150 



ownership. A stockholder may sell his farm and continue 

 to be a stockholder in a stock corporation and still have 

 the right to examine the affairs of the association, or he 

 may sell his stock to some one who is not interested in the organ- 

 ization, or who may even be antagonistic to it ; or he may with- 

 draw his membershi]) and still remain a stockholder. There is no 

 legal way by which the stock, and therefore the control of the 

 corporation, can be confined to the membership after the stock 

 has once been issued, unless the association is able to take over 

 the stock and hold it as a trustee, until it can be re-sold to a 

 member. Neither is the voting power of the stockholders under 

 control in a stock corporation, because the voting power is gen- 

 erally proportional to the number of shares held by each stock- 

 holder. 



As a matter of fact most of the so-called cooperative associa- 

 tions of the country have been incorporated as ca])ital stock cor- 

 porations in the absence of other statutes under which they could 

 be incorporated and many of them operate by mutual agreement 

 expressed in the articles of incorporation, or in the by-laws, on 

 strictly cooperative i)rinciples : others vote in accordance with 

 stock ownership, fi.x a luaximum amount of stock to be owned by 

 any member, and apportion the stock on the bearing acreage of 

 the members, but make no profits on capital. These organizations 

 usually provide that a withdrawing member shall ofifer his stock 

 to the association before he can sell it outside, a provision that is 

 useless if the association is not able to take it over. 



They may provide also that all the earnings shall be returncl 

 to the members pro-rated on the business transacted by each after 

 interest is paid on the capital invested and other overhead charges 

 are deducted. The stockholders may vote equally by agreement 

 and the capital invested may be paid only a fair rate of interest 

 for its use. The difificulty in such organizations lies in the fact 

 that some of the conditions to which they agree are not, in case 

 of trouble, enforceable in the courts, and the organization ceases 

 to be co-operative when the stockholders desire for any reason 

 to exercise their legal privileges along noncooperative lines. 



As a result of organizing a so-called cooperative as.sociation 

 under the usual stock corporation laws, many of these organiza- 

 tions often pass into the hands of non-producers or of rival inter- 

 ests, following the withdrawal of members through the sale of 

 farms and the sale and transfer of stock: or a jiartial coutul 

 may be held 1)\- dissatisfied stockholders who ha\'e w itlidrawn ;i ■; 

 members. 



NON-PROFIT CORPORATIONS. 



Tn other states, espccialh- in California, the statute provide"^ 

 for the incorporation, organization, management and cooperation 

 of agricultural, non-profit association*; which do not have caj^ital 



