DAIRYING DISPUTE.

New Zealand Herald, Volume LXVII, Issue 20528, 1 April 1930, Page 15

DAIRYING DISPUTE.

CONSTITUTION OF COMPANY. VALIDITY OF ARTICLES. [BY TELEGRAPH. —FItESS ASSOCIATION.] WELLINGTON, Monday. Argument in the case of the Eltham Co-operative Dairy Factory Company against William Johnston, farmer, was continued in the Court of Appeal to-day. The case is an appeal from a judgment awarding the respondent £lOl 16s 7d as bonuses on milk supplied, but it was stated that the case was brought, principally to lest the validity of the company's articles.

Mr. ChrystaJ, for the respondent, submitted that the company could not alter i(s articles- at its pleasure. No distinction existed between dairy companies nnd other companies in this respect, yet the appellant company had endeavored to alter its articles. Ho contended that article 55 was ultra vires, because it imposed an obligation to supply milk in addition to capital, and because it was outside the scope of what might be the subject, matter of regulations made by ihe company for its own internal government, in so far as it dealt not with obligations of shareholders as shareholders, but as suppliers. It was also ultra vires because it was not within tho hcope of the memorandum, as tho ob* j'cts of the company did not give the company power to purchase raw materials from shareholders.

lie also contended that if respondent v.ns bound by article 55, then tho contract contained in that article was illegal and void as being an unreasonable reFtiaint of trade, in that it was unlimited in distance and time, and did not fix il'finite price nor give reasonable right <>f withdrawal. It was also void as a c <mlract because it imposed penalties for » breach. According to tho articles, fiieo/a shareholder commenced to supply, there was no' means by which ho could withdraw without incurring a penalty, unless lie divested himself of his shares. The Court reserved its decision.