CROWN v. DISTRIBUTORS LIMITED.

Otago Daily Times, Issue 19316, 31 October 1924, Page 2

CROWN v. DISTRIBUTORS LIMITED.

ALLEGED BREACH OF COMMERCIAL TRUSTS ACT. CLAIM FOR PENALTIES. MORE EVIDENCE FOR THE PROSECUTION. In the Supreme Court yesterday, before His Honor Mr Justice Sim, the hearing ol the case in which the Crown proceeded against Distributors, Ltd., and certain allied companies was continued for the third day. Ihe Crown claimed a penalty of £500" from each of the following: L'rown Milling Co., Dunedin; Fleming and Co. (Invercargill),' the Atlas Roller Flour an.) Oatmeal Mills (Evans and Co., Timaru) Wood Brothers (Christchurch), and Distributors, Ltd (Christchurch). An injunction was also asked against the Crown Milling Co., Fleming and Co., the Atlas Roller Mills, and Wood Bros., prohibiting each defendant from continuing to employ Distributors, Ltd., as its sole selling agent for flour, bran, and pollard in pursuance of an agreement and from entering into any similar agreement in future with Distributors, Ltd., or any other person, firm, or company. An injunction was also asked against Distributors, Ltd., prohibiting it from continuing to act as the sole selling agent of the other defendants. The costs of the action were also claimed. Mr F. B. Adams (Crown Prosecutor), with Mr J. B. Callan, appeared for the Crown, and Mr S. Solomon, K.C., with him Mr W. D. Campbell (Timaru), for the Crown Milling Co. and the Atlas Co., Mr M. Myers, K.C. (Wellington), with him Mr A. N. Haggitt, for Distributors, Ltd., and Mr C. 1\ Skerrett, K.C. (Wellington), with him Mr John Sim, for Fleming and Co. and Wood Bros. Messrs Adams and Callan continued the examination of their witnesses. William Whitelaw Millar, secretary and director of A. C. Millar's, Ltd., Invercargill, and president of the Southland Bakers Association since March last, said he was a member of the association in 1922. Ho knew of nothing of a movement at that 'time by the New Zealand Bakers' Association to assist and encourage the formation of Distributors, Ltd.. His firm had a. bakery, two tearooms, and three shops, and there'was no larger bakery business in Invercargill. Before Distributors, Ltd., came into operation they used Fleming's flour off and on. Prior to that there were special discounts to be got with almost any flour. About December, 1923, they were in desperate- straits in regard to their supplies of flour. From August on to Lie end of the year Fleming's flour was very unsatisfactory, and they wore _ unable to get sufficient supplies of Dunedin or Oamaru flour. They did not use the poorer local flour for broad but wero able to use it in the smallgoods denartment. Y.nen he asked Mr Wish, Southland manager of Distributors, Ltd., for supplies of northern flour the answer was that the Southland quota was oversold. His firm wrote and wired direct to various northern millimr companies. In December thev required 15 tons of flour to carry on t,ll the end ot the month. They did not want Fleming s as they already had more than hey could use in the bakery. Mr Wish told him he would have to take 10 tons of Fleming s and Mr Wish would give him five tons ot northern flour. Witness P^V^? B *,™ Crown Milling flour thrown Distributor and about the same time he got another Pve tons of it through Bra-y Brothers. As the result of a test it was found that articles baked with Flnr*„«?', flour sole v wero quite unsaleable Fe did not think ii was possible at that tune for n baker to mal<e good brr"d out of F emmg Pour. He thovcht some of that „„; J." ,*„ a ret-nned. TTJ, enmHvnt »W Flomin.rVflo.n- covered from August .19*3, to January, 1924. In December Inst he unsuccessfully attempted to gel. M;l i«ran and Bond's flour, but was given Meek s because it was the "least over-sold." Hjb price was lUd per 41b loaf, cash over the counter, oi- is Oid cash for bread delivered, with a booking fee of id. The price the miller chanred for his flour had. an effect on the baker's method of charging:. Before Distributors the practice always was for millers to cart the flour to the bakery. A circular was received from Distributors on the subject but no notice was take* of it. To Mr Skerrett: Before Distroiutors came in his firm had used as much as tons of Fleming's flour in a month. It was then quite good. He had complained ing's flour more particularly since Distributors started. After January last Fleming s fiour had imr.roved in quality, and they had been using substantial quantities of it since. Before August of last year ho had complained of the. quality of Fleming s flour to Flemings and to Distributors. To Mr Myers: He did not think wheatgrowing was one of the recognised industries ol Southland. Just prior to Distributors there was a general cutting of flour prices throughout New Zealand, and special discounts were allowed. In Invercargill the euttiii"- lasted only about a fortnight. Flour was rediiced about £2 a ton, and on the top of that purchasers could get about 5 per cent, discount. Speaking generally, there was.not a drop in the pnoos of bread. This was a secret rebate, and all the. bakers did not participate. He did not anticipate that this would last long. . To his Honor: He thought his firm had bought a little extra while the price -cutting was on. Gavin Baird Millar, brother of the previous witness, said he also was connected with tho firm of A. C. Millars (Ltd.). He fas a practical baker with 17 years' experience. Before Distributors came in they used whatever flour they thought best. Two and a-half years ago they used nothing but Fleming's flour for six weeks or two months. After Distributors started they had had as many as seven brands in. the bakehouse at one time. They tested them all, and always made a mixture. Before Distributors they never had any difficulty in getting the brand which they at the time desired. Afterwards they found difficulty about this. He often saw Mr Wish, and the only explanation was that certain brands wero over-sold in his district." When Distributors was formed and for some time after th e quality of Fleming's flour was poor. It was never as good then as it was now. For a time they were getting 23 or 30 tons a month through Distributors, and about 10 tons from outsido sources They could not get as much flour except Fleming's as they desired. At the time he conducted tests it was not possible to make good bread with Fleming's flour. . To Mr Skerrett: Up till a certain period 'witness and his brother had used a good deal of Fleming's fiour, which proved very satisfactory. They started the manufacture of bread about six months before Distributors came into existence. Their present orders were for 20 tons of Fleming's flour and from 20 to 22 tons of northern flour. The results from those brands' were quite satisfactory. Witness could not say what proportion of Fleming's flour they used betweon October, 1922, and the beginning of 1924. At one period the amount was only about three tons a month. To Mr Solomon : It- was a distinct advantage to have a mixture of flours. In December, 1923, or perhaps a littlo earlier, his firm's order to Distributors went up by 10 ions owing to the difficulty in securing supplies from outside mills. He understood that this difficulty was due to the dry season. To Mr Callan: The firm's business had not suffered. Silas Leslie Beer, manajring partner of the firm of Helm and Dickson, storekeepers, Kiverton, said the firm had boon in existence for two and a-half years. Prior to the formation of Distributors no dimenltv was experienced in getting supplies of flour. Since Distributors started there was trouble in regard to flour. The difficulty was very great from September, J 1923, until February or March. 1924. The firm's delivery motor would come back with as much flour as it. took away, as the customers would not take Fleming's fiour. Efforts had been made to get other brands of flour, but Distributors would not supply them. On one occasion Mr Wish promised to supply him with some nothcrn flour, but if witness remembered aright he was told that it would be the last he would get. To Mr Myers: At present witness was selling some of Fleming's and .some of Hudson's (lour. Apart from January witness had been able to get northern floifr during the current year, but not in the quantities he desired. In December and January last, owing to the trouble nt Fleming's mill, there was n general demand in Southland for more northern flour. Fleming's flour had been quite satisfactory since Australian wheat had been used, and tthe demand for it was good'. Witness was one of those who had complained to the Hoard of Trade. Wm. O'urrie, secretary of the Progress Industrial Co-operative Society, Invercargill, said the society had been iu existence

for about six years, and had boon defiling in flour for about five years. I.ofore the formaNon of Distributors the society baa used other flour besides Fleming's and had no difiiculty in getting supplies. After Distributors started it got very little northern /lour. The trouble in this respect started very soon after Distributors came into txisteiice. When witness spoke to Mr Wish about securing supplies of northern flouv he was informed that it could not be supplied to his society unless it was supplied to other societies. The effect of not having northern flour was a loss of trade. In October, 1923, and in January and May, 1024, some of Fleming's flour was returned. He did not think any was returned prior to the publication of an advertisement by Fleming's firm invitrnp the return of flour. In January, 1924, he ordered 30c\vt of Steven's flour from the Dunedin Co-operative Society. Another consignment of 30ewt was obtained from the same source, but an attempt to secure a third lot cf 30cwt was not successful. To Mr Myers: At present the society stocked Fleming's flour chiefly, but also had some of .Steven's. Prior to August, 1923, the society stocked Fleming's flour principally, this being due to the difficulty | in getting other brands. I William John Ward, store-man and local buyer for J. M. Brown (Ltd.), merchants in Invercargill, said that before the formation of Distributors his firm was agent for Steven's and Miilligan and Bond's flour. 'lhey sold to bakers and storekeepers,, and did business with about 40 Invercargill storekeepers. Some of the larger storekeepers bought in 30owt lots. That quantity was sent to Invercargill'free of railage. Most of the storekeepers bought smaller lots. His firm purchased approximately 100 tons a month from the two firms mentioned. Outside Invercargill,they sold flour to a large number of country stores. Bofore began there had been no ■ trouble in getting the flour from Stevens and Milligan and Bond or in disposing of it to customers. When Distributors commenced his firm was ddvisea that its agency had ceased, and for three months they made no inquiry for these flours. Many of the small shops in. town, however, requested them to stock the' flours as before because Distributors had no depot ,in Invercargill. Witness began by ordering direct from Steven's, and got it for about six months. About July of last year they got a letter from Steven's telling them to order direct from Distributors. Witness for some months" made requests over the telephone to Mr Wish, then Mr Wish advised them that they could not get any northern flour. The reason was that the allotment for Southland was" already sold. Mr Wish said witness's firm could not get any flour, and that Distributors (Ltd.) did not require its business. Witness offered to give Mr Wish a standing monthly order, and later still ho offered to pay railage. His firm got some of Steven's flour in August, 1923 Mr Ringer, of Distributors, on a viist to Invercargill promised to do what he could to secure them a supply of flour for customers. Nobody connected with Distributors had suggested that the difficulty was that tne northern flour did not exist. To Mr Myers: His firm was agent for the firms of Steven and Milligan and Bond. He did not get more than 2£ per cent, commission for the flour sold to the bakers. Prior to Distributors he knew there was a certain amount of cutting going on among the millers. He did not deal in Fleming's flour, but he knew there had been a misfortune in Fleming's mill about November, he thought, of last year. This trouble naturally caused a greatly increased demand for northern flour. He was not told by Distributors that Steven's mill could not supply because it was closed down. The baiters had offered to pay his firm commission if it could have got northern flour for them. He had no knowledgo of Mr Qnin, one of the directors, going round to get signatures to a petition. He had asked Mr Brown to make complaint to the Board of Trade. John Mactiibbon Shanks, manager of Mat-Gibbon and Co. (Ltd.), retail storekeepers, East Gore, said his firm handled chiefly Milligan and Bond's flour. There was difiiculty in getting this flour in Octobar and November, 1823. They were cut down on several occasions. He always communicated direct with Milligan and Bond. On one occasion an advice was sent to them by Distributors saying that the flour from Milligan and Bond was on its way. Mr WI3II rang up to say they could not give it to him, but next morning he rang , to say ho found he could give it to them. The Hour arrived all right. To Mr Skorrett: He had been able to purchase the balance of Milligan and Bond's Hour elsewhere when Distributors did not complete his j?rdor. He, had kept a stock of Fieming's'nour'before Distributors started and had had no difficulty with it in October and, JvovembeE of year. ?v Ja'mes Brownlie, of the firm of J. Brownlie and Sons, storekeepers, Gore, said he had been in business there about 15 years. He handled Milligan and Bond's flour and also Fleming's. Customers seemed to require more of the northern flour. Beforo Distributors he had never found any difficulty in getting Milligan and Bond's flour. He bought it outright and got per cent, discount. Distributors started to out down his orders of Milligan and Bond's flour in October of last, year and cut him off »lfcogether in Novomber. He was forced to keep using Fleming's flour. Mr Wish, when complaint was made, said he would do his best for witness, but there was no definite arrangement. For about a month customers were coming back returning Fleming's flour, [t ha<J a peculiar smell and an unusual colour at that time. The flour returned was that sent out by him in December, 1923. Thomas Steven Searle, baker, Dunedin, said he had had 30 years' experience as a practical baiter. Before Distributors started he ordered his flour straight from the mills and had no difficulty whatever except on one occasion. When Distributors started he rang up the mill as«usual, but he was always referred to Distributors, so he bowed to the inevitable and ordered through Distributors. He thought the quality of the flour now was as good; as before. A lot of Crown flour ho received in December, 1923, was an exceedingly low grade flour. One lot of 350 loaves made from it was unsaleable and they were 'destroyed. They had lots of complaints about other batches from the same flour though the bread was still eatable. They lost some customers and some took less bread. His Honor: I do not see how you can blame the combination for one case of bad flour. M Adams: It depends partly on what other witnesses say about the same occasion. Mr Myers: We did not make the Orown flour. . His Honor: How is the combine responsible? Mr Adams : I recognise that I must carry this further before I can make any use of this. His Honor: I do not think it is any use labouring the point. Mr Adams: Had it not been for this regulation of the market the -Crown flour would never have got into the market. His Honor: Mr Searle does not say he did not get all the flour he ordered. Continuing, witness said that in May of this year ho ordered a ton of special flour rom Steven's mill of very high grade for the bakers' exhibition. He got it ultimately, but 100 late for his purpose. Stevens were prepared to deliver it, but Distributors said Steven's were oversold, and would not. allow if to be delivered. He sold bread for Is the 41b loaf, delivered to customers. Since Distributors started Oamoru flour had been raised 10s in price. To Mr Solomon: He was quite satisfied with local flour. He did not like Distributors, but they had treated him very fairly. Because of new machinery put in (hero was bad flour turned out by the Crown Milling Company, and the manager immediately gave him compensation. The delay in getting the special flour from Steven and Co. was about two days. It might have been three or four. William Gumming Hendry, baker,, at South Dunedin, said he had been in business for five years. Up to till the time of the formation of Distributors he had no difficulty in getting brands of flour he required. He had been in the habit of using half Dunedin flour and half Oamaru flour. Since Distributors camo into existence the price of Oaniaru flour had been raised by 10s per ton. Of late he had been ordering Steven's. Hcrraway's, and Hall flours. ' At present he was getting what ho ordered, but at times he had bean forced lo take Crown flour, which he had not ordered. Ever since Distributors started he had teen asked to take Crown and Hudson's flours, which he did not went, but which he Kid to take because the agents for Distributors had told them that the other mills were oversold. He bad had trouble with flour from the Crown , and Hudson's mills. He had trouble with Crown flour in November, 1923. and Julv. 1921. and with- Hudson's in February, 1924, the qunlitv of his bread being affected, with the result that he lo=t business. At the end of August, 1924, ho ovdered from Distributors six tons of Steven's and ■ Harraway's flours, and rereived one ton as a result. He had no flour at that time. Mr Nancarrow (Distributors' agent) visited witness's shop, and witness expressed himself strongly about the matter. Mr Nancarrow said that the brands which witness wanted were oversold, and that he would b.a*» to wait oatil

the beginning qf next month. Witness told ftlr Nancarrow that he had been told by the carters that Steven's mill was chock-full of flour. He could not say whether Mr Nancarrow answered him. To Mr . Solomon: Witness was being treated all right at present, and things hod been satisfactory since August 1. To Mr Myers: Witnea knew what the gazetted .price of flour was. Mr Myers: Do you expect to get Oamaru flour in Dunedin for 10s per ton less than any other purchaser has to pay? Tho witness did not answer. Gifford Alexander Laurenson, partner in the firm of J. G. Laurenson and Son. bakers and storekeepers, Roslyn, • said he had not had experience in the baking of flour. His firm had a considerable reputation for its,baking. Before Distributors started he had not had trouble in getting the brands of .flour he wanted or with l its quality. Ho used Dunedin brands and flour from Clark Brothers, Maheno. Outting took place just prior to the formation of Distributors, but he could not say how long it lasted. After Distributors started he could not get Oamaru flour, and had to rely entirely on local flour. This produced irregular quality in tho bread. It was some few weeks before they actually found out what was the causey and during that time their sales decreased. About November, 1923, thoy succeeded in getting Oamaru flour at 10s u ton more than the prioe of the local flour. After the price was put up there was no more difficulty about getting Oamaru flour. He had returned flour to the Crown Milling Company and Hudson and Co:' 1 Their trade wa s affected by. bad flbur from the Crown Milling Company to the extent of about 100 loaves a week. Early this year they had had bad flour from R. Hudson and Co., but they detected the trouble before it went far. The flour was musty and was replaced by Hudson's free of charge. In May of this ye*r his firm sought to got. two tons of flour from Stevens for the Bakers' Exhibition' They were told that Stevens was oversold, but after complaint to the Board of Trade they eventually got 10 sacks instead of • 20. It was not possible to make good bread from bad flour. -To Mr Myers: The price of Oamaru flour was raised after the formation of Distributors. He knew that Dunedin flour was being sold at 10s less than the gazetted price, and that Oamaru flour was being sold at the gazetted price. Formerly they got the Oamaru flour at the same price as tho Dunedin flour, and the millers paid the railage. He did not think he had received any quantities of Oamaru flour between September, 1922, and November, 1523. He had been connected with the business for 18 years. At 5.30 p.m. the court rose till 10 a.m. to-day.