$ 883f-38. Effect of failure to furnish information.—Unless such information as above requested shall be furnished by said association, in any litigation which may arise between such association and the person or persons inquiring, it shall be presumed, in the absence of evidence to the contrary, that the person requesting said information was without notice that the person inquired about was a member of such association or had signed such marketing contract, or that the person inquiring knew the terms of the contract. (March 1924, c. 1, p. 1, § 3.)

§ 883f-39. Effect of failure to request information.-Unless such landlord, lessor or lessee shall have made the above inquiry and waited until the expiration of the time above set forth or until the receipt of answer thereto, in any litigation arising with such cooperative association, it shall be conclusively presumed that such person has notice of the contract or membership obligations actually existing between the association and its member or obligor. (March, 1924, c. 1, p. 1, §4.)

§ 883f-40. Mortgage upon growing crops.-That growers of agricultural products who have signed contracts with co-operative marketing associations, authorized by the Bingham Co-operative Marketing act, be, and they are hereby permitted to place crop mortgages upon crops in esse; but said crop mortgages shall not defeat the right of any association organized under the co-operative act to take delivery of any crop covered by a marketing contract. Any grower executing such a crop mortgage may make an assignment to the mortgagee of the grower's interest in the proceeds of such crop, subject to the provision of said marketing agreement, which assignment must be accepted by any association organized under said act. (March 29, 1924, c. 7, p. 9, § 1.)

§ 883f-41. Foreclosure, attachment, etc.-In the event of foreclosure, attachment or proceeding in court concerning any crop covered by such marketing agreement and mortgage, it shall be the duty of the court to direct that the crop shall be delivered to and sold by the said marketing association according to the terms of the contract and the proceeds derived therefrom so far as may he necessary to satisfy the judgment in the case shall be paid as directed by the judgment of the court. (March 29, 1924, c. 7, p. 9, § 2.)

Suggested Organization Forms

SUGGESTED organization forms for agricultural cooperative associations of producers appear on the succeeding pages. Separate articles of incorporation and bylaws for stock and nonstock associations are included, but the remaining forms have been prepared for the use of stock associations. These latter forms, however, may readily be adapted to the use of nonstock associations by making the changes indicated in the footnotes.

The fundamental cooperative principles discussed in the text, such as democratic control, the revolving-fund plan of financing, adequate reserves, and equitable distribution of earnings, are reflected in the forms.

Since these forms are general in character, the services of an attorney are required for adapting them to suit the needs of a particular association; and they should be checked, altered, and modified to meet the local needs and legal requirements of the State in which

the association is to be incorporated. The forms should also be modified so as to best serve the business needs and methods of operation of the association.

While the forms have been prepared primarily for use in forming agricultural marketing associations of producers, they may be adapted for use in forming an association that is exclusively engaged in handling supplies. Ordinarily, such an association would not use a marketing agreement which would bind its members to patronize the association; revolving funds would be obtained by including in sales prices margins for the purpose of accumulating such funds, rather than by making deductions from sales proceeds; and certain other changes should be made.

ORGANIZATION AGREEMENT

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We, the undersigned, all of whom are residents of the State of engaged in the production of ----- together with signers of agreements identical herewith, in order to promote, foster, and encourage the marketing cooperatively, propose to organize a cooperative marketing association at with capital stock under the and to acquire suitable facilities therefor.

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laws of the State of

1111111

4

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The undersigned, each for himself and collectively for the express benefit of and for the association to be organized, and in consideration of the premises and of the subscriptions of others to agreements identical herewith, hereby covenant and agree with each other as follows:

(1) The Association shall be organized with suitable articles of incorporation and bylaws, by an organization committee consisting of the following persons:

If any member or members of this committee shall resign or be unable to act, the remainder of the committee may elect a successor to fill any such vacancy, or the committee may increase its membership if deemed necessary.

(2) The organization committee shall keep a full, true, and detailed account of all receipts and of all expenditures of every kind, and shall have such accounts audited and render a written report thereof to the board of directors of the Association, when organized, and shall thereupon turn over to the Association any balance remaining in its hands, free of obligation. If an Association is not so organized, such unexpended balance shall be prorated among those who contributed to the organization fund.

3 Insert in this and corresponding blank spaces the agricultural product or products to be covered.

If organized without capital stock, substitute "without" for "with."

(3) The amount of the capital stock shall be dollars ($‒‒‒‒‒), divided into

value of

shares of common stock, each of the par dollars ($------), and shares of preferred stock, dollars ($------).*

each of the par value of

(4) The undersigned agree to purchase and do hereby subscribe for the amount and kind of capital stock set opposite our respective names, and agree to pay for same as follows: "

(Here insert the plan of stock payment to be used)

(5) If, on or before

19-, bona fide subscriptions from acceptable parties to the common and preferred stock' of the Association shall equal the sum of dollars ($‒‒‒‒), and producers of average annual production thereof for sales purposes aggregates at least have agreed to execute marketing agreements covering their

whose

crops of the organization committee shall forthwith proceed to file the articles of incorporation and to have the organization of the Association completed; subject, however, to the foregoing conditions only, the undersigned agree that their signatures hereto are irrevocable and they so agree in order to induce others to sign this or similar agreements for their mutual benefit. (6) Acceptance of this agreement by the Association shall be deemed conclusive upon the mailing of notice to that effect to the undersigned, at our respective addresses listed hereon, and such notice shall be conclusively established by the affidavit of the secretary of the Association. Upon receipt of such notice, the undersigned shall promptly tender to the Association the respective amounts subscribed for common and preferred stock, or the initial payments required thereon."

(7) The undersigned represent that the average annual acreage of harvested and the average quantity of purposes during the past

names.

produced annually for sales years are set forth opposite our respective

(8) The undersigned agree that we will become members of the Association, when formed, and will execute marketing agreements, the terms of which shall be similar to the terms contained in the form attached hereto and made a part hereof.

In witness whereof, we have hereunto set our hands as of this

day of

This provision should be omitted in case the association is organized without capital stock.

"If the association is organized without capital stock, this provision should be revised to provide for an application for membership and certificates of indebtedness or revolving-fund certificates in the amount set opposite the respective names of the subscribers.

'If organized without capital stock, revise accordingly.

MARKETING AGREEMENT

This agreement between the_--

Association, hereinafter called the "Association" and the undersigned, hereinafter called the "Producer"

Witnesseth:

(1) The Association buys and the Producer sells to the Association all_

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hereinafter referred to as "products," produced by or for him or acquired by him as landlord or lessor and the Producer agrees to deliver all such products at such place or places as the Association may direct. This agreement is intended by the parties to pass an absolute title to all such products as soon as the same have a potential existence but such products shall be at the risk of the Producer until delivery. The Association is authorized to exercise any and/or all powers conferred upon it hereunder through any central agency of which this and any other similar associations are or may become members.

(2) The Association agrees to make such advances to the Producer on such products upon the delivery thereof as in the discretion of its board of directors may be justified by marketing conditions.

(3) The Association agrees to sell, either in the natural or processed state, such products, together with the products delivered by other producers, and to pay over ratably the net amount received therefrom as settlement in full to the Producer, less following deductions authorized by Producer (a) advances, interest upon advances, interest or dividends on capital, the cost of picking, gathering, harvesting, receiving, assembling, transporting, handling, grading, packing, inspecting, processing, financing, advertising, storing, insuring, selling, and marketing such products and/or products derived therefrom; (b) organization, operating and maintenance expenses and purchase of stock in a central agency; (c) revolving-fund retains for the purpose of building up such an amount of capital as may be deemed necessary by its board of directors from time to time and for revolving such capital in the manner that may be provided in the bylaws of the Association of not to exceed - percent of the gross sale price of such products and/or products derived therefrom; and (d) reserves which have the status of capital to meet the general contingencies of the business of the Association of not to exceed — percent of the gross sale price of such products and/or products derived therefrom. The deductions made for capital purposes and for revolving such capital from time to time shall be evidenced by certificates of preferred stock in the Association. The Association, within the discretion of its board of directors, is authorized to establish, from time to time, daily, weekly, monthly, or seasonal pools of the agricultural products marketed by it of the same variety, grade, and quality, and all producers having such products in the particular pool shall share ratably in the net amount received therefrom.

(4) All products shall be delivered by the Producer at his expense at the earliest reasonable time after harvesting at such places as the Association may direct, and with such identification as may be prescribed by the Association.

(5) Any loss that the Association may suffer on account of inferior or damaged condition of products at delivery shall be charged against the Producer, individually.

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Insert in this and corresponding blank spaces the agricultural product or products to be covered.

'In case an association is to be formed without capital stock such deductions may be evidenced by revolving-fund certificates.

(6) The Producer further agrees that the Association and/or the central marketing agency shall have the power to borrow money for any purpose of the Association and/or the central marketing agency on the security of the products delivered to the Association and/or the products derived therefrom and/or on any evidence of such products or byproducts or cash or accounts arising from the sale thereof, and to give a lien, either legal or equitable thereon, as the absolute owner thereof; and the Association and/or the central marketing agency may grade, pool, or commingle such products and/or products derived therefrom or any part thereof with other products of like grade and variety; and shall exercise all other rights of ownership without limitation.

(7) In as much as the remedy at law would be inadequate and in as much as it would be impracticable and extremely difficult to determine the actual damage resulting to the Association should the Producer fail to deliver the products covered hereby, regardless of the cause of such failure, the Producer hereby agrees to pay to the Association for all products delivered or disposed of, by or for him, other than in accordance with the terms hereof, the sum of cents per on all products, as liquidated damages for the breach of this agreement; all parties agreeing that this agreement is one of a series dependent for its true value upon the adherence of each and all of the contracting parties to each and all of the said agreements, but the cancelation of any other similar contract or the failure of any of the parties thereto to comply therewith shall not affect the validity of this contract.

(8) If the Association brings any action whatsoever by reason of a breach or threatened breach hereof, the Producer shall pay all costs of court, costs for bonds and otherwise, expenses of travel and all expenses arising out of or caused by the litigation, and reasonable attorney fees expended or incurred by it in such proceedings and all such costs and expenses shall be included in the judgment.

(9) It is agreed that the articles of incorporation and the bylaws, now or hereafter in effect, and this agreement constitute the entire agreement between the Association and the Producer.

(10) The Association may enter into agreements with other producers differing in terms from those contained herein but consistent with the bylaws of the Association without invalidating this agreement, provided that the Producer at his request may sign a similar agreement as a substitute for this agreement.10

(11) The Association or the central agency shall establish or adopt standards for such products and shall make rules and regulations governing the handling and shipping thereof and shall provide inspectors or graders to grade the products; and the Producer agrees to be bound by such grading and to observe such rules and regulations. The Association or said central agency shall provide for the inspection of all products delivered hereunder, and if any such products are not in proper condition for sale they shall be prepared for sale at the expense of the Producer.

(12) After this agreement shall have been in effect 2 years from the date of its acceptance by the Association, either party hereto may terminate it in any year on the last day of the anniversary month in which this agreement was so accepted by notifying the other party in writing of this intention, such notice to be given between the first and fifteenth of the month immediately prior to the effective date of termination. If neither of the parties hereto terminate this

10 If the Association is to be formed without capital stock, the following should be added to this paragraph: By signing this agreement the Producer applies for membership in the Association and the signing hereof by the Association shall constitute an acceptance thereof.