Wednesday, November 20.

The case was resumed at the Supreme Court at 10.30 o'clock.

R. S. Cuthbertson (cross-examination by Mr Bell continued) said: I do not altogether agree with Mr Reid's letter of February 23. The price referred to was a temporary one. I have no doubt when he wrote it it was correct for the moment, but the price fell immediately afterwards.

Mr Bell: You say immediately afterwards: you are incorrect there.

Sir R. Stout: You have no right to say that.

Mr Bell: We know the exact state of the frozen meat market. Had the frozen meat market remained as it was when Mr Reid wrote that would have been right?

Witness: Yes.

That is to say, Ward could have afforded to pay a higher price to growers than you could?—Yes, so long as the London prices remained at that figure.

Witness continued: Nelson was paying us a good price. We had the offer, the grower got back the skins. We knew exactly what we were going to get per carcase and the cost of freezing. When the frozen meat market was as high in London as Mr Reid mentioned, Mr Ward could afford to give a somewhat higher price than we could. The price in London, I agree, necessarily governed the position. It was all a question of the relative value of meat. If our output had been restricted in that way it would have damaged them to us. We had guarantees from a considerable number of sheep owners. Most of the sheep guaranteed we got, but not all. Sheep outside the guarantee we could not get on a high London market unless Ward was equally bound. If the market fell in London, then Nelson made a loss. We had an agreement with Nelsons before 1891. The price of that was lower than 1891.

Sir R. Stout: What has that to do with it?

Mr Bell said Sir R. Stout had suggested that the concessions made on a firm contract by Nelson Bros, to Ward had a sinister meaning. He wished to show that concessions were made to the Southland Company on a firm contract prior to 1891.

Sir R. Stout said that for every concession' to the Southland Company Nelson Bros, got a quid pro quo.

page 30

His Honor said that, apart from any other circumstances, no reasonable person would draw an inference of "sinister motive" from the mere fact of concessions.

Mr Bell wished to show that there were concessions made in the agreement of 1889 with the Southland Company in order to lay them alongside another competing company.

Cross-examination continued: I do not think we were competing with the refrigerating company. The distance between Invercargill and Dunedin almost invariably protected us. We never poached nor were poached upon. There was a fixed price under the contract of 1889, and that contract at Nelson's request was abolished and supplanted by another. For the higher price an equivalent was given. Nelsons did not increase the price paid to us between 1889 to 1891 by 1/8d. I feel cartain they did not. There was only one increase in price, and that was under the new contract. The busy time at the freezing works is from March till May, and again about August till September; generally between October and December there was hardly anything doing. In 1893 we shut down about November, and continued shut down until the end of the year.

Why was not that arrangement carried out?

Witness: Because I believe a more favourable offer was received from two shipping companies.

These two shipping companies each put £10,000 into the concern at the end of 1893?—Yes.

Then it did not occur to you that you had a claim of £30,000 against Nelson?—My private opinion was never asked.

Sir R. Stout submitted that this was entirely irrelevant. Whatever they did with the shipping companies was not a release to Nelson Brothers.

Mr Bell undertook, in accordance with the rules of evidence, to make this relevant. He had indicated that the Southland Company never thought of any grievance till the rival shipping companies each put £10,000 into the Southland Company. He was entitled to show the foundation of the action, and who was behind it, and prepared to show that this was not the action of the Southland Company at all.

Sir Robert Stout: If you can show that I have no objection. Whose action is it?

Witness: May I be permitted to state that the question of the company having a cause of action against Nelson Bros, was discussed at one of the meetings?

Sir R. Stout: Before the negotiations with the shipping companies?

Witness: Yes; very shortly after Mr Ward commenced operations—some little time after.

Mr Bell: That was before you wrote the letters saying you admitted that Nelsons were entitled to buy the output, and all the it?—I never wrote any such letters.

Mr Bell: I will read you this memo [unclear: a] proposals for the formation of a new [unclear: up] on the 25th of August 1893:—

Memo, of agreement made this day, [unclear: t] of August 1893, between Messrs Nelson (Limited) and Messrs Nichol [unclear: nd] (directors of the Southland Frozen [unclear: Mest] pany).

Proposals having been made for the [unclear: form] of a new company, it is hereby agreed [unclear: that] event of their being carried to a [unclear: sa] point the following will form the [unclear: bas] agreement between the parties above-[unclear: mentioned].

1.	The company sha 11 be called "The [unclear: St] Refrigerating Company (Limited)."
2.	The Southland Refrigerating [unclear: Company] give Messrs Nelson Bros. (Limited) the [unclear: sole] to the freezing power of their [unclear: respective] for a period of seven years from the first [unclear: days].
3.	Messrs Nelson Bros, to have sole [unclear: right] vide stock for freezing, and shall [unclear: appoint] representative to supervise the [unclear: manipulated] said stock, such manipulation to be [unclear: carried] his satisfaction.
4.	The rate Messrs Nelson Bros. ([unclear: Limited] pay for freezing shall be three-eights [unclear: of] penny per pound for sheep and seven-[unclear: s] of one penny per pound for lamb, [unclear: deliver] both cases frozen f.o.b. at the Bluff.
5.	Messrs Nelson Bros (Limited) to [unclear: per] each for bags, quality of which [unclear: must] meet their approval.
6.	Messrs Nelson Bros. (Limited) to [unclear: p] cost of railage to the Bluff on meat [unclear: fr] Mataura works.
7.	The company to fellmonger skins [unclear: and] manipulate pelts, fat, &c., &c. on [unclear: Messers] Bros. (Limited) account at rates [unclear: here] be agreed upon. The runners, heads, [unclear: fee] &c. to be sold by Messrs Nelson Bros, to [unclear: the] company.
8.	Messrs Nelson Bros. to make [unclear: of] all arrangements for carriage of meat and [unclear: other]duce which pass through the works.
9.	Should Messrs Nelson Bros. ([unclear: Limited] to withdraw from this agreement they [unclear: can] at the end of each period of two years [unclear: by] the directors at head three clear [unclear: month's] writing of their intention to do so.

Cross-examination continued: I can [unclear: not] what the motive was for not [unclear: complete] agreement. The company may have [unclear: to] the offers of the shipping companies [unclear: to] £10,000 into the company better, [unclear: inss] as preserved the separate existence of [unclear: the] land Company.

Mr Bell: They desired to go on [unclear: with] fight?—Witness: They desired to [unclear: m] separate existence. I do not see that they [unclear: is] wanted to continue the fight [unclear: with] Ward. That was no desire of [unclear: ours], reports of the annual meetings in the [unclear: South] Times were sometimes fairly [unclear: accurate] always.

Mr Bell proposed referring to [unclear: ews] reports of annual meetings.

page 31

[unclear: Sir] R. Stoat objected that this was not not [unclear: ant] Statements made by directors at [unclear: ngs] of shareholders were not binding on [unclear: i] Company.

[unclear: Mr] Bell said the chairman of the board of [unclear: tos] was present at the general meeting [unclear: nt] for the company, and his declarations were [unclear: ant] as the declarations of any agent. What [unclear: wanted] to establish was that at the meeting [unclear: a] was no suggestion of complaint against [unclear: ns] or any mention of a right of action [unclear: t] them, and that at the general meeting [unclear: b] the company it was stated that the losses [unclear: a] due to reasons entirely different from [unclear: s] alleged in the present action.

[unclear: Sir] R. Stout submitted that it could not be [unclear: t] that the statements of a chairman or a [unclear: Beholder] at a meeting of shareholders was [unclear: ing] as against the company.

[unclear: Mr] Hosking said the Southland Company [unclear: ks] one particular view of the losses they were [unclear: s] seeking to put down to Nelsons. The [unclear: directors] put forward the statement that their [unclear: s] were due to certain causes, not due to [unclear: Nelsons], and the shareholders must be taken [unclear: as] in the view first put forward as to [unclear: cause] of the losses.

[unclear: Sir] R. Stout presumed the minutes were the [unclear: ks] record. How could it be said that the [unclear: ts] made by a chairman, who at the [unclear: a] probably was functus officio, [unclear: requiring re] could bind the company.

[unclear: His] Honor suggested that what was wanted [unclear: ht] might be shown by the report and [unclear: balance].

[unclear: Mr] Bell would first ask Mr Cuthbertson [unclear: concerning] the statement he had read at the [unclear: tra] meeting of shareholders, which ap-[unclear: ed] in the Weekly Times of 16th February [unclear: 1910]

[unclear: Sir] R. Stout objected, but the objection was [unclear: ed].

[unclear: Mr] Bell read the statement, which was as shows:—

[unclear: The] total loss for the past 12 months amounts in [unclear: d] numbers to nearly £6000. Of the amount [unclear: is] £5000 is due to the increased price paid for [unclear: s] beyond the current rates of former years. [unclear: d] £1500 has arisen through the necessity for [unclear: employment] of the hulk Edwin Fox during [unclear: greater] part of the year in connection with [unclear: considerations] and improvements to the machinery [unclear: Bluff] and Mataura. The unfortunate fire at [unclear: town] Crossing caused a loss of £500 of [unclear: ue] to the company, through their being [unclear: aby] obliged to dispose of the offal, &c., at [unclear: s] rates than they would have obtained had [unclear: b] in a position to manufacture it them[unclear: s] The above items not only account for the [unclear: d] loss during the past year, but they show that it had not been for their occurrence the directors [unclear: d] have been able to show a profit on the [unclear: year's] operations instead of a loss. Some of the above items of expenditure will certainly not [unclear: s] and as since the balance sheet was [unclear: published] the company's capital account had been strengthened by the £20,000 worth of shares subscribed by the two shipping companies, it was manifest that the amount of interest payable to the bank will be very materially reduced in future.

Witness continued: I do not remember reading that statement, but I remember the statement, and as far as my memory serves me the statements are accurate. The figures given in it I prepared myself. There is no reference in it to any complaint against Nelson Bros. I do not know why. I cannot tell you why.

Mr Bell: Now, your Honor, I submit that the chairman of a company in making an official statement at the annual general meeting to the company from the board of directors as to the profit and loss of the company during the preceding year, and of the reasons by which either the profit has been gained or the loss has been suffered, makes it first an official statement on behalf of the board of directors, and secondly an official statement on behalf of the company, which may be used, not expressly as an admission against the company, but as evidence in an action brought afterwards that the complaint in such action is the result of an afterthought. And, in another form, I put it in this way: That the only way of proving inconsistency on the part of a company in an action of this kind is to prove the antecedent course by the speech of the chairman at the annual meeting.

Sir R. Stout submitted first that his learned friend must, before putting in such a statement, prove that the chairman was authorised by the directors to make the speech. In the second place, the way to prove it was to call the chairman or persons who heard the speech. Then, he submitted that any speech made by the chairman was not admissible.

His Honor: I do not see very well how you can distinguish this case from that in re the De Valla Provident Gold-mining Company. It was there decided that a statement made by the chairman of a company at a meeting of the company was not an admission binding upon the company in an action between the company and a third party. The facts of that case are somewhat different from the present, but the principle laid down in the judgment seems to govern the present case. I do not think, therefore, that the evidence is admissible.

The speeches of the chairman of the plaintiff company at four several annual meetings—in 1891, 1892, 1893, and 1894—tendered by Mr Bell were ruled out.

Witness continued: There was some correspondence between Mr Reid and myself—chiefly, I think, in 1892. Part of it was in 1891. I handed Mr Hall all the letters I had.

Mr Hall undertook to produce the correspondence.

Re-examined by Sir R. Stout: Mr Cuningham Smith was not in the employ of the page 32 company during the currency of the contract. He joined the company in May 1894. He had absolutely nothing to do with the business of the company during the existence of the contract, in 1891, 1892, and 1893. The first official intimation I had from Mr Reid of the contract with Ward was contained in his letter to me on the 16th June 1892.

Supposing that sheep went down in London in 1892 and 1893 after Mr Ward's contract was made what would have been the result if Ward had not had the contract with Nelson?—The result would have been that he would have lost money on the shipments.

Could he compete with you?—That would be purely a question of finance. I should imagine he could not compete for any length of time. It would have meant a great loss to Mr Ward.

When you say that Mr Ward's opposition caused you loss what do you mean?—I mean that his being in the market and purchasing sheep of all kinds, owing to the contract he had with Nelson Brothers, we thereby suffered loss because, to keep our works at all reasonably supplied, we had to give a higher price and to use extra exertions to get sheep.

George Willis Nichol deposed: I am a director of the Southland Frozen Meat Company, and have been so for many years. We had contracts with the Nelson Company. We had one in 1889, and that was cancelled and replaced by one in 1891. I consider that for any alteration made Nelson Bros, got sufficient quid pro quo. Mr Cuthbertson was the officer of the company under the directors during the existence of this contract. The company had a heavy struggle in the early stages of its existence, but we had entered on a fairly prosperous career for three years previous to the contract of 1891. Our balance sheets show the profits we made. The erection of freezing works at Mataura was under consideration for some time before we decided to erect them. What determined us to start additional works at Mataura was the starting by Mr Ward of his works at Ocean Beach. That was the immediate cause of our being put in motion, but it had been under consideration previously. The competition with Mr Ward simply altered the character of our company from being a prosperous company to being a company that was losing money. The prices given for stock were raised in competition. The market really was excited.

Sir R. Stout: The market in London, we know, was falling.

Witness: The Ocean Beach Company and ourselves had only one market, and that was Nelson Bros. We had to raise the price to growers, and we got no increase from Nelson's. We did not lead off in raising the prices. The Ocean Beach Works first raised the prices. We tendered for Mr Price's sheep. We first of all raised the price to growers. For the best part, if not the whole, of 1892 we never [unclear: n] the price to farmers; we kept our price [unclear: a] at the works, and we relied entirely [unclear: on] farmers bringing their stock to our works published rates. In addition to [unclear: farmers], Price and one or two other drovers [unclear: col] sheep and brought them in at our [unclear: pub] rate, acting on their own responsibility. [unclear: In] latter part of 1892 Mr Price for some [unclear: r] withdrew his trade from us and went [unclear: over] the opposition works. This occasioned [unclear: a] siderable loss of stock to us—he was [unclear: a] large dealer,—and early in 1893 there [unclear: was] effort made to get his trade again. [unclear: This] suited in his asking us to tender what [unclear: price] would give him, and we were told the [unclear: O] Beach Company were also asked to [unclear: te] Just before that we had raised our price [unclear: d] the farmers and published it, and [unclear: seeing] Price would expect to get something [unclear: over] we tendered 23-16d, and he did not [unclear: accept] tender—he [unclear: accepted] a tender from the [unclear: opposite] works. We realised then that the [unclear: struggle] getting very severe between the two [unclear: works,] we then put on another buyer, named [unclear: Fl] and we gave him 2¼d. That left only [unclear: ¼d] margin to carry all the expenses of [unclear: r] freezing, bagging, shipping, and all the [unclear: a] dentals.

If you had not raised the price, what [unclear: wa] have been the result to your works?—We [unclear: ev] have had a very restricted supply of [unclear: sheep], as we had determined to go in for the [unclear: Ma] works, and as we had considered it [unclear: necessary] connection with these works that there [unclear: as] shall be a hulk at the Bluff, it was, with the [unclear: t] works, necessary to keep the works [unclear: hi] supplied or to shut down, and the latter [unclear: m] losing our connection. I have not to the [unclear: pe] time seen a copy of the agreement [unclear: be] Ward and the Nelsons. I think it was [unclear: be] Ward started operations that I first [unclear: heard] was an agreement. When I did hear [unclear: the] I think it had a definite form—that the [unclear: Nelson] had contracted for Ward's output. It [unclear: is] correct that the company only thought [unclear: of] Nelsons when we were pressed by [unclear: the] has The company is not now pressed by the [unclear: back].

Are you independent of the bank?—[unclear: a] Last week we put in promissory notes [unclear: f] substantial growers to the amount of [unclear: £21,000].

His Honor did not think this was [unclear: relev] examination-in-chief.

Now, Mr Nichol, you have heard of [unclear: the] cessions given to Mr Ward—the 2½ [unclear: per] commission on freight, and that his [unclear: works] to be kept clear. Do you consider Mr [unclear: Ward] your company was best treated by [unclear: Nelson] consider the concessions given to Mr [unclear: Ward] made his company the best favoured one.

Cross-examined by Mr Hosking: When [unclear: a] erection of works at Mataura was [unclear: first] jected by the directors, which was, to [unclear: the] of my recollection, after the contract [unclear: with] page 33 [unclear: son] was made, the attitude I took was of [unclear: advocasting] delay. The idea in going in for works [unclear: there] was that the power at the Mataura was [unclear: unique] for freezing works, and we knew that if we did not take it up it would in all probability [unclear: be] taken up by others. We also considered [unclear: that] our works at the Bluff and Wallacetown [unclear: were] not sufficiently complete. The idea was [unclear: to] fence ourselves as a growing company [unclear: properly] against an attack.

You wished to maintain the monopoly of [unclear: Southland]?—No; we wished to make ourselves [unclear: a] efficient as possible. The reason why I counselled delay was that we had only reached [unclear: a] position of prosperity and rest for about two [unclear: years]. We were doing fairly well, and I simply [unclear: preferred] to go on quietly Not to my [unclear: recollection] did I ever take up a strong attitude on the [unclear: matter]. I never threatened resignation from [unclear: the] board in connection with that subject. The [unclear: only] time that I threatened to resign was upon [unclear: the] contract for three years with Nelson Bros., [unclear: and] I did place my resignation in the hands of [unclear: the] chairman. I was very strongly opposed to [unclear: that] contract. The chairman, after several [unclear: conversations] persuaded me to withdraw the [unclear: designation] The company did go on with the [unclear: Mataura] works and the hulk, and that involved [unclear: as] in considerable expenditure. We knew [unclear: when] we were going in for the hulk that we [unclear: were] going in for a business that might lead us [unclear: into] loss. We did not consider that the Mataura works would involve a loss, but we [unclear: felt] that the hulk would probably be a drag [unclear: during] the completion of the Mataura works. [unclear: The] first amount that was under discussion for the Mataura works was, I think, £15,000. [unclear: Before] they were completed they cost £25,000.

With reference to the price of sheep rising, [unclear: did] you ever fear any competition from the [unclear: side] works?—The competition was of a [unclear: a] very slight character. Our business was to [unclear: a] extent isolated. The Burnside works [unclear: be] a good deal handicapped by the extra distance from the farmers.

What were the concessions to Mr Ward that [unclear: your] company complained of?—Notably the [unclear: Emission] on flight. We only knew of the [unclear: others] since this correspondence was discovered. [unclear: I] may say deliberately that we suspected from [unclear: a] very early stage that Mr Ward had other [unclear: concessions].

What concessions now do you complain of?—[unclear: I] think that the position Messrs Nelson took [unclear: up] with regard to the other company was [unclear: generally] of a helping character. The clearing [unclear: of] Mr Ward's works was another item—I forgot it [unclear: for] the moment—that was before the [unclear: directors] very often. The grades of the sheep Mr [unclear: Ward] had to ship were made easier, assuming [unclear: that] the original terms with Mr Ward were the [unclear: name] as with us. I think that the grade was a [unclear: simple] one in our contract. Considering that [unclear: Nelson] Bros. bound themselves not to assist any other company, I consider that to enter into the financial arrangements—

What financial arrangements?—Lending Mr Ward £20,000 and arranging to buy his works.

How could the advance to Mr Ward, made after you had shut down in 1893, help him as against you?—You must remember that both companies were fairly exhausted with the struggle.

But this was after the shipping companies had come to you with £20,000. Do you think now that Nelsons could have helped Ward by that as against you?—Well, it is simply a matter of quantity. You asked me for illustrations, and I gave you that as an illustration. It was not before the directors of the company that the Nelsons offered the company the same contract as was made with Ward.

Mr Hosking read the following letters:—

R. F. Cuthbertson, Esq.,

Southland Frozen Meat Company (Limited), Invercargill.

Dear Sir,—Referring to the conversation I had with you last week, I now put in writing the offer then made, which, if accepted, will take the place of the present agreement as far as the modifications contained herein go.

1.	That all sheep shall be weighed separately, and the weight of each carcase marked on the ticket attached.
2.	That 6 per cent, shall be deducted from that weight for shrinkage.
3.	That the price of all prime carcases weighing from 59lb to 69lb (inclusive) (hot weights), shall be 2½d per lb f.o.b. (bags included).
4.	That the price of other grades of prime wethers and maiden ewes—viz., those up to 58lb (hot weight) and those from 70lb to 79lb (hot weight)—shall be 2¼d per lb f.o.b. (bags included).
5.	That the price of aged ewes weighing 70lb and under (hot weight) shall be 23-16d per lb f.o.b. (bags included).
6.	That the price for prime merino wethers shall be 2 3-16d per lb f.o.b. (bags included).

I will also agree to pay 2½ per cent, on net amount of freight on above meat. Terms cash on exchange for bill of lading, but should your works become blocked with meat at any time and we are unable to provide freight, arrangements can be made to pay for meat in the works on production of store warrant. I enclose herewith detailed list of grades, &c., with price of each marked.—

Yours faithfully,

(Signed) J. B. Reid.

Messrs Nelson Bros. (Limited), Dunedin.

Dear Sirs,—We are advised that Mr Ward recently offered to freeze sheep for one of our clients, and allow him to dispose of them either in the colony or elsewhere, as he chose.

We are also advised that he has not only offered, but has actually frozen beef for one of our clients, on the distinct understanding that the latter is to be permitted to dispose of it in any way he thinks fit. We shall be glad to know if Mr Ward's contract with you permits him to do so, and if not we have to request that you will take such steps as may be necessary to put a stop this practice. . . . I am also to state that my directors con- page 34 sider the 2½ per cent, commission on freight granted to Mr Ward is an infringement of their agreement with you, and formally ask you to grant them the same consideration.

(Signed)

R. F. Cuthbertson,

Secretary.

Witness: I understood that Mr Reid, on behalf of Nelson Bros., was prepared to give us the same terms of contract as Mr Ward's in lieu of the one we had, and when that statement was made we had a statement of what that contract was in regard to grading, and we considered that it was no better than the one we had. I have not the slightest recollection if the 2½ per cent, commission was offered to us in connection with that contract. The general attitude towards Ward as in opposition to ourselves was one of attention and consideration for his requirements. Our method of buying sheep was to give a price per head delivered at the works. That was the method followed all through the contract. The guarantee system gradually died out during the continuance of the contract. It was on its last legs during the last contract. There was very little strength in it at the beginning of the contract, as the farmers liked to have a free hand. There was no dissatisfaction during the last contract that the large farmers were favoured at the expense of the small farmers. We had some large suppliers of sheep on our board. We had Ellis Bros, and Mr Bell. I don't think there were any other large suppliers. Mr Turnbull and Mr Carswell were also members of the board. I believe Mr Cars well got commission from the Tyser line, and the board never wished to take that commission from him. I did the stevedoring for the Tyser line for some time, but I don't think it was during this contract. I was never in favour of selling the Southland works. I do not recollect having any correspondence on the subject of selling the works, and I have never discussed the question of their sale.

Re-examined by Sir Robert Stout: If inferior sheep were put on the London market it would not do us good. With the present freezing power we have we can freeze 700 sheep a day at the Mataura works. My impression is that the Southland district has been a growing one in the production of sheep. I gathered from the correspondence that there was an agreement to purchase the Ocean Beach Works by Nelson Bros. My impression is that some new works were made at the Ocean Beach Works in 1893.

To Mr Bell: It was the initiation of Mr Ward's works that made us go into the Mataura works as a necessity. I cannot recollect that Mr Ward advocated a policy of extension of the works. Mr Carswell was strongly in favour of the erection of the Mataura works.

George F. Clulee deposed: I live in Timaru, and have been there for many years. I have had some experience in freezing sheep as manager of the South Canterbury [unclear: Fred] Works. I believe the signature on the [unclear: dur] ment produced is that of Harvey, the [unclear: secretary] of Nelson Bros in London.

Sir Robert Stout said he wished to put is [unclear: the] document to show the price of mutton London on December 22, 1891.

Mr Bell submitted that the documents [unclear: a] not admissible. His learned friend could give evidence of a particular sale. The [unclear: evidence] of value or of price must be general [unclear: evidence] collected from a series [unclear: of] documents of kind, but no evidence of a particular [unclear: sale] evidence of value.

His Honor disallowed the putting in [unclear: of] document.

Witness (proceeding with his evidence) [unclear: a] know the price of sheep in 1892. I sent [unclear: He] Hon. sheep myself in that year and the [unclear: following] year. I have the average price of sheep [unclear: that] sent Home in 1892 and 1893 In 1882 [unclear: t] shipments made in March, June, July [unclear: a] October averaged 4 1-16d. In 1893 [unclear: shipment] made in January, April, June, July, [unclear: August] September, October, and November [unclear: average] 3¾d.

Sir Robert Stout: What would be the [unclear: pre] price to deduct from this price to get [unclear: at] price to the grower?

Witness replied: About 1[unclear: 1]d.

What would be your own price [unclear: compare] with the Southland price?—My opinion [unclear: is] there would be a difference of 1/8d [unclear: per] in favour of my sheep.

I now ask you, Mr Clulee, could the [unclear: New] Zealand Freezing Company pay 2[unclear: 5]d 2 3-16d in Southland in 1893 and make [unclear: a] profit?

Mr Bell submitted that that was an [unclear: en] irrelevant question. These people had a [unclear: New] Zealand market and not a London market, [unclear: a] therefore the question had no bearing [unclear: on] the case.

Sir Robert Stout said his learned [unclear: friend] not see his point at all.

His Honor asked what was the object [unclear: of] it question.

Sir Robert Stout: If it had not been [unclear: for] the firm contract that Ward had he could not [unclear: t] sold mutton at the price. Mr Bell: It is admitted the Freezing Company knew that.

Sir Robert Stout: If Ward had not had [unclear: for] firm contract for two years with Nelson purchase his mutton at the price he got [unclear: is] and 1893, his works would have had to stop.

Witness continued: I have been [unclear: engaged] the meat trade for nine or ten years, I [unclear: know] no London buyers except Nelsons [unclear: taking] tracts for more than a year. The [unclear: general] tice now is to sell c.i.f.

Cross-examined by Mr Bell: The [unclear: Nelsons] made contracts all over New Zealand, and I [unclear: had] page 35 [unclear: heard] that they had a three years' contract [unclear: with] the Southland Company. In February [unclear: 1892] mutton was high. It was a rising market [unclear: from] the 1st January to the 19th February, and [unclear: then] stationary to the 4th March, after which it [unclear: began] to fall. Having regard to that, and to [unclear: the] fact that the Southland Company were [unclear: bound] to sell to Nelsons at 2½d, and could only [unclear: afford] to give growers 2 1/8d, allowing 0 3/8d for [unclear: freezing], I would certainly anticipate that if [unclear: powers] had another outlet for their sheep they [unclear: would] sell to another market.

Therefore it would be to the interest of [unclear: the] Southland Company that a contract at [unclear: a] price should be made with the Ocean [unclear: Beach]?—That is equally certain.

Re-examined by Sir R. Stout: It is well [unclear: known] that January and February are always [unclear: the] best months for London prices. The price, [unclear: after] the drop in March 1892, was never up for [unclear: the] rest of the year.

Sir R. Stout said he wished now to put in [unclear: the] letters and telegrams he had read, and he [unclear: wished] to draw attention to a class of letters he [unclear: had] not commented on in his opening—that [unclear: class] of letters dealing with the purchase in 1893. [unclear: The] first letter was dated on the 27th January [unclear: 1893] from Mr Ward to Mr Reid. It was a [unclear: schedule] called a contingent expenditure of [unclear: £8045]-seven dwelling houses and so on. That [unclear: would] be of importance, for the plaintiffs would [unclear: submit] that the money was expended after the [unclear: Nelsons]' purchase, and paid for after the Nelsons' purchase, as it was concerned in the [unclear: tion] of works.

His Honor: I see. There was an agreement [unclear: to] pay at the end of the year for something [unclear: which] at the date of the agreement was not in [unclear: existence], but had to be brought into existence.

Mr Bell: It was already under way.

[unclear: Sir] R. Stout: It was not under way according [unclear: by] to the letters. It was a contingent lia[unclear: bility]. Learned counsel put in certain letters [unclear: written] in February 1893, and the agreement, [unclear: Ward] to Nelson, dated the 20th February 1893. [unclear: In] that agreement it was provided that the [unclear: nes] set down in schedule A under the head [unclear: of] contingent expenses were to be completed in [unclear: a] workmanlike manner.

His Honor: That was not a binding agre[unclear: ement], was it? That was when it was put under offer?

Sir R. Stout: Yes. He put in 36 other let[unclear: ters] and said a point of importance, to show [unclear: how] the money was paid—that the thing had [unclear: En] "put up" since—was an admission by [unclear: Nelson] in a letter on January 22:—The [unclear: advantages] to us of the proposed alteration are [unclear: as] follows (but I must first point out why the [unclear: works] are now valued at £50,000 instead of [unclear: £32,000]):—Since we purchased the new storage [unclear: agreed] upon has been added, and sundry other [unclear: necessary] additions, with an amount still [unclear: further] be spent, which would bring the total cost up to £42,000, the additional £8000 of which—of course half will belong to us—is on the ground of the large paper interest which Ward has in it," and so on. He asked his Honor now, in case any question might be raised, that the words in the defendants' pleadings should be added to the eighth paragraph of the statement of claim. He had cases to show that there was no doubt whatever about the power to do it.

His Honor thought it better perhaps to postpone the discussion as to whether the amendment should be made.

Mr Bell: Contingent upon that, if that amendment is allowed, obviously an amendment of the defence would have to be allowed to me.

Sir R. Stout: I have no objection.

The case for the plaintiffs was then closed.

Mr Bell: May it please your Honor, gentlemen,—You have heard one side of the story and practically part of the defendant's story, but what you have not heard is a consecutive narrative of the circumstances connected with the contracts entered into between the company which I represent and Mr Ward, and apparently there was, I should imagine, a desire on my learned friend's part throughout to prevent any consecutive account appearing of his case, for as you follow the acts from date to date and the communications between the parties, it becomes perfectly manifest that the plaintiff company never had, or deemed they had, any cause of complaint against the defendant company, and that, as I shall show you, this action is the discovery of certain people quite outside the directorate of the plaintiff company, who wish perhaps—one or two of them—to "get at" Nelson Bros. (Limited) and the Tyser line through the medium of a jury of their fellow countrymen. In fact, as Mr Cuningham Smith says in a letter I am about to read to you in a moment, "this will be a bombshell in the Nelson-cum-Ward camp.'

Sir R. Stout: Smith to whom?

Mr Bell: Smith to Turnbull, Martin, and Co.

Sir R. Stout: That won't be evidence.

Mr Bell: I propose to read it in a moment to the jury. It is in the discovered correspondence. I will show it to your Honor, and your Honor can see what I propose to open. I propose to open and read the correspondence immediately prior to the writ, and the interrogatories that were then issued and the allegations then made against the company, and then I shall proceed to bring the jury to what has been attempted to be proved in this action, and for that purpose I propose to read the letters written by the general manager of the company, Mr Cuningham Smith, and produced by the other side to us as relevant to the action.

page 36

Sir R. Stout: That does not make it relevant. I object.

Mr Bell: I propose to show your Honor the letter I propose to read, and your Honor can see whether I can read it.

Sir R Stout: I wish it argued first.

His Honor: I suppose I can see the letter first.

Sir R. Stout: The point is, that I want the matter argued.

His Honor: Certainly, before Mr Bell opens a doubtful letter to the jury you have a right to argue.

Sir R. Stout: I do not wish to interrupt my friend, but the practice is to take disputed points afterwards. My friend has no right to have the question of evidence or no evidence in the opening.

Mr Bell: I admit that is the usual practice.

His Honor: Why should you depart from it?

Mr Bell: Your Honor will see in a moment. I must address the jury in a particular way in regard to the initiation of this action. I cannot do so without reading to the jury the documents which passed between the officers of the company and others immediately prior to the issue of this writ.

His Honor: Do you think it is anything in your case's favour the matter should be determined in the first instance? I do not see there is any binding practice to prevent this being determined

Mr Bell: I am so anxious to get on that I won't do that. If my learned friend will undertake not to interrupt me more than he can possibly help

Sir R. Stout: I shall not interrupt unless it is necessary.

His Honor: There are obvious objections to introducing a letter from the general manager to an outsider

Mr Bell: This is not to an outsider, but to one of the companies which put £10,000 into the Southland Frozen Meat Company and has a director on the board. To save time I will not refer to that letter. I want to know if my friend objects to my reading letters between the general manager of the company and the Bank of New Zealand immediately prior to the commencement of the action.

Sir R. Stout: Yes, I object.

Mr Bell: On what ground?

Sir R. Stout: They cannot be of avail in the action.

His Honor: What is the position of the Bank of New Zealand?

Mr Bell: There was an overdrawn account of close on £30,000. The Bank of New Zealand makes a demand, and then a letter is received from the Bank of New Zealand regarding the intention of the company in relation to this. The objection, of course, your Honor, to this, which appears to me to be obvious evidence, is somewhat disconcerting, but my learned friend is quite within his [unclear: rights] making it. Very well, I'll take it from company's minutes. I assume it is not tended that the minutes of the company [unclear: are] evidence against them.

Sir R. Stout: The minutes of the coma after the litigation was commenced, are evidence against them.

Mr Bell: I simply ask my friend the [unclear: question]. Very well, we'll tender them [unclear: late] Gentlemen of the jury, you will observe Sir Robert Stout and those who are in [unclear: ch] of the plaintiffs' case are exceedingly [unclear: tender] to the production—

Sir R. Stout: You have no right to say [unclear: fr]

Mr Bell: They are exceedingly [unclear: tender] the production of any correspondence [unclear: and] about to object to any correspondence [unclear: occing] the commencement of this action, and [unclear: if] very sorry that there is going to be an [unclear: attended] to keep that from the jury, because it [unclear: would] clearly interesting to you, and, I [unclear: app] also of advantage to my clients that you [unclear: should] have it, and I shall endeavour later on [unclear: to] it before you. At present I am [unclear: only] to refer to the fact, which [unclear: has] proved independently that at the [unclear: end] 1893, in lieu of the proposal to [unclear: amalgamate] Southland Company with the Ocean [unclear: Be] Company the Southland Company [unclear: elected] take into co-partnerships two shipping [unclear: companies], each of which put in £10,000, to [unclear: a] on the fight vigorously. And carried [unclear: a] was with results not very satisfactory [unclear: to] Southland Frozen Meat Company, [unclear: which] that year lost £16,785—a sum enormously in excess of any sum the [unclear: had] lost before,—so that when they came to [unclear: I] us, without the contract but with the co-[unclear: occupation] of the shipping companies, [unclear: they] enormously; and in 1895 they came [unclear: to] conclusion that the Nelsons had been [unclear: play] them false—that is to say, that [unclear: they] eluded—or pretended to conclude, [unclear: for] was a mere pretence on their [unclear: pu] that the Nelsons had in the years 1891, [unclear: 1892] and 1893, in defiance of their [unclear: contract] them, been interested directly in the [unclear: Oc] Beach Works. Now in that they were [unclear: a] incorrect. Their surmise was quite [unclear: false], having failed in their surmise, and having [unclear: in] the action which they launched upon [unclear: a] surmise, they now seek to take advantage [unclear: a] matter they knew all along and never [unclear: e] plained of. The action ought to have dropped when the interrogatories [unclear: which] about to read—Does my learned [unclear: fre] in object to my reading the interrogatories?

Sir R. Stout: No; and the answers if [unclear: yo] like.

Mr Bell: Your Honor, I was about [unclear: to] for a nonsuit, and I am at a loss to [unclear: know] I rose to address the jury. I have never [unclear: in] experience done such a thing before—

page 37

Sir R. Stout: I do not object to my friend [unclear: moving] now.

His Honor remarked that when the jury was [unclear: present], though he was there to hear what was [unclear: to] be said on the subject of nonsuit, he was [unclear: always] disinclined to hear a nonsuit argued [unclear: when] the jury was in the box, but rather to [unclear: reserve] leave.

Mr Bell: I must move—

His Honor: I have no objection at all. If [unclear: Mr] Robert Stout does not object, I am sure [unclear: I] do not.

Sir R. Stout: Not the slightest.

Mr Bell: The grounds upon which I [unclear: move] for a nonsuit are that this contact [unclear: contains] an express permission to [unclear: Nelson] Bros, to buy the output of any [unclear: works]. There is no evidence that we ever [unclear: were] concerned in the erection or use of the [unclear: Ocean] Beach Works otherwise than in [unclear: aspect] of the purchase of the output. Secondly, if there were any doubt as to the [unclear: construction] of the contract, the letters [unclear: put] in show that the plaintiffs acted upon [unclear: a] particular construction of that contract, admitted [unclear: our] right to purchase the output, and insisted [unclear: upon] certain contingent rights in [unclear: confluence]—consequent upon that [unclear: admission]. There has been no proof whatever of any breach except the purchase of [unclear: the] output. Obviously the question whether that was a breach or not is a question for the [unclear: court]; at least I submit it is obvious. It is [unclear: for] the court and not for the jury. Therefore [unclear: your] Honor will have to rule that it is a breach.

His Honor: No doubt sooner or later the [unclear: court] will have to rule whether the agreement [unclear: to] purchase the output was a breach.

Mr Bell: Now your Honor will understand [unclear: why] I am bound to move for a nonsuit.

His Honor: It is far more convenient you [unclear: should] do so.

Mr Bell: The other breach alleged is that we [unclear: accepted] in April 1893 an offer made by Mr [unclear: Ward] in February of 1893 to sell us the Ocean [unclear: Beach] Works In our acceptance it was [unclear: provided] that the arrangement was to take effect [unclear: on] the 1st of January 1894. Now that again, [unclear: I] submit, is a question for the court and not [unclear: for] the jury. It is a very simple question, [unclear: I] think, when it is considered out.

His Honor: It depends rather on the [unclear: correspondence], does it? The evidence in [unclear: connection] with the purchase in 1893 is in writing.

Mr Bell: Yes, it is all in writing. Supposing [unclear: Nelsons] were not entitled to agree to buy the [unclear: Frozen] Meat Works on January 1, or to erect [unclear: works] to as to bring them into operation on January 1, then they would be bound, [unclear: not] for three years, but for five years,—that is the position, and so it [unclear: is] all trades. If a man agrees not to [unclear: enter] into competition for two years, he is [unclear: entitled] to prepare himself for competition at the conclusion of that term, otherwise he would be bound for a much longer period. Then I understand the third suggested breach of contract is that we lent Mr Ward £20,000 in November 1893. How that is being concerned in Mr Ward's freezing works it is difficult to understand.

Sir R. Stout: It is a form of purchasing them.

Mr Bell: That is exactly what it was not. My learned friend put it to the jury that Nelsons lent £20,000 as soon as they were asked for it, which was the fact, and Nelsons had as security the works put in pledge. The fact was that he had agreed to buy them, so they were actually worth to Mr Nelson £32,000. When Mr Nelson agreed to lend £20,000 to Mr Ward in November he got as security the deeds of the Ocean Beach Works, and not only were they worth £32,000 as face value, but they were actually worth £32,000 cash to Mr Nelson, because he had got to pay £32,000 for them. What I mean is that they were a different security to Mr Nelson than to anyone else. If they had been mortgaged to A they might not have sold for £32,000, but in Mr Nelson's hands they were actually worth £32,000. The other matters that have been suggested are surely not suggested as breaches themselves, but as evidence that we might have been concerned in Mr Ward's works—that is to say, it is suggested that certain concessions made to Mr Ward are indications that we were in some way or other concerned in Ward's works Now the correspondence shows throughout that we loyally observed the conditions of the contract. If we were entitled to purchase the output, which is really the question here, then we were entitled to purchase upon any terms we pleased. Now I shall be prepared to show that Mr Ward's terms, so far from being favourable to him, the reverse was actually the result—that is to say, that in every case we paid less to Ward for sheep and they sold for more. But irrespective of that, and assuming that any favour was given to Mr Ward, if we had a right to enter into the output agreement with Mr Ward we had a right to enter into the output agreement upon any terms we pleased, subject, of course, to the condition that if we gave higher terms the Southland Company could, if it chose, exercise its rights under the contract and terminate its own agreement. It all practically turns upon that Everything we did with Mr Ward we did under the contract with him which is before the court, and our contract with him was to put him upon the same terms as the Southland Company. The point is, were we entitled to enter into a contract or not. As a matter of fact Mr Ward had reason to complain that we did not put him on the same terms as the Southland Company, and he did complain vigorously, though not so vigorously as he was entitled to. There is a clause in Mr Ward's contract that he page 38 is to have as good terms as the other company. Were we entitled to enter into that contract with him? If we were, then everything done was in pursuance of that. So that I submit to your Honor the sole question is whether the agreement to take Mr Ward's output is or is not a breach of our contract with the Southland Frozen Meat Company. If your Honor were to rule that the output agreement with Mr Ward was in itself a breach, then we should have to go into an entirely different line of evidence. We should have to endeavour to show that if we had not purchased the output there were other people ready to do it at that time, and therefore that the damage that flowed from Mr Ward's opposition did not result from our act. But if, on the other hand, we were entitled to enter into the output agreement, then all questions pass except the question as to whether we were entitled to agree in 1893 to buy in January 1894. It seems clear that unless your Honor, for the purpose of getting to the jury, were to rule against me on all points, certain of these matters would not go to the jury at all. The nonsuit point comes to this: The other side, as your Honor is aware, launched this action—it is not irrelevant to refer to it even at this stage. The other side began by alleging, as is clear from their own pleadings, that we were directly interested in Mr Ward's works. That is what they say.

Sir R. Stout: That and more.

Mr Bell: What they said was this: "The defendants without having made any special arrangement with the plaintiffs in the year 1891 erected or assisted, and were concerned or interested in the erection of certain freezing works at the Bluff, and were thenceforth during the remainder of the term of three years concerned and interested in the use of the said freezing works." Well now they have administered stringent interrogatories to ascertain whether or not Nelson had money invested in the concern.

Sir R. Stout: How does that affect the nonsuit?

Mr Bell: The interrogatories not being in I can only refer to the pleadings to show that that is the way the action commenced. They alleged that we were actually directly concerned, and now it turns out in the evidence that the Nelsons never had a shilling in the matter at all—that is perfectly clearly proved.

Sir R. Stout: I do not admit that.

Mr Bell: There is no evidence that a single shilling of Nelsons' money was ever invested with Ward, nor that Nelson paid anything to Mr Ward until the £20,000 was lent on the title deeds. That was a transaction they were entitled to enter into upon the authorities. As to that, I don't think your Honor will have any difficulty at all. There is plain authority upon that. Upon a contract of this kind, lending money, even though the only means of being paid back is out of the profits, is not a [unclear: br] of contract. Well, putting that aside, [unclear: i] there was not a shilling of Nelsons' [unclear: a] ever passed to Mr Ward according [unclear: to] evidence. That narrows it down to [unclear: the]: Were we interested in the use [unclear: of] works? Colloquially, we were interested [unclear: is] use of the works by having purchased [unclear: the] put, and so you come back to the point [unclear: when] we were entitled to enter into the output [unclear: up] ment. That would have been [unclear: arguable] submit, had it not been for one clause [unclear: is] agreement and for the subsequent [unclear: conduct] the parties, which makes it clear [unclear: that] in parties adopted the interpretation [unclear: of] contract that the Nelsons were [unclear: perfect] entitled to buy Ward's output. Though [unclear: si] possible your Honor may think it [unclear: necessary] postpone your ruling upon other [unclear: question] until the close of the case, I [unclear: apprehend] would be very convenient if your Honor [unclear: dec] this question now, before the case goes [unclear: to] jury for defence, as to whether the [unclear: occe] agreement was a breach of contract.

Mr Hosking was also heard in supports [unclear: set] motion for the nonsuit. The way, [unclear: he] mitted, the matter should be put, was [unclear: be] Clause 7 in the agreement—the one [unclear: w] referred to the purchase by Nelsons of [unclear: any] output—was practically a license or [unclear: exceptions] from the general covenant which followed [unclear: t] they should not be interested in any [unclear: o] works. At all events it meant that they [unclear: mi] purchase the output of another person submitted that was the proper [unclear: consideration] the document. It said, in the event of Nelsons purchasing from any other [unclear: person] that then the Southland Company [unclear: a] terminate the contract or Nelsons must [unclear: p] them on the same footing—that was [unclear: to] subject to certain conditions, Nelsons [unclear: were] liberty to purchase the output of another son; that it was not necessary for [unclear: Nelson,] fore they did purchase the output, to go [unclear: to] Southland Company and say we [unclear: want] enter into this contract, will you allow [unclear: se] do so? They could proceed [unclear: independently] the first instance, to negotiate for the [unclear: purchase] of another person's output. If they [unclear: were] liberty to purchase another person's output [unclear: the] necessarily involved the liberty to do [unclear: whatever] was necessary, fair, and proper, to give [unclear: effect] to that purchase. As to what was [unclear: fair] proper in the purchase of the output, [unclear: they] really the Southland Company's own [unclear: stand] upon that—viz, the contract the [unclear: company] entered into with Nelson's; so that the [unclear: Southland] Company might be taken by [unclear: their] contract to admit that in the purchased [unclear: of] output it was proper and fair to enter arrangements with regard to the [unclear: freight.] submitted that Nelsons were perfectly [unclear: just] therefore, in entering into the [unclear: arrangements] to freight which were found in Mr [unclear: Wards] tract. Now if he was right in [unclear: the] page 39 [unclear: had] taken up—viz., that there was liberty to [unclear: later] into an agreement to purchase the output [unclear: and] to make consequential terms upon the [unclear: purchase]—let them see how the matter would [unclear: and]. Cuthbertson put the grievances which [unclear: followed] from the breach of the contract—[unclear: that] the price had been raised; that the [unclear: Nelsons] had accepted inferior sheep from Mr [unclear: ward]; that the Nelsons had not cleared their ([unclear: the] Southland Company's) works quickly [unclear: enough]. Those were the three points which [unclear: were] said to be the result of the brea[unclear: ch] contract. It was alleged that these [unclear: ults] had followed from entering into this contract with Ward to buy his output. [unclear: It] followed that these grievances were [unclear: expressly] permitted by the original contract, for [unclear: they] were the necessary result of buying the [unclear: output] of any other works than those of the [unclear: Southland] Company. If the original contract [unclear: with] the Southland Company said. "You may [unclear: buy] another person's output" it necessarily followed [unclear: that] they gave the Nelsons liberty to place them at that disadvantage. He [unclear: submitted] that this was a perfectly legitimate [unclear: gument], and that it could not be got out of [unclear: upon] any proper construction of the agreement. [unclear: All] the grievances that Mr Cuthbertson had [unclear: mentioned] followed as the natural consequence [unclear: of] Nelson Bros, entering into a contract to [unclear: purchase] the output of any other company. The [unclear: oject] of the company in putting up works at [unclear: Mataura] was to keep out a rival competitor, [unclear: but] when they said "You can buy from other [unclear: persons]," they at once said "You can [unclear: introduce] competition into the market" Then there was the restriction as to the class of sheep. With regard to that the contract which [unclear: Nelsons] were committed to enter into by the Southland Company said nothing about [unclear: the] class of sheep they might contract to buy. [unclear: It] simply said Nelsons might buy sheep from [unclear: another] person, and said nothing about grades, [unclear: so] that the Nelsons were at perfect liberty to [unclear: buy] sheep of any grade they chose. It didn't [unclear: follow] that the grades which prevailed in 1891 [unclear: would] be acceptable to anybody in 1892. They [unclear: knew] that these were matters which would [unclear: change] as trade developed, and it did not fellow that the same grade was to be provided [unclear: for] in the case of the third party; but the [unclear: Southland] Company, in fact, went further than [unclear: that]. They said, "We acknowledge you may buy [unclear: from] other persons, and at different prices from [unclear: what] you give us, or on different terms, [unclear: provided] we have liberty to come in and to get the same terms "The evidence as to this was that [unclear: they] had liberty to come in and have a contract [unclear: on] the same lines as Ward, but they said "No, [unclear: it] would not suit them; it would cost them too much money to alter their works." The way [unclear: in] which they treated this matter of a rival contract was directly shown by [unclear: what] bad taken place on that occasion. [unclear: They] were to have liberty to take up the same terms if they chose, and they said they would not accept them. The third grievance which was said to have followed was that in consequence of this purchase of the output the Southland Company's works were not cleared. Whether that was so or not he submitted that it was not a consequence of Nelson buying Mr Ward's output at all. The true cause of what happened was that Nelsons hadn't provided sufficient freight accommodation—it was not because they bad bought Ward's sheep that a block ensued, but because sufficient freight accommodation was not provided. Then they might fairly put it in this way: that the license to Nelsons to purchase any other output in Southland left it open for the chance to arise of a block if they allowed competition to come in, as he submitted the contract did. Then the further consequence of the non-clearing of the works and of the block at the Bluff must necessarily be licensed also. If these acts were licensed to that extent, then the results which may be said to arise from them were licensed also. That would lead to the question as to what the interest in the contract really was. It could not possibly mean the interest which the buyer of sheep would have in seeing that the sheep were graded properly and so on, because that was the very thing the purchaser of an output would do. It could not be what might be called the natural interest shown by Nelsons in seeing the way the sheep were graded, for that was a proper interest for the purchaser of an output to take. It was not a pecuniary interest that Nelson Bros. were to receive—so much for each sheep frozen,—the legitimate interest which Nelson Bros, were justified in taking, and which Mr Ward might have complained if they had not taken. It was in evidence that Mr Ward was new to the business and therefore there was all the more reason that Nelsons should aid the sale of sheep in London and see that they were made proper for the London market, and all the more reason why that interest which was apparent in the correspondence should be shown by Mr Nelson. But that interest, he submitted, was not interest within the meaning of the contract. This was simply an attempt to charge the losses which had arisen from the doing of those acts that the defendants were licensed to do to a breach of the covenant They were simply trying to say, "Although we licensed you to buy another man's output, and uncessarily to do other things, you must pay us for having done that, although we allowed you to do it." That was really the position taken up by the plaintiff. They were trying to make the defendants pay them for what they had not guarded themselves against, and for what they had expressly allowed the defendant to do. He suggested that the true construction of the covenant not to erect or assist in erecting, or be concerned or interested in any works, must be page 40 that they would not be peculiarly interested, and pecuniary interest meant interest in the profits. It must mean that defendants should not put money in the business. In the first place Nelsons covenanted with them that they would not erect certain works That could not be that they would not with their own hands put up certain works. It must mean that they would not pay money to a contractor for that work. To covenant not to erect meant to covenant not to find funds. Then how were they to assist in erecting except by making a contribution to the funds for that purpose. A covenant against erecting works must be a covenant not to supply any moneys required to build or to assist in putting up any portion of the buildings. Then exactly the same meaning must apply to assist in the use of the works. They could not put a different meaning in the one case than in the other. He submitted that the true construction of the covenant was clearly that they should not provide the money for erection or assisting in the erection or for using the works. The covenant must deal with the pecuniary interest of the parties. The learned counsel then dealt with the legal aspect of the points mentioned, citing as authorities: Bird v. Lake (H. and M., 308), Smith v. Hancock (L.J. Chancery Division, page 384), and Smith v. Hancock (L J. Chancery Division, 12).

Sir R. Stout would first deal with his friend's last point. He said the test of the word "interest" with reference to the contract completed in 1893 would be, supposing the building had been burned down: Could Nelson compel Ward to recrect them before completing the purchase? If not, had Nelson an insurable interest? There were hundreds of cases to show that Nelson had an insurable interest.

His Honor: What do you say would have happened if the buildings had been burnt down?

Sir R. Stout: Ward could not have been compelled to erect them.—(Porter on Insurance, page 48) In this agreement, strange to say, the contract only was that the purchase money should be paid in January.

Mr Bell: No, no ! It says "to take effect."

Sir R. Stout: The only arrangement was about the purchase money. The words were these: "This offer to remain open until Monday, 15th May 1893, and if accepted the £16,000 cash shall be paid to me not later than the 1st January 1894, and dividend upon the shares transferred to me shall be calculated, and shall be at the same rate as pa d to other shareholders for the year ending 30th September 1894." There was not a word about when the business was to be taken over.

Mr Bell: It is in the acceptances.

Sir R Stout: There are two acceptances.

Mr Bell: The official acceptance.

Sir R. Stout: I don't know what that [unclear: is,] acceptance does not vary it. Warren's [unclear: letter] her suppose, is it?—The arrangement to effect from the 1st January 1894."

Mr Hosking: Mr Ward confirms the [unclear: van] by a subsequent letter.

Sir R. Stout: What variation?

Mr Hosking: The variation "to take [unclear: ef] from the 1st January 1894."

Sir R Stout: What letter do you refer [unclear: to]

Mr Hosking: Ward to Nelson, 27th [unclear: March] 1893.

Sir R. Stout: Read the letter.

His Honor: It is obvious that if the [unclear: a] was to be paid on the 1st January, and [unclear: t] was no provision for interest in the [unclear: mean] possession would not be given until [unclear: the] January.

Sir R. Stout: That was not to say that [unclear: th] were not interested. The contract [unclear: provide] the schedule that certain works [unclear: were] be erected and to be paid for. [unclear: The] gave £27,000 as the "present price," [unclear: and] were contingent expenses of £6000 and [unclear: th] agreed to buy for £32,000 on the conditions Ward proceeded with the erection of works a workmanlike manner. If that was not [unclear: "be] interested and concerned in" he did not [unclear: ka] what language was. How could they [unclear: say] were not interested in the erection? [unclear: That] he submitted, sufficient to wipe out all nonsuit points; but as to the other [unclear: point] dealing with clauses 7 and 8—he was not [unclear: during] to make the first contention that he [unclear: made,] it was open to him to make in, that [unclear: cleanse] meant outside the two counties of Southland and Wallace, and that clause 8 referred [unclear: to] two counties of Southland and [unclear: Wallace;] the company's reason for this was: "[unclear: Old] Southland and Wallace you can [unclear: contract] any output you please, but if you do you do so on the same terms as ours." But [unclear: class] 8 meant that they were not to do [unclear: anything] affect the company's output, and that meaning of the contract. If that [unclear: was] meaning his friend would admit that the [unclear: work] constituted a breach.

Mr Bell: No.

Sir R. Stout: Unless it was said [unclear: that] plaintiff had waived or acquiesced, and [unclear: th] was not pleaded.

Mr Bell: If that construction is possible [unclear: a] rely on the Bank of New Zealand v. [unclear: Wilson].

Sir R. Stout: The Bank of New [unclear: Zealand] Wilson is not that. It is what? [unclear: Estopped] conduct. What have we done to [unclear: stop] conduct?

Mr Hosking: You have not alleged this [unclear: as] breach.

Sir R. Stout said the words "assist [unclear: in] use" covered it. Those words [unclear: were] enough to cover it all. There were [unclear: hundred] of cases as to the meaning of the [unclear: word "]cerned," which was the word used in the [unclear: ce] tract. There was the use of the word [unclear: in] page 41 [unclear: case] of "any member of a local board [unclear: concerned] in any bargain or contract who [unclear: participates] in the profits."

His Honor: That is a case of disqualification, [unclear: of] the imposition of a penalty. That is a [unclear: different] class of case from this. It does not [unclear: follow] that because the word "concerned" has [unclear: a] particular meaning in that class that in the [unclear: the] present case it should have a similar [unclear: meaning].

Sir R. Stout: No, but it had a stonger [unclear: meaning], because there a man was charged [unclear: with] crime. He cited the following [unclear: authorities]:—Nutton v. Wilson (58 L J, [unclear: Common] Law, 443), Smith v. Hancock, Wil[unclear: tion] v Pettit, Jones v. Evans (L.R., 4 [unclear: Chancery], 636), Newlyn v. Dobell (38 L J., [unclear: Chancery], 111), Baxter v. Lewis (30 Solicitors' [unclear: Journal], 705), Attorney-general v Robinson [unclear: on] L.J., Exchequer, 188), Attorney-general v. [unclear: Woodmas] (Bunbury's reports, 320). Hill v. [unclear: Hill] (55, Law Times), Turner v. Evans (22 [unclear: L J]., New Series, Q.B., 412), Brompton v. [unclear: Beadows] (13 Common Bench, New Series, [unclear: 542]), Whitely v. Bailey (57 L.J., Q B., 643) [unclear: Learned] counsel submitted that the words of [unclear: the] contract in the present case were wider [unclear: than] those in any of the cases cited, and that [unclear: was] part of the bargain that Mr Ward was to put up buildings which were to become Nelson [unclear: Bros].' in January. If they entered into a [unclear: contract] with a contractor to erect works the [unclear: were] fact that the contractor was to have three [unclear: years] to erect them in and was only to be paid [unclear: at] the end of three years would not prevent [unclear: their] action being a breach of contract. The [unclear: words] of the contract were that they were [unclear: not] erect, or assist, or be in any way concerned [unclear: t] interested in, the erection of works during [unclear: three] years—not that the works were to be [unclear: completely] finished during that time. He [unclear: therefore] submitted that there was no ground [unclear: for] the nonsuit. He might have referred to [unclear: the] letter in May and to the letter of January of [unclear: 1894], in which Mr Nelson said the company are [unclear: to] purchase the new storage. Mr Nelson looked upon it as [unclear: a] purchase in May, and if there was to be an estoppel by a statement as was the meaning of the contract, how [unclear: ed] that estoppel not been pleaded?

Mr Hall having followed on the same side,

Mr Bell said: With regard to what my learned [unclear: ned] friend says as to our endeavoring by [unclear: the] case of the Bank of New Zealand to allege a [unclear: kind] of estoppel, that is not the intention at [unclear: all]. My learned friend suggested that the true [unclear: terms] the contract are those relating to the [unclear: purchase] of the output, and that they mean [unclear: that] we are only entitled to purchase the output [unclear: beyond] the counties of Southland and Wallace. [unclear: And] that is a possible interpretation of [unclear: the] contract. What he has now suggested [unclear: a] not; and we rely upon the Bank [unclear: of] Zealand v. Wilson as showing [unclear: that] was not the interpretation of the contract adopted by the parties, that interpretation being obviously possible. In regard to what has been contended as to this purchase, mind, your Honor, I contended in respect to the contract of April that it must be possible in such a case to make arrangements for the commencement of business on the 1st of January—that is to say, to make arrangements for the commencement of business at the termination of the period of restriction. Therefore it must have been competent for Nelson Bros, to have entered into a contract for the purchase of freezing works at the same time during the year 1893; and that; so long as they were not concerned in the use in any way—so long as they kept aloof from the use of the freezing works—the mere fact that they entered into a contract that would allow them to enter into competition on the 1st of January, was not a breach of contract That is all I wish to say in reply

His Honor said: The question of the construction of this contract is one of considerable difficulty, and I do not wish at present to express a concluded opinion upon it However, I am satisfied that it is not a case which I ought to withdraw from the jury at the present stage. It seems to me to be always desirable, where there is is any fair doubt, that where a jury are present the matter should be left to the jury, and the doubt finally solved by the court in Banco. That is undoubtedly in the best interest of the parties. I have great difficulty in deciding that the contract of April 1893 was not a breach of the agreement. The contract involved the erection, or partial erection, of freezing works during the period within which the defendants have bound themselves not to be in any way concerned or interested in the erection of freezing works. On that ground, therefore, alone I should be inclined to refuse a nonsuit. No doubt that ground is comparatively an unsubstantial one, because it is difficult to see so far as that breach is concerned what damage the plaintiffs suffered from it If the plaintiffs are entitled to recover any substantial damages at the hands of the defendants, it is because the defendants have by the purchase of Mr Ward's output interfered with their trade and have by such purchase committed a breach of paragraph 8 of the agreement. I quite agree with what Mr Bell said, that if the defendants were justified in purchasing Mr Ward's output that the concessions they made to Mr Ward in respect to the 2½ per cent, commission on freight—if the defendants can be said themselves to have made that concession—and the clause in the agreement which relates to keeping Mr Ward's works clear do not affect the question. If the defendants were justified in making the output agreement with Mr Ward then the only thing the plaintiffs can complain of in the present action is the breach by the purchase in April 1893, page 42 and as I have Raid in respect to that breach, it is difficult to see that they can claim any substantial damage. The cardinal point in the case, as Mr Bell has said, is whether this output agreement with Mr Ward was a breach of this paragraph 8. I am inclined to think, though I do not wish to decide finally, that it was a breach, and for the purpose of the present trial I shall rule that it was a breach. The terms of this paragraph 8 are so exceedingly wide that it is difficult to apply any of the cases cited to them. I can hardly accede to the contention that paragraph 7 is a general license to do something which paragraph 8 would forbid to be done. The way to construe the agreement, I think, is to look at paragraph 8, and if by the terms of paragraph 8 an agreement of the kind made with Mr Ward is forbidden, then paragraph 7, if necessary, must be reconciled with paragraph 8, if it is reasonably possible to do so; and it can be reconciled by limiting the right of purchase of output to the purchase of output in parts of New Zealand other than Southland and Wallace Counties. The covenant contained in paragraph 8 is: "That the defendants shall not during the term of three years erect or assist or be in any way concerned or interested in the erection or use of freezing works on land or water at the Bluff or within certain limits." They are not even to assist in the use of such works. I confess these words are so wide that it is certainly difficult for me to say that the action of the defendants does not bring them within these words. What the defendants have done is that they have dealt with a rival freezing works at the Bluff, not as a chance customer, but as a purchaser of the whole of the produce for a definite term. It certainly does seem to me as the case stands at present that that circumstance does bring them within the paragraph. If it does so then I do not think that the case of Wilson and the Bank of New Zealand and the cases there cited apply. That case was one where a document was capable, fairly capable, of two constructions, and the parties had placed a particular construction upon it, and bad acted on such construction. There was, therefore, a kind of estoppel on both parties in saying that the construction they had adopted was not a proper construction. Here I do not think that is so If the construction which I have for the purposes of the trial placed upon this paragraph is the correct one, then, unless the plaintiffs have released the defendants or unless the plaintiffs have in some way or other estopped themselves from saying that this construction of the contract is the correct one, then, notwithstanding any doubtful conduct or delay or inconsistent conduct on the part of the plaintiffs, the plaintiffs are entitled to recover damages against the defendants for a breach. It may be that this particular breach—viz, the breach by purchase of Mr Ward's [unclear: output] not sufficiently alleged in the breach [unclear: which] charged in paragraph 5 of the statement [unclear: of] but it is quite clear that the question [unclear: of] the entering into the agreement with [unclear: Mr] was a breach of the agreement or [unclear: nu] something which the parties came here [unclear: to] because the defendants themselves [unclear: in] statement of defence have set out [unclear: the] with Mr Ward at length, and [unclear: have] terms stated that it was not a breach [unclear: of] agreement. I say, therefore, that I must [unclear: let] case go to the jury. Of course I [unclear: reserve] is to you to move for a nonsuit.

Mr Bell asked his Honor to bear in [unclear: mind] he made at the outset, and would renew [unclear: at] conclusion of his case, application [unclear: for] to amend paragraph 3 of the [unclear: statement] defence by making it more clear that [unclear: they] could rely on the doctrine of the [unclear: Basic] New Zealand v. Wilson.

Mr Bell said he would prefer to [unclear: resume] address to the jury in the morning, and [unclear: at] past 5 the court adjourned until 10.30 cent [unclear: of]