SUPPLYING A FACTORY.

Taranaki Daily News, 28 June 1916, Page 6

SUPPLYING A FACTORY.

FACTORY PROPRIETOR v. SUPPLIERS. ; INTERESTING COURT CASK A case of considerable importance to ,dairy factory suppliers was hoard in the New Plymouth Magistrate's Court yesterday, when N. J. Neilson, proprietor of the Puniho cheese factory, for whom Mr. F. K. Wilson appeared, sued Ralph Gibson (Mr. J. li. Quilliam) for £75 damages for alleged breach of contract in connection with the supply of milk to the factory. Mr. Quilliam submitted that particulars supplied as to damages claimed were deficient, only the bald amount of £75 being given.

Mr. Wilson outlined tlie ease. In 1913 plaintiff was approached by certain farmers and undertook to erect a factory on the Puniho Road, they on their part agreeing to supply for three dairy seasons on certain terms. The factory was erected. During two years they all supplied, but in the early part of this year defendant, among ot/hers, ceased to supply. Later he supplied again for a few days and then ceased.

Plaintiff stated he had been engaged far 21 years in the dairying industry. In 191'3 witness' erected his factory, and the deed of covenant was signed, defendant to supply for three years. Defendant had supplied for two years and had also commenced this year, and without giving any reason, ceased supplying on March 9th. Plaintiff instructed his solicitor to write defendant. Without giving any notice defendant returnled to the factory on April 19, and again ceased to supply on April 27th, [giving no reason. Plaintiff had been at all times ready to accept the milk. Witness assessed his loss as follows: Defendant had agreed to supply the mill; from 40 cows, but plaintiff only calculated his loss on 30 cows. These, at an average of 2501bs butter fat per cow. —a fair average—should have produced 75001bs butter fat. Defendant only supplied 37321bs of fat, a deficiency of 37G81bs, representing IMOOlbs of cheese, based on "2Vilbs of cheese to the lb of butter fat. This at 2d per lb, the extra price lie had to pay for cheese to fulfil his contracts, represented £75 Ids. He had paid out to suppliers 14 one-six-teenth pence. He had not taken into account the loss through the extra cost of-manufacture, owing to reduced supply-

In cross-examination plaintiff stated he could not tell the exact date when defendant signed the deed, hut it wa; probably in August, 1914. (Mr. Quilliaiu here pointed out that the deeil was dated December 31, 1913, am' stamped January 28th, 1914.) He wa.' unaware that defendant did not own a farm or any cows when lie signed tin agreement, nor that Gibson and his brother were milking on shares for Mr. Old. Had he known the cows belonged to Old, he would have expected him to sign the deed. He understood the cow belonged to Gibson. He did not remem ber saying to Mr. Old that he did not care a jot whether the agreement was signed or not, as he only wanted Gibson to sign to satisfy other suppliers.

To the Magistrate: Plaintiff always paid Gibson the cheques. To Mr. Quilliam: He had not accepted milk from persons other than those who had signed the deed. He admitted having taken milk from Ronald Tuke, who hud not signed the deed. He had al lowed F. G. Soli to supply another factory for a month, as it was imposible for him to get to the factory owing to the roads. He had not deducted anything from the other suppliers on account of the loss of Sole's milk. lie had refused to accept milk delivered before 10 a.m., the time mentioned in the agreement, because it was not in a fii condition, not because it was delivered too late. Regarding the condition of la-w-bey, no one refused to'take it home and he had never received any com plaints as to its quality, nor, to li'n knowledge, had his manager. He hat l seen dead rats in the whey. This wat a common occurrence at factories. He did not know that the tank was seeth ing with maggots. He occasionally lmd complaints that there was not suffi cient whey for the last supplier. He line on one occasion refused to accept millfrom Thomas, one of -the original sup pliers, because -the milk , was not in i: fir condition. He had not ■ yet takoi any action against Thomas, nor again*! Cowling, who ceased supplying on January fit-h. He had sent t'heni formal no tice-s.

Mr. Quillkim asked as to the extent or the profits he was making. The Magistrate held that plaintiff >va> not bound to disclose his profits. Mr. Qnilliatn submitted that this wa? necessary in order to ascertain the basi? on which damages were claimed. To Mr. Quilliam: He estimated his profits at 2d 011 every 11) of cheese, but the working expenses at that time of year would be l'/jd per lb, so that 011 l<M)lbs of butter fat the profit would be 10s sd. Tile profits would lie proportionately greater on a larger supply. According to the deed lie was obliged to pay at least l)'/id, but the lowest he had paid was 12'/,d. and last season he had paid 14% d. His was a proprietary factory, but he had at times held a conference of suppliers at the beginning of the season to fix the price. This season, in addition to fixing illie price,

the time of delivery was considered, Mr. Thomas presiding. Messrs Gibson and Cowling were among those present. The reason for holding the meeting was because it 'had previously been arranged j that suppliers should be paid %d less for | second grade. At this meeting' it was agreed suppliers should deliver by 9 a.m. in tlhe three hottest months of the year, and plaintiff should himself stand the loss of any s.eeond grade. Tn the three hottest months milk became overripe. He had' no idea why Cowling left him. A co-operative factory had been opened on the Oxford Road during the present season, and the three suppliers mentioned had since supplied there. The wbev had never been left behind on account of its alleged filthy condition. Tt was usually the other wav ; supplier.-; were anxious always to take too much. Mr. Qnilliam submitted the deed was in-operative as far as defendant was concerned. Its terms had so often been varied that 110 contract had been broken.

Ralf flibson, farmer, iPmiilio. deposed i that in August. 1014, lie took Mr. Old's' cows on shares. Xeilson asked witness to get Mr. Old to sign the deed, as the other suppliers were complaining. Plaintiff asked Mr. Old to 3ign Uhe deed at plaintiff's house. Mr. Old read the dt.-fl and declined to sign it, Mr. Neilson said tbat he did not care a jot who signed it as long as it was signed. "You had better let Gibson sign it, so as to shut ttie otlher suppliers up," he said. Witness signed the agreement then jgd big jffitto laftoa .Witaeas did not

own any farm or cows. Witness and his brother agreed to supply from 40 cows. In January, 1915, witness leased the farm from Mr. Old and bought the cattle under a bill of sale. He continued supplying Mr. Neilson, Who said he [would get the agreement for witness to sign as Gibson Bros, did not exist, as his brother had gone. Witness did nyt t'hen sign, and did not consider himself bound by the document. He was not satisfied with the way the factory was conducted, yhidli he detailed at length. Owing to the stnti' Ihe whey, he could only rear a very fc> -lives, and those he had to kill, or t.iiey ould have died. He should hjive had 4.'» calves, but .only reared 13. The whey was not fit to feed young pigs on. About March 5 witness had a conversation with the manager about the test. His test at tflie time was 4.1. The manager said: "I'll cut you down to 3.9 next test." On Marcli 9, when witness asked what was his test, the manager replied, "What I said, 3.9." When witness saw that this was so he took ibis milk to Oxford road, where he received a 4.0 test.

To Mi. F. E. Wilson: He did not know that Mr. Neilsen tested the milk himself, nor that the deed provided for an independent test in the event of si dispute. Ho knew tthat the manager tad taken a sample of hi* milk for testing by Government analysis. He would not say that Mr. Neilsen did not teat the milk fairly. ' 1 i>p thought it strange that the m . should prop'hesy the test tlhree du\s before the teat was taken. It was not his habit to sign a deed a3 a joke, hut he did not think he was binding himself to anything, as Mr. Neilsen said that lie had no cows or land. He had some benefits and a lot of burdens, including hhe loss of 30 calves. He did not have any of t'he calves examined. He bad not heard of his -neighbor's calves dying in such numbers.

Mr. Frederick Old, farmer, also gave evidence as to liis refusal to sign the deed, etc. Plaintiff knew that the cows and land belonged to witness and tlhat Gibsoa Bros, were milking on Shares. Had witness signed the deed, he would have considered it binding. The average butter-fat production for all cows, according to Government statistics, was from lfiOlbs to 1701bs, and, allowing for the cows on the good country producing more, it was quite possible cows running on bush country would only average lOOlbs. Moreover, a man starting without any cash could only buy inexpensive cows. He regarded the estimate of 2501b average as llhduly high. W. A. Thomas, fsu-mov, I'nniho, and one of the origin;'! to the •Iced, deposed that whey was the; principal side line in the farming industry, as it went to feed the calves and pigs. Unless there had been a provision tJhat he was to receive a portion of the whey he would have refused to sign the docu-

ment. When the factory started the whey was good, but it afterwards got very bad indeed, being kept in a wooden tank let into the ground. The first voar he fed the whey to calves he had no cause for complaint, but next year in the hot weather the wttiey -became useless, and so he killed about half his calves. He detailed his reasons for leaving the factory and going to Oxford road factory. He did not think Mr. Neilsen had considered tJie interests of the suppliers. The.deed, he thought, was made for Mr. Neilsen,, and not for Uhe suppliers.

Frederick J. Cowling, also one of the original signatories, gave evidence on similar lines regarding the whey. On January 7 he reported the matter to the health authorities, and Mr. Kendall inspected it. In the previous season the whey killed his .15 calves and 14 pigs. He complained to Mr. Neilsen nbout the whey,' but could get no satisfaction, only "cheek." To Mr. Wilson: He did not know the result of the inspector's visit, but would be surprised to know that he liftd reported favorably, nor did lie know that u Government dairy expert liad been asked by Mr. Neilsen to report on the

natter. ' He had taken no steps to complain to the Dairy Department. They ■vere paid Is Id at Oxford road, with a prospect of a bonus of ad. Mr. Neilsen paid Is 2Vid, but no bonus. Mr. Quilliam submitted that, taking ■the deed a-s being effective, the breach was limited to the date Trom March 9 to April 19, when 4301bs of butter-fat ■vas .supplied to Oxford road, at '2y 2 lb of •lieese to lib of butter-fat. This would

dean 10751bs of cheese anil, at per I'd profit this would represent £2 4s !>y 2 d. Mv. Quilliam submitted, however, that the ileed was inoperative because it was ■signed by defendant some montlis after t°siad been signed, stamped and sealed. The addition of a party was a material alteration. lie held also that the signature was merely put in to induce the other suppliers to believe that the contract was being fulfilled. He also submitted that at the time the brotlhers signed they were servants of Mr. Old and could not bind each other. The plaintiff realised this when he wrote and asked defendant if lie was willing to ■supply that season. He also submitted that there had been discharge by breach on plaintiff's part. ■ Mr. Wilson submitted that the deed was valid, fti'd as defendant had taken advantage of its benefits, he Could not now question its validity. Judgment was reserved.