By s. 91 of the British North America Act, 1867, exclusive legislative authority with regard to "Interest" is conferred upon the dominion parliament, and by s. 92 of the same statute, in each province the legislature may exclusively make laws in relation to "Property and Civil Rights in the Province."

The subject of mortgages, generally speaking, falls within "property and civil rights in the province," and for our present purpose difficulty arises only where the subjects of interest and mortgages impinge on each other. The natural division between the legislative authority of the Dominion and that of the provinces would appear to be (1) to assign to the Dominion the right to legislate with regard to usury and the rate of interest generally, including the right to require that the rate-of interest shall be stated clearly in a mortgage securing the repayment of a loan with interest and, at least in the absence of express provincial legislation, the right to prescribe the rate of interest payable in cases where the rate is not specified in a mortgage, and (2) to assign to the provinces the right to legislate as to the time and terms of redemption of a mortgage, including the right to provide upon what terms a mortgage shall be redeemable after a given period or after maturity, even though the terms prescribed involve the payment of interest in lieu of notice.

(n) As this provision and the corresponding Ontario statute relate to the right to redeem, they are discussed in chapter 25, Action for Redemption, Sec. 252. As to the question of legislative authority, see Sec. 318, infra.

(o) As the subject relates to the terms of redemption after default, it is discussed in chapter 25, Action for Redemption, Sec. 253.

All the provisions of the Interest Act appear to fall clearly within the legislative authority of the Dominion, with the exception of s. 10, which provides in effect that no mortgage shall be made irredeemable for a longer term than five years if after five years the mortgagor tenders or pays three months' interest in addition to the principal and interest to the time of tender or payment (p). The question whether this section is within the legislative authority of the Dominion is to a large extent academic in Ontario because in that province there is a similar provincial statute (q), but the question may be important in some of the other provinces. In Ontario prior to the enactment of the provincial statute the validity of s. 10 of the Interest Act was upheld (r), but it is doubtful whether the decision can be justified on principle.

(p) The text of the section is quoted in chapter 25, Action for Redemption, Sec. 252.

(q) The Mortgages Act, R.S.O. 1914, c. 112, s. 17.

(r) Bradburn v. Edinburgh Assurance Co., 1903, 5 O.L.R. 657. In the case of In re Parker, Parker v. Parker, 1894, 24 O.R. 373* the section was applied and its validity appears to have been taken for granted.

It would seem that the minister of justice himself questioned the validity of the statute on the ground that it related "not to interest, properly speaking, but rather to contracts for the securing of money-clearly a matter of provincial jurisdiction" (s).

Britton, J., holding that s. 10 was intra vires, said (t): "In so holding I do not overlook the argument that, as a logical result, the Dominion can legislate to limit any contract to the shortest duration where the interest is involved, nor do I overlook the decision in The Citizens Insurance Co. of Canada v. Parsons (u) that 'property and civil rights' in section 92 of the British North America Act, include rights arising from contract, . . . and are not limited to such rights only as flow from the law. It is however, one thing to legislate where the contract has sole reference to security for money lent at interest, and quite a different thing to legislate in reference to other contracts where interest is only an incident."

In the passage quoted the learned judge has referred to two considerations which render it highly probable that the section ought to be held to be ultra vires. It is submitted that a statute providing that interest shall cease to be chargeable under a mortgage after a certain period upon the mortgagor making tender or payment in accordance with the statute has as its primary object the shortening of the duration of the contract, that is, it relates to the time and terms of redemption, and this is so notwithstanding that interest is incidentally involved in the fact that the shortening of the duration of the contract is enforced by the depriving of the mortgagee of the right to subsequent interest. Further, it is submitted that in view of the fact that interest is not an essential feature of a mortgage, the contract of mortgage is not properly distinguishable from all other contracts as being one which "has sole reference to the security for money lent at interest." Indeed, if such a distinction were valid, it would seem to follow that the Dominion would have the right to legislate with regard to the subject of mortgages generally.

(s) House of Commons Debates, 1886, p. 440. The paragraph In the text is in substance quoted from Lefroy, Canada's Federal System, p. 277. The learned author, after referring to some decisions not specifically relating to s. 10, adds at pp. 278, 279: "It may be that the Dominion power as to 'interest' will be ultimately found to be confined to fixing what shall be the legal rate of interest apart from express agreement or express provincial enactment, and the passing of usury laws, restricting the charging of interest throughout the Dominion or any part thereof."

(t) 5 O.L.R. 657, at p. 666.

(u) 1881, 7 App. Cas. 96.

In Ontario the Mortgages Act, R.S.O. 1914, c. 112, contains several sections involving the question of interest. In accordance with the division between the legislative authority of the Dominion and that of the provinces suggested above as the proper one, these sections all appear to be intra vires except perhaps s. 18.

The subject matter of the last mentioned section would seem to be the rate of interest chargeable after default rather than the terms of redemption of a mortgage (v), whereas the subject matter of ss. 15, 16 and 17 (w) is the terms or the time of redemption, not the rate of interest.

(v) The text is quoted in Sec. 314, supra.

(w) As to ss. 15 and 16, see chapter 25, Action for Redemption, Sec. 253; as to s. 17, see Sec. 252.