IMPORTANT JUDGMENT.

Hawera Star, Volume XLIX, 18 July 1929, Page 6

IMPORTANT JUDGMENT.

PAYMENT OF BONUSES. SUPPLIERS TO DAIRY FACTORIES. A judgment of far-mudiing effect' to the dairy industry in the Dominion was delivered at New Plymouth yesterday in the case of William Johnson v. tlie Eltham Co-op era five .Dairy Conipany. Ltd., which came before the Hon., Mr Justice Ostler at the last sessions of the Supreme Court at New Plymouth,. Thy action was one in which a. claim was made for .£11)1 10s- 7(1 alleged to be the balance due for milk supplied to

defendant company from July. 1924, to February 1925. In substance the easts raised difficult and important questions as to- the validity of certain of defendant’s articles of association. Clause 8 of the articles contained the words:— “Subject to such dividends a-s may from time to time be declared (a® remuneration to sliarehofcleas for capital paid by them to company), the whole of net profits' of company shall be paid to suppliers, provided that each supplier holds one share for every 300 gallons of milk or LOS pounds buitterfat supplied by him during year; otherwise ianv /milk or butterfat supplied -and not supported by one share -shall not be taken into account in ca.lcu’ating propotition of profit.' to which each shareholder shall he entitled.'’ Plaintiff beca-m-e a shareholder in 1911. acquiring 76 shares .meter the original articles then in force. In May. 1912, defendant a.’tered tlieir articles by providing that suppliers should take up one share for every 150 gallons of milk or 06 j wound® of butterfat supplied. In September plaintiff acquired a further 107 shares under the amended articles-. The- basis upon which suppliers were to hold their .shares was not- altered, but certain important alterations were made. These were set out in the judgment. The. plaintiff said lie did not attend the meeting, nor did lie know of the alteration of the articles. From November. 1924, lie supplied only half his milk to the .factory of the defendant company til,'- February, 1925. He was informed by the officials 1 of the company that unless he supplied the whole of his milk to the company he would not be entitled to share in the bonuses. His answer was that lie- did not- know that the articles so provided. If there was a contract the plaintiff said he never /agreed to contract, and if he -did the contract was void, as being in restraint of business.

His Honour expressed tile view that a, company could nob impose upon its members any pecuniary obligation over and above -the obligation to pay to the full amount- due on the shares they have agreed to take. Where a- company wishes to rely on its articles as a contract with its members, it must p-rive aliunde that such contract was made. . . “In my opinion,” says the judge, ' - the company ha® failed to prove a contract in terms of the article with the plaintiff. . . I must- therefore hold that the mfjk supplied during the period in question was supplied under the con tract -a® evidenced by article 8 of the original articles, as amended in 1912, and under the contract- the plaintiff is entithed! to the whole of his share of the net profits. . . As to whether thisi contract, if it has been found that it was -a contract agreed to by the plaintiff. woulid have -been void as unreasonable and in restraint- of trade, I exnressly refrain from deciding,” said his Honour.

Judgment was therefore given for the plaintiff for the full amount, claimed, with co/st-s according to scale, witnesses’ expenses and disbursements. At the hearing Mr A. Cbrysta. l ap-nea-red for the plaintiff and Mr J. L. Weir for defendants.