32 Cooperation in Agriculture 



five cents per package shall be assessed against every 

 package of fruit sold outside of the association as liqui- 

 dated damages sustained by the association which has in- 

 curred expenses to provide for the selling and marketing 

 of the fruit. In some of the farmers' cooperative grain 

 elevators, the agreements provide that the producer may 

 market his crop outside of the association by paying to 

 the association a commission of two per cent or more of 

 the price received outside. The legality of such special 

 requirements has been called into question in some of the 

 courts when these requirements operate as a penalty 

 rather than as a liquidation of damages. In a recent 

 decision in Iowa affecting the right of a farmers' coopera- 

 tive society to oblige all members selling hogs or produce 

 to any other individual or company to pay into the treas- 

 ury of the company five cents a hundredweight, the court 

 permanently enjoined the association from enforcing such 

 a rule. It held that the association must enter into the 

 open market in seeking business the same as other con- 

 cerns and that the enforcement of the rule as provided in 

 its by-laws compelled any other firm doing business in the 

 same territory to pay to it ten cents more per hundred- 

 weight than the farmers' association. It thereby acted 

 as a restraint of trade. 



A Citrus Fruit Membership Agreement, as an Illustration 



The following is a copy of a uniform crop agreement 

 between the members and many of the associations that 

 are affiliated with the California Fruit Growers' Exchange. 

 This organization represents six to eight thousand growers, 

 who have formed more than one hundred local associa- 



