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LEGAL PHASES OF COOPERATIVE ASSOCIATIONS. 5 
corporations to engage in that business, they can not be formed in 
that State. 
Those desiring to form a corporation must meet the terms and 
conditions prescribed by the State. The power of the State in this 
matter is supreme. The legislature can grant just as little or 
just as much power to corporations within constitutional limits 
as it desires. The State can determine upon what conditions cor- 
porations may be created and do business within its borders. A 
cooperative association was incorporated under a statute which 
among other things provided that all business of associations in- 
corporated under it, except certain enumerated types, should be for 
eash, and that all persons who extended credit to such associations 
except for specified purposes should forfeit the amount of the credit 
thus extended. The statute required that notice to this effect be 
published on the letter and bill heads, advertisements, and other 
publications of associations incorporated thereunder. Debts for 
purposes not contemplated by the statute were incurred by the 
association, and the creditors sought to throw the association into 
bankruptcy, but failed, as the court held that they had no claims 
which could be recognized in bankruptcy, owing to the provision 
in the statute referred to.1% In a California case, the validity of 
a statute providing for the forfeiture of the charters of all corpora- 
tions which failed to pay a certain tax by a specified date was up- 
held.*# 
At one time the various States did not have statutes which were 
adapted to the formation of cooperative associations. There have 
been, however, many statutes passed by the legislatures of the differ- 
ent States during the last few years for the purpose of providing 
for the formation of cooperative associations, and at the present 
time the great majority of the States have statutes especially de- 
signed to authorize the creation of such bodies.° Although corpora- 
tions are now, as a rule, formed under general statutes, the act in- 
volved in bringing them in existence is regarded as a legislative one, 
and the rules relative to statutes should be apphed in construing 
charters.*° 
INCORPORATED ASSOCIATIONS—HOW FORMED. 
In organizing an incorporated cooperative association, or any 
other corporation, it is necessary to ascertain and to follow the re- 
12 City Properties Co. v. Jordan, 163 Calif. 587, 126 Pac. 351. 
18 In re Wyoming Valley Water Coop. Ass’n., 198 Fed .436. 
144 Kaiser Land & Fruit Co. v. Curry, 155 Calif. 638, 103 Pac. 341. 
18 Copies of the statutes of a particular State on this subject can usually be obtained 
by writing to the Secretary of State of that State. 
16 Casper v. Kalt Zimmers Mfg. Co., 159 Wis. 517, 149 N. W. 754; Lord v. Equitable 
Life A. S., 194 N Y. 212, 87 N. E. 443, 22 L. R. A. (N S.) 420. 
