Can an Immoveable Be the Object of
a Commercial Operation ?
John W. Durnford *
Introduction
1. The rule and its origin.
2. Exceptions to the rule.
a) where the immoveable is an accessory to a larger operation.
b) where the immoveable is not really the object of the operation.
3. A new trend and outlook; and leases.
Conclusion.
Introduction.
“An immoveable cannot be the object of a commercial operation.”
How often have the members of the Quebec legal profession heard
this rule expressed!
It is no idle maxim. Its application has a profound effect on cer-
tain key areas of the law, and while it may afford a safeguard in
some instances, in others it will effectively prevent the exercise of
legitimate rights.
Its most important effect is to exclude the application of the ex-
ception permitting evidence to be made by testimony in commercial
matters (article 1233, par. 1, C.C.). Thus a person dealing in real
estate, who may be a trader by reason of being a speculative builder,
or just a plain speculator, may find himself enjoying the protection
of the civil rules of evidence, even though he would otherwise be con-
sidered a trader, making it impossible for his opponent to make proof
against him in the absence of a writing.’
Because of its long existence in our law, the rule has until recently,
been accepted without occasioning much debate. A careful examina-
tion of our jurisprudence will disclose, however, that its application
has been substantially narrowed by exceptions to the rule created by
Associate Professor of Law, McGill University.
1 Other effects of the rule which excludes speculators in real estate from the
operation of the commercial rules include the applicability of the general thirty
year prescription of article 2242 C.C. instead of the short five year commercial
prescription of article 2260, par. 4, C.C., joint instead of joint and several
liability (aiticle 1105 C.C.), the necessity for a putting in default (articles 1067
and 1069 C.C.), the exclusion of a jury trial (article 421 C.C.P.).
No. 4] IMMOVEABLE, OBJECT OF A COMM. OPERATION 311
the judges and doctrine; and in more recent times, a new trend of
thinking has developed which has seriously questioned the very sound-
ness of the rule.
1. The rule and its origin.
The rule, then, is that an immoveable cannot be the object of a
commercial operation. 2
It is well known that real estate is frequently subjected to specu-
lation to the highest degree by speculators in land and builders of
housing projects, not to mention the acquisition and use of land by
commercial interests for the purpose of carrying on their businesses
thereon, such as stores and factories. In view of this, what is the
justification for stating that land operations are always civil by
nature? The reason given is that immoveables are incapable of circu-
lation.3
In order the better to understand the significance of this term,
we must look at a definition of commerciality and the elements that
2 Quebec authorities : Perrault, Traitj de Droit Commercial, I (1936), nos. 314
et seq., pp. 325 et seq., no 493(b), p. 488, II (1936), nos. 774 et seq., pp. 202 et
seq., no. 988(b), p. 446; Langelier, De la Preuve (1894), nos. 495 and 496, pp. 213-
214; LeDain, The real estate broker (1957-58) 4 McGill L.J. 219 at 225; Letarte,
Problmes Juridiques de l’agent d’immeubles (1949) 9 R. du B. 105 at 107;
Corbeil v. Marleau (1896) 10 S.C. 6 (Mathieu, J.) ; St. Genevieve Shopping Centre
Ltd. v. Dalfen’s Limited [1964] .S.C. 554 (Batshaw, J.); The Bell Telephone
Company of Canada V. Dame LefranVois [1952] Q.B. 101; Malo v. Dame Lalibertj
[1958] R.L. 321 (Brossard, J.); Chandler v. Federal Alcohol Distillery, Limited
(1930) 49 K.B. 47; C6t6 v. Cantin (1902) 21 S.C. 432 (Cimon, J.); J. L. Vachon
& Fils Ltie v. Corbeil (1929) 35 R.L.n.s. 453 (Walsh, J.); Sobinsky v. Allard
(1907) 16 K.B. 530; Troster v. British Rubber Co. of Canada, Ltd. [1943] K.B.
248 at 255; Girard v. Trudel (1876) 21 L.C.J. 295 (C.A.); Laurentide Realties
Company Limited V. Haz [1958] S.C. 57 (Challies, J.); Ernest Pitt & Co. v. Payne
(1925) 31 R.L.n.s. 308 (Surveyer, J.); Dame Patenaude v. Hamel (1923) 35 K.B.
333; Dudemaine V. Pelletier (1915) 21 R.J. 306 (Court of Review); Laflamme v.
Dandurand (1904) 26 S.C. 499 (Lavergne, J.); Freudenthal v. Bigras (1929)
47 K.B. 340; Baillie v. Nolton (1897) 12 S.C. 534 (Lynch, J.) ; Trudeau v. Rochon
(1895) 8 S.C. 387 (Pagnuelo, J.); Langlois v. Berthiaume (1913) 19 R.L.n.s.
367 (Court of Review); Bachand v. Duchesne (1919) 56 S.C. 132 (Court of
Review); Racicot V. Eaves (1937) 75 S.C. 74 (Chase-Casgrain, J.). Contra:
Gamma Realty Ltd. v. Brummer [1962] S.C., p. 607 (Provost, J.); Colonia De-
velopment Corporation v. Belliveau [1965] Q.B. 161 at 163-167 (notes of Owen,
J.). Dubitante : Mignault, Le Droit Civil Canadien VI (1902), p. 63, VIII (1909),
p. 81, footnote (1). See also Gagnon V. Richardson [1963] R.L. 156 (Brossard, J.).
3 See, in particular, Perrault (op. cit.), I, No. 316 at p. 328; Thaller, Traiti
6lmentaire de droit commercial, 6th ed. (1922), no. 23, p. 21; Lacour et Bouteron
Prgcis de droit commercial, 2nd ed., I (1921), no. 35, p. 29; The Bell Telephone
Company of Canada v. Dame Lefrangois [1952] Q.B. 101 at 110 (notes of Bis-
sonnette, J.).
McGILL LAW JOURNAL
[Vol. 11
make up a commercial operation. Mignault was pessimistic about the
possibility of formulating such a definition: 4
Je crois qu’on ne saurait en donner une d~finition satisfaisante, et de fait
la plupart des auteurs se contentent d’indiquer ce qu’ils appellent les carac-
tires distinctifs de l’acte de commerce, mais ne tentent pas de la d6finir. On
ne s’entend m~me pas sur tous ces caract~res distinctifs, de sorte que la base
d’une definition manque.
However, Perrault seems to have been successful, and his resulting
definition reads as follows: 5
C’est un contrat h titre on~reux, consenti dans le but de sp6culer ou de
r~aliser un b6n6fice et contribuant A la circulation des biens mobiliers.
He also give the elements of a commercial operation. 6 There is
the trader is intending to acquire only transitory rights
entremise –
in the object of the contract, that is, he is buying the thing with a
view to passing it on to another instead of keeping it for himself.
There is also speculation: this is the profit motive in commercial
operations, the aim being to make a profit on the circulation of goods.
It is the connecting link between two agreements –
thus a trader
buys a thing at a certain price in order to resell it at a higher price
to make a profit. It is to be noted that for the element of speculation
to be present, the intention to make a profit must exist at the time of
the acquisition, the resale of a thing which one originally bought for
one’s own use not constituting speculation, even if a profit is realized.
It is also to be noted that the failure to make a profit is irrelevant.
The other element of commerciality is the one that concerns us
here, namely that of circulation, which merely rounds out and is the
inevitable result of the presence of the other two. It signifies that
commercial operations involve distribution, whether of goods, instru-
ments of credit or otherwise, from person to person.
So the statement is made that immoveables are civil because of
being incapable of circulation. While this may be true in the literal
physical sense that a piece of real estate cannot be picked up and
handed over by the seller to the buyer, surely the criterion of circu-
lation is not referring to delivery but to mutations of ownership.7a
Even if delivery were considered as being the criterion, then cannot
it be said that as the handing over of the title deeds constitutes an
4 Op. cit., VI, pp. 62-63.
5 Op. cit., I, no. 295, p. 307.
60 p. cit., I, nos. 306 et seq., pp. 314 et seq.
7a Lon Mazeaud, Cours de Droit Commercial (1960-61), pp. 119-122, esp. at
pp. 121-122.
IMMOVEABLE, OBJECT OF A COMM. OPERATION 313
No. 4]
essential element in the delivery of immoveables, 7b circulation of real
estate takes place by virtue of circulation of the deeds?
It is respectfully submitted that the justification for considering
immoveables to be exclusively civil on the ground of their not being
susceptible to circulation was simply an afterthought, that the true
reason lies deep in history and tradition, for which we must look back
to France.
By the ninth century, the Mediterranean having fallen under the
control of Islam, which cut off the old trading routes by which Gaul
had been linked to the outside world, trade and commerce had largely
come to an end.8 Gaul had become an agricultural community; the
towns became depopulated, withered away, and municipal organiza-
tion in its true meaning disappeared.9
With the advent of the feudal system, life became localized and
immobilized, with the country divided up into small independent terri-
torial units governed by nobles who ruled like kings. Each territory
was self sufficient and there was virtually no communication (and
isolation was the
consequently no trade) with the outside world –
order of the day.10
Of special significance to us is that the legal system reflected the
way of life of that era. For one thing, the system was one of land
tenures, that set forth the reciprocal rights and duties of lords and
vassals in a self sufficient society based on services rather than on
money and trade. The laws were unwritten customary laws which
varied from locality to locality, and the laws of contract were conspi-
cuous by their absence. This is reflected in the Coutume de Paris,
7b See, inter alta, Marler, The Law of Real Property (1932) no. 489, p. 225;
Mignault, op. cit., VII, (1906), pp. 67-68; Faribault, Trait6 de Droit Civil du
Qudbec, XI (1961), no. 218, p. 190; Lebel v. Les Commissaires d’Ecoles pour la
Municipalit6 de la Ville de Montmorency [1955] S.C.R. 298.
8 Pirenne, Les villes du moyen dge (1927), pp. 14-43.
9 Ch6non, Histoire gingrale du droit frangais public et privg des origines & 1815,
I (1926), no. 106, p. 224; Declareuil, Histoire gingrale du droit frangais des
origines 4 1789 (1925), p. 74 (at the top) and pp. 97 (at the bottom) to 98 (at
the top); Foignet, Manuel glimentaire d’histoire du droit fran~ais, 11th ed.,
(1926), p. 40; Pirenne, op. cit., pp. 53 and 70; Perrot Les institutions publiques
et irives de l’Ancienne France jusqu’en 1789 (1935), pp. 262-263; Olivier-Martin,
Histoire du droit frangais (1948), no. 116, p. 159; Timbal, Histoire des Institu-
tions Publiques et des Faits Sociaux (1961), no. 392, p. 185. See also Dareste
de la Chavanne, Histoire de l’Administration en France, II, (1848), p. 195.
10 Laurent, Le Droit Civil International, I (1881), no. 196, pp. 269-270; Lyon-
Caen et Renault, Traitg de Droit Commercial, 5th ed., I (1921), no. 17, pp. 15-16;
Hamel et Lagarde, Traitj de droit commercial, I (1954), no. 13, p. 22.
314
McGILL LAW JOURNAL
[Vol. 11
where there is no title of obligations.”L Another aspect of feudal law
is that justice was still administered by judicial duels and the ordalies.
In the earlier part of the feudal period, what remained of the
former towns were administered as integral parts of feudal fiefs.
There was no distinction between town and country. The former
towns were governed by the seigneur or his agent, and there remain-
ed no municipal organization that would give rise to municipal auto-
nomy.12 The result was that all inhabitants were subject to feudal
justice and more or less the same feudal obligations. 13
A subsequent rebirth of trade took place, probably caused to a
great extent by the Crusades.14 With it came the revival of the
towns.15 The carrying on of trade and living under a feudal regime
were simply not compatible. It was therefore inevitable for a clash
to occur. The bourgeois in the towns wanted freedom to come and
go instead of being attached to land, together with the right to have
their own laws and courts to enforce them. In short, they wanted
local autonomy.’ The freeing of the towns and the granting of a
certain degree of local self-government got under way towards the
end of the eleventh century, the first being Cambrai in 1077. Those
feudal obligations which were incompatible with town living had
11 See, inter alia, Olivier-Martin, La Coutume de Paris (1925), p. 80; Walter
S. Johnson, Q.C., Chapters in the History of French Law (1957), p. 263; W. B.
Munro, The Genesis of Roman Law in America (1908-09) 22 Harvard Law Rev.
579.
12 Esmein, Cours 6lmentaire du droit frangais, 15th ed. (1925), p. 287; Tisset
and Ourliac, Manuel d’histoire du droit franpais (1949), no. 231, p. 155; Perrot,
op. cit., p. 263; Olivier-Martin, Histoire du droit franVais (1948), no. 115, pp.
157-158; Declareuil, op. cit., pp. 280 et seq.; Brissaud, Manuel d’Histoire du droit
frangais, I, (1898), p. 687; Timbal, op. cit., no. 392, p. 185; Dumas, Manuel d’His-
toire du droit franpais, p. 127; see also Petit-Dutaillis, Les Communes Frangaises
(1947), pp. 18-20.
13 Olivier-Martin, Histoire du droit frangais (1948) no. 115 at p. 158.
14 See, inter alia, Dupin, Profession d’Avocat, I (1832), pp. 412-413.
15 Pirenne, op. cit., pp. 116 et seq.; Thaller, op. cit., no. 43, p. 38; Foignet,
op. cit., pp. 93-94; Ch6non, op. cit., I, pp. 623-624; Olivier-Martin, Histoire du
droit frangais (1948), no. 116, p. 159; no. 124, p. 170; Timbal, op. cit., no. 392,
p. 185; Dumas, op. cit., p. 128; Mundy and Riesenberg, The Medieval Town (1958)
pp. 26-41. See also Tisset et Ourliac, op. cit., no. 231, pp. 155-156; Brissaud, op.
cit., I, p. 691; Petit-Dutaillis, op. cit., pp. 107 et seq.
16 Pirenne, op. cit., pp. 150-151; Perrot, op. cit., pp. 263-264. See also Regnault,
op. cit., p. 141; Olivier-Martin, Histoire du droit frangais (1948), nos. 116 and
117, pp. 159-162; Ferguson, The Development of Law during the Middle Ages,
especially in France and England (1901-02) 1 Canadian Law Review 200; Timbal,
op. cit., no. 392, pp. 185-186.
No. 4]
IMMOVEABLE, OBJECT OF A COMM. OPERATION 315
been thrown off by the end of the twelfth century,17 and the free
towns were administered by the merchants.’ s
Traders travelled around and attended fairs in various places. A
body of commercial usages grew up by which the merchants effected
the prompt settlement of their own disputes.’ 9 These usages had a lar-
they were uniform because of the fact
gely international character –
that the merchants travelled from country to country and were not
subject to any national authorities. 20
Side by side in the same territory, then, existed two mutually
exclusive entities: the feudal system with its own laws, and the towns,
where the merchants lived and carried on trade and commerce under
their own commercial rules.
After the Kings of France had regained national power and
authority, their legislation supplanted the merchants’ own law making
powers and the international character of commercial law was re-
placed by separate national legislative enactments. 21 It is interesting
to note that instead of bringing unity into the law of France by
fusing the commercial and civil systems, they continued and confirm-
ed the already existing duality, so that even today France has its
separate Civil Code and Code de Commerce, and its civil and com-
mercial courts. In contrast, in England the Law Merchant became
absorbed into the Common Law in the eighteenth century as a result
of the work of judges such as Lord Mansfield. One reason for the
divergent lines of development may have been that while the English
legal system became essentially uniform throughout England by the
latter part of the thirteenth century as a result of the growth of the
17 Pirenne, op. cit., p. 173.
18 Houin, Cours de droit privi commercial (1961-62), p. 7.
19 Perrault, op. cit., I, no. 42, p. 50; Escarra, Manuel de droit commercial, I
(1947) nos. 16 et seq., pp. 8 et seq.; Ripert, Traitg 6lmentaire de droit com-
mercial, 5th ed., I (1963) nos. 19 et seq., pp. 11 et seq.; Hamel et Lagarde, op. cit.,
I, no. 14, pp. 23-24, no. 17, p. 26; Thaller, op. cit., no. 43 at p. 39; Lacour et Bou-
teron, Pricis de droit commercial, 2nd ed., I (1921), no. 10, pp. 6-8; Register,
Notes on the history of commerce and commercial law (1913) 33 Canadian Law
Times 1078 at 1090 et seq.; Bewes, The romance of the law merchant (1923),
pp. 8-9, 12 et seq.; Houin, op. cit., p. 8.
20 The weakness of governmental power in the feudal era meant that there
was little or no regulation of trade, and commerce was of an international charac-
ter, unaffected by national boundaries: Marguerite Boulet, Histoire du com-
merce, II (Le commerce de l’Ancien Monde jusqu’A la fin du XVe sicle), 1950,
pp. 234-238.
21 Escarra, op. cit., I, no. 26, pp. 12-13; Houin, op. cit., pp. 7-10. Hamel et La-
garde, op. cit., no. 17, p. 26, suggest that the Middle Ages offer an example to
be followed for the present-day efforts at the unification of commercial law.
McGILL LAW JOURNAL
[Vol. 11
Common Law, the French kings were never able to achieve the same
uniformity in France –
indeed, the local systems of customary law
endured until Napoleon brought into force that Code that was named
after him in 1804.22 Consequently, when the French kings came to
legislate on commercial law, there was no uniform body of civil law
with which to fuse it. The civil and commercial systems have accord-
ingly always remained separate in France.23
It was by the Edict of November 1563 24 issued by Charles IX that
commercial courts were set up for the City of Paris. It is to be noted
that the jurisdiction of these courts was limited to merchandise (real
estate being thereby excluded) :
Connoistront lesdits juge et consuls des marchands, de tous procs et dif-
fdrens qui seront ci-apr~s mils entre marchands pour fait de marchandises
seulement… soit que lesdits diffdrens proc~dent d’obligations, r6dules, r~c6-
pissez, lettres de change ou credit, r~ponses, assurances, transports de dettes
et novations d’icelles, comptes, calcul ou erreur en iceux, compagnies, soci~tez
ou association deja faites, ou qui seront faites ci-apr6s. 25
This aspect of the jurisdiction of the commercial courts would
not seem to have been altered by the Ordonnance du Commerce of
1673.20
Then we come to the Code de Commerce of 1808 and discover that
articles 631 and 632 read as follows:
Art. 631. Les tribunaux de commerce connaitront-
1. des contestations relatives aux engagements et transactions entre n~go-
cianst, marchands et banquiers;
2. des contestations entre associ~s, pour raison d’un soci~t6 de commerce;
3. de celles relatives aux actes de commerce entre toutes personnes.
Toutefois, les parties pourront, au moment oii elles contractent, convenir
de soumettre A des arbitres les contestations ci-dessus 6num6r~es, lorsqu’elles
viendront h se produire.
Art. 632. La loi r6pute actes de commerce:
22 See, inter alia, Hazeltine, Some aspects of French legal history (1927) 43
L.Q.R. 212 at 225.
23 The phenomenom of royal legislation being enacted in the commercial field
a century earlier than in the civil field is mentioned in Ripert, op. cit., I, no 23,
p. 13.
24 Isambert et al., Recueil Gindral des Anciennes Lois Frangaises, XIV (1829),
no. 69, pp. 153-158. See Lefas, De l’origine des juridictions consulaires des mar-
chands de France (1924) 3 Rev. Hist. de Droit Frangais et Etranger 83, for a
history of the consular jurisdictions, and Minier, Pricis historique du droit fran-
Vais (1854) pp. 705-706.
25 The italics are mine.
26 See Title XII of the Ordonnance, Isambert et al (op. cit.), XIX (1829) at
pp. 105 et seq.
No. 4]
IMMOVEABLE, OBJECT OF A COMM. OPERATION 317
Tout achat de denries et marchandises 27 pour les revendre, soit en nature,
soit apris les avoir travaill~es et mises en oeuvre, ou mgme pour en louer
simplement l’usage;
Toute entreprise de manufactures, de commission, de transport par terre
ou par eau;
Toute entreprise de fournitures, d’agence, bureaux d’affaires, 6tablisse-
ments de ventes A l’encan, de spectacles publics;
Toute operation de change, banque et courtage;
Toutes les operations de banques publiques;
Toutes obligations entre n~gociants, marchands et banquiers;
Entre toutes personnes, les lettres de change.
The words denrges et marchandises have been emphasized in
French works, and while immoveables are not expressly excluded
from being objects of actes de commerce, it is not surprising that the
result in France has been that immoveables are excluded so far as
actes de commerce are concerned. 28 Indeed we are told that formerly
“On disait… faire la marchandise, pour signifier faire le commer-
ce”.29 It is to be noted, however, that some of the same French
authors who state that immoveables are always civil suggest that this
is a result of tradition arising, in part at least, from the connection
between the organization of society and the system of land tenure,
and the need for extending greater protection to transactions in land,
which reasons have lost part of their validity.30
27 The italics are mine.
28 Perrault, op. cit., I, no. 314, pp. 325-6; Escarra, op. cit., I, no. 111, pp. 67-68;
Julliot de la Morandi~re, Droit Commercial, I (1958), no. 23, pp. 31-32; Thaller,
op. cit., no. 23, pp. 21-22; Hamel et Lagarde, op. cit., I, nos. 180 et seq., pp. 211
et seq.; Jean, Edouard Escarra, Jean Rault, Trait6 Thiorique et Pratique de
Droit Commercial, Vol. I, Les contrats commerciaux by Jean H6mard (1953),
no. 17, p. 8; Lyon-Caen et Renault, Traiti de Droit Commercial, 5th ed., I (1921),
nos. 109-112, pp. 125-133; Lyon-Caen et Renault, Manuel de Droit Commercial,
13th ed. (1922) no. 22 at pp. 30 eet seq.; no. 22 bis, p. 33; Lacour et Bouteron,
op. cit., I (1921), nos. 35 and 37, pp. 29-30, 31; Ripert, op. cit., I (1963), no. 315,
pp. 157-158; Mass6, Le Droit Commercial, II (1861), nos. 1382 et seq., pp. 513 et
seq.; Pardessus, Cours de droit commercial, 2nd ad. I (1842), no. 8, p. 4; Boitel
et Foignet, Manuel ilimentaire de droit commercial terrestre, 7th ed. (1924),
pp. 13 and 21; Delamarre et Poitvin, Trait6 thiorique et pratique de droit com-
mercial, 2nd ed., IV (1861), p. 5; II (1861), p. 27; Houin, op. cit., pp. 47-49;
Bedarride, Des socigtis, 2nd ed., I (1872), nos. 88 et seq., pp. 172 et seq.; Ma-
zeaud, op. cit., pp. 119-122.
29 Delamarre et Poitvin, op. cit., II, p. 27, footnote 1.
30 See, in particuar, Julliot de la Morandi~re, op. cit., I, no. 23, pp. 31-32;
Escarra, op. cit., no. 111, pp. 67-68; no. 134, pp. 80-81; Hamel et Lagarde, op. cit.,
I, no. 180, pp. 211 et seq.; Mazeaud, op. cit., pp. 119-122.
McGILL LAW JOURNAL
[VCol. 11
The foregoing brief historical background shows why immovea-
bles have always been considered to be civil –
first by reason of the
old tradition of land being considered as something separate and
apart, which concept finds its origin in the feudal system, secondly
by reason of language of the Code de Commerce, and thirdly by
reason of the separate systems of courts with their own respective
jurisdictions, which factor may well have tended to prevent a gradual
merging of immoveable transactions with those involving moveables.
In the light of this, it is not difficult to understand why, in Fran-
ce, immoveables are excluded from commercial operations. Then when
we consider that we in Quebec have always turned to French doctrine
for guidance in the civil law, it is not surprising that we have also
tended to do the same in that field of commercial law which is con-
cerned with the distinctions between civil and commercial matters,
even though the points of resemblance between our respective sys-
tems of law are lesser in the commercial field than they are in the
civil, Quebec having neither a Code de Commerce, nor separate com-
mercial courts. Consequently, when some of the modern French
writers (as seen above) question the logic of the rule that immove-
ables should be restricted to civil matters, then a fortiori it is time
for the legal profession in Quebec to do likewise. Indeed, as we shall
see, there are already signs of a new trend.31
Thus the rule of Quebec law is that regardless of what elements
of commerciality there may be in a contract, and regardless also of
the qualities of the parties, that is, even if they are traders, if the
object of the contract is an immoveable, the contract will be regard-
ed as civil, and both parties will enjoy the protection of and suffer
from the limitations of the rules governing civil matters, especially
that which requires a writing for proof to be made, thus rendering
unproveable and consequently unenforceable a purely verbal agree-
ment.
This rule has, however, been tempered in its application by excep-
tions, which we shall now examine.
31 It is interesting to note that Perrault, writing in 1947 (Le droit commercial
quibecois : 1923-1947, (1948) 26 C.B.R. 137) expressed the view that it was time
to abolish the commercial distinctions in Quebec law altogether, and referred in
particular to the commonness of speculation in real estate (p. 143). The problem
of the two sets of laws, civil and commercial, as they exist in France, is discussed
by Jean Escarra, in A propos de la rivision du Code de Commerce (1948) 1 Rev.
trim. dr. comm. 3.
No. 4]
IMMOVEABLE, OBJECT OF A COMM. OPERATION 319
2. Exceptions to the rule.
(a) where the immoveable is an accessory to a larger operation.
It has long been accepted that where a transaction, such as a
sale, has as its principal object moveables under such circumstances
that the sale is a commercial one (e.g. a merchant selling his stock
in trade to another merchant), the inclusion in the transaction of an
immoveable will not affect the commercial nature of the sale, provid-
ed that the immoveable is merely an accessory. This is true whether
we are concerned with the sale itself 32 or some other related aspect,
such as the claim of the real estate agent who is demanding payment
of his commission for bringing about the sale, in the face of a denial
by the vendor that he ever engaged the agent and in the absence of a
writing to prove it. 3
3 The same rule will apply to a lease of a business,
where the business itself is of greater value than the building.3 4
32 Perrault, op. cit., I, nos. 324 et seq., pp. 339 et seq.; Ripert, op. cit., no. 315
at p. 158; Hamel et Lagarde, op. cit., no. 184, pp. 218-219; Mass6 v. McEvilla
(1895) 4 Q.B. 197 (in which the fonds de commerce and building were respectively
estimated to be worth $3-4,000 and under $2,000).
33 LeDain, The Real Estate Broker (1957-58) 4 McGill L.J. 219 at 225; Letarte,
Probl~mes Juridiques de l’agent d’Ximmeubles (1949) 9 R. du B. 105 at 107; Hand-
field v. Binette [1947] S.C. 384 (Fortier, J.) (a sale of a tavern business for
$34,000, of which $27,000 was for the business and $7,000 was for the building);
St-Amour v. Dame Toupin (unreported judgment of Marier, J., December 23,
1952, S.C. Montreal, no. 318,961),
involving a sale of a tavern business for
$91,000, of which $75-80,000 was for the business and about $7,000 for the im-
moveable. In Pekola v. Bloom (1928) 34 R.L.n.s. 154 (Bond, J.)
(involving the
sale of a candy store) and in Pouliot v. Lavoic [1952] R.L. 111 (Marquis, J.)
(involving the sale of a restaurant), no breakdown was given as to the respective
values of the fonds de commerce and of the immoveables, but it would seem
reasonable to assume that the businesses were worth more than the buildings. (In
Financial Trust Co. Ltd. v. Steiman [1947] R.L. 171 (Bertrand, J.), which con-
cerned the sale of a tavern business where no immoveable was involved, the
matter was held to be commercial).
In Hamelin v. Hervieux [1947] S.C. 201
(Loranger, J.), the sale “de toute sa propri~t6, y compris la boulangerie” (quoted
from p. 202 of the report) was held, by inference, to be civil, as testimony was
excluded. It is likely that in this instance the immoveable was worth more than
the fonds de commerce, which is to be expected in a business like a bakery where
the fonds de commerce might tend to be modest in relation to the building (since
bakery products rapidly become stale). I therefore respectfully disagree with
LeDain’s listing of this judgment as being contra to the propositon that the man-
date to sell a business may be proved by testimony (see footnote 23 on p. 225
of his above-mentioned article).
(In contrast to this last-mentionned judgment,
in Laventure v. Vaillancourt (1936) 42 R.J. 276 (Duranleau, J.), the sale of a
“boulangerie, maison privge, four, p6trin, automobile, etc.” (quoted from p. 281
of the report), was simply accepted as being commercial).
34 Perrault, op. cit., II, no. 774, p. 202; Htmard (I of Escarra et al), op. cit., no.
17, p. 8; Cobetto v. B6langer Bowling Alley and Restaurant Limited [19551 S.C.
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It is essential to the operation of the theory of the accessory that
the immoveable constitute the lesser part of the transaction. If the
value of the immoveable outweighs that of the stock in trade, the
sale will be civil.3 5
Perrault,36 without commenting on the significance of it, cites a
passage from Mass6 37 where that author not only states that where
a sale is made for a single price the nature of the contract will depend
on what is the principal object of the contract (i.e. the moveables or
the immoveables), but also declares that should separate prices be
given for the two objects of the sale, then only that part of the sale
that relates to the moveables will be commercial, even though only a
single contract have been entered into. It is emphatically submitted
that this is not logical. Indeed, it was rejected by the Court of Appeal
in Mass6 V. McEvilla,s where it was pointed out that the true test is
whether the building would have been bought without the fonds de
commerce. If it is established that the immoveable would not have
been bought alone, that it was only an accessory to the principal
object of the sale (the fonds de commerce), then the fixing by the
parties of separate prices would seem to be irrelevant, provided, of
course, it is not done in such a way as to constitute two separate
agreements. The setting of the respective prices by the vendor and
buyer would actually assist in the determination as to what was the
principal object of the transaction.
It is well established then, that by reason of the theory of the
accessory, an immoveable may be considered as an object of a com-
mercial operation. We now come to another exceptional category of
instances where an immoveable can be considered as commercial. This
additional category, while well established in particular instances,
has not been as clearly defined as the first.
301 (Challies, J.) (involving the lease of a restaurant). See also the decision
of the Tribunal Civil de Lille, June 3, 1949, Gaz. Pal. 1949.2.141; D. 1949, som. 43
(Scrive v. 6poux Tondeur) cited in Ripert, op. cit., I, no. 315 at p. 158, by Jauf-
fret (1949) 2 Rev. Trim. de Droit Commercial, 619, and by H~mard
(1949)
2 Rev. Trim. de Droit Commercial, 687. See, as well, the decision of the Court of
Appeal of Montpellier, October 10, 1951, Gaz. Pal. 1951.2.234 (Soc. Grand Hotel
des Ambassadeurs v. gpoux Ricard) and Cour de Cassation, November 19, 1924,
D. 1926, 138 (Epouz Neuzy v. Dame veuve Leblanc).
3 5 Malo v. Dame Lalibertg [19581 R.L. 321 (Brossard, J.).
36 op. cit., I, no. 325 at p. 340.
370 p. cit., II (1861), no. 1382 at p. 516.
38 (1895) 4 Q.B. 197 at 200.
No. 4]
IMMOVEABLE, OBJECT OF A COMM. OPERATION 321
(b) where the immoveable is not really the object of the operation.
A typical situation involving this exception is where a merchant
who owns a store decides to expand the same by adding an extension.
To do this, he engages a builder. One might be tempted to say that
because an immoveable is involved, the contract of construction can
only be civil. The contrary, however, was held by the Court of Appeal
in Blais V. Paradis 39 where there was a dispute between a storekeeper
and a builder as to the terms of the contract for the enlargement of a
shop, and the question arose as to whether proof by testimony could
be made. As to the contract being commercial for the merchant, Mr.
Justice L6tourneau expressed himself as follows in the two separate
passages here reproduced: 40
Elle le sera A coup sir pour le propri~taire, si sa pens6e, son intention
6vidente, a 6t6 de servir ainsi son commerce; car, bien qu’en th~se g~n6rale
l’acte de commerce doive se rattacher plut6t b des choses mobili~res 41
–
moins chez nous peut-atre qu’en France oii il faut compter avec la restriction
d’un texte, 42 -,
il est reconnu qu’h la faveur de la th~orie dite g de l’acces-
soire :, l’on peut parfols rattacher un immeuble au commerce, faire d’une
operation concernant un immeuble, un acte de commerce; lorsque, comme
dans l’esp~ce, l’intention manifeste du propri~taire a 6t6 uniquement ou tout
au moins principalement, de servir un commerce. (p. 497).
Dans 1’esp~ce, il ne peut y avoir de doute qu’en entreprenant cet agran-
dissement de son magasin, l’appelant ait eu principalement en vue d’aider
ou de mieux servir son commerce en s’am6nageant b nouveau. (p. 498).
The foregoing discloses that the justification for the labelling of
the construction contract commercial for the merchant lay in the
theory of the accessory. A trader is entering into a commercial con-
tract when expanding his premises even when an immoveable is in-
volved, the construction of the extension being an accessory to his
business.
The decision, in stating that the storeowner had entered into a
commercial contract, was a sound one. It is respectfully submitted,
however, that while it is true to say that the contract entered into by
the merchant was accessorial to his business, which fact gives rise to
39 (1933) 54 K.B. 495. This was a 3-2 decision. The notes of only one of the
dissenting judges are reported, those of Bernier, J., and he is in agreement with
the majority that the presence of an immoveable did not affect the commercial
nature of the transaction. The decision was confirmed unanimously by the Su-
preme Court, [1933] S.C.R. 452. See also Perrault, op. cit., I, no. 326 at pp. 343-4.
40 From pages 497 and 498 of the report.
41 Carpentier, R~p. Vo Acte de commerce, nos. 90, 94 et 95.
42 Art. 632 C. com.
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a presumption of commerciality, 43 the ground of the theory of the
accessory was not the soundest that could have been used for justi-
fying the commerciality of the operation insofar as the immoveable
was concerned. For one thing, the theory of the accessory by which
an operation involving an immoveable can take on a commercial
character, is based on the premise that the accessory is of lesser value
than the principal. 44 In this instance, it would mean that the exten-
sion to the store would have to cost less than the value of the already
existing business. This would rule out expansions that were large in
relation to the enterprizes as then operating. This is an untenable
proposition, as traders who are more ambitious than others should
not be considered as entering into a civil contract while the corres-
ponding contracts for the less ambitious would be commercial.
Another illustration of the unsuitability of the accessory theory
for this type of instance is well illustrated by the case of The Bell
Telephone Company of Canada V. Dame Lefrangois,45 which might at
first glance seem to conflict with the earlier Court of Appeal decision
in Blais V. Paradis, but does not in fact do so.
Bell Telephone wished to lay a cable between the City of Montreal
and St. Jean. In order to do so, it had to obtain servitudes from the
owners under whose properties the cable would be laid. Dame Lefran-
gois was one of such owners. She sued for damages caused by the
burying of the cable, and asked for a trial by jury, which under
article 421 C.C.P. could only be had if the agreement was of a com-
mercial nature. The argument used by her can be easily anticipated,
and was adopted by Mr. Justice Bertrand, dissenting in appeal. It is
as follows: that while an immoveable was involved, the contract was
commercial for Bell Telephone because it was entered into for the
purpose of furthering its business, and so the theory of the accessory
to the company’s business made the matter commercial.
Mr. Justice Bertrand cited in support of his opinion the earlier
Court of Appeal decision in Blais v. Paradis. He quoted a passage
from the notes of Mr. Justice L6tourneau, including the following
43 Perrault, op. cit., I, nos. 360 et seq., pp. 381 et seq. and the authorities therein
listed, to which should be added Globe Slicing Machine Co. Ltd. v. Ethier [1948J
S.C. 257 (A. 1. Smith, J.); Lajoic v. Thomas [1949] K.B. 767.
44 This is well illustrated by the contrasting judgments in Mass6 v. MeEvilla
(1895) 4 Q.B. 197 (where the agreement was held to be commercial, the fonds
de commerce being of a greater value than the immoveable), and Malo V. Dame
Lalibertj [1958] R.L. 321 (Brossard, J.), in which the greater value of the im-
moveable rendered the contract civil.
45 [1952] Q.B. 101.
No. 4] IMMOVEABLE, OBJECT OF A COMM. OPERATION 323
paragraph taken by that judge from the Manuel de Droit Commercial
of Lyon-Caen & Renault: 46
La thiorie de l’accessoire ne doit pas faire reconnaitre le caract~re com-
mercial A des actes qui, d’apr6s le loi, sont essentiellement civils. Ainsi,
l’achat ou la location d’un immeuble pour y exercer un commerce sont des
actes civils. I1 serait irrationnel de declarer civile la speculation portant
directement sur un immeuble (no. 22) et commerciale celle qui ne s’y ratta-
che qu’accessoirement. I1 ne faudrait pas conclure de L que les contrats
passes par un commergant qui fait construire une maison pour l’exercice de
son commerce, ne sont pas commerciaux pour lui. Ces contrats ne sont pas
relatifs h la propri~t6 immobilire et ils sont passes r~ellement pour les
besoins du commerce.
Is not the key to our problem contained in the above-quoted para-
graph, if it is given a different interpretation to the one put on it by
Mr. Justice Bertrand ?
Firstly, we note that the theory of the accessory will not confer a
commercial nature on a contract which is essentially civil. Therefore,
a purchase or a lease of an immoveable, even if for the purpose of
carrying on business therein, will be civil.47 On the other hand, con-
tracts entered into by a trader for the construction of a building for
his business are commercial for him. Why? It is because, in the words
of Lyon-Caen and Renault quoted above, such contracts “… ne sont
pas relatifs A la propri~t6 immobilii re…”
What have we here? It would seem to be the following: the civil
or commercial nature of the contract will not just depend on whether
an immoveable is involved. The question is to know what is the object
of the contract. Where a building is purchased, or a servitude (being
a real right in an immoveable)
is granted, then the object of the
transaction is an immoveable and the contract will be civil. But where
a contractor is engaged to construct a building, while the end result
may be an immoveable, the object of the contract is not an immove-
able –
it consists of the services of the contractor, namely the erec-
tion. 48
49
46 13th ed. (1922), no. 38 bis at p. 51.
47 We have already seen this under our heading 1. The rule and its origin.
48 Lacour et Bouteron, op. cit., I (1921), no. 69 at p. 52. See also Julliot de la
Morandi~re, op. cit., I (1958), no. 25 at p. 35; no. 37 at p. 40.
49 It has been well established that a building contractor is a trader and his
operations are commercial, provided, of course, that he is speculating on the
materials or labour : Perrault, op. cit., I, nos. 319 and 320, pp. 330-331; Colonia
Development Corporation v. Belliveau [1965] Q.B. 161; Gravel v. D~ziel [1965]
S.C. 257 (Martel, J.); Panneton v. Brunet (1924) 36 K.B. 290; Duphily v. Char-
bonneau [1945] R.L. 461 (D~cary, J.); Boileau v. F. J. Bastien, Inc. [1951] R.L.
304 (Archambault, J.); Pag6 v. Connolly (1909) 35 S.C. 121 (McCorkill, J.);
Blais v. Paradis (1933) 54 K.B. 495 (remarks of L~tourneau, J. at pp. 497, 499);
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This approach easily explains the different results arrived at by
the Court of Appeal in Blais v. Paradis and in Bell Telephone V. Dame
Lefrangois. The object in the first case consisted of services on the
part of a builder; in the second case of a servitude, that is, of an
immoveable right. This is the real justification for holding, as did the
Court of Appeal in Bell Telephone V. Dame Lefrangois, that the con-
tract of servitude was civil. If Blais V. Paradis had related to the
purchase of a new extension, then it is submitted that that decision
would have been quite different.
Another situation where the rule that immoveables are civil is
sometimes mistakenly applied is where we are faced with real estate
agencies. At least one judgmentr.o holds real estate agencies to be
civil in nature, and Perrault cites this decision in support of the
proposition that immoveables are always civil.51 Other judgments
hold the operations of such agencies to be commercial, 52 and Per-
rault’s view of these decisions is that they are ill-founded. 53
Where a partnership is formed for the buying and selling of real
estate, its operations are, under the traditional rule, civil. However,
what we are frequently involved with are real estate partnerships
that do not buy or sell real estate: what they are doing is selling their
services in finding buyers for those who desire to sell their houses.
The agents are not dealing in real estate for their own account, but
are providing the services for the bringing together of others who
will do the buying and selling, and this would seem to bring into
operation article 1735 C.C. 54 of which the first paragraph is as fol-
lows:
Art. 1735. Le courtier est celui
qui exerce le commerce ou la pro-
fession de n6gocier entre les parties
les achats et ventes ou autres op6-
rations licites.
Art. 1735. A broker is one who
exercises the trade and calling of
negotiating between parties
the
business of buying and selling or
any other lawful transactions.
Dame Pelletier v. Duchaine (1933) 71 S.C. 217 (Lalibert6, J.); Leblanc v. Dame
C6tj [1943] S.C. 351 (Boulanger, J.); Gaudreault v. Beauchamp (1940) 68 K.B.
353; Boivin v. Paquet (1914) 46 S.C. 461 (Dorion, J.); Amyot v. Pageau (1918)
53 S.C. 414 (Weir, J.) ; Perras v. Marotta (1923) 29 R.L.n.s. 155 (Lafontaine, J.) ;
McRae V. MacFarlane, M.L.R. (1891) 7 S.C. 288 (Court of Review); McGrath v.
Lloyd (1856) 1 L.C.J. 17.
50 Girard v. Trudel (1876) 21 L.C.J. 295 (C.A.).
51 Op. cit., I, no. 321, p. 331; II, no. 988(b), p. 446.
52 Lamontagne v. Lafontaine (1918) 53 S.C. 326 (Court of Review); La Ban-
que d’Hochelaga v. Messier (1920) 58 S.C. 471 (Monet, J.); Paquette v. Boisvert
[19581 Q.B. 150.
53 Op. cit., I, p. 332, footnote (1); II, no. 988(b), p. 446.
54 See Paquette v. Boisvert [1958] Q.B. 150 at 154 (notes of Pratte, J.).
No. 4]
IMMOVEABLE, OBJECT OF A COMM. OPERATION 325
What we have effected here is a reconciliation between the tradi-
tional rule that transactions involving immoveables are always civil
and those decisions that hold the operations of real estate agencies to
be commercial. The object of such a partnership is not the buying
and selling of immoveables, but the selling of services in the finding
of buyers and sellers.
Consequently, while the theory of the accessory is a valid excep-
tional category whereby immoveables may be considered as commer-
cial, this category should be restricted to those instances where the
object of the transaction is a combination of moveables and an im-
moveable (or immoveables), and where the value of the former
outweighs that of the latter. Where the direct object of the transac-
tion is not an immoveable, but something else, such as the lease and
hire of services, then the civil or commercial nature of the contract
should be determined without reference to the presence of the im-
moveable.
3. A new trend and outlook; and leases.
We have seen that the traditional rule is that an immoveable
cannot be the object of a commercial operation. We have also observed
that while on a quite frequent number of occasions the courts have
held that transactions involving immoveables can be commercial, such
decisions can be explained as fitting into categories which constitute
exceptions to the rule, thus leaving the old rule intact.
When, however, one considers the artificial nature of the rule that
immoveables are always civil and the adverse remarks made concern-
ing this principle by some of the more modern authors in France
where this tradition arose and where the Code de Commerce gives
some justification for it, and when one also realizes how outdated the
rule is in this era of real estate development and speculation, it was
inevitable that attacks on the validity of the rule would be made
sooner or later.
The first such attack was launched by Mr. Justice Provost in
Gamma Realty Ltd. v. Brummer.5 5 Brummer was a speculative build-
er who was building houses with a view to selling them at a profit.
He entered into a verbal agreement with Gamma Realty Ltd. whereby
that agency was to find a buyer for the houses then being built. Plain-
tiff agency found a prospective buyer who signed an offer to pur-
chase which the defendant Brummer accepted. The sale never went
55[1962] S.C. 607. See also Gagnon v. Richardson [1963] R.L. 156 (Brossard, J.).
McGILL LAW JOURNAL
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through. When Gamma Realty Ltd. came to prove the existence of
their mandate from Brummer, objection was made to the use of
testimony.
Mr. Justice Prdvost quoted from the passage in Perrault 50 where
the problem of the immoveable is discussed, where that author shows
that in specific instances an operation can be commercial even though
in certain respects it may concern an immoveable. The key section in
this passage taken by the learned judge from Perrault would seem
to be paragraph number 320: 57
Que d~cider si une personne ach~te des terrains pour les revendre apr~s
y avoir 6lev6 des constructions ? S’il s’agit d’un entrepreneur faisant ces
sortes d’op~rations, A titre professionnel, i1 pourra, je crois, acqurir la qua-
lit de commergant. Sa speculation porte moins sur le terrain que sur l’achat
et la revente des mat~riaux ainsi que sur la main-d’oeuvre. Et il posera des
op6rations commerciales au cours de la construction. Mais celle-ci terminde,
la vente de l’immeuble lui-m~me, terrain et maison, constituera un contrat
civil.
In the foregoing, we see that Perrault agrees that a building con-
tractor is carrying on commercial operations, because he is dealing
primarily in materials and labour. He is careful to point out, however,
that the sale of the land and completed building will be civil. This
accords with the traditional rule that where the object of the contract
is an immoveable, the transaction will be civil. But the significant
thing to note is that this is the point at which Mr. Justice Pr6vost
broke with the old principle: 58
La plupart des arr~ts cit6s par Perrault remontent i la fin du XIXe siacle,
alors qu’il n’y avait que peu ou pas d’entrepreneurs construisant des
immeubles en s~rie pour les revendre A profit, ni de sp~culateurs achetant
des terrains pour les lotir et les revendre comme ce genre de commerce existe
de nos jours. II semble au tribunal que toute personne qui gagne sa vie de
cette fagon pose essentiellement des actes de commerce et est un commergant
pour fins de preuve.
Brummer dtant un commergant, la demanderesse pouvait donc prouver
par t~moins la convention par laquelle il aurait accept6 de payer une com-
mission de $500 A un agent d’immeubles. L’objection du d6fendeur sur ce point
est donc rejet6e.
Here, we have a clear break with tradition. This is not a holding
that can be explained away as falling into one of the exceptional cate-
gories. The sale of a lot of land with the completed house on it does not
involve a sale of moveables, which rules out the theory of the acces-
56 Op. cit., I, nos. 319 et seq., pp. 330 et seq.
57 Ibid., at p. 331.
58 [1962] S.C. at pp. 610-611.
No. 4]
IMMOVEABLE, OBJECT OF A COMM. OPERATION 327
sory. Moreover, the object of the contract is directly an immoveable;
we are not faced with a contract of lease and hire of services. 59
We are, therefore, led to the inevitable conclusion that this judg-
ment of Gamma Realty Ltd. v. Brummer really holds that an immove-
able can, on its own merits, be the object of a commercial operation.
Is this decision, as time goes by, to be considered as a vagary in the
jurisprudence, as an exception that will not be followed? This is an
unlikely fate for it, when we consider the artificiality of the old rule
and of the extent of modern speculative enterprise in real estate and
construction. 0
Indeed, favourable and recent comments along the same lines
have recently been made by Mr. Justice Owen in the Court of Appeal
judgment of Colonia Development Corporation v. Belliveau.61 Colonia
was having twenty-four houses built with a view to selling them for
a profit. It had engaged a contractor by the name of Turcot et Lefort
Limit~e to do the actual building, and the latter had entered into a
sub-contract with plaintiff Belliveau for the plumbing and heating
work. Before the completion of the houses, a flood damaged the heat-
ing systems of several of them. Belliveau carried out the necessary
repairs, and then sued for their cost.
When Belliveau came to prove that he had been asked to do the
repairs by Colonia’s secretary-treasurer, he was met with the defence
that testimony was not allowed to prove the agreement. Chief Justice
Tremblay (with whom Bissonnette, Taschereau and Badeaux, JJ.
concurred), held Colonia to be a trader: 62
Celle-ci faisait construire vingt-quatre maisons par un entrepreneur non
pas dans le but de les occuper ou de les louer mais de les vendre au plus tat.
A cette fin, elle gardait un vendeur sur les lieux. Elle aussi, tout comme
l’entrepreneur, sp~culait sur les mat4riaux et la main-d’oeuvre.
Je suis d’avis que la d~fenderesse 6tait une commergante et que la preuve
testimoniale est admise contre elle.
59 It is acknowledged that this statement may not appear to coincide entirely
with the decisions in Gagnon v. Latouche [1963] S.C. 417 (Marquis, J.) and
Dame Zori Seiwerth V. Gaea Corporation (unreported judgment of Deslauriers, J.,
August 6, 1964, S.C. Montreal 535736). These judgments were rendered in rela-
tion to article 1688 C.C. and the problem as to whether the speculative owner-
builder is subject to that article. They suggest that an owner-builder does not
enter into a contract that is one of sale alone; that there is also involved a contrat
d’entreprise (which comes under the title of lease and hire in the Civil Code).
However, it is submitted that this does not affect the fact that once the con-
struction has been terminated, it is a contract of sale that is entered into.
60 The holding in Gamma Realty Ltd. v. Brummer is supported by Hamel et
Lagarde, op. cit., I, no. 183 at p. 217.
61 [1965] Q.B. 161.
62 Ibid, at p. 163.
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Mr. Justice Owen went somewhat further and made comments of
a more general nature: 63
In my opinion it should no longer be held that if a contract is with respect
to an immoveable then such contract is per se a civil matter. At one time it
may have been the accepted view that gentlemen dealt with land and that
such transactions were on a higher level and distinct from those entered
into by persons lower in the social scale who were engaged in trade and
dealt in moveables. Today, however, there is no justification for such a
distinction. A person who buys and sells or otherwise deals with immoveables
for the purpose of private gain or profit is just as much a trader or a
commergant as the person who does the same thing with respect to move-
ables.
Instead of merely looking at a contract and, on seeing that it relates to
an immoveable, declaring that such contract is per se civil, it is now necessary
in my opinion to look behind such a contract and consider the parties and
their purpose in entering into the agreement. Applying this test to the
present case I am of the opinion that defendant Colonia Development Corpora-
tion with respect to the alleged contract was a trader or commergant. Its
purpose was not to live in the house when completed but to sell it for a
profit. Accordingly I am of the opinion that plaintiff was entitled to offer
proof by testimony against defendant with respect to the alleged contract
relating to work done and materials furnished for the house belonging to
defendant.
Thus Mr. Justice Owen of the Court of Appeal has expressed
himself in favour of abolishing the old rule. The matter cannot be
considered as conclusively settled yet, however, for while immove-
ables were involved, the object of the transaction was a contract
of lease and hire of services – Belliveau was engaged to do repair
work. Until the Court of Appeal or the Supreme Court has expressed
itself on the subject when faced with a contract such as the out-
right sale of an immoveable, the point will still be open to question.
It is interesting to note that the Hon. Mr. Justice Nadeau and
Professor Ducharme, in their recently published book on evidence 04
agree that it is no longer logical to exclude immoveables from com-
mercial operations:
On constate aussi dans la jurisprudence une trbs grande r4sistance it con-
siddrer comme commerciale l’entreprise ayant pour objet de sp~culer sur
l’achat et la vente ou la location des immeubles. Si, autrefois, il 6tait logique
d’exclure du domaine du commerce les op6rations qui avaient pour objet des
immeubles, cette exclusion, A notre avis, n’a plus, de nos jours, sa raison d’atre.
Now that the first steps have been taken in Gamma Realt Ltd. v.
Brummer and in Colonia Development Corporation V. Belliveau to
having immoveables considered as being eligible for being objects of a
commercial operation, the question can be asked as to what objection
631bid., at p. 166.
04 Traiti de Droit Civil du Quibec, IX (1965) no. 511 at p. 409.
No. 4] IMMOVEABLE, OBJECT OF A COMM. OPERATION 329
there can be to such a reform. The view used formerly to be held that
immoveables, being then the principal form of wealth, should receive
greater protection. It was no doubt considered desirable to give more
protection to the wealth of landowning families than to traders who
voluntarily incurred risks with a view to making money. There were,
as well, the added factors that trade had to be able to move with
greater speed and simplicity than ordinary civil acts relating to land,
and in any event real estate was not traded in on anything like the
same scale as it now is.
Nowadays, we find that land is no longer the principal source of
family wealth and that rapid speculative turnovers by traders in real
and this is what really gives the
estate are frequent. Moreover –
coup de grace to the theory that the protection of the civil rules should
always be applied to real estate –
under the mixed operations prin-
ciple the owner of an immoveable is protected anyway if he is a civil
party who is not performing a commercial operation; it is only when
a commercial operation is being performed that the transaction in-
volving the immoveable will be considered to be commercial, and then
only for the commercial party.
For example, Dr. Jones, who owns a house in which he lives as his
as his home, will benefit from the protection of the civil rules of evi-
dence with respect to that property; proof of an alleged undertaking
to sell it would not be able to be made against him without a writing
testimony would not be allowed against
or an admission on his part –
him in the absence of at least a commencement de preuve par 6crit.
Dr. Jones, though, could use testimony to prove an undertaking to buy
his property made by somebody desirous of acquiring the house with
a view to speculating on the property instead of living in the house
himself.
Where real estate is owned by a commercial enterprise that
bought it to further its business, or by a speculative builder who
makes a practice of buying land and building on it with a view to
reselling at a profit, this type of owner will be subject to the commer-
cial rules. But will be subject to the civil rules a person who offers to
buy one of the houses built by such an owner, provided the purchaser
is buying to make of it his home.
All that we are doing here is taking the already well established
mixed operations theory 61 and extending its application to immove-
able property, instead of observing the rigid old rule that immoveables
are always civil regardless of the qualities of the parties, their inten-
65 The mixed operations theory has been applied in: Blais v. Paradis (1933)
54 K.B. 495, confirmed by [1933] S.C.R. 452; Panneton V. Brunet (1924) 36 K.B.
290; Pellerin V. Vincent (1908) 33 S.C. 51 (Court of Review); Naud v. Dolbec
330
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[Vol. 11
tions and the circumstances. The result of the application of this
mixed operations theory is that the trader who is speculating in real
estate will have the commercial rules invoked against him (so that
testimony can be used to prove an undertaking made by him), which
is quite right as he has voluntarily assumed the risks arising from
being in business, and the fact that he is dealing in land rather than
in moveables should make no difference, whereas a civil party who
enters into a transaction affecting real estate without the intention of
speculating will receive the protection afforded by the civil rules. In
other words, by virtue of the mixed operations theory those persons
[1959] S.C. 120 (Langlais, J.); Click v. Acme Waterproof Mfg. Co. [1963]
R.L. 382 (Associate Chief Judge Leduc, Magistrate’s Court); Angers v. Dillon
(1899) 15 S.C. 435 (Court of Review) in which it was held that it is the nature
of the claim from the creditor’s point of view which determines whether the civil
prescription of thirty years or the commercial prescription of five years will
apply; Bachand V. Duchesne (1919) 56 S.C. 132 (Court of Review); Boivin v.
Paquet (1914) 46 S.C. 461 (Dorion, J.); Duphily v. Charbonneau [1945] R.L.
461 (D~cary, J.); Gravel v. Deziel [1965] S.C. 257 at 261-262 (Martel, J.).
Contra: Darling V. Brown (1878) 1 S.C.R. 360 (the notes of Fournier, J. at
pp. 391-394, where he attacked the mixed operations theory; his views do not
seem to have been followed and were effectively answered by Perrault op. cit.,
I, no. 387, pp. 403 et seq., esp. at p. 405). See also Nadeau et Ducharme (op. cit.),
IX, no. 514, pp. 410-411, and no. 518, pp. 414-416. The mixed operations theory
was actually applied to a lease of a store in Blain v. Chavrefils (1919) 55 S.C.
173 (Court of Review), and by the Cour de Cassation, December 5, 1961, D.
1962, 88 (Epoux Verrechia V. S.A.R.L. Chasseau); February 14, 1956 J.C.P.,
1956. 2.9375 (Dame Valette v. Lardeau et Std Beau-Rivage). It was also applied,
though it is respectfully submitted, in reverse, in another lease case, Blondeau
v. Corporation des Abattoirs Rigionaux de Quibec [1950] S.C. 70 (A.I. Smith, J.).
(It must be acknowledged, en passant, that it is an unsettled question as to
whether contracts of employment constitute mixed operations, that is, com-
mercial for the employer and civil for the employee, or commercial for both.
Perrault expressed himself in favour of the application of the mixed operations
theory to contracts of engagement, (op. cit.), I, no. 361 at p. 383, II, nos. 1159-
1161, pp. 627-629. It was applied in or was compatible with: Richer v. Perusse
[1950] S.C. 108 (Andr6 Demers, J.); Cousineau v. Beauvais (1890) 20 R.L. 319
(Mathieu, J.) ; Brown V. Security Life Assurance Co. (1914) 46 S.C. 276 (Court
of Review); Abeles V. Turgeon (1914) 23 K.B. 533; Lajoie v. Thomas [1949]
K.B. 767. The employment contract was considered commercial for the employee
in Graff Brushes Ltd. V. Marvin [1962] S.C. 72 (Andr6 Demers, J.); Legge v.
The Laurentian Railway Company (1879) 24 L.C.J. 98 (C.A.); Charbonneau v.
The Publishers’ Press Limited (1912) 42 S.C. 97 (Bruneau, J.) ; National Paper
Box Ltd. v. Marois (1934) 57 K.B. 170; Yves Germain Inc. v. Leclerc [1962]
S.C. 305 (Dorion, A.C.J.); Bidard v. Berubj [1958] S.C. 248 (Lesage, J.); see
also Dominion Life Assurance Co. v. Beaulieu (1939) 77 S.C. 426 (White, J.).
Even if the view were to prevail that contracts of engagement of employees
are not mixed contracts but are commercial for both, there would seem to be
no indication or reason why the rest of the fields of mixed operations should
not continue to be applicable.)
No. 4]
IMMOVEABLE, OBJECT OF A COMM. OPERATION 331
owning real estate who should be protected will continue to receive
protection, while traders will cease to receive protection to which
they are not entitled.
Until such time as the Court of Appeal or the Supreme Court 66
clearly and decisively puts to rest the old rule that immoveables can
only be civil, it would be interesting to consider making an additional
breach in the application of the rule by way of creating another
exception. We have already seen that an operation which involves an
immoveable but of which the direct object is not really the immove-
able itself (e.g. a contrat d’entreprise whereby the services of a build-
er are leased for the erection of a building), will be commercial if the
elements of commerciality are present. This exception will not affect
the application of the rule to the sale of an immoveable (unless the
immoveable is merely an accessory to a larger sale involving a fonds
de commerce), or the granting of some other real right such as a
servitude.
But what about a lease of a building, such as by a merchant for
the purpose of carrying on business therein? It is true that the object
of the contract is not as far removed from the immoveable involved
as it is with a contract of construction (lease and hire of services).
It must also be acknowledged that leases of immoveables have been
traditionally, and recently, held to be civil, regardless of the purpose
for which the lease was entered into.6 7
It would not seem inappropriate, however, at a time when the
rule that immoveables are always civil is undergoing close scrutiny,
to reconsider the question of leases of immoveables.
It is true that a lease of an immoveable relates closely to the
immoveable – what could be more obvious! But while under a con-
tract of sale the vendor “… . gives a thing to the other.. .” (article
1472 C.C.) i.e. transfers the very object itself to the buyer, and a ser-
vitude is a charge imposed on an immoveable (article 499 C.C.), such
as to constitute a real right in the property itself, a lease is a contract
66 The question of the commercial or civil nature of a transaction does not
seem often to come up for adjudication before the Supreme Court.
67 Perrault, op. cit., I, no. 321 at p. 332; II, nos. 774 et seq., pp. 202 et seq.;
Lyon-Caen et Renault, Traitg de Droit Commercial 5th ed. (1921), I, no. 121,
p. 142; St. Genevieve Shopping Centre Ltd. V. Dalfen’s Limited [1964] S.C.
554 (Batshaw, J.); Corbeil v. Marlean (1896) 10 S.C. 6 (Mathieu, J.).
332
McGILL LAW JOURNAL
[Vol. 11
by which the lessor grants to the lessee the enjoyment of a thing
during a certain time (article 1601 C.C.). It might be argued, then,
that the real object of the contract of lease, is the obligation on the
part of the lessor to furnish enjoyment. This would involve an accept-
ance of the principle that a lease confers only a personal right and
not a real right. There is a substantial body of jurisprudence on the
matter which in turn has been fully commented on, and unfortunately
there does not seem to be a unanimity of points of view. 8 This is not
the place to conduct another study 0, fonds on this problem. If one
were permitted to reason a priori on the matter, one might well be
able to arrive at the conclusion that the mere fact that the law (arti-
cle 2128 C.C.) protects a tenant against a subsequent acquirer of the
leased property through the medium of registration does not make a
lease a real right on the property. All that is done is to protect the
lessee through the giving of notice by registration. The fact that the
lessee has only a personal right would seem to be borne out by the
principle that the lease is valid even where the lessor is not owner of
the premises. 9 The tenant cannot have the lease resiliated so long as
the lessor is furnishing him enjoyment. The true owner, on the other
hand, who, it is submitted, is the only one having a real right in the
property, may evict such a tenant at any time. However, the authori-
ties on the matter are so complex and divided, that it must suffice to
say that if one were able to accept the proposition that a lease con-
fers a personal right only and not a real right, it would follow that
the object of the contract was only a personal obligation to furnish
enjoyment on the part of the lessor, with the result that the object of
the lease was not an immoveable. The contract of lease would there-
fore not be tied to the rule that immoveables are always civil. Indeed,
68 See, inter alia, Faribault, Traitg de Droit Civil du Quibec, XII (1951),
pp. 24-25, 27, 277-283; Mignault, Le Droit Civil Canadien, VII (1906), pp. 361-
365; Snow’s Landlord and Tenant in the Province of Quebec, 3rd ed. by Lovell
Carroll (1934), pp. 10-11, pp. 392 et seq.; Dainow, La Nature Juridique du
Droit du Preneur & Bail dans la loi frangaise et dans la loi de Qudbec (1931);
Lavall~e, Etudes sur le contrat de louage (1931-32) 34 R. du N. 101 at 107-130;
De la Saisie Immobiliare (1927-28) 30 R. du N. 193 at 254-255; Bail enregistrg –
opposition & fin de charge (1935-36) 38 R. du N. 535; Giroux, Le Dderet et le
bail d’immeubles (1935-36) 38 R. du N. 258; Brassard, Quelques r dfleions en
marge du ddcret (1943-44) 46 R. du N. 361 at pp. 368 et seq.; Sirois, Le ddcret
purge-t-il le bail enregistr6 ? (1904) 7 R. du N. 239; Baudoin, Danger des
charges secretes (1904) 7 R. du N. 271 at 277 et seq. The foregoing contain many
references to the jurisprudence to which may be added In re Palais des Sports
de Montrial Ltde [1960] Q.B. 1012 at 1017. See also Ginossar, Droit rdel,
proprigtM et criance (1960), especially at pp. 168 et seq.
69 See, inter alia, Pard v. Cowper [1957] Q.B. 323; Mignault, op. cit., VII,
pp. 226-228; Snow, op. cit., p. 59.
No. 4] IMMOVEABLE, OBJECT OF A COMM. OPERATION 333
the French courts are now tending to hold leases of immoveables to
be commercial where the circumstances are commercial.70
Conclusion.
That an immoveable cannot be the object of a commercial opera-
tion is a rule that originated in old French law, at a time when there
was a sharp dividing line between the trade carried on in moveables
by the merchants and the system of land tenure which was under
the grip of the feudal system. Preserved thereafter in France by the
weight of tradition, it was inevitably accepted into the law of Quebec.
Exceptions to the rule which were created, such as where the
immoveable is only an accessory in a larger agreement dominated by
moveables, or where the transaction while involving an immoveable,
does not have it as its direct object, reduced the application of the
rule. There are increasing signs, however, that the courts may be
prepared to go the whole way and abolish the rule altogether. This
would be a desirable result: the rule never really belonged in Quebec,
questions as to the advisability of retaining it are being raised in
France, from whence the rule came, and the rule no longer has any
justification for its existence, if indeed it ever had any, for there is
no justification for extending to a trader the protection of the civil
rules (inter alia, those of evidence), just because he happens to be
dealing in real estate rather than moveables. Moreover, the mixed
operations theory will protect those who enter into a real estate trans-
action without the intention of speculating by shielding them with
the civil rules while at the same time applying the commercial rules
against the non-civil parties.
Here, then, is an outstanding opportunity for the Quebec courts to
effect a measure of judicial reform, unfettered by any restraining
text of the law.
70 Ripert (op. cit.), I, no. 315 at p. 158; Hamel et Lagarde, op. cit., I, no. 218
at p. 219; Juliot de la Morandibre, op. cit., I, no. 37; p. 40; Paris, May 28, 1945,
D. 1945, 341 (SociWtd mftallurgique glectrique des chemins de fer v. Agence
de produits alimentaires –
a lease of commercial premises between traders);
Cour de Cassation, February 8, 1961, D. 1961, 219 (Epoux Ravel-Bouchet v.
Epoux Argillet-Chadefaux –
contracts of lease entered into by a commercial
enterprize are deemed to be made for the needs of its business and confer a
commercial character on the premises leased regardless of the destination of
the leased premises); Cour de Cassation, December 5, 1961, D. 1962, 88 (Epoux
Verrechia v. S.A.R.L. Chasseau –
the lease by an owner to a trader for the
furtherance of his business, is commercial for the trader); Cour de Cassation,
February 14, 1956, J.C.P., 1956. 2.9375 (Dame Valette V. Lardeau et StM Beau-
similar holding to preceding one). See also Htbraud et Raynaud,
Rivage –
Jurisprudence frangaise en mati~re de procidure civile (1950) 48 Rev. Trim. de
Droit Civil 386 at 388-389; and Cour d’Appel de Paris, February 4, 1963, D.
1963, 351 (Boullaire V. Soo. de gestion imvzobili~re et mobiliare).
