LEGAL PHASES OF COOPERATIVE ASSOCIATIONS. 27 



elation, and it brought suit for $284 and recovered. The court, 

 among other things, said that " the existence and life of the asso- 

 ciation itself depended upon its being furnished fruit to dispose of 

 in the public market," and that the " standing of the association as 

 a marketing concern " would be affected by a reduction in the 

 amount of fruit marketed. 



In two New York cases ^^ involving milk associations, provisions 

 in by-laws and contracts for liquidated damages of $2 per cow 

 during the period that milk was not delivered in accordance with 

 the contracts involved were upheld. In an Alabama case^^ the by- 

 laws provided that members should pay the association 3 per cent on 

 the gross selling price of all produce disposed of by them, whether 

 sold through the association or outside, and although the judgment 

 of the lower court was reversed by the Supreme Court of that State 

 on another point, it expressed the view that the by-law was valid 

 and binding. Mention was made of the necessity for providing in- 

 come for the association, and of the expense the association incurred 

 in preparing to handle and in being in readiness to handle the 

 produce of its members. A case "^ decided by the Supreme Court of 

 Washington in 1921, involving the right of an association to obtain 

 an injunction to prevent a member from disposing of produce out- 

 side of the association, is to be regarded as a decision indicating 

 that a liquidated damage clause provision is valid. 



In the New York and Alabama cases referred to it was claimed 

 that the provisions relative to liquidated damages were invalid on 

 the ground that they restrained trade. It was also claimed in the 

 Washington case just discussed that the contract involved was in 

 restraint of trade. But the court in each instance overruled this 

 contention. However, in two Iowa cases by-laws providing for the 

 payment of a stipulated amount in case a member disposed of his 

 produce or live stock to a competitor in a particular market were 

 held invalid on the ground that they restrained trade or competition. 

 The by-laws involved in the first ^* of the two Iowa cases to be de- 

 cided provided that any member of the association should forfeit 5 

 cents for every hundredweight of produce or live stock sold to anj^ 

 competitor of the association. The association bought and sold the 

 produce and live stock of nonmembers as well as that of members. 

 The by-law in question did not provide that the sum to be paid by 

 members in case they sold to competitors was to be regarded as 

 liquidated damages, but it is doubtful if any weight is to be attached 



91 Bullville Milk Producers' Ass'n. v. Armstrong, 178 N. Y. S. 612 ; Castorland Milk 

 & Cheese Co. v. Shantz, 179 N. Y. S. 131. 



92 Ex Parte Baldwin County Producers' Corporation, 203 Ala. 345, 83 So. 69. 



»3 Washington Cranberry Growers' Ass'n. v. Moore, (Wash.) 201 Pac. 773, 204 Pac. 811. 

 »* Reeves v. Decorali Farmers' Cooperative Society, 160 Iowa 194, 140 N. W. 844, 44 

 L. R. A. (N. S.) 1104). 



