LEGAL PHASES OF COOPEKATIYE ASSOCIATIONS. 45 
ducers. 39 This is true, whether it is incorporated or unincorporated 
and whether it is organized with or without capital stock. 
B. Associations that desire to come within the act must be oper- 
ated for the mutual benefit of the members thereof, as such pro- 
ducers, and conform to one or both of the following requirements: 
First. That no member of the association is allowed more than one 
vote because of the amount of stock or membership capital he may 
own therein, or, second, that the association does not pay dividends 
on stock and membership capital in excess of 8 per cent per annum. 
And in any case to the following: Third, that the association shall 
not deal in products of nonmembers to an amount greater in value 
than such as are handled by it for members. 
Associations must comply with either the first or second condition 
and may comply with both. As the first condition embodies the one- 
man one-vote principle, all associations operating on this basis, or 
which elect to operate on this basis, need not, unless they wish to do 
so, give consideration to the second condition. Of course, an asso- 
ciation, if it desires, may operate in accordance with both of 
these conditions, but it will come within the scope of the act by 
complying with only one of them, if it complies with the other 
conditions of the act. 
If an association elects to operate under the second condition, divi- 
dends on stock or membership capital are limited to 8 per cent per 
annum. This does not mean that stock may be owned by or sold to 
nonproducers so far as this act is concerned. Only associations 
whose stock is held by or whose membership is made up of producers 
can come within the act. It is not necessary for associations oper- 
ating under the act to pay dividends in any amount unless they 
elect to do so. It is entirely a matter of choice with them. If, how- 
ever, an association elects to operate under the second condition, 
dividends, if paid, must not exceed 8 per cent per annum. 
All associations desiring to operate under the act must meet the 
third condition, which is that the value of the products handled for 
nonmembers shall not exceed the value of those handled for mem- 
bers. This condition does not mean that an association shall handle 
any business for nonmembers. / It may do so or not, as it sees fit. If 
it does handle such business, however, the act specific ally provides 
that the value of the products handled for nonmembers must not 
exceed the value of the products handled for members. 
39 Undoubtedly, in those isolated instances where nonproducers become members of an 
association through inheritance, operation of law, or otherwise, contrary to the policy of 
the association, or where producers cease to be such, the association being one which is 
incontrovertibly controlled and dominated by its producer members, would not, because 
of such nonproducer members, if it otherwise complied with the terms of the act, fall 
without its provisions. Such an association should take such measures as are compatible 
With law to eliminate and exclude nonproducers from membership. 
