DAIRY COMPANY'S POWERS

Taranaki Daily News, Volume L, Issue 59, 25 March 1907, Page 2

DAIRY COMPANY'S POWERS

AN LMI'UKTANT CASE. McCjuecok v imuama dairy co. (Before llis Honor, Mr. Justice Cooper.) In this case MetJregor, a shareholder in lhe IMliama Co-operative Dairy Company, limited, sought an injunction to restrain the company from performing certain acts which they were authorised to do under certain amended memorandum of articles of association. Dr. Findlav. with him Mr. Caplen, of llawera, appeared for the plaintilf, and Mr. K. L. Barton, of Hawera, for the defendant. Dr. Findlay opened brielly, staling that the company had the usual characteristics of companies of this kind. A number of milk suppliers had combined and formed themselves into a company for the purpose of supplying ni'lk to tin* company, ami share the profits from the manufacture and sale of the products of the milk supplied. The articles of association had been amended so that the company was permitted to purchase milk from persons other than members of the company, and further permitting them to borrow mom-ys and re-lcud : I hem to others. This power seemed I quite unlimited, and the company could

•.■(institute itself an ordinary lending institution without restriction or limitation. The capital of the company had been increased from .121)00 to £4OOO, and some of Iho additional £2OOO shave capital had been allotted. The only importance of this was in the part that under the original articles the company could take milk from members unlv. If those amendments were, as (he defendant admitted, invalid, then any shares allotted on the strength of this capital was of no effect, aud these shareholders were not members in law. So that if the company had takeu milk from these new members they had takeu milk from other than members. Then the company had refused to take milk from the plaintiff, ex:-3pt at a lower rate than was paid to other supplier*, and he contended that, whilst the directors had tie? light to choose from whom they could purchase milk, they had no right to lia\e a ditl'ereatial rate of payment, t'he plaintiff applied for an injunction restraining the company from acting on lite amended memorandum of articles 1 f association; for a declaration by the court that the,-c amended ai tides wen?' M»id and 01 no effect; for an order restraining the defendant from lending money other than surplus money; and from borrowing money for the purpose of lending same; and for costs.

It was 'idmilted that the ameud"d articles were invalid, having been made by 111 olh'er who had no jurisdiction. Mr. J.artoi, for the dtfepje, quoted I he ease of the Attorney -General v liu

| Jersey Ih-ilway Company. Court of Ap* I : >»':\l, Chancery Division, reported in 70 [ Law Journal, p. 100, February, lotto, in .vhieh Lord Justice Uuckley decided on similar fae'-s. The difcndant comptny twned an \KHlergvt.und railway for pt n;ciiger traffic, competing against the corporation t'-ain and steamer ferry f-orvi 0 .vhieh was so worked that passenger-, vlulst catching the stetmer, were always late, for the train. The company thereupon instituted an omnibus servi." for the purpose of bringing passengns to the railway terminus, aud these, omul buses occasionally set down passenger.; before arriving at the said terminus. A.i injunction was sought to restrain the Company from embarking its capital in this enterprise, and the defence

i that the new service came within the meaning ol' the. general powers gi "en i nI he articles giving them power to do '.ll necessary to the carrying on >] tlie underground railway business, :nd tliat this omnibus service was yeallv to provide (he life-blood of the company -—passengers, Lcul Justice Puckley ••.aid: "In my judgment the decision in the present case must he dimply a decision on this ([iiestion of fact, Are (he ueteudants running the omnibuses noiv in <|Ues{ion as a line for the purpose of llie railway, and so as (o obtain and give facilities for better traffic over their lines, or is the omnibus business an independent business in which they i'tok substantially to general (rallie? ||-> (jiioted another illustration of the same principle in Lyde v the Eastern Pengaj Kailway Company, .'ld I>evau. p. 10. iu which the company had opened a colliery for the purpose of obtaining cheaper coals {'or use on (he railway. The lest was whether this was the real object I of the colliery, for in (hut case it would be proper to allow them the accidental additional profit to be obtained by selling coals to others. J»ul if (he principal object of the company was (he raising and selling of cogls to others, then it. was a perversion of (he objects of ihe ! company and a scheme which could not I bo permitted, however prolitable it might be. The analogy -was this: the Pilama Dairy Company was competing against proprietary and other companies which were making advances to milk tribulors. and unless the defendant company was prepared to do the same thing it must lace the extinction of its business as a company. It being admitted that the company had confined its lending business to assisting suppliers upon terms that they sliould covenant not to supply milk to any oilier company or person, and to become shareholders of : the Piliama Company, this was not the

starting of a loan business as a principaUmMiiess. but was essentially a subsidiary business conducted solViv and bona .-de lor the purposes of supplying to the company or attracting to the company its lif'ed.dood iu the shape of milk supply. Uis Honor reserved judgment,