UNITED STATES DEPARTMENT OF AGRICULTURE 
DEPARTMENT BULLETIN No. 1106 
Washington, D. C. 
October 23, 1922 
Revised April, 1923 
LEGAL PHASES OF COOPERATIVE ASSOCIATIONS. 
By L. S. Hulbert, 
Assistant in Cooperative Marketing, 1 Bureau of Agricultural Economics. 
CONTENTS. 
Page. 
Foreword 1 
Incorporated associations or corpo- 
rations 2 
Nature and characteristics 2 
Antiquity of corporations 3 
Power to create corporations — 4 
Incorporated associations — how 
formed 5 
Name of association 7 
Charter — what it is 8 
By-laws 8 
Directors and officers 10 
Who may become members 12 
Subscriber, stock, capital stock_ 12 
Stock— how paid for 13 
Voting unit 13 
Restricting transfer of stock- _ 14 
Lien on stock 16 
Limitation on indebtedoess 17 
Liability of corporation for pro- 
motion expenses 18 
Differences between stock and 
nonstock corporations 18 
Transfer of stock, loss of mem- 
bership 21 
Dissolution 22 
Contracts 22 
Nature and characteristics 22 
Crop contracts 23 
Pooling : Right to determine 
grade 24 
Liquidated damages 24 
Running with land 28 
Interference by third persons 29 
Promissory notes 29 
Agency 31 
Cooperative associations as 
agents 31 
Agency — Continued. Page. 
Cooperative associations liable 
for acts of agents 34 
Monopolies — restraint of trade 35 
Monopolies 35 
Sherman and Clayton Acts 36 
State statutes exempting farm 
organizations 38 
Section 6 of the Clayton Act 39 
Right to select customers 40 
California Associated Raisin Co. 
case 41 
Capper- Volstead Act 42 
Federal Trade Commission 46 
Unfair competition 46 
Specific performance — injunctions 48 
Specific performance 48 
Injunctions 49 
Income taxes 52 
Unincorporated associations 54 
Differ from partnerships or cor- 
porations 54 
Unincorporated associations — 
how formed 55 
Admission of members 56 
Membership nontransferable 56 
Who control an association 57 
Notice of meetings 57 
Unincorporated associations and 
third persons 57 
Money must be used for pur- 
pose furnished 59 
Expulsion of members 59 
Withdrawing or expelled mem- 
bers receive nothing 60 
Dissolution 60 
Appendix 61 
Form of by-laws 61 
Form of contract 70 
FOREWORD. 
It is the purpose of this bulletin to discuss some of the legal ques- 
tions with respect to the organization, conduct, and operation of 
1 In view of the widespread interest in the legal phases of cooperative marketing, 
stimulated by the passage of the Capper-Volsiead Act, this exhaustive study has been 
made of the legal phases of the subject by an investigator who not only has had sev- 
eral years of actual legal practice, but has had opportunity to make an intensive study 
of the economic side of cooperative marketing. 
4O024 — 23 1 
