Citizens Insurance Co of Canada v Parsons[1] is a major Canadian constitutional case decided by the Judicial Committee of the Privy Council, at that time the highest court of appeal for the British Empire.

The Judicial Committee held that the provincial power included regulating individual business contracts, in this case insurance contracts, while the federal trade and commerce power related to matters that affected Canada as a whole, but did not extend to regulating particular businesses.

[2] Parsons sued to collect on the policy and contended that it did not comply with the presentation requirements of the provincial Act.

[3]: 221 The third case involved Ellen Johnston, who held a policy of insurance with the Western Assurance Company, which refused to pay on the basis that they had been incorporated by the former Province of Canada and continued under federal legislation, and therefore were not required to comply with the provincial Fire Insurance Act.

[3]: 222 In each case, the Court of Appeal rejected the arguments of the insurance companies and ruled in favour of Parsons and Johnston.

The federal power to regulate trade and commerce applies to Canada as a whole, but does not take the law of contract out of provincial jurisdiction.

The Court ruled: As was the practice at that time, each judge wrote their own reasons, except for Justice Strong, who concurred with the majority.

If the business of insurance is connected with trade and commerce, the legislation we are now considering does not attempt to prohibit the carrying on of the business of insurance, but having the property and the civil rights of the people of the province confided to them this legislation, in relation thereto, is simply the protection of such property and of such rights.

In particular, Gwynne said: Citizens’ Insurance was the thin end of the wedge to bring about Provincial Sovereignty which I believe Mr. Mowat is labouring to do.Citizens' Insurance appealed to the Privy Council, and Mowat asserted his influence on the case by having the province assume Parson's costs and by briefing his lawyers to argue that the provincial legislative jurisdiction should be broadly defined, and the federal government could not encroach upon it.

The Queen's Bench verdict was reversed, however, because of outstanding questions as to the interpretation of certain interim notes and the matter was remitted back to that court for reconsideration.

If the words had been intended to have the full scope of which in their literal meaning they are susceptible, the specific mention of several of the other classes of subjects enumerated in sect.

[8] Smith declared that the federal incorporation power arose from s. 91's introductory words: in relation to all Matters not coming within the Classes of Subjects by this Act assigned exclusively to the Legislatures of the ProvincesS.