PROFITEERING CHARGE

Otago Witness, Issue 3467, 24 August 1920, Page 41

PROFITEERING CHARGE

AUCKLAND BOOT FIRM CON*

VICTED.

AUCKLAND, August Is, At the Magistrate's Court this afternoon Mr J. E. Wilson, S.M., gave his judgment in the profiteering chargo preferred at the instance of the Board of Trade against the boot firm of Dadleys (Ltd.). In giving his judgment, his Worship said: "The facts which are proved or admitted are that on the date mentioned, April 1. defendant sold one pair of black suede oourt shoes (ladies')' for the sum of £3 7s 6d. -which it is claimed by informant was an uni-easonably hig-lj; price. Defendant landed the shoes into the shop at Auckland at a cost pf £1 18s 3d» He was oalled upon by the Prices Investi* gation Tribunal to Justify the price changeoY and on May 10, 1920, the seoretary andi working managed (Mr Goldsmith), f/6r defendant, wrote to the secretary of tribunal Setting out that the price Ws# made up as follows;—Landed cost £1 3LBa 3d, overhead charges 19s 2d, added on the . ground that the shoes were fashionable one? and might have to be sold at a lossj. 4s 6d, added oil the ground that the shoes had been purchased at a cost. lower thaji .. that ruling at the time. of pricing 5s 7d ;'-=*■' total, £3 7s 6d. Mr Goldsmith's evidence' was that the line of shoes from which the particular shoes were sold had. only beefjt a few days in stock, and that on the, a&# on which this pair of shoes was sold he:ha4 sold three pairs of the same shoe to one customer. In his opinion if he imported* direct from the maker instead of buying from local warehouses. his firm was to add from, 5 per cent, to 10 per centC extra in pricing the goods. It seenis clear that the siloes in respect of the sale of which the charge is laid, were of a very, fashionable type, and that there was more risk in dealing in such types than in deal* ing in what one may call everyday lines,' This being so, I think it reasonable that a dealer should have such higher price ag will reasonably compensate him for his risk. - I have to consider whether the price charged by defendant in this instance goes beyond th a t reasonable figure. Tak- \ ing all the evidence, I have come to the • conclusion that ifc does. The defendant admittedly caters for a high-clas3 trade; " that is its customers are people who buy, , fashionable goods. It was urged upon me by defendant's counsel that I must have regard only to the particular transaction ill-' volved in the charge; that I should not consider the whole of the year's dealings in coming to a conclusion as to whether in _ this particular instance the price charged was unreasonably high. Ido not see, how- " ever.. how I am to gauge the ■ risk unless - I do regard the whole of the year's transactions. On the face of it I have nd, hesitation in saying that the charge of £3 7s 6d for an article which is landed in de-.v ; fendant's place of business at. a cost of £1 18s .3d is, in my opinion, unreasonably ■'%. high. Defendant contends that the line ' v of shoes is a risky one to deal in, and that.: in common with shoes of a like fashionable- '; and extreme nature it.should bear the addi-« ,-'■; tions which he hag placed upon it. In ■■:■ concluding,l feel that I am entitled to loos., to the last of defendant's ' : and seek there evidence as to whether or v not dealing in goods of this nature entails such risk as would justify the price charged. | It seems that thi s gives the best evidence which can be made. The balance sheet for the year ending March 31. 1920, shows ; that the defendant company (which was in- : ; corporated in May, 1913, and which is a 7: private company) in .which the managing . director holds the great majority of the. shares, has a capital of £SOOO. During the • year covered by the balance sheet a net profit was made or £3931, and this after allowing for a salary to the managing director of £SOO, in addition to other costs of conducting the business. The result of j seven years' trading is that the defendant company i after paying a dividend of 2 per - cent, on its capital and a yearly salary of 1 £SOO to the managing directdr, has still its | capital of £SOOO intact, and in addition/ >' to that, the sum of £10,012 of accumulated s| profits. I consider it impossible for me to - come to any other conclusion but that the - : defendant company could have sold the shoes in question at a considerably lower price, and yet have received a reasonable : ; commercial profit on the transaction. In, | considering the evidence I have > looked for || some indication that the high prices charffed .7 in respect of Home lines would be'applied ; ' in the alleviation of the cost of goods in ? more general' use. Had defendant com.- | pany been able to show-that that was ■the : case, I should have considered it a relevant ;.* factor in determining whether the sale-in .J question was at an unreasonably high price. J That, however, does not appear in the'evi- j dence. given by Mr Goldsmith." In con- m elusion,- the Magistrate .stated' that in- his m opinion an offence had been committed. >* The fact that the defendant company's || business was of a special nature had, to; : be taken into account. Had it concerned V~ goods required by the ordinary run of buyers he should have felt obliged to impose a very heavy penalty. In the circum- | stances the defendant company- would begg fined £75, and £7 7s costs. . At the request of Mr M'Veagh (for de- . fendant) to fix security for appeal on. general grounds, his Worship fixed the ' amount at £IOO.