That Time Capreol Took The Railroad To Court

The year was 1925 and the entire nation was enthralled by a David vs. Goliath court case. Okay, maybe not the entire nation. But every part of it that dealt with the railroad.

What happened was this: the Canadian Northern Railway (precursor to Canadian National) didn’t want to pay its taxes.

Okay, that’s a bit unfair. As the newspaper article attached below explains, the crux of the issue was whether the town of Capreol had been justified in assessing the local Y.M.C.A. at $50,000 value.

(Factoring in inflation that $50, 000 would be equivalent to almost $750,000 in 2019 dollars. And for a small town, Capreol had less than 1500 people at the time, that money meant progress. Infrastructure (roads, sewers, electric grids) didn’t come cheap…even then.)

The building, owned by CNoR, was sometimes used for ‘charitable purposes’ and that seems to be where the conflict developed. From what I can decipher (from news stories nearly 100 years old) the railroad held a tax exempt status for buildings/properties essential to the industry’s operation* and the Y.M.C.A., being a charitable organization, held its own tax exemption. But, by allowing their building/property to house the charity and contracting with them to operate lodging for railroad employees, the CNoR opened themselves up to being taxed.

[* If anyone out there knows more on this please contact me. Thanks.]

The CNoR appealed the town’s action, lost, then appealed to a higher court. They lost again and appealed, once more, to a higher court and won. At which point the town appealed and won. Not happy, the CNoR appealed and lost before the Ontario Railway and Municipal Board. They tried again, this time before the Appellate Division of the Supreme Court, losing once more. Then the case ended up before the highest court in the land, the Supreme Court of Canada.

The Supreme Court reserved judgement, meaning they needed time to ponder the issue. But contemporary experts agreed it seemed unlikely the Court would overturn the previous ruling. The article doesn’t state what happened next but a bit of research reveals that the town ultimately won the case.

Type in the following link to read the official verdict:

With the final decision made the railroad was left with two, equally bad choices: taking their case to the Privy Council; or paying the bill (both the tax bill and the legal fees—a substantial amount after three years of court cases). Petitioning yet another branch of government seems to be a lot of work for $7,500 worth of taxes.

And that was what was at stake…less than ten grand. Still a lot of money back then but not an exorbitant amount by any measure.

Of course it wasn’t the cost of the taxes owed to Capreol that prompted Canadian Northern to undertake such vigorous legal shenanigans. The case would set a precedent. One that could be cited by other towns across Canada—and there were hundreds of railroad towns in our nation back then—meaning millions of dollars were on the line…for the CNoR and the myriad other railroads then expanding throughout our country.

So there you have it. Almost one hundred years ago Capreol took its largest employer all the way to the Supreme Court and won. A true underdog moment for our town and one of which we can all be proud.

Interestingly enough this wasn’t the last time Capreol fought a giant faceless corporation and won. But that is a column for another day.

Posted on: August 6, 2019, by :