LEGAL PHASES OF COOPERATIVE ASSOCIATIONS 29 
contract, but are confined and limited to the right, title, and interest 
which a corporation or individual may have in and to the net assets 
of the association by reason of membership therein subject to the 
payment of all of its debts and liabilities. They do not give to the 
association the right to keep the money which it promised and agreed 
to pay another under its express contract." In other words, the mem- 
ber was entitled to nothing by reason of his membership, but w 7 as 
entitled to payment in accordance with his marketing contract. 
If the contracts or by-laws of an association state, for instance, 
that unless a person is a member of the association at or prior to a 
specified time, he shall not be entitled to the return of any money 
advanced by him, then this language is conclusive and bars from any 
recovery a person who was not a member prior to the time fixed. 39 
In the case of associations formed with capital stock, at common 
law, a person on the sale or transfer of his stock has no further in- 
terest in the association and no claims against it except such claims 
as are independent of stock ownership. 40 This is the rule unless it 
has been changed by statute, by contract, or by a provision in the 
by-laws. 
In contrast with the common-law rule applicable to nonstock asso- 
ciations many of the cooperative statutes providing for the formation 
of cooperative associations require the incorporators of such non- 
stock associations to state in the articles of incorporation 41 " whether 
the property rights and interests of each member shall be equal or 
unequal; and if unequal, the general rule or rules applicable to all 
members by which the property rights and interests, respectively, of 
each member may and shall be determined and fixed; and provision 
for the admission of new members w 7 ho shall be entitled to share in 
the property of the association with the old members, in accordance 
with such general rule or rules." Such statutes also authorize associa- 
tions formed under them to adopt by-laws relative to the interests of 
members therein and further provide that " In case of the withdrawal 
or expulsion of a member, the board of directors shall equitably and 
conclusively appraise his property interests in the association and 
shall fix the amount thereof in money, which shall be paid to him 
within one year after such expulsion or withdrawal." 42 The statu- 
tory provisions referred to are applicable only to associations 
formed under statutes that contain them. 
Some associations are authorized in their marketing contracts to 
make deductions for " creating funds for credits and other general 
commercial purposes (said funds not to exceed 1 per cent of the 
gross resale price)." Such funds constitute a reserve that may be 
used for the purposes specified and a member may not successfully 
sue an association for their return. 43 Such funds might be lost or 
dissipated in the conduct of the business of an association without 
liability therefor. 
At common law on the dissolution of a nonstock cooperative associ- 
ation only the persons who are then members are entitled to share in 
38 Webster Implement & Automobile Co. v. St. Louis Automobile Mfrs.' & Dealers Ass'n 
(Mo. App.), 181 S. W. 1025. 
40 Whitney v. Butler, 118 U. S. 655. 
41 See sec. 8 of Bingham Cooperative Marketing Act of Kentucky on p. 120 of appendix. 
42 S n e sec. 10 of Bingham Cooperative Marketing Act on p. 120 of appendix. 
43 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 et al. 227 Ky. 297. 11 S. W. (2d) 119; 
Burley Tobacco Growers' Co-op. Ass'n v. Brown, — Ky. — , 17 S. W. (2d) 1002. 
