LEGAL PHASES OF COOPERATIVE ASSOCIATIONS 27 
minate in the case of a nonstock organization 32 or the conditions 
under which he would agree to transfer his stock either to the asso- 
ciation or to a person designated by it. Stipulations of this character 
could be made, as a general rule, although there was no specific 
statutory authority for them, assuming that they did not conflict 
with the law. 
Fundamentally, the termination of a marketing contract or ceas- 
ing to do business with an association does not terminate a member- 
ship in a nonstock association 33 or cause a stockholder in a stock 
association to cease to be a stockholder. 
At the time an association is formed, consideration should be 
given to the inclusion of provisions with reference to the termina- 
tion of membership in the case of a nonstock association, and in the 
case of an association formed with capital stock suitable provisions 
should be made so that all voting stock may be kept in the hands 
of active patrons of the association. Consideration should also be 
given to the inclusion of provisions with respect to the voting power 
of members or stockholders in the event they become inactive. Under 
the cooperative statutes, associations usually have great latitude 
with respect to these matters. 
In the case of nonstock associations, certificates of membership 
are not transferable at common law unless made so by statute, by- 
law, or contract. In the case of associations formed with capital 
stock, generally speaking, the provisions restricting the transfer 
of the stock or giving the association the authority to purchase the 
same under certain conditions should be set forth on the certificates 
of stock. Such provisions are, as a rule, authorized by the coopera- 
tive statutes and, even independent of such statutes, are generally 
held valid. 34 
INTEREST IN ASSOCIATION 
As cooperative associations acquire property and establish reserves, 
inquiry is frequently made concerning the financial or property in- 
terest which members have in their associations. In considering this 
matter, certain fundamental propositions should be kept in mind. 
Neither a stockholder of a stock association, nor a member of a non- 
stock association has title to any part of its assets. 35 Again a 
member or stockholder of an association may be a creditor thereof. 
He is a creditor not because he is a member or stockholder, but 
because the association, independent of that fact, owes him money; 
such indebtedness may exist because the association, usually in a 
contract or in its by-laws, has agreed to make certain payments to 
him. Purchase and sale marketing contracts and certificates of in- 
debtedness illustrate this debtor-creditor relationship. 
Aside from the claims that a member may have against an asso- 
ciation as a creditor, what financial interest does he have in his 
association ? This question, generally speaking, does not arise unless 
a producer ceases to be a member or stockholder of an association. 
32 Stevenson v. Holstein-Friesian Ass'n of America, 302 F. (2d) 625; George v. Hol- 
stein-Friesian Ass'n of America, 238 N. Y. 513, 144 N. E. 776. 
33 Burley Tobacco Growers' Co-op. Ass'n v. Tipton et al. 227 Ky. 297, 11 S. W. (2d) 119. 
34 Carpenter v. Dummit [Burley Tobacco Growers' Co-op. Ass'n], 221 Ky. 67, 297 
S. W. 695. 
35 Rhode Island Hospital Trust Co. v. Doughton, Commissioner, 270 U. S. 69, 46 S. Ct. 
256. 
