Frame, Alex --- "Fictions in the Thought of John Salmond" [1999] VUWLawRw 32; (1999) 30(1) Victoria University of Wellington Law Review 159

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A Lecture delivered for the Stout Centre's "Eminent Victorians" Centennial Series in the Council Chamber, Hunter Building at Victoria University on 31 March 1999. The Stout Centre intends to publish the series later in the year.

I INTRODUCTION

Two images will provide the background for the study I would like to make tonight of our "eminent Victorian", our intellectual tupuna, Sir John Salmond, who lived between 1862 and 1924, taught law at this College from 1906 to 1907, and thereafter served our country in high legal office until his death.

The first shows the founding Professors of our Law Faculty - Salmond and Maclaurin - together with Sir Robert Stout and other teachers and leaders of the then College, on the steps of this building at its opening on 30 March 1906.[1] Here then is Professor Salmond at age 44, freshly arrived from the University of Adelaide whence enticed - in breach of contract - by Sir Robert Stout. He is already the author of Jurisprudence: or the Theory of the Law,[2] a work praised in the Harvard Law Review as "the work of a bold and original thinker and forceful writer",[3] and by the pre-eminent legal historian Maitland as a "liberal and liberating"[4] text suitable to the needs of Maitland's students. Next year, he will publish The Law of Torts - judged by Harvard University in 1911 to be the best law book written in the English language in the preceding five years.[5] Think of the competition, put aside all doubt that we have here a great writer, and wonder why no example of, or reference to, his work appears in recently published surveys of New Zealand literature.[6]

The second image presents Salmond on the steps of Washington Railway Station, on the morning of 12 November 1921, with other members of the British Empire Delegation on arrival at the Washington Disarmament Conference.[7] Now, he has been a high-level adviser to government for a decade as Solicitor-General, and most recently has taken his place on Chief Justice Sir Robert Stout's Supreme Court. His appointment as New Zealand delegate to Washington reflects the confidence of political leaders earned in times of tumult and peril for the state from the near civil war of 1913 through the desperate and brutal days of the Great War, to the constitutional and territorial manoeuvrings of the Peace. He will be busy today: placing the New Zealand wreath at Washington's war memorial and still finding time to give an interview to a journalist which will get him into trouble with the Canadian delegate, Sir Robert Borden. On the left hand of the tall figure of the Delegation leader, Lord Balfour, is US Secretary of State, Charles Evans Hughes: later this day he proposes to the Conference at its opening the famous ratio of battleships and defences between the major powers - hindsight tells us that the acceptance of this at the Conference gave the balance of military advantage in the Western Pacific to Japan.

The first image reminds us of the connection between Salmond and this building and College in their earliest years. The second recalls that Salmond was a man of two worlds -

of abstract ideas but also of government in action; of philosophy but also of statecraft and realpolitik. Sir Ivor Richardson has pictured Salmond as:[8]

We should not forget Salmond's sense of humour either. It was Froggie de la Mare who recalled that at the first graduates' dinner, Professor Salmond proposed a toast to "The Affiliated Colleges" and gave "the wittiest of speeches" on "the strangest affiliation case in legal history".[9]

Both photographs are also connected with my theme for this evening - the place of fictions in the thought of Sir John Salmond.

II FICTIONS - BEYOND THE LIMITS OF FACT

Salmond's proximity to the remarkable lawyer/physicist Richard Cockburn Maclaurin on the steps of this building in 1906 provides our first connection. Maclaurin, on whom Sir Kenneth Keith, our distinguished colleague, will speak here later in the year, understood well the epistemological status - and the utility - of the fiction. Maclaurin's thesis on "The Theory of Light", published in Cambridge in 1908, contains this statement:[10]

Lon Fuller observes that "the fiction finds its most pervasive application in two subjects that seem in other respects at opposite poles from one another: physics and jurisprudence".[12] The similarity between Maclaurin's approach and that of Salmond with regard to the principles of political economy, or to legal personality, is evident: [13]

As to the relationship between the fiction and "truth", Salmond had stated as early as 1893 his view that the object of the fiction was:[15]

Maclaurin and Salmond are thus epistemological brothers-in-law: they understand the nature, the utilities, and the dangers of the fiction, matters to which I would now like to turn.

III THE NATURE, UTILITY, AND DANGERS OF FICTIONS

Two writers stand out as our guides to the world of "As if": the American jurist Lon Fuller,[16] and the German philosopher Hans Vaihinger.[17] Both thinkers developed a strong interest in the device whereby we deliberately and openly distort or falsify what we know, or believe, to be true. I emphasise that the device differs from the mere lie (and also from simple error) in that it contains, explicitly or implicitly, the admission of its own contradictory nature. In fact, as Fuller's masterly exposition shows, there are many kinds of fiction, and the motives for them also differ widely. Ranging from the heuristic fiction - such as Maclaurin's "ether" - which serves as a tool of inquiry and understanding, to the more prosaic prescriptive fiction by which the law may insist that red be treated as if it were blue.

As to the utility of the fiction, it seems generally agreed that the device is facilitative in permitting escape, if only provisionally, from the tyranny of apparent fact. Vaihinger observes that it provides "an instrument for finding our way about more easily in the world", and comments that: [18]

Sir Kenneth Keith has reminded us in his recent Harkness Lecture[19] of T H Huxley's salutary dictum that "many a pretty theory has been slain by ugly facts", but here is a weapon which turns the tables - we might almost say that "many an ugly fact has been slain by a pretty fiction". In the world of "as if", it is facts which are on the run - subject to a warning.

There is a Buddhist story - which I think Sir John Salmond would have enjoyed. The Master exhorted his students to pay no attention to the illusions and distractions of the sensory world, but to go about their lives listening only for the voice of God. Later, a bruised and dishevelled student came breathless to the Master complaining that he had been walking along the road intently following the Master's instructions, paying no attention whatever to the mere forms of the world, totally alert for the voice of God, and suddenly he was run over by an elephant. "What did you think you were doing?", the Master asked impatiently, "that was the voice of God!".

In reality, we might be safer to say, with Lon Fuller, that facts and theories are in an interdependent and dynamic relationship. Fuller quotes Morris Cohen:[20]

The danger of fictions is that when the moment of truth arrives - when the Faustian pact which had released us from the tyranny of fact falls due - we have forgotten the provisional and suspensory nature of the device. Intoxicated by the freedom so marvellously discovered, we are reluctant to abandon the clarity which it has appeared to create. As Fuller puts it, following Vaihinger:[21]

Common lawyers understand the point well in respect of legal fictions, and a great eighteenth century judge observed:[22]

Vaihinger distinguishes three kinds of statement - each with its own epistemological status:[23]

Vaihinger points out that ideas have a habit of journeying from status to status without it being noticed, calling this phenomenon the "law of ideational shift". Thus, for example, the modern tendency has been to treat some Biblical accounts formerly viewed as dogma as being in the nature of hypothesis, or even instructive fiction. Conversely, Adam Smith's conscious fiction as to motive and political economy has come to be seen as hypothesis or even, in the eyes of some, as dogma.[24] Similarly, the fiction that civil servants sell goods to their Ministers comes to be seen as relating in some way to reality and so to entail consequences for the production and marketing of the "goods" and the organisation of the civil service. Policies come to be seen as good because faithful to the "market model" - forgetting that the "market model" is a fiction. Policies may indeed be good, but assuredly not because of fidelity to a fiction. As Vaihinger characterises Adam Smith's simplification:

IV LEGISLATIVE FICTIONS

Those two little words - "as if" - are dynamite in the hands of the legislator. The world can be refashioned in accordance with the legislator's desires. Salmond as master law drafter was well aware of the utility of treating that which is not true as if it were true, and that which is true as if it were not true. Sir Kenneth Keith has run a computer search on the frequency of the words "as if" in the body of New Zealand statute law and discovers the total to be 7756!

Look no further than Salmond's Land and Income Assessment Act 1907, in which shareholders of a land-owning company are liable as if they were owners of the company's land; equitable owners are liable as if they were legal owners; trustees are liable as if beneficially entitled, and so on. Or his Death Duties Act 1909, in which a ship overseas is treated as if it were property in New Zealand, and shares held overseas in a New Zealand company are treated as if they were property in New Zealand.

Incidentally, it is no accident that my examples come from areas of law which create the temptation to use legal forms to disguise substance and so, by creating legal facts, to avoid undesired consequences - typically taxation.[26] A useful weapon in the armoury of the legislator is to head off these disguises by requiring the legal facts so created to be treated as if they were identical to the legal facts from which it had been sought to escape. Like so many Barbie Dolls, citizens can be kitted out with intentions never formed, transactions never entered into, and benefits never enjoyed. Ships on the high seas can be transported miraculously to Wellington harbour. Truly, if poets are the unacknowledged legislators of the world, may it not be equally true that the legislator armed with the fiction is an unacknowledged poet of the world, before whom the real world is infinitely malleable putty?

I should note here two dangers of the fiction as a device for preventing the exploitation of legal forms to frustrate the intent of legal policy. First, use of the device strengthens the legitimacy and likely success of such exploitation in respect of those legal forms as are not specifically targeted - thus, if legal facts A, B and C are specifically treated as if they were legal fact T (Taxable), then by implication legal fact X, which has not been designated, is not to be so treated, however artificial its existence may appear to be. Secondly, an ever-widening net of fictions may end in frustration and a despairing lunge towards legislation of the Danzig Decree type promulgated by the Nazi regime in the 1930s:

V CONSTITUTIONAL FICTIONS

Here is a second type of legislative fiction - this time at the constitutional level. Salmond's Samoa Constitution Order 1920 declared that:[27]

Note the brevity with which Salmond as draftsman is able to empower the executive government of Samoa, whilst avoiding the question of the exact constitutional status of Samoa under the League of Nations Mandate. Indeed, if the declaration had anything to say about that status it must surely be that Samoa was not part of His Majesty's dominions! But the subsequent history of the fiction with respect to Samoa shows one of the dangers of the device - that if used too boldly, it may come to lose its fictive aspect. "As if" may, in the eyes of interpreters, come to mean "is".[28]

I had promised to return to our second image in connection with fictions. Salmond on the steps of Washington Railway Station in 1921 - about to give an interview to a reporter from the Evening Star. That journal carried a story that night headed "New Zealand Firm for United Empire" and quoted Sir John Salmond as stating that the Dominions had no international existence and recognition separate from that of the British Empire, whatever conventional practices might properly develop to ensure dominion representation within that overarching unity. Other Dominion representatives on the British Empire Delegation were incensed - in particular, the Canadian representative, Sir Robert Borden. Sir Maurice Hankey, the "man of secrets" as his biographer titled a volume on the long-serving British Cabinet Secretary, needed all his skills to placate Borden's resentment of this challenge to Canadian doctrine - and practice - affirming its international status.[29] How then did Salmond explain the apparent concession in the Treaty of Versailles and at the League of Nations of the independent position of the Dominions? Again, the fiction is made to serve:[30]

Salmond's fiction saves both the unity of the Empire and the practical, de facto autonomy of the Dominions. But what is the difference between being "as if" independent, and being "really" independent? Not very much, and here Saleilles' dictum reminds us of another limit on the range of the fiction:[31]

VI CORPORATE PERSONALITY - FICTION AND REALIST THEORIES

It was Sir John Salmond's conception of the nature of "corporate personality" however (and his supposed view of this as fiction) that sparked a debate which I should now note. The issue may best emerge if we consider the thing we call Victoria College - latterly, Victoria University. If we seek its true date of birth we may find ourselves looking at the Victoria College Act 1897 and the words in section 3:

The Act came into force on the date it received the Royal Assent - 22 December 1897.

From that date, therefore, our "thing" had legal recognition, awaiting only the creation of its constituent elements (the Council, Professorial Board, and so on) to spring forth in the pursuit of knowledge.

Victoria University's modern legal identity arises from the Victoria University of Wellington Act 1961, which continues the 1897 model, but with the addition of a purpose:

Salmond's view of the "thing" brought into existence by these legislative declarations was clear:[32]

So what was wrong with this view - this "fiction theory" of corporate personality?

Plenty, thought some legal and political thinkers of Salmond's time and of our own.[33]

Primarily, these critics were suspicious of the fiction theory's insistence that whatever "personality" groups had was a concession by, and a creation of, the State. The clear implication of such a theory seemed to be that the State might make such concession limited, conditional and revocable in a way which it would not dare to do in respect of natural persons - in short, that the theory marginalised group or collective rights in favour of a duopoly on "real" identity involving at one end the individual, and at the other the State, with all else "unreal" and dependent upon the favour of the State. The modern critic might find that danger realised in Mrs Thatcher's dictum (and practice based thereon) that "there is no such thing as society, only individuals".

But, before we divide too quickly along these lines, consider that the reason the New Zealand Rugby Football Union was prevented by Court order from proceeding with its proposed tour of a racially segregated South Africa in 1981 was that it was an incorporated society and so constrained by the purpose which it was required to identify and register under the Incorporated Societies Act 1908 - in its case the fostering and encouragement of the game of rugby. The Court was thus able to find that the divisions in New Zealand society which the tour would produce meant that the NZRFU would be exceeding its powers in proceeding.[34] Individuals could tour, but the artificial person of the Rugby Union could not - classic "fiction theory" stuff! Indeed, Salmond had drafted the Incorporated Societies Bill, and stated in the accompanying explanatory memorandum that:[35]

If I may return to our Victoria College and the nature of its "personality", I would observe that I could decide one day to burn all my books - and I will have a perfect right to do so. But Victoria University may not decide to burn its books - to do so would not be for the "advancement of knowledge" and therefore not in accordance with the statutory condition of its legal personality. Is this conclusion quite so monstrous a denial of the "group right" as Laski suggests?

The State controls - but also encourages and empowers - groups in all sorts of ways. Whether we say that the legal personality of such groups is "real", or a "fiction", does not seem to assist very much with the policy choices. In fact, Sir John Salmond may be given the last word:[36]

The semantic basis of the argument is well shown in New Zealand by the debate about legal recognition of Maori tribes or iwi. The Runanga Iwi Act 1990 declared that:

The Act went on to provide a process by which runanga (tribal councils) could, if tribal members so desired, be established, together with a "Charter", agreed by the tribe, setting out "the principles by which the runanga will be guided in the conduct of its affairs". The runanga could then be incorporated, and would have "all the rights, powers and privileges of a natural person", and was to be recognised by the Crown and all public autuhorities as "the authorised voice of the iwi".[37]

The Act was short-lived, repealed with the change of government in 1990.[38] The ostensible reason for its repeal was that iwi were autonomous and were not to have their identities dependent upon government recognition. It will be seen that this is a variant of the "realist" theory - iwi identity exists independently of the state. Indeed it does - as Salmond would say, the tribe is a very real thing - but to the question whether the tribe has "personality", the answer must be that it has "iwiality", and the trouble is that "iwiality" does not answer such questions as: can iwi sue? can iwi be sued? can iwi own property separately from the members? can iwi be taxed on income from commercial activities? How to choose between rival claims to represent iwi? Statutory incorporation and the creation of legal personality - as was proposed in the 1990 Act - could answer those questions, the only issue being whether there are good reasons for allowing it to do so.

VII A CONCLUSION

Fictions can afford to lose contact with facts - although we must keep an eye out for elephants! Indeed, as we have seen, that is their very purpose - but they cannot afford to lose contact with purpose. It is purpose which keeps the fiction honest, and the relationship between fiction and purpose is as important as that between hypothesis and fact. When the goal is reached, or the purpose exhausted, it is time to consider whether the fiction should be dismantled like the scaffolding of a completed building.

Even Sir John Salmond's unbuttoned views on fundamental beliefs reflect the provisional and instrumental approach we have seen to characterise the use of fictions.

In his collection of aphorisms published privately in 1920 appears the following:[39]

[*] Director of the New Zealand Institute of Public Law, Faculty of Law, Victoria University of Wellington.

[1] The image was published in the New Zealand Mail of 11 April 1906 with the caption "Group taken at Victoria College". Sir Robert Stout (Chancellor of the University), Members of the College Council and Professorial Board. Stout is top-hatted in the centre-front, the other top hat in the front is Sir Francis Bell. Salmond and Maclaurin are the central figures three rows back. I am most grateful to the author of the forthcoming history of the University, Ms Rachel Barrowman, for assistance with identification of other figures in the photograph: Maurice Richmond (another teacher of law, and another mathematician/lawyer! Richmond, a latecomer to law, had won the de Rothschild Exhibition for Pure Mathematics at University College, London, in 1880 - just before Salmond's time there), Professors Mackenzie, Rankine Brown, Kirk, Easterfield, and the Registrar, C P Powles.

[4] H A L Fisher (ed) The Collected Papers of Fredrick William Maitland, Vol 3 (Cambridge University Press, Cambridge, 1911) 419.

[6] Neither Roger Robinson and Nelson Wattie (eds) The Oxford Companion to New Zealand Literature, (Oxford University Press, 1998), nor Terry Sturm (ed) The Oxford History of New Zealand Literature in English (2 ed, Oxford University Press, 1998), make mention of Salmond's contributions.

[7] This image appeared in New Zealand Freelance of 5 April 1922 with the caption 'British and American Delegates - an Interesting Group'. In front: Lord Lee (First Lord of the British Admiralty), Sir John Salmond (New Zealand's representative), General the Earl of Caven (a British delegate), Sir A J Balfour (now Earl Balfour) enjoys a little joke sprung on him by Mr Hughes (United States Secretary of State), Senator Pearce (Australian Minister of Defence). Standing at back, on left hand side: General Pershing (USA) and Sir Maurice Hankey (Secretary to the British Cabinet). The American host, Hughes, had a truly stellar judicial career at both domestic and international levels.

[8] Sir Ivor Richardson, President of the New Zealand Court of Appeal, very generously spoke at the launch in this building, on 12 October 1995, of my biography Salmond: Southern Jurist, (Victoria University Press, Wellington, 1995).

[9] F A de la Mare, "A Knight's Progress" in Ernest Beaglehole The University and the Community: Essays in Honour of Thomas Alexander Hunter (Victoria University College, Wellington,1946) 12. At the same dinner, Professor von Zedlitz is reported as making 'a frontal attack' on the Chancellor, Sir Robert Stout:

[10] The Theory of Light : A Treatise on Physical Optics, (Cambridge University Press, Cambridge, 1908). For brief discussion, see Salmond: Southern Jurist above n 8, 72 at n 2. The quotations are from pages 10 and 4 of Maclaurin.

[12] Lon Fuller, Legal Fictions (Stanford University Press, 1967). Fuller suggests that it is the urge towards comprehensive system which provides the common interest.

[13] Salmond, Jurisprudence, (7 ed, Stevens & Haynes, London, 1924) 45-46. It is convenient to draw throughout this paper on the 7th edition of the work, published in 1924, being the last for which Salmond was personally responsible.

[15] Salmond, The First Principles of Jurisprudence, (Steven and Haynes, London, 1893) 85.

[16] Fuller's ideas on Fictions first appeared in 1930 and 1931 in 25 Illinois L Rev but are now conveniently brought together in Legal Fictions, (Stanford University Press, 1967).

[17] Hans Vaihinger (1852-1933) started his thesis in 1876, and published Die Philosophie das Als-Obs (The Philosophy of As-If) in Berlin in 1911. The work was first published in English translation (by C K Ogden) by Kegan Paul in 1924. In a note in the Encyclopedia of Philosophy, Vol 8, 224, Rollo Handy states:

An interesting entry in Katherine Mansfield's Notebook in 1921 in relation to Vaihinger's book is discussed in Salmond: Southern Jurist, above n 8, 32 and n 36.

[19] Rt Hon K J Keith "The Impact of International Law on New Zealand Law" (1998) 6 Waikato LR 1.

[20] Fuller, Legal Fictions, above n 11, 133-134. The quotation is from Morris Cohen. "The Place of Logic in the Law" (1916) 29 Harv L REV 622, 626.

[22] Lord Mansfield CJ in Morris v Pugh (1761) 3 Burr 1242, 1243, quoted in Fuller at 51, n 4.

[24] Vaihinger uses this example, cf Salmond above, pointing out that Adam Smith treats human action and the conduct of business as if their driving force lay in but one single factor - egoism. By cutting away all other motives - goodwill, habit, etc. - it is possible to deduce the relations of trade and commerce. Vaihinger, above n 17, 20.

[26] Of the 7756 "as ifs" on the New Zealand statute book, 325 are in the Income Tax Act 1994. For a discussion of the techniques available to control tax avoidance, see John Prebble, "Should Tax Legislation be written from a Principles and Purpose Point of View or a Precise and Detailed Point of View?" [1998] British Tax Rev 112. The concept of 'ectopia', which Professor Prebble has developed to explain the problems of tax law, would appear to be essentially the same as that of the fiction understood sufficiently widely.

[27] The background to the League of Nations Mandate, the New Zealand response, and Sir John Salmond's involvement as Solicitor-General and draftsman is treated in Salmond: Southern Jurist, above n 8, 189-197.

[28] I have in mind here, of course, the Privy Council's decision in Lesa v Attorney-General [1982] 1 NZLR 165.

[29] The background is dealt with in some detail in Salmond: Southern Jurist, above n 8, 202-210

[30] These observations are found in Sir John Salmond's subsequent report to the New Zealand Parliament [1922] AJHR 1-15, 15.

[31] Saleilles, above n 13, De La Personalité Juridique, 613, quoted in Fuller, Legal Fictions, above n 10

[33] I discuss the views of the critics, principally Maitland, Figgis, and Harold Laski in Salmond: Southern Jurist, above n 8, 68-71. Laski is particularly severe in letters to Holmes.

[34] I refer here to Finnigan v NZRFU [1985] 2 NZLR 181, see Salmond: Southern Jurist above n 8, 90 at n 38. Technically, the finding was that the conclusion was sufficiently arguable to sustain an interim order.

[35] The memorandum is found in Parliamentary Counsel Office, Bill Book 1908, 4/1.

[36] Salmond, Jurisprudence, 7 ed, above n 13, 342. The emphasis is Salmond's.

[39] John Salmond, 'My Son' said the Philosopher; being the Meditations of the Late Epaphroditus McTavish.

Victoria University of Wellington Law Review

Frame, Alex --- "Fictions in the Thought of John Salmond" [1999] VUWLawRw 32; (1999) 30(1) Victoria University of Wellington Law Review 159

FICTIONS IN THE THOUGHT OF SIR JOHN SALMOND

I INTRODUCTION

II FICTIONS - BEYOND THE LIMITS OF FACT

III THE NATURE, UTILITY, AND DANGERS OF FICTIONS

IV LEGISLATIVE FICTIONS

V CONSTITUTIONAL FICTIONS

VI CORPORATE PERSONALITY - FICTION AND REALIST THEORIES

VII A CONCLUSION