QUESTION TESTED

Hokitika Guardian, 22 September 1937, Page 6

QUESTION TESTED

v*j ' 1 RIGHT TO DIVIDEND • OF DRY SHAREHOLDERS f , . / TE KUITI, September 20. ; Thd, Gghts of dry shareholders in. dairy, companies., were discussed at length before Mr F. H. Levien, S.M.r when he heal’d a .claim for £4B by John Bell, of Kintehpre, against the Marokopa Co-operative Dairy ’Company, a concern which recently ceased operations. , A’ - k In 1911, when the company was formed, plaintiff had invested £so.in it. On only two years had any dividends been paid on share capital, and, i being a supplier, he received. nothingl^onTtheydistribution of profits by way of butter-fat bonsuses. He held, that the distribution of ,the net profits of the company among the supplier without paying the non,-suppliers a dividend of-6 per cent was an unequal distribution of The profits pf the company, was contrary to the articles./ pf; the company, and was ultra vires, and he claimed that he , was entitled tp, dividends or a ireturn of his capital of £43. ' • ■’ ' , 1 . ; ARTICLE OF THE COMPANY The relevantjirticle was read to the Court, as follows: —“Subject to.such dividends as mgy from time to time be declared on the paid-up share capital, not exceeding \ 6 per centj and after due provision for reserves and other contingencies, The whole of the net profits; 5 of the t company shall g (after , making provision for the payment to members who jare not contributor of milk of a. dividend not exceeding, the . rate aforesaid), be divided and paid > to contributors in proportion to the . 1 value pf the Rutter-fat contributed. . For the company, Air Swarbrick held that,: whereas interest accrued as . ; of right, dividends must be declared l •before'* t-he.w became a debt for which . a person might sue. As they had not . -been declared. Hell, could not sue for nnv dividends He considered he was efi- . titled, to. receive. The plaintiff had his , remedy • in an . application to the - Supreme "Court. ■ A “UNFAIR AND ILLEGAL” 1 Air ET-AI. Alackerseyj for- the , plaintiff, produced balance-sheets •to show that money available for dm* x \ d G nds on Vhare capital had been paid 1 as butter-fat bonuses. Such action, he *: contended was ultra, vires, and contrary io.articles of..the company.. 1 Air Mackersey asked that judgment be entered under the equity, and gopd conscience' clauses There was,, he said, only one .other shareholder .with ■ only £5 invested in the same, position, as Bell. ‘Tim. other dry shareholders Rad ’ },een suppliers; at one time, and had reaped benefits from bonuses,. The. profits had been distributed .in ..a. grossly unfair and, h&. considered, illegal JjMT*’ The, magistrate... reserved his , decision. '