SUEDE SHOE CASE

Nelson Evening Mail, Volume LIV, Issue LIV, 20 August 1920, Page 5

SUEDE SHOE CASE

iIAGISTBATrIS i UDtilllCM

V (United Press seoefU a;

AUCKLAND, Aug. 18

! As previously stated, at the Magisr trate’s Court this afternoon Mr niiI son, S.M., gave judgment In me profiteering charge preferred at the instance of the Board of Trade against the liooi, merchant linn of Dudley’s, Limited. in giving judgment. His Worship said: — “The facts which are proved, or admitted, are that on the date mentioned, April Ist, defendant sold one pair of black suede court shoes Ladies’) for the sum of £3 7s 6d, which, it is claimed by the informant, was an unreasonably high price. The defendant landed the shoes into the shop at Auckland at a cose of £1 18s 3d. He was called upon by the Price Investigation Tribunal to justify the price charged, and on May 10th, 1920, the secretary and working manager of the defendant company (Mr Goldsmith) wrote to the secretary of the tribunal setting out that he price was made up as follows; —Landed cost £1 18s 3d; overhead charges, 19s 2d ; added on the ground that the shoe was a fashionable one and might have to be sold at a loss, 4s 6d; and, added on the ground that the shoes had been purchased at a cost lower than that ruling at the time of the pricing, 5s 7d : a total of £3 7s 6d. Mr Goldsmith’s evidence was chat the line of shoes from whicn the particular shoe was sold had only been a few days in stock, and that on the day on wliich. this shoe was sold, he had sold three pairs of the same shoe to one customer. In his opinion, of he imported direct from the maker, instead of buying from a local warehouse, Ins firm was entitled to add from 5 per cent to 10 per in pricing the goods.

THE QUESTION OF RISK

“It seems clear that the shoe in respect of the sale of which the charge is laid was of a very fashionable type, and that there was more risk in dealing in such types than in dealing m what one may call everyday lines. This being so, I think it reasonable that tho dealer should have such higher price as will reasonably , compensate him for his risk. 1 have to consider whether the price charged by the defendant in this instance goes beyond that reasonable figure, and, taking all the evidence, I have come to the conclusion that it does. The defendant firm admittedly caters for a high-class trade; that is, its customers arc people who buy fashionable goods. Admittedly. there is risk in such business, and the question arises as to the degree of risk and its compensation. It was urged upon me by the defendant’s counsel that I must have regard only to tho particular transaction involved in tho charge, and that I should not consider the whole of tho year’s dealings in coming to a conclusion as to whether, in this particular instance, the price charged was unreasonably high Tdo not sco, however, how 1 am to gauge tho risk unless I do regard the whole of the year’s transactions. On the face of it. I have no hesitation in saying that the charge of £3 7s 6d for an article which is landed in tin? defendant’s place of business at a cost of £1 1% 3d is, m my opinion, unreasonably high.

PROFITS OVER A PERIOD

“Defendant contends that the shoo' is a risky one to deal in and that, ini common with shoos of like fashionable and extreme nature, it should bear the, additions which he has placed upon it.; In concluding, I feel that I am entitled | to look to the last balance-sheet of the; defendant’s business, and seek there j evidence as to whether or not dealing; in goods of this nature entails such ; rusk as would justify the price charg-j ed. It seems that ibis gives the best! evidence which can he had The bal-l ance-shcet for the year ending March; 31st, 1920, shows that tho defendant companv (which was incorporated in May. 1913, and which is a private comnanv in which tho managing director holds a great maiorifc-- of the i shares) has a capital of £5000.* During the year covered by the balancesheet (produced) a not profit was made of £3931. and this after allowing for a salary to the managing director of £-700. in addition to other costs of conducting the business. The result of seven years’ trading is that tho defendant company, after paying a dividend of 2 per cent on its capital and a yearly salary of £SOO to the managing director, lias still its capital of £SOOO intact, and, in addition to that, a sum of £10,012 of accumulated profit. 1 consider it impossible for mo to come to any other conclusion hut that the defendant could have sold the shoe in question at a considerably lower price and yet ha ve received a reasonable profit on the transaction.

THERE IS NO ALLEVIATION

“In considering tEo evidence I have looked for some indication that the liigli prices charged in respect of some lines would be applied in alleviation of the cost of goods in more general use. Had defendant been able to show that "that was the fact, I should have considered it' a relevant factor in determining whether the sale in question was at an unreasonably high price. That, however, does not appear on the evidence given by Mr Goldsmith.” In conclusion, the magistrate stated that in his opinion an offence had been committed. The fact that defendant’s business was of a special nature had to be taken into account, and had it concerned goods required by the ordinary- run of buyers he should have felt obliged to impose a very heavy penalty.; 'ln the circumstances, the defendant company would be fined £75 and £7 7s costs. At the reauest of Mr McVeagh, for the defendant, to fix security for appeal on general grounds. His Worship fixed the amount at £IOO.