LEGAL PHASES OF COOPERATIVE ASSOCIATIONS 97 
ner. As a result, the orchard was badly damaged. The member 
then brought suit against the union and recovered a judgment for 
$2,250. 16 . 
TAXES 
GENERAL TAXES 
In every State of the Union it is believed the physical property of a 
cooperative association, such as buildings, office equipment, trucks, 
and the like, is liable for property taxes on the same basis as similar 
property owned by others. Taxes must be imposed pursuant to law, 
and in the case of those imposed by a State or any municipality or 
subdivision thereof, the taxes must be imposed in accordance with 
laws that are in harmony with the State and Federal Constitutions. 
Broadly speaking, a State or the Federal Government has relatively 
broad powers with respect to the classifying of property for taxation. 
Is an association liable for property taxes on products which it has 
received from its members for marketing if it is in possession of such 
products at the time property taxes are assessed? This is a local 
question, but, generally speaking, if an association takes title to the 
products which it is engaged in marketing, there would appear to be 
little doubt but that it would be liable for taxes thereon. If an 
association were simply acting on an agency basis in the marketing of 
products, generally speaking it would not be liable for such taxes, 
because, as a rule, taxes are imposed upon the owner of property 
or the person who occupies the relation of principal rather than 
upon the agent who may have custody of the property or be employed 
to sell the same. In a Kentucky case it was said, referring to the 
Burley Tobacco Growers' Cooperative Association : " Under its 
charter and the marketing agreement shown above, the association is 
authorized to incur all necessary expenses in holding and marketing, 
and this together with the absolute legal title and full control of the 
article certainly includes liability for taxation." 17 
In Massachusetts it was held that a city of that State was entitled to 
tax tobacco in the hands of an association that was stored by it within 
the city, the tobacco having been received by the association under a 
purchase-and-sale contract. The court said : " The tobacco on which 
the tax was levied was the property of the plaintiff." The associ- 
ation involved was organized in Connecticut but was doing business 
in Massachusetts. 18 
In the Kentucky case referred to, involving the question of the 
liability of an association for city taxes on tobacco that it had on 
hand in the city on assessment day, which tobacco had been received 
by it under a purchase-and-sale contract, section 31 of the cooperative 
act of that State was declared unconstitutional 19 because the practi- 
cal effect of that section was to exempt " all products held by the 
association from all taxation," thus violating the rule of uniformity 
16 Andreen v. Escondido Citrus Union, Calif. App. , 269 P. 556. 
17 Burley Tobacco Growers' Co-op. Ass'n v. City of Carrollton, 208 Ky. 270, 270 
S. W. 749. 
18 Connecticut Valley Tobacco Ass'n, Inc., v. Inhabitants of Town of Agawam, 
Mass. , 158 N. E. 506. 
19 See sec. 31 of Bingham Cooperative Marketing Act on p. 125 of appendix. 
68118°— 29 7 
