DAIRY INDUSTRY.

Hawera Star, Volume XLV, 1 July 1925, Page 11

DAIRY INDUSTRY.

CONFERENCE OF N.D.A. TO-DAY’S PROCEEDINGS SOME LEGAL PRINCIPLES. To-day’s proceedings at the meeting of the delegates to the National Dairy Association consisted mainly of addresses and the discussion thereon. One of the addresses was given by Mr Robert Kennedy. M.C., LL.AI., the association’s solicitor, who dealt with some lega] principles affecting the dairy industry. In his opening remarks, Mr Kennedy said he wished to speak on broad principles on matters affecting the dairy industry in New Zealand, which he intimated was not based on as sound a basis as could be desired. There were problems which arose because the co-op. dairy industry in the Dominion had undergone great changes since it was founded. The men associated with the industry about the period 1888 could not have dreamt it would later assume such large proportions, and that the problems presented to-day would have to he met. Therefore the memorandum of the companies when originally formed was not. sufficiently comprehensive. As one instance, a company under its memorandum had no power to take shares in another unless such was definitely specified. He considered that some medium should he provided by which companies could do this, and without recourse to the court have the power to enter into the larger sphere of activities which the present-day development of the industry had opened up. • A shareholder must supply to the company capita] in proportion to his contribution of produce. _ Those associated with the industry in the early days had provided for this by stipulating that a man must take up a share for every cow he milked. Later it was stipulated that a share must be taken up for each. 1501 bs of butter-fat. This had been done when the expenses of production had increased, making such a. stop necessary. A further .principle was that every shareholder must, supply the whole of his milk, excepting the amount required for domestic purposes, and such was in operation. He quoted cases dealing with <ii>s legal aspect-, and with reference to one in New Zealand explained that the judge had pointed out the clause in the -articles, if valid, would permit companies to compel a shareholder who was residing in. the Bluff to .supply to Wellington, and although directors could be expected to be reasonable in the matter, .such was the interpretation of the clause, and therefore it was an unreasonable. restraint of trade. A directorate would not-, of course, ask a man who had removed from the district to continue to supply the company, but could reasonably ask that hjs full supply be given when in the district. To provide for this, however, the company must be in a position to prove a- contract with that contention.

Reverting to the subject of extra capital, Mr. Kennedy stressed that if companies wanted a. man to be bound to take up extra capital in accordance with increase in supply it must get him to sign an agreement to that effect. This was a point of fundamental importance, concluded the speaker. A company should be in the position to stipulate that if a man took up shares and received -the benefit provided by the corporation, ho should also be required -to- take up further capital in accordance with .shams allotted under the article® of association.

The principle of suppliers’ agreement was also treated by the speaker, who pointed out the difficulties of securing individual signatures of large numbers of suppliers on the articles of the company. Tie referred to the AlacDonald case, in which it was ruled that the defendant was not compelled to take up additional shares in his company when such were called for by the company. This had caused people in the industry to serious’y consider the position and security of co-operative companies. The principle tha+ -a co-operative dairy company was different from an ordinary trading company was one which lie wished to impress. The former existed for service rathe.r than profit, and legislation should, therefor© be passed to meet tbe special conditions under which the co-operative companies operated. Further legislation should give power to us© the articles as contracts so as to be binding in effect as to- future supplies. On the conclusion of -his -address, a vote of thanks was accorded Air. Kennedy, who gave further information in reiply to questions. NOTICE OF AIOTION.

The following notice of motion to the next conference was given by Air. G. Bucbianan (Hawera) : “That- the Government be requested to alter the present -system of electing the Dairy Produce' Export Control Board, -and that in future the members of the board be elected by directors of dairy companies, voting •to be on an export output basis.”