FOREWORD

C.

ONSIDERABLE legislation has been enacted directly

affecting farmers' cooperative associations and many cases involving them have been passed upon by the courts during the last few decades. Through this clarification of the relationships of cooperatives with their members and the general public, much information and experience have been accumulated, which should be of value to cooperatives and those charged with the duty of advising them in their business activities.

In this publication more than 1,200 cases, nearly all of which involved cooperative associations, are referred to and the Federal statutes specifically mentioning such associations are discussed.

This bulletin represents the third revision by the author of his original publication, first issued in October 1922, as Department Bulletin No. 1106, of the United States Department of Agriculture.

While this bulletin is published by the Farm Credit Administration it should be regarded only as representing the conclusions, opinions, and findings of the author.

H끄 205/ U 5

DEPOSITED BY THE
UNITED STATES OF AMERICA

FEB 23:43

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CONTENTS

Page

1 13 28 28 32 32 35 37

38

Introduction....
Organizing a farmers' cooperative association.
Incorporated associations or corporations

Nature and characteristics.-
Antiquity of corporations.
Power to create corporations.
Blue-sky laws.
Name of association...
Charter...
De facto corporations...
Bylaws.-.-.
Liability of association for promotion expenses.
Limitation on indebtedness.
Lien on stock
Subscriber, stock, capital stock...
How stock is paid for..
Stock and nonstock associations..
Restrictions as to transfer of stock.
Who may become members...
Membership-how acquired.
Rights of members...
Termination of membership-
Interest in association...-
Dissolution.---
Expiration of charter--

Reorganization of associations.
Board of directors.

Compensation of directors -
Meetings of the board..
Quorum..
Conflicting personal interests..
Contracts with directors.--.
Obligations and liabilities of directors..
Additional liabilities imposed by statute.-
Executive committee..

Minutes of meetings.
Officers and employees..

Terms and compensation...
Powers of officers..
Removal of directors, officers, and agents.

Liability for wrongs done..
Meetings of associations.--.

Quorum for meetings of members.-
Voting unit..

Proxy voting-
Bankruptcies and receiverships.

Marketing contracts...

When may cooperative marketing contracts be made...
Kinds of cooperative marketing contracts ---
When marketing contracts become effective...
Duration of marketing contracts..
Signing marketing contracts---
Contracts obtained by force or fraud..--
When title to products passes to the association.--
Restrictions on association's right to sell..
Pooling------
Excess advances or payments.
Effect of breach of contract.

Defenses to contracts..
Deductions.
Assessments
Assets and creditors..
Nonprofit associations..
Equality of treatment..
Nonmember business.
Control of crops by landlord..
Crop mortgages --
Liquidated damages.
Specific performance.
Injunctions...
Interference with marketing contracts.
Transfers in attempts to avoid contracts-
Conclusive presumption ---
Monopoly and restraint of trade.

Section 6 of the Clayton Act.
Capper-Volstead Act----

Classification of agriculture-
Promissory notes.
Agency.

Cooperative associations as agents.

Cooperative associations liable for acts of agents Taxes.-

General taxes.

Income taxes.
Patronage dividends.
Revolving-fund plan of financing -
Associations operating in various States.
Associations and third persons.
Unincorporated associations..

Characteristics..
How formed...
Admission of members in unincorporated associations
Membership nontransferable..
Control of an unincorporated association..
Notice of meetings..
Unincorporated associations and third persons.
Money must be used for purpose specified.
Expulsion of members...

Page 115 121 121 126 129 132 133 134 141 142 145 149 151 154 158 160 166 169 171 173 174 179 185 188 194 197 198 199 211 213 228 232 236 236 239 240 240 250 270 276 283 289 293 293 294 296 296 296 297 297 300 300 Page 301 302 302 307 307 311 313 314 317 320 322 323 337

375

Unincorporated associations-Continued.

Withdrawing or expelled members receive nothing

Dissolution..
Regulatory statutes----
Federal statutes mentioning cooperatives..
Tax statutes.---
Statutes providing credit facilities -
Antitrust and related statutes..
Regulatory statutes...
Agricultural adjustment and soil conservation statutes.
Statutes providing for research.
Statutes involving electric projects.
Bibliography
Table of cases.
Appendix:

Bingham Cooperative Marketing Act..
Suggested organization forms—

Organization agreement..
Marketing agreement.
Articles of incorporation (for stock corporation) ---
Articles of incorporation (for nonstock corporation)
Bylaws (for stock corporation)--
Bylaws (for nonstock corporation).
Common-stock certificate.
Transfer of common stock
Preferred-stock certificate ---
Transfer of preferred stock.
Membership certificate.-
Revolving-fund certificate.
Waiver of notice of first meeting of members.--
Waiver of notice of first meeting of board of directors.-
Minutes of first meeting of members.

Minutes of first meeting of board of directors.
Index

386 388 390 394 397 406 414 415 416 416 416 417 418 418 419 419 423

U.S. GOVERNMENT PRINTING OFFICE: 1942

For sale by the Superintendent of Documents, Washington, D. C.

Price, 55 cents