IN LIQUIDATION.

Putaruru Press, Volume IV, Issue 120, 11 February 1926, Page 4

IN LIQUIDATION.

PUKETURUA DAIRY CO. Triangular Agreement. For some time past the directors of the Puketurua Co-op. Dairy Co., Ltd., have been endeavouring to realise their assets and wind up the company. Some few months back an agreement was come to with the Rotorua Dairy Co. to act as liquidators and wind up affairs, but a hitch occurred over the financial arrangements. A further agreement was made and Messrs. Joseph Nathan and Co., Ltd., were joined as a third party, and thus the pecuniary trouble was overcome.

Last Friday an extraordinary general meeting of shareholders was held at the company’s office to pass special resolutions as required by law covering this latter agreement but a further complication arose through the presence of Mr. W. Goodfellow, Hamilton, who submitted counterproposals on behalf of the N.Z. Coop. Dairy Co. The position now is that apparently the bulk of shareholders wish to supply this company but owing to an agreement having been entered into wi/th the Rotorua Co. to supply butterfat in consideration of this company finding certain moneys and acting as liquidators, a further meeting is to be held, when i epresentativea of all parties are to be invited to attend, and make a further effort to solve the problem. At Friday’s meeting there were nine shareholders present, Mr. R. A. Bent occupying the chair. After the secretary (Mr. A. H. Dukeson, junior) had read the minutes, and these had been confirmed, the chairman explained that Messrs. Nathan and Co. had already paid moneys into the bank to meet certain pressing liabilities. The directors had been operating on this, and a question had been raised as to the legality of the action of Messrs. Nathan and Co. in finding the money. According to Mr. Goodfellow it was not legal. Mr. Goodfellow was then invited to attend the meeting and at once explained that in a written opinion his company’s solicitors had held that Messrs. Nathan had neither a legal nor a moral right to assist any dairy company in this district according to an agreement entered into with the N.Z.C.D.C.

Clause 56 of this agreement was very stringent and set forth that for 20 years from 1919 Messrs. Nathan covenanted that they would not either directly or indirectly be -tmeerned or interested in or advance moneys to any concern dealing in milk or cream within certain territory. The advance of £2OOO by Messrs. Nathan and Co. was held to be a breach of this agreement. So far as his company was concerned, if the Rotorua Co. was finding the mpney they had no intention of butting in, but in view of the circumstances he thought they ought to know the position. Mr. G. G. Bell, solicitor to the Puketurua Co., then entered the meeting, and, his opinion being sought, he stated that it was a matter of complete indifference to him which company they joined up with. His, position was simply to protect the'Puketurua Co.’s interests. If there was any breach of agreement it affected Messrs. Nathan and the N.Z.C.D.C. only.

The Chairman : If an action is brought against Messrs. Nathan by the N.Z.C.D.C. how do we stand ? Does it render our agreement null and void ?-

Mr. Bell : It is a matter entirely of damages. It wouldn’t in any way invalidate your agreement with Messrs. Nathan and Co. Mr. Goodfellow : All we want to point out is that we have an agreement and we consider they have neither a legal nor moral right to advance the moneys.

Mr. King : Would it be different if we signed the agreement (with Messrs. Nathan) now that we know or the other agreement ? Mr. Bell replied that it would not affect the agreement. There was no question of illegality affecting them. This was purely a question of an agreement between two outside parties. There was nothing in law to prevent them entering- into any agreement with Messrs. Nathan, hut if by virtue of another agreement the other party should not have done so, then that party was liable for damages. Mr. Goebel : In the event of us not signing- the agreement with Messrs. Nathan what legal proceedings could they .take ? Mr. Bell : You have signed nothing yet so far as this agreement is concerned, but I believe a number of you have contracted with the Rotorua Co. to take shares and milk a certain number of cows. Any breach is between the N.Z.C.D.C. and Messrs. Nathan and does not affect you. However, I know nothing of that, for

there are always two sides to a question, though on the face of it there appears to be a breach. Mr. Peters : We signed the agreement to take shares on the understanding that the Rotorua Co. would find the money almost immediately. Now they bring a proprietary concern in. The Chairman : I never understood that it mattered where they got the money, though they certainly said they could get the money within 24 hours. Having gone as far as we have, and speaking personally, I feel like a drowning man grasping- at a straw. I am in favour of going on, arid letting the others fight it out. This has been dragging- on for two seasons, and I want to see the end of it. If we throw the agreement over will Nathan and Co. bring an action against us ? Mr. Bell replied that it was impossible to express an opinion on such a point on the spur of the moment. They had not signed anything, but he thought they were morally bound to go on with it. The agreement had been signed by the Rotorua Co. at the request of their delegates, and the question arose as to whether part performance of a contract had not taken place. He thought Mr. Goodfellow would agree with him. that any difficulty would be solely between Nathans and the N.Z.C.D.C. He wished to make that point very definite. Mr. Goodfellow explained that ~so far as the Rotorua Co. was concerned he had nothing to say. Mr. Bent had visited Hamilton, and his directors had discussed the proposition, and they were prepared to take the company’s stock over and square up immediately. He admitted their claim was against Nathans and not against the Puketurua or Rotorua Companies. Mr. Bell thought Mr. Goodfellow' had a proposal and suggested the meeting hear it. It W'as purely a matter of business as to which company would give them the best terms. I The Chairman : I don’t know about the legal points but I feel morally j bound to the Rotorua Co. If share- | holders did not think it was good business then he had done his part. | Mr. King : Do you think Rotorua has shown us much consideration ? I The Chairman : Two wrongs don’t | make a right. | Mr. Goodfellow then explained that he had a typed letter which they j could sign. In it his company agreed to discharge their liabilities immediately on condition they received their cream. As the assets were not expected to realise sufficient to pay alt liabilities it was proposed to deduct a sum of not more than Id a pound from the butterfat cheques till the advance plus 61 per cent, interest was paid off. They would take their assets into stock at valuation. The basis of shares was one for every 701 b of butterfat and there would be a penalty clause of £1 per cow' for every cow contracted for and not milked. If shareholders in the Puketurua Co. wished it the amount deducted to repay the loan could be left at 8d per pound. In reply to questions Mr. Goodfellow stated that share calls would not be made till the liabilities were paid off. As well as the shares on a basis of one share for every 701 b of butterfat there would be calls of Id for coal and butter box shares. If a supplier gave up after milking- for 12 months his fully-paid-up shares would be resumed at face value less 25 per cent. His company had a creamreceiving- dump at Putaruru and they were looking forward to erecting a factory there. At present there were not enough suppliers to warrant a factory but every additional supplier secured brought the time nearer. Suppliers would be charged Id for the expense of working the dump and.,it was worth it for their cream* w-as weighed and graded on the spot, and the clean cans returned at once. However, if a supplier wished he could rail his cream to Waharoa and. the [ company would pay the. freight. His ! company also paid a subsidy oif id per lb on all cream routes. [ Mr. Bell: It seems to me that before anything is done the Rotorua Co. and Nathans should be represented. I hold no brief for Nathans, but there are always two sides to a question, and it is advisable that nothing is clone until the other side states their case. Nothing will be lost by a little delay, and it will save you from appearing to be discourteous. Mr. Goodfellow- explained that he w'as present by invitation, and if it were not for the fact of Nathans coming in he would not have been there. Eventually it was decided that another meeting be held and that representatives of all the parties -interested be invited to attend.