A SHAREMILLER’S CLAIM.

Putaruru Press, Volume I, Issue 10, 20 December 1923, Page 4

A SHAREMILLER’S CLAIM.

DAIRY COMPANY’S BONUS. An important Legal Action. i 1 | An important legal action which ; possibly may effect all future share- : : milking agreements was concluded at i To Ar’oha on Monday before Mr. J. ' 11. Salmon, S.M. The case was one I in which J. B. GcminsH, sharemihier, ; 1 oL' Mat a. mat a, claimed 1103 i rom H. j i Magiil. farmer, of Te Aroha, who ; | counter-claimed £55 12s lOd. Mr. : j E. McGregor appeared for plaintiff, ; and Mr. G. Gilchrist for defendant;. ; third of the Dairy | took place, an ad- j joujjfmHt being granted for further j that* he* was employed j by Mr. Magill on thirds, with a £6OO ; guarantee for the first year. He also i understood he was to get a third of everything produced on the farm. To Mr. Gilchrist: He did not see j i unv of Mr. Mag-ill’s statements from ; the factory. He took Mr. Mag-ill’s word for it that he got a third of everything. Hugh M.'i gill, defendant, deposed that ilie arrangement with the previous witness was for one-third of all he received from the dairy company. This was the agreement he had made with all his previous sharemilkers. He had no deductions made for butter. He always paid to the last copper of what ' he received from the company. i To His Worship: He did not re- ; ceive any butter from the company j for years. 1 To Mr. McGregor: He did get goods | from the company. He did not get I anything- in the way of separator ! parts. j To Pis Worship: He had got seed j but it was a separate account—nor j included in any factory cheque acj count. j To His Worship: J said to Gemj mell. that T would give him one-third I of every cheque T received from the ! factory.’’ I Alexander Johnston Sinclair, actj ing-manager of the New Zealand Coj op. Dairy Co., deposed that he agreed ' with the decision set out in the case ! Burgess v. Brady, that the shareI holders’ bonus was in substance a division of profits paid to shareholrtj ers as recompense for the liability in- ! cur red in taking up shares in the 5 company, and that therefore when an agreement to milk on shares was silent on the point the shareholders’ bonus coukl not he claimed by the milker as part of the purchase money c( the milk. At that time there was a full bonus to shareholders and to non-sharelioldevs of «d less. Now there was a bonus on butter-fat covered by shares —known as the shareholder's’ bonus—the amount was Sd. His company was the successor in business to the New Zealand Dairy Association. In the butter branch each shareholder must hold £1 sidling share for every 701 b of butterfat supplied. In 1918 when the case Burgess v. Brady was decided it was a £2 10s share for 2401 b of butter-fat supplied. Now under the present arrangement the shareholding was a little more'onerous. The bonus is now higher because of the special issue of shares made for coal and timber. At present the shareholders’ bonus was Id. Calls made against this were gd for butter and Ml for coal and timber shares. There was no dividend now on share capital at so much per centage. Non-shareholders do not receive the Id bonus. The retention for shares was not the equivalent for cash because they are not resumable at face value. The shares were saleable. Mr. Magi 11 could sell to a supplier but lie would not be a shareholders’ supplier in that case. A shareholder could sell to another supplier if the directors did not object. Shares were redeemable when a supplier had not supplied for 12 months. That relates to the butter shares, as no provision has yet been made for the coal and timber shares. The present issue of butter shares are resumable at only 75 per-cent of their face value. They were redeemable only in October and November of each year. Shareholding entailed a responsibility, e.g., if a man took up 100 shares in the butter branch it took him nearly six seasons to clear |off’ his liability. It was for that reajson that the special payment was made, generally known as the shareholders’ bonus. There was power to call up at any time in the articles. To Mr. McGregor: Wintess said the case of Burgess v. Brady treated the shareholders’ bonus as interest on capital, but this was perhaps not quite correct. Strictly speaking a co-op. dairy company had no profits. It would be better if the word premium or bonus was used instead of profits in dairy companies. They did not pay income tax because the whole of the money obtained from butter was paid out to suppliers. There was a difference between a bonus ancL, a final payment. There was also a differentiation between the shareholder and the non-shareholder. If a man's shares were paid up he would receive a full payment in cash for his butter-fat. The present basis of shareholding was one share for every 701 b of butter-fat. If a shareholder holding 100 fully paid up shares and supplying 70001 b of butter-fat lastyear. he should be paid the whole of the shareholders’ bonus in cash. If a supplier holding 100 fully paid shares supplied 90001 b of butter-fat then he should receive the shareholders’ bonus in cash as to the 70001 b, and would have further shares allotted to him, and a oall of Sd per lb made to him in respect of the other 20001 b. Mr. Magi!! held fully paid up shares in.the company, and should receive the shareholders’ bonus in • cash to the extent of his paid up share capital. If at the beginning of the season one shareholder supplier held one. share and another* held 100 shares and both supplied T o,ooolb of,

butter-fat extra shares on the above- i mentioned basis would be allotted to both patties and the deductions of "d made for shares. Both shareholders would receive the shareholders’ bonus of sd per lb buttcr-fat. In response to a question horn His Worship, Mr. Sinclair stared that Mr. Mag'dl had 909 shares of which 167 were fully paid up. The bonus was paid out on the previous season’s suppi-.-. i,ast- year was the last year on which, a deduction would be made on coal and timber shares from all suppliers who had contributed for three veais. His company each month made deductions for goods received—this was in the stores department. The whole of the accounts went through the main office. They treated all payments made as cash. Mr. Sinclair: We give a bonus premium to certain suppliers because they have put their capital into the company. There is no inducement for a farmer to buy fully paid up shares when the company will give •him six years to pay for them in. If a shareholder left his company to supply another company he would be liable to have all his shares called up. There was a further small payment to be made on butter-fat from October to January and April to suppliers—but it was a very small one. To His Worship: They had not r.d lied to the reserve fund taken over at the amalgamation. They had about 6000 suppliers who were sharehold- ! ers and about 1500 suppliers who ! were not shareholders. The full i price received for butter, less the j overhead and manufacturing expenses, was paid out to shareholders. All suppliers get coal at a special rate, if a loss were made in connection with the coal mine or the timber fac i Lory this loss would be borne by the j suppliers by way of reduced pay- ■ meats on butter-fat. The sharehold- | ers’ bonus was earmarked from tin* i start because his capital was locked I up in. the company. Judgment was reserved.