LEGAL PHASES OF COOPEKATIVE ASSOCIATIONS. 5 



corporations to engage in that business, they can not be formed in 

 that State. 



Those desiring to form a corporation must meet the terms and 

 conditions prescribed by the State. The power of the State in this 

 matter is supreme.^^ The legislature can grant just as little or 

 just as much power to corporations within constitutional limits 

 as it desires. The State can determine upon what conditions cor- 

 porations may be created and do business within its borders. A 

 cooperative association was incorporated under a statute which 

 among other things provided that all business of associations in- 

 corporated under it, except certain enumerated types, should be for 

 cash, and that all persons who extended credit to such associations 

 except for specified purposes should forfeit the amount of the credit 

 thus extended. The statute required that notice to this effect be 

 published on the letter and bill heads, advertisements, and other 

 publications of associations incorporated thereunder. Debts for 

 purposes not contemplated by the statute were incurred by the 

 association, and the creditors sought to throw the association into 

 bankruptcy, but failed, as the court held that they had no claims 

 which could be recognized in bankruptcy, owing to the provision 

 in the statute referred to.^^ In a California case, the validity of 

 a statute providing for the forfeiture of the charters of all corpora- 

 tions which failed to pay a certain tax by a specified date was up- 

 held.^* 



At one time the various States did not have statutes which were 

 adapted to the formation of cooperative associations. There have 

 been, however, many statutes passed by the legislatures of the differ- 

 ent States during the last few years for the purpose of providing 

 for the formation of cooperative associations, and at the present 

 time the great majority of the States have statutes especially de- 

 signed to authorize the creation of such bodies.^^ Although corpora- 

 tions are now, as a rule, formed under general statutes, the act in- 

 volved in bringing them in existence is regarded as a legislative one, 

 and the rules relative to statutes should be applied in construing 

 charters.^*^ 



INCORPORATED ASSOCIATIONS— HOW FORMED. 



In organizing an incorporated cooperative association, or any 

 other corporation, it is necessary to ascertain and to follow the re- 



" City Properties Co. v. Jordan, 163 Calif. 587, 126 Pac. 351. 



^2 In re Wyoming Valley Water Coop. Ass'n., 198 Fed .436. 



^* Kaiser Land & Fruit Co. v. Curry, 155 Calif. 638, 103 Pac. 341. 



15 Copies of the statutes of a particular State on this subject can usually be obtained 

 by writing to the Secretary of State of that State. 



i« Casper v. Kalt Zimmers Mfg. Co., 159 Wis. 517, 149 N. W. 754 ; Lord v. Equitable 

 Life A. S., 194 N Y. 212, 87 N. E. 443, 22 L. R. A. (N S.) 420. 



