46 CIRCULAR 10 0, U. S. DEPARTMENT OF AGRICULTURE 



tobacco was not signed up until January, 1922, so the association did 

 not handle the 1921 crop. On February 9, 1922, as a nonstock, non- 

 profit association, the Tobacco Growers' Cooperative Association was 

 incorporated under the cooperative marketing act of North Caro- 

 lina 17 for the purposes of intelligently " promoting, fostering, and 

 encouraging the business of marketing tobacco cooperatively; for 

 reducing speculation ; for stabilizing the local tobacco markets ; for 

 cooperatively and collectively handling the problems of tobacco 

 growers; and for other pertinent purposes." 18 



From the standpoint of legislation under which to operate, the 

 association was fortunate. The three States comprising the terri- 

 tory of the association have laws with practically identical provisions 

 designed especially to aid farmers in cooperatively marketing their 

 products. These laws passed in 1921 and early in 1922 are substan- 

 tially the same in their provisions as those of 35 other States. 



The North Carolina law provides that five or more persons en- 

 gaged in the production of agricultural products may form a non- 

 profit cooperative association to engage in any activity in connec- 

 tion with the marketing and selling of the products of the members 

 of the association or with the harvesting, preserving, drying, proc- 

 essing, canning, packing, storing, handling, or shipping thereof. 

 The members must be producers of agricultural products, and the 

 association may handle only the products of its members. 



The articles of incorporation of an association formed under the 

 act must contain a statement showing whether the association is 

 organized with or without capital stock ; whether the property rights 

 of the members shall be equal or unequal; if unequal, general rules 

 must be made applicable to all members, whereby property rights 

 will be determined, and these rules may not be changed except by 

 consent of three-fourths of the members. 



Provision is also made for by-laws protecting the rights of mem- 

 bers and conserving the status of the association as a nonprofit cor- 

 poration for marketing cooperatively products of the members, with 

 the usual stipulations for the time, place, and manner of calling and 

 conducting meetings ; the number of members constituting a quorum ; 

 the right to vote by proxy; and the powers and duties of officers 

 and directors. 



The act also provides that associations formed under it may con- 

 tract with their members requiring the members to sell their prod- 

 ucts through the association or any facilities created by the associa- 

 tion, with or without taking title thereto, and pay over to its members 

 the resale price after making authorized deductions. Provision is 

 made for liquidated damages, and in the event of a breach or threat- 

 ened breach of the marketing agreement the association is entitled 

 to an injunction to prevent further breach of the contract and to a 

 decree of specific performance. 



An association formed under the act may organize, operate, own, 

 control, or have interest in, any other corporation engaged in pre- 

 serving, drying, processing, canning, packing, storing, handling, 

 shipping, manufacturing, or marketing products handled by the 

 association. 



17 The North Carolina cooperative marketing act had been ratified March 7, 1921. 



18 Tobacco Growers' Cooperative Association agreement, p. 1. 



