DAIRY FACTORY LAW.

Shannon News, 1 August 1922, Page 4

DAIRY FACTORY LAW.

suggestions" FOR incorporation. At the meeting of dairy factory delegates in Levin on Friday, Mr Evelyn McDonald, of To Horo, brought forward a series of suggestions for incorporation in the proposed Dairy Companies Act, 1922.” In introducing his proposals, Mr Me _ • -C \T .I,

Donald said in the experience of IN gw Zealand it would seem that co-opera tion did not suryive by law but m spite of it. At any. rate it had to struggle for such law as it got on its side jusr as unionism had to struggle. In spite of many failures, however, they could point to notable, and even wonderful successes. By dint of hard knocks it was to-clay shaping towards triumph. But more “open diplomacy” was wanted, and antagonism should be replaced by confidence and co-operation—the

basis of sound business. Under co-op-eration was found the greatest efficien-

cy, just because, perhaps, its defects were so visible. The. co-opernting dairyman, he maintained, was not a combiner in restraint of trade, but a facilitator of trade, and was no relation to the predatory trust. The combinations of the “creamy (jocky’’.looking for a bit more o:n butterfat were more comparable to "the workers union, demanding a living wage and a

higher standard of living. They sought only what was fairly tlicir own. The; Companies Act, 1908, neither filled the bill noi fitted the case of co-operative dairy companies, but the dairymen tvere being forced to fit it—like round pegs in square holes. If as dairymen

they had really got some of the acumen I they flattered themselves with . tlieic was a chance now to show it. To-day, [lie thought, no co-oped’utive dairy eoniI puny‘-could be sure of where it stood or I how long it would. ' stand, , and this I should have an early rreffiedy. This was I a matter for the ico-operution of all I "dairy companies, and. not one to be left

Ito spasmodic and sseparate ellort. So I he had sought that .conference to put 1 constructive proposals before it. Ob--2 ligations and responsibilities must be | spared as well us profits and protection. | He believed this should be re-asserted | and placed upon tbje solid foundation of | statute law. The speaker referred to a | judgment by Mr Justice Chapman that | a person accepting membership in a | company was, bound by its articles of' | association as if there were a signed

| deed between them to the same cflect. |An Irish case decided by the Privy | Council upset this ruling. The elfed I was that -most co-operative articles of j association , were unreasonable in rc

straint of trade and therefore void. The alleged unreasonable provision was that of binding members to .supply without means of escape. In the Irish ease, members were certainly tied up for

life. To get over that sonic companies had taken one expedient and some .ano-

ther; others had done nothing. In a

every case he believed the position was of doubtful legality and liable at any time to be contested over again. He referred to a recent New Zealand

Full Court, and judgment was reserved

He hoped that the steps taken would lead to .satisfaction and finality. The proposals lie was submitting for approval were constructive and marked a real milestone of progress. He ask-

ed for thorn the support of the meeting. Mr McDonald then moved: “That as

dairymen, we view with concern present legal and doubtful status of cooperative dairy companies, and the unsatisfactory results of endeavouring to fit in with existing law; we therefore determine to ask with all urgency and our united voice that a law be placed upon the statute book to be called the ‘Co-operative Dairy Companies Act, 1922’.”

The motion w 7 as seconded by Mr F. J. Ryder. The Chairman (Mr S. A. Broadbelt) said it was a question whether the law required -.revising. Mr McDonald questioned that and said one of the provisions already provided by law was that, companies could buy back their own shares. The motion was carried.

I Proposals Dealt With. Mr McDonald’s suggestions, six in number, were then dealt with in detail. Briefly these were (1) That the new legislation bo in the direction of compulsory supply of saleable surplus of dairy produce, particularly milk or cream, by members to the factories and companies in which they are shareholders, the liability in respect to the nominal value of shares held to be extended for live years after ceasing to be a member or refusal to discharge obligation; (2) provision is to be made for the holding of “security” shares already held in co-operative companies; (3) no place of profit is to be held by directors of co-operative companies in such apart from, such profits as shall accrue by virtue of membership in or supply of products to such company; alterations in the memorandum tnd articles e£ association of co-ejieiativo

dairy companies w iil alco bo consider- j «1, and (5) especially with reference to . allotment of unallotted shares to existiug shareholders. ~ Mr Taylor (Shannon) considered the proposals submitted by Mr McDonald were impossible of adoption by the Gov-

ernment. He considered the latter part, of proposal “Security shares” not acceptable to farmers as they would not know where their liability ended. Mr Bertram (Wellington Dairy

Farmers) was of opinion that some change was necessary in the law as it existed, and co-operative companies should get more protection than they had at present. ...

Mr ,T. G. Darkness (To Horo) said i for many years in the past companies J had purchased the shares of shareholders who had left their respective districts. He had been a mover in getting a change, and had approached the late, Hon, Mr McNiift, who was instrumen-

tal in passing the law giving companies power to buy back their shares. When the statutes were consolidated in 190 S, the provision mentioned above was included in the Act. The speaker instanced the man who started farming in a small way and took up, say, five shares. Before the season was over it was discovered he should have 40 or 50. That was the point—should a company have the power of compelling a farmer to take up shares commensuato with his business with the company. Referring to Mr McDonald’s proposals,

he considered the' terms, used were too ambiguous, and the meeting should be asked to affirm a principle or otherwise. He did not agree that a dairyman

should be bound for life to supply a company, but a provision could be made to supply for, say, not loss than three years, or not to exceed five years. As regards the other proposal re ”so'Curity ” shares, he was not in favour of the directors delegating their powers to shareholders, but should act foi

themselves.

Mr Hnrdham said ii-thc proposals as put forward were adopted • there was poor prospect' of any further co-opera-tive companies being formed. They gave companies too much power, and would not be acceptable bo suppliers. Mr Bertram did not consider the proposals had a chance of getting through the House and becoming law. On a vote being taken on clauses one and two, it was lost. Proposal number three, was, carried. On proposal number four the chairman and Mr Harkness said a company should well eousider the giving up of the privilege of going to the Supreme Court to secure , an alteration in the memorandum and articles of association, in preference to giving that power to the company by special resolution, as proposed by Mr McDonald. The proposal was defeated. Tlie fifth proposal was carried. . Proposal number six was in the direction of compelling a person acquiring shares by virtue of being an executor, legatee or official assignee, to give up, sell or transfer such stares within 12 months of such acquisition. This whs carried on the voices.