I. A. A. RECORD— July, 1933 



Quality Milk Wins 

 Suit At Davenport 



Dealers Reported Dissatisfied With Their Leadership, Now 

 Buying Milk From Quality Association 



GRADUAL disintegration of the 

 close tieup between the organ- 

 ized millc dealers in the Quad 

 Cities and the "rump" organization 

 which they brought into being, known 

 as the Illinois-Iowa Milk Producers 

 Association, began several weeks ago 

 when the Mississippi Dairy of Rock 

 Island and Midvale Farms of Moline 

 broke away and are now buying milk 

 from the Quality Milk Association. 

 Additional dealers are expected to do 

 likewise. 



Distributors who have been seeking 

 to disorganize producer members of 

 the Association received another blow 

 when the justice court at Davenport 

 recently rendered a decision favorable 

 on all accounts to the organized farm- 

 ers. C. M. Strawman of the I. A. A. 

 legal department assisted in winning 

 the case. 



The court held (1) that the Quality 

 Milk Association is a lawful agent of 

 the producers and has a valid contract 

 with its members to receive payment 

 for milk delivered, and may dispense 

 such payment if and when received 

 from the dealers; (2) a membership 

 in a co-operative is not a security and 

 therefore does not come under the 

 Iowa Blue Sky Act; (3) plaintiff 

 (producer, believed to be backed by 

 local dealers) must pay all court costs. 



The suit before the Iowa justice was 

 brought against the Association by 

 William Gronewalt, a producer, to col- 

 lect $9.93 covering milk delivered to 

 one of the contracting dealers during 

 the last few weeks of January. The 

 Quality Milk Association had a con- 

 tract with the dealers up to February 

 1 when the latter refused to renew 

 and instead entered into a contract 

 with the "rump" organization in Iowa 

 for their requirements. 



The dealers thereupon refused to 

 pay Quality Milk Association for milk 

 delivered by member producers during 

 the two weeks' period, in defiance of 

 their contract. As a result Quality 

 Milk could not pay its members. 



The court in its decision showed 

 that the producer, Mr. Gronewalt, 

 under an agreement had appointed 

 Quality Milk Association as his agent 



to sell his milk and collect the pay- 

 ment therefor. 



The court said: "I construe the 

 agreement to be a contract of an 

 agent (Quality Milk) of the producer 

 (plaintiff, Mr. Gronewalt) with the 

 distributor. The intention of the 

 parties as disclosed in the agreement 

 was that the Quality Milk Association 

 will be recognized by the dealer as a 

 sales agent for the milk producers. 

 Therefore a principal (plaintiff Grone- 

 walt) cannot sue his agent (Quality 

 Milk Association) for money that the 

 agent has not received from the dis- 

 tributor, vv;; ,v 



"In other words I am -of the opinion 

 that the agreement was an agreement 

 between the distributor and the agent 

 of the milk producers to accomplish 

 the act of collective bargaining. The 

 contract disclosed that Downing 

 (dealer) was to pay Quality Milk As- 

 sociation as the plaintiff's agent — 'all 

 milk producers supplying him with 

 fluid milk shall be paid through the 

 offices of the Quality Milk Associa- 

 tion!' ■.■':':^;-*:;'^'v.v' v-^ 



"I am therefore deciding the case 

 that the farmer producer cannot re- 

 cover a judgment against his agent 

 for money that the agent has not yet 

 received from the distributor. 



"Regarding the plaintiff's claim for 

 a refund of $4 for a membership 

 please be informed that I made a thor- 

 ough search of the Iowa Blue Sky Law 

 and was unable to find any authority 

 to classify the membership in a co- 

 operative company as a 'security.' 



"Therefore under the Blue Sky Law 

 a person cannot recover the considera- 

 tion paid. The defendant (Quality 

 Milk) then being a foreign corpora- 

 tion not licensed to do business in 

 Iowa could not maintain a suit in 

 court to recover the price of a mem- 

 bership. The membership once having 

 been paid, I find no authority au- 

 thorizing the purchaser to recover the 

 price of the membership since the 

 membership is not a security." 



Mr. Gronewalt, the plaintiff, also 

 subscribed for a share of stock in the 

 co-operative creamery of the Quality 

 Milk Association's subsidiary at Daven- 



A Lesson In Organiza- 

 tion 



Organized milk producers 

 numbering more than 500 ad- 

 jacent to the Quad Cities refused 

 to accept defeat when the or- 

 ganized dealers last winter 

 sought to shut them off the fluid 

 market by purchasing their milk 

 from a "rump" organization of 

 outlying producers in Iowa which 

 they set up. 



The Quality Milk Association 

 representing the regular pro- 

 ducers for the local market be- 

 gan developing their own fluid 

 milk outlets. The members stuck 

 together although it meant a 

 sacrifice temporarily. The or- 

 ganized dealers then waged a 

 newspaper campaign against the 

 Quality Association, and the Illi- 

 nois Agricultural Association 

 for the aid given its members in 

 that area. An effort was made 

 to prejudice the public against 

 the Quality Association, its mem- 

 bers, and dealers friendly to the 

 latter's cause. 



Battling against odds, the 

 Quality producers maintained 

 their position and the right of 

 collective bargaining. The re- 

 cent court decision outlined in 

 the accompanying article upholds 

 the Association and deals a blow 

 to efforts of certain dealers to 

 hurt the organization by illegally 

 withholding payment for milk. 



In efforts to obtain fair prices 

 and equitable laws, farmers may 

 receive temporary reverses but 

 they can win eventually by 

 standing together for their 

 rights. ORGANIZATION alone 

 makes victory possible. — Editor. 



port for which he gave a note of $12. 

 Then he filed suit to collect the $12 

 subscription, although the note had 

 not been paid. On this point the judge 

 said: "Regarding the plaintiff's claim 

 for $12 as the value of his note held 

 by the defendant, and the claim as 

 amended for the return of the note, 

 please be informed that a note is a 

 security as defined in the Blue Sky 

 Law, but the plaintiff has not paid the 

 note therefore he cannot recover the 

 price thereof. The plaintiff did not 

 buy a note, he executed and delivered 

 a note. Again, the plaintiff has a 

 valid defense to an action on the note 

 because the defendant was not li- 

 censed to do business in Iowa at the 

 time of the transaction. 



(Continued on page 9) .{i'; 



