weather on its way." (599); (1856), 14 Q.B., 228. 33 (1854), 11 Q.B., 399. Also, see Johnson v. Crew (1835), 5 Upper Canada Court of King's Bench [hereafter, K.B.] (O.S.), 200; Barton v. Fisher (1846), 3 Q.B., 75; Elliott v. Hewitt (1854), 11 Q.B., 292. These cases involved unexpected events concerning house building and labor generally. 34 (1854), 9 Great Britain, Court of Exchequer, 341. 35 (1856), 16 Q.B., 538; (1860), 18 Q.B., 68. See also Lane v. The Montreal Telegraph Co. (1857), 7 Upper Canada Court of Common Pleas [hereafter, C.P.], 23. 36 Tilt v. Silverthorne (1854), 11 Q. B., 619, was a case involving a contract to deliver flour. In helping

This content downloaded from 129.100.49.67 on Fri, 10 Feb 2017 14:35:48 UTC All use subject to http://about.jstor.org/terms 272 BUSINESS HISTORY REVIEW or sector of the economy, his opinions may also represent an attempt to encourage private enterprise to regulate itself through the mainte- nance of customary expectations among parties, which are standard- ized as the "norms" of trade. In this way, judicial decisions concerning grades, warranties, responsibilities, and damages met a broad range of needs and contributed to the increased efficiency of the trade in commodities over the vast distances of the St. Lawrence system.

PROPERTY LAW AND ECONOMIC DEVELOPMENT

Just as contract law has a basic economic function, so too does property law. By creating incentives to use resources more efficiently, the legal protection of property rights serves to maximize the value of land. The essential economic principle for deciding cases of conflicting land use is that the right to exclude should be assigned to the party for whom the use is more valuable.37 Transaction costs will be minimized if this principle is followed. As the relative values of different resource uses change over time, property rights will be redefined periodically. The English property law adopted by Upper Canada was more settled than the law of contracts. As a result, a judge had less freedom to take initiative in departing from English precedent to incorporate pe- culiarly Canadian conditions. Certainly, one of the most important areas demanding an application of difficult points of law in Upper Can- ada was landholding. By the 1830s, much of the land in Upper Canada had been granted, and the chief problem involved conflicting transfers of land by settlers made before and after they were granted letters patent confirming their title. The case of Hennesy v. Myers points out the transfer problem specifically. Abbott, the original nominee of the Crown, conveyed the land in fee to Hennesy before receiving letters patent. When Abbott finally obtained letters patent confirming title, he subsequently conveyed the title to Myers, who then argued that the land was his, not Hennesy's. Faced with this situation, Robinson held that after Abbott conveyed the land to Hennesy, he was "estopped" from any further transactions, and that the letters patent, once awarded, only established and made

formulate his decision, Robinson said, ". . . being aware, as we are, from what has often been proved before us in relation to contracts in this description of business, that it is the usage of the trade, and the common understanding of the parties, that wheat delivered in large quantities at a mill, as this was, is not expected or intended to be kept apart and ground for the person delivering it. ..." (620). See also Reynolds v. Shuter (1847), 3 Q.B., 377, Tumblay v. Meyers (1858), 16 Q.B., 145-46, and Brown and McDonnell v. Browne (1852), 9 Q.B., 312, where Robinson said, ". . . when we know what the general usage of trade is in regard to anv branch of business, we are to look on the parties as intending to contract with reference to it, unless we have proof that they meant to deviate from it" (314). 3' Posner, Economic Analysis of Law, 39.

This content downloaded from 129.100.49.67 on Fri, 10 Feb 2017 14:35:48 UTC All use subject to http://about.jstor.org/terms GEORGE and SWORDEN: CANADIAN COURTS AND TRADE 273

THE TORONTO EXCHANGE, 1854 A meeting of leading Toronto businessmen in 1854 to organize an Exchange Associa- tion culminated in the construction of the Toronto Exchange, which provided a cen- tral meeting place for merchants, millers, and businessmen, and also housed a Board of Trade and a commercial newsroom. (From a reproduction printed in Charles P. de Volpi, Toronto: A Pictorial Record [Montreal, 1965].) valid the title to Hennesy. The later case of Tiffany v. McEwan con- firmed the principles underlying the Hennesy decision. In the case of Irvine v. Webster, Robinson noted that the practice of switching titles was "notorious" and that the situation of a new territory granting land titles which had not existed in England for centuries made the doctrine of "estoppel by title" necessary for Upper Canada.38 Reliability of title was crucial to the smooth functioning of the land market. In the United States, the judicial interpretation of property rights was transformed from an antidevelopment bias into one in which "the relative efficiencies of conflicting property uses should be the para- mount test of what constitutes legally justifiable injury."39 The traditional right to property conferred on its owner power to prevent any use of his neighbor's land that conflicted with his own quiet enjoyment, but, as Horwitz notes, in the transformation of America in the nineteenth century from an agrarian to a more industrialized society, a view

38 (1832), 2 K.B. (O.S.), 458; (1837), 5 Q.B. (O.S.), 598; (1846), 2 Q.B., 224. "Estoppel" is the principle which precludes a party from alleging or proving that a fact is other than it appears to be from the title deed. 39 Horwitz, Transformation of American Law, 38.

This content downloaded from 129.100.49.67 on Fri, 10 Feb 2017 14:35:48 UTC All use subject to http://about.jstor.org/terms 274 BUSINESS HISTORY REVIEW

of property emerged that emphasized the newer currents of economic growth and productive use. Thus, in America, economic development came to confront the basic and older antidevelopmental premises of the common law. Upper Canadian judges had to deal with conflicts between the new spirit of economic development and the traditional English views on the rights of property. These contending influences came to the fore in cases involving externalities associated with the impact on landholding rights of growing economic activity incidental to the St. Lawrence trading system-milling, logging, river travel, and railways. The legal interpretation consistent with considerations of economic efficiency is that an externality will be declared lawful if the benefit from continuing to act exceeds the cost to the victims of either tolerating or elimi- nating the activity. Milling and the concept of riparian rights probably best illustrate the conflicts. The old law, as seen in Applegarth v. Rhymal, was based on strict prior use. Applegarth had occupied a mill on a stream for many years. Rhymal erected another mill on the stream, five miles above Applegarth's, which subsequently interfered with Applegarth's mill. Justice Levius P. Sherwood, delivering the opinion of the Court and citing William Blackstone, held that "the common law rule is that a prior occupancy does give a right and property in a current of water to the first occupant, and every subsequent occupant must exercise his right so as not to injure the first occupant."40 But, as society became more and more industrialized, interpreta- tions began to reflect the change. In America two great jurists, Joseph Story and James Kent, were beginning to create a new riparian doctrine which, by 1825, was based not on strict prior use, but upon reasonable use; that is, each owner had the right to make a reasonable use of the water in a stream flowing past his mill. In Upper Canada, McLaren v. Cook followed this American development. The facts were similar to those in Applegarth, but Robinson now held that the principle was "well settled" that a proprietor of land on a river or stream had the right to the reasonable use of the water flowing past him in its natural course. In fact, he ruled, ". .. nothing short of a grant, or use for such length of time as will support the presumption of a grant, will entitle the proprietor of land on a stream to divert or pen back the water in such a manner as to occasion damage to those being above or below in the same stream."41

40 (1827), 1 K.B. (O.S.), 431. Robinson was then attorney general and counsel for the defendant on appeal from a trial at Gore District Assizes. 41 See T. E. Lauer, "The Common Law Background of the Riparian Doctrine," Missouri Law Review 28 (1963): 60; (1847), 3 Q.B., 300.

This content downloaded from 129.100.49.67 on Fri, 10 Feb 2017 14:35:48 UTC All use subject to http://about.jstor.org/terms GEORGE and SWORDEN: CANADIAN COURTS AND TRADE 275

Rivers considered "public," thus involving the precedence of public rights over private, presented additional complications. In The Queen v. Myers, the defendant dammed the North Sydenham River. Before the dam was built, vessels had been able to navigate higher up the river, but were now prevented from doing so by the dam. James Ma- caulay, chief justice of the Court of Common Pleas, concluded that a public right of navigation existed over all rivers "naturally adopted to purposes of navigation" and that the jury was warranted in finding the river to be a public navigable water course, with which the defendant could not interfere. Robinson dealt with this issue two years later in Snure v. The Great Western Railway Co., in which Snure complained that because of the railway's bridge, ships could no longer come up river to his tannery. Although the company pleaded statutory authority, Robinson gave judgment for Snure, thereby confirming the precedence of public navigation.42 Logging cases present another common example of economic conflict. As lumbering grew to become an important source of wealth for Upper Canada, the Legislative Assembly created statutes providing for the creation of aprons (slides designed to ease the passage of logs) over dams, so that logs could continue to be floated downriver. This area created many problems for the courts, especially when a dam had no apron. In Little v. Ince the defendant cut away some of the plaintiff's dam to get his logs downriver.43 Chief Justice Macaulay held that he was justified in doing so. But, faced with this issue in Shipman v. Clothier, Robinson voiced concern:

... if the proprietor shall obstruct the stream at any time contrary to the statute, does it follow that any person having occasion to float timber down it, and finding it unlawfully obstructed, is at liberty to remove the obstruction, as he might abate a nuisance upon the Highway? I should say not, as a consequence of the general provisions of the act, in any case in which the stream does not appear on the pleadings to be a navigable river, and, as such, a common and public highway.44

In both logging and railway examples, determining the consistency of the decisions with principles of economic efficiency is complicated by the difficulty of assessing whose use of the resource was the more valuable or for whom discontinuing the interference would be most costly. Certainly, Robinson's decision to make loggers responsible for safeguarding private property in dams was politically, if not economically, courageous since lumber merchants-mainly because of the Brit-

42 (1854), 3 C.P., 305; (1856), 13 Q.B., 376. 43 An Act . . . To Provide for the Construction of Aprons, Statutes of Canada 1849, c. 87; (1854), 4 C.P., 95. 44 (1852), 8 Q.B., 593.

This content downloaded from 129.100.49.67 on Fri, 10 Feb 2017 14:35:48 UTC All use subject to http://about.jstor.org/terms 276 BUSINESS HISTORY REVIEW

ish preferential tariffs on timber-were staunch defenders of the Brit- ish connection.45 Both canals and railways figure prominently in property cases involving actions for nuisance or negligence. By the 1840s, the Legisla- tive Assembly was passing various statutes exempting transportation companies from conduct that would otherwise have been actionable. The courts inevitably were called upon to settle disputes over liability for damages. In Griffiths v. Welland Canal Co., an action was brought against the canal company for releasing surplus water during a flood. Robinson noted that the canal company had power under its charter to do so, and that ". .. for anything that may be thus done in strict pursuance of the power of the statute, no action can be maintained, for the statute makes it legal, and is a perfect defense under the general issue." So too in Young v. The Grand River Navigation Company, the company was held not to be liable by virtue of their act of incorporation, in an action for damages arising from company works on the Grand River.46 When Upper Canada progressed into the "Railway Age," the defense of statutory authority was used frequently. In the leading case of McDonell v. The Ontario, Simcoe, and Huron Railroad Union Com- pany, it was held that no right of action could arise against the railway for obstructing McDonell's access to a public highway, because the act incorporating the railway bound it to do so for the safety and convenience of the public, and made no provision for compensation that could have applied in this case. Similarly, in the case of Wallace v. The Grand Trunk Railway, in which Wallace alleged that the railway's tracks obstructed a stream, thereby flooding several acres of his land, the defense of statutory authority prevented Wallace from succeeding in his action.47 However, Robinson did not allow this defense to prej- udice fundamental property rights. In Anderson v. The Great Western Railroad Co., Robinson stressed that the company could not divert a stream supplying Anderson's mills without exercising due care and diligence in the construction of railway works:

? . . we cannot say that the statute 4 Wm. IV., ch. 29, sec. 9, gives authority to the company to stop or divert at their pleasure, and without necessity, and as long as they please, the flow of any stream of water over which they have occasion to construct their railway. If it was necessary to do so in this instance for a time, while they were constructing their road, they should have set forth

45 M. S. Cross, "The Lumber Community of Upper Canada, 1815-1867," Ontario History 62 (1970): 226-32. 46 (1839), 5 Q.B. (O.S.), 686; (1854), 12 Q.B., 75. 47 (1854), 11 Q.B., 271; (1858), 16 Q.B., 551. Robinson said, ". .. nothing is shewn in the declaration to have been done except what the law allowed, namely, the making the railway, for which there is no right of action, but only a right of compensation to be settled by arbitration" (555).

This content downloaded from 129.100.49.67 on Fri, 10 Feb 2017 14:35:48 UTC All use subject to http://about.jstor.org/terms GEORGE and SWORDEN: CANADIAN COURTS AND TRADE 277

A GRAIN ELEVATOR OF THE GRAND TRUNK RAILWAY, 1863 Toronto was the provincial capital of Upper Canada, and the major point of shipment for a large agricultural and commercial hinterland. The city was the western termi- nus of the Grand Trunk Railway, completed from Quebec City to Toronto in 1856. From Toronto the Grand Trunk connected with the Great Western Railway at Ham- ilton, from which rail service continued to Buffalo, Windsor, Detroit, and the Amer- ican Midwest. (From a drawing in The Canadian Illustrated News [Hamilton], 18 April 1863.)

the necessity and admitted they did stop or divert the stream, and should have averred that they were proceeding with all reasonable diligence in the com- pletion of the road, so as to show that they were continuing the obstruction no longer than was necessary. It was indispensable, also, that they should have averred that they gave that notice to the plaintiff of their intention to interfere with the flow of water to his mill which the statute requires.48

Moreover, the statute limiting a railway's liabilities also contained provisions for compensation to be awarded by arbitrators, who were, as Robinson made sure, to assess all damage done, and compensate the property owner accordingly.49 Furthermore, if the subject of the com- plaint was not authorized by the statute, the general law of torts applied, especially trespass and nuisance, provided the action came within the six-month limitation demanded by the statute.

48 (1854), 11 Q.B., 128. 49 The main problem here was amount of compensation. In Great Western Railroad Company v. Baby (1854), 12 Q.B., 106, Robinson made suggestions about the proper form of award: ". . . the sum awarded is given for the value of the lands and tenements or private privileges proposed to be purchased, or for the amount of damages which the claimant is entitled to receive in consequence of the intended railroad

This content downloaded from 129.100.49.67 on Fri, 10 Feb 2017 14:35:48 UTC All use subject to http://about.jstor.org/terms 278 BUSINESS HISTORY REVIEW

The defense of statutory authority claimed by transportation companies was overruled, however, primarily when railway companies built their works carelessly or negligently. In Alton v. The Hamilton and Toronto Railway Co., the railway had negligently covered up drainage ditches in the construction of tracks across Alton's land, causing flooding. Alton was allowed relief because of the company's "ne- glect of proper precautions."50 These views governed the outcome in Moison v. The Great Western Railway Company, where the railway had constructed a bridge across the plaintiff's land in a careless and improper way. Robinson's willingness to check a railway's actions is recorded especially in L'Esperance v. The Great Western Railway Co., where he (dissenting) held that the action of the company in filling up a drainage ditch on the plaintiff's land, causing flooding, was negligent and was not relieved by the railway's statute of incorporation (as the majority believed).51 In Renaud v. The Great Western Railway Co., the railway was found guilty of negligence for not properly fencing a crossing and for excessive speed through the crossing, causing several of Renaud's livestock to be killed. Here again statutory authority was circumvented. Finally, in Campbell v. The Great Western Railway Company, although some cattle owned by Campbell had escaped onto the company's track, Robinson held that the railway was still obliged to use ordinary care and skill to avoid collisions.52 Campbell v. Great Western is also important because in it Robinson refers to the fluid nature of property rights with economic development in the United States. Faced with counsel's argument that Amer- ican law should be applied, Robinson noted that "American decisions . . . take ground more in favour of the railway companies than is up- held in England, holding that they are entitled to their track, and may use it regardless of any one. . . .53 Robinson's persistence in articulat- ing a Canadian attitude to property and economic development that

in and upon his lands (as the case may be); . . .if the estimate has been influenced bv anything which the Company has engaged to do in order to lessen the inconvenience, it should be plainly expressed that the company have undertaken to do it; and the particular thing should be defined as to leave no uncertainty, and no room for future litigation as to what is to be done or allowed bv the company, and at what particular point in their work, and in what manner it is to be done"(121). 50 If the doctrine of negligence is to be applied consistently with principles of economic efficiencv, the cost of steps necessary to prevent "accidents" is compared with the loss that the precautions would have averted (that is, the loss caused by an accident multiplied by the probability of the accident's oc- currence), and the lesser of the two costs is incurred. See Posner, Economic Analysis of Law, 122-23; (1856), 13 Q.B., 598. 51 (1856), 14 Q.B., 102; (1856), 14 Q.B., 173. See also Vanhorn v. The Grand Trunk Railway (1859), 18 Q.B., 356. Vanhorn sued the railwav for negligently building a bridge over a stream on his land, so that it caused flooding. Vanhorn succeeded in his action, according to Robinson, "for an alleged injury not foreseen, and first experienced long after the railway was completed and an injury attributed solely to the unskillful and negligent manner of constructing a culvert" (360). 52 (1855), 12 Q.B., 408; (1858), 15 Q.B., 498. 53 (1858), 15 Q.B., 503. To back up his statement, Robinson cited several American cases. Also see Wilcocks v. Tinning and Hornby (1851), 7 Q.B., 372.

This content downloaded from 129.100.49.67 on Fri, 10 Feb 2017 14:35:48 UTC All use subject to http://about.jstor.org/terms GEORGE and SWORDEN: CANADIAN COURTS AND TRADE 279 was more restrained than the American perception is explained by the legal obligation to adhere to English law in Upper Canada, where the formal doctrine of stare decisis and appeals to the Privy Council made property law more conservative in practice. That Upper Canada was not independent of British law left less room for improvisation or mod- ification of law there than in the United States. Without an appropriate English precedent or Canadian statute, the opportunities for justices to alter the property law to accommodate local economic conditions and business practices were sorely con- strained. Robinson was able occasionally to take note of peculiar Upper Canadian conditions in land clearing, for example, where the lack of an English precedent permitted. And William Blake, an eminent jurist who was chief justice of Upper Canada's Court of Chancery from 1850 to 1862, stressed that Canadian law should be adapted to Canadian conditions in deciding issues of title.5 But in Upper Canada as in England, legal innovation was properly the function of the legislature, not of the courts. In McCuniffe v. Allen, Robinson summed up the prevailing view: "The legislature may of course place the law on a different footing, if they think it proper to do so, but we have no authority to change it."55 Gradually, between 1830 and 1860, court decisions in Upper Canada came to reflect a greater reliance on Canadian statutes. In 1831, for example, the Court of King's Bench referred to Canadian statutes in only one-quarter of its decisions, the vast majority of its cases being decided on English precedents and statutes. By 1860, however, about two-thirds of the cases in Queen's Bench were based on Canadian statutes and precedents.6 The growing body of Canadian statutes dealing with the local economy, as in the examnple of railways, gave the courts and sympathetic justices greater scope for accommodating local economic conditions within the bounds of accepted legal practice.

CONCLUSION

In pre-Confederation Upper Canada, court decisions in contract law concerning grades, warranties, responsibilities, and damages; decisions in property law relating to the development of lumbering, milling, and railway building vis-a-vis settlement; transformation of the

54 Dean v. McCarty (1846), 2 Q.B., 448, was a case involving owners of land who, while burning brush on their own land, caused a neighbor's fence to be burned. Robinson felt that in Upper Canada, where such fires were useful and necessary to clear the land, owners were responsible for injury to their neighbors only where negligent. O'Keefe v. Taylor (1850), 2 Upper Canada Court of Chancery, 95; (1851) 2 Ch., 305. 55 (1850), 6 Q.B., 382. 56 Brode, Sir John Beverley Robinson, 238.

This content downloaded from 129.100.49.67 on Fri, 10 Feb 2017 14:35:48 UTC All use subject to http://about.jstor.org/terms 280 BUSINESS HISTORY REVIEW riparian and prior-use doctrines and judgments respecting "public" and "private" rivers-all had, as their background, the St. Lawrence commercial system. As exemplified by the cases discussed here, many of the decisions were neither trivial nor commonplace in their economic impact, given the emergent stage of Upper Canada's economy and stiff American competition. Nevertheless, the decisions of Upper Canadian courts were not consistently prodevelopment. In part, this reflects the complex set of influences which governed judicial opinions: a belief in the essential importance of commercial prosperity to the secure future of Canada as an integral part of the British Empire had to be balanced against the abstract, conservative weight of English common law in Canadian legal proceedings. Although many decisions, particularly on contract law and riparian rights, were encouraging to businesspeople, some-like those on the limitations of statutory authority for railways when they threatened to interfere with fundamental private property rights, for example-fell far short of accepted judicial interpretation in the United States. On balance, however, court decisions in Upper Canada did much to facilitate business by means of an encouraging legal framework within which businesspeople could be certain of the law, and could allow with confidence for its implications in their commercial dealings. There are limitations of information which make it difficult to extend this analysis further. In particular, we need to know much more about the conduct of everyday business among members of the Canadian business community. It would be useful to attempt comparisons between the experiences of businesspeople in Upper and Lower Canada, given the different legal systems in place in the two colonies, on the basis of data at the level of the business firm. Much of this type of information is unfortunately not yet available.

This content downloaded from 129.100.49.67 on Fri, 10 Feb 2017 14:35:48 UTC All use subject to http://about.jstor.org/terms