LEGAL PHASES OF COOPERATIVE ASSOCIATIONS 63 
is sufficiently broad, such money could be used, as was done in a 
California case, 48 for instance, for advocating a higher tariff on the 
products handled by the association. 
Unless expressly authorized to do so, an association may not use 
money derived from the sale of the crop of one season and to which 
its growers are entitled, for financing the handling of the crop of a 
succeeding season. 49 Under the usual type of marketing contract 
the courts regard each year as a unit, so that those who were mem- 
bers during a given year are entitled to the money arising from that 
year's operations after subtracting expenses and other authorized 
deductions, even though, it has been held, a part of the money 
received consisted of commissions paid by nonmembers to the asso- 
ciation for selling their products, although the association was not 
authorized to handle nonmember business. 50 
An association may, in good faith, where its contract provides 
therefor, pay off a mortgage on a member's crop so as to permit the 
marketing of the crop through the association. 51 If a loss arises from 
paying off such a mortgage, it is chargeable against and should be 
borne by the member in question ; 52 and the fact that an association 
suffers a loss by paying off a mortgage on a member's crop, if the 
payment was made in good faith, does not relieve other members 
from their contracts. 53 
If the by-laws or marketing agreement authorizes deductions for 
permanent reserves, that is for money that may be retained and 
used by the association in the year or years following that in which 
deducted, such a provision is valid. 54 The question arises, Is an 
association required to account to a member for deductions made 
for permanent reserves other than by showing the amount of them? 
If the deductions were made pursuant to provisions that showed 
that the member was merely making a loan to the association which 
was to be paid on the dissolution of the association or on some 
future date or occasion, then obviously the member becomes a cred- 
itor of the association subject to the terms of the loan, and such is 
the case where certificates of indebtedness are employed. 
If, on the other hand, there is nothing to show that the deductions 
for reserves are loans, then the member has no legal claim of any 
character upon the association in the absence of a stipulation pro- 
viding therefor. Under such circumstances neither stockholder nor 
member could successfully sue an association to recover the amount 
of deductions for reserves made from the proceeds received for his 
products. 
Many of the cooperative statutes provide for the appraisal of the 
interest of a member of a nonstock association in the organization on 
the termination of his membership and the payment to him on stated 
terms of the amount thus ascertained. But this does not mean 
that a withdrawing member would be entitled to receive the amount 
48 California Bean Growers' Ass'n v. Rindge Land & Navigation Co., 199 Cal. 168, 248 
P. 658, 47 A. L. R. 904. 
49 California Bean Growers' Ass'n v. Rindge Land & Navigation Co., 199 Cal. 168, 248 
P. 658, 47 A. L. R. 904. 
60 McCauley v. Arkansas Rice Growers' Co-op. Ass*n, 171 Ark. 1155. 287 S. W. 419. 
51 Cunningham v. Long (Maine Potato Growers' Exchange), Me. , 135 A. 198. 
52 McCauley v. Arkansas Rice Growers' Co-op. Ass'n, 171 Ark. 1155. 287 S. W. 419. 
53 Cunningham v. Long (Maine Potato Growers' Exchange), Me. , 135 A. 198. 
54 McCauley v. Arkansas Rice Growers' Co-op. Ass'n. 171 Ark. 1155, 287 S. W. 419 ; 
Burley Tobacco Growers' Co-op. Ass'n v. Tipton, Ky. , 11 S. W. (2d) 119. 
