LEGAL PHASES OF COOPERATIVE ASSOCIATIONS. 45 
eign commerce the products of persons so engaged, and then only with 
such associations as have complied with the conditions of the statute. 
The question of whether an association is liable for income taxes 
is one that is not resolved by this act. Whether an association 1s 
liable for income taxes is to be determined by the income tax statutes 
and the regulations issued under them. 
This act does not provide for the incorporation of cooperative asso- 
ciations and makes no provision for their formation. Those inter- 
ested in organizing or incorporating such associations should look to 
the laws of their respective States relating thereto. The act does not 
change nor supersede laws of the various States affecting or relating 
to the regulation of cooperative associations. So far as this act is 
concerned, such State laws are all in effect. Compliance with the con- 
ditions set forth in this act does not relieve an association from the 
operation of State laws. 
Congress under the Constitution has control over interstate and 
foreign commerce, and this act deals only with the operations of co- 
operative associations in such commerce, and then only with such 
associations as comply with certain conditions prescribed therein. 
The test which those interested in an association should apply to 
learn if their association comes within the scope of the act is—does 
the association meet the conditions set forth therein? These condi- 
tions are: 
A. “ That persons engaged in the production of agricultural prod- 
ucts as farmers, planters, ranchmen, dairymen, nut or fruit growers 
may act together in associations, corporate or otherwise, with or 
without capital stock, in collectively processing, preparing for market, 
handling, and marketing in interstate and foreign commerce such 
products of persons so engaged.” This and other language which ap- 
pears in the act makes it plain that a cooperative association to come 
within the act must have only producers as stockholders or members. 
This is true, whether it is incorporated or unincorporated and 
whether it is organized with or without capital stock. It is clear from 
the foregoing that an association that is in part composed of, or 
whose membership contains, or a part of whose stock is held by, 
those who are not producers does not come within the act. This would, 
of course, exclude all associations that have other than producers as 
members or stockholders. 
B. Associations that desire to come within the act must be oper- 
ated for the mutual benefit of the members thereof, as such producers. 
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 or membership capital in excess of 8 per cent per annum. And 
