SUPREME COURT

Otago Daily Times, Issue 17323, 24 May 1918, Page 7

SUPREME COURT

CIVIL SITTINGS. Thubsdat, Mat 23. (Before his Honor Mr Justice Sim.) WEIB V. HABWOOD. Claim £150, compensation for breach of Agreement with regard to the sale of land and stock at Puerua. Mr Finch appeared for the plaintiff; Mr R. R. Stewart for the defendant. Mr Stewart said he had not heard from ■ his client since July. _ Ho had been told that Harwood was living in Milton or in its vicinity, and no reply had oome to hand. Then, on the 20th inst., he had received from tho plaintiff's solicitor notice of an amended statement of claim. His Honor pointed out that the amended statement of claim was filed on the 22nd inst., and defendant was entitled to seven days to answer it. Mr Finoh said tho case had been sent up to him, and ho had taken it for granted that his friend knew the position. For himself, he had never until that moment heard of tlie date of filing the amended statement of claim. His Honor said the defendant was entitled to seven days, and therefore the case could not be taken at the present sittings. The parties might arrango that it should be taken after his return from Invercargill; if not, it would have to stand over until the next sittings IN BANCO. OKIOINATINQ BUILMONB. Co-operative Fruitgrowers' Society of Otago v. the Central Produce Mart. —This was an originating summons for a declaratory judgment determining a certain question.—Mr Dawson appeared for the piaintiii, Mr Calvert for the defendant. When the Cooperative Fruitgrowers' Society was formed it had no premises in Lhinedin, and it was arranged that it should purchase the business and promises of the Central Produce Mart. The principal question to be settled was whether the society had power to give debentures in payment of £5000, part of the purchase money. In this previously hoard case, his Honor gave judgment. He said the first question submitted for determination was whether or not the society's rule empowering it to borrow was valid. In Laing v. Reed, -it was held that there was provision authorising a building society to make a rule empowering the trustees to borrow a limited amount of money for the purposes of the society. Lord Hatherly, L.C., in the course of his judgment, expressed the opinion that a rule authorising the trustees to raise an unlimited sum of money, wholly regardless of the contributions which might be made by members, would be contrary to the intent and scope of the Act. This opinion, however, was disapproved of by the House of Lords in Murray v. Scott, and a rule was held there to be valid which authorised the directors from time to time as occasion might require to borrow any sum of money at interest from any persons. In the course of his judgment Lord Selborne, L.C., said that the only real and true limit to the rule-making power as to a matter not governed by the general law of the realm or by an express prohibition in the statute must be that pointed out by Gifford, L.J., in Laing v. Ree<}—namely, the power cannot be so exercised as to make the society a thing different from a benefit building society . for the purposes and in the manner defined by the Act. These cases seemed to be much more in point than any of the cases cited by counsel during the argument, and were authority for holding that the rule in question was a valid exercise by the society of its rule-making power. In this case the question was whether or not the society might take power by its rules to borrow. In his opinion it oould do so, and the power was not limited in any way by the provisions of section 10 of the Act. He thought, therefore, that the answer to the first question was that the rule was valid. The next question raised was whether or not the plaintiff had power to issue debentures to the defendant for the purpose of securing the payment of moneys owing under the agreement of the 20th October, 1917. The plaintiff agreed to purchase the business subject to all debts and liabilities owing by the defendant in respect thereof, and undertook to indemnify the defendant against such debts and liabilities. There was nothing in the rules of the plaintiff which authorised it to make such a purchase. It was clear that, in the absence of express authority to do so, a company incorporated under the Companies Act would not have power to make such a purchase. In Ernest v. Nicholls, Lord Cranworth, L.C., said that the purchase bv one company of the goodwill and the whole concern of another was a transaction m which ordinarily speaking a company "would not be justified in engaging, because it oould not be said to be within the ordinary scope of the object of any company to purchase the goodwill of another. In the same case Lord We'nsleydale said that a contract for the purchase by one company of the trade of another ii. Car j i d # not bind unless authorised by the deed of settlement and made strictly according to its provisions. Tho same view of the question was taken by Vice Chancellor Page-Wood in the cases of in re the Lra Insurance Company. There was also the New Zealand case of D. Henderson and Co. v. DanieU, in which the Vw ? f Appeal inclined to take'the view that the sale there in question, which was of nearly all a company's assets, was not one which could be made under the general powers of the company. It was clear that a society registered under the Industrial and Provident Societies' Act could not have greater powers than had a •company registered raider the Companies Act, and in his opinion the purchase of the defendants business was ultra vires of the p.awtifF. For this reason the second question submitted ;by 'the summons must be answered in the negative.