LEGAL PHASES OF COOPERATIVE ASSOCIATIONS. 53 
vent its breach. or both, inasmuch as the association is prevented from 
going into the open market to buy the produce involved. 
It has been urged in certain cases that specific performance of a 
contract would not be decreed or an injunction issued to restrain its 
breach on the ground that the contract involved provided for liqui- 
dated damages. This, however, is not the general rule. Although 
a contract provides for liquidated damages, an injunction will be 
issued to restrain its breach, or specific performance will be decreed, 
if the other facts involved warrant such relief, unless the contract 
shows that damages were to be accepted in heu of performance of the 
contract.°* 
Statutes have been passed in many of the States dealing with the 
remedies of injunction and specific performance, and these should be 
examined to determine their effect and scope and to ascertain how 
they have modified or altered the general rules on these subjects. 
INCOME TAXES. 
Are cooperative associations liable for Federal income taxes, and 
what must they do to establish their claim to exemption from such 
taxes? The answers to these questions will be found in the extracts 
from the Federal revenue act of 1921, and from the regulations issued 
by the Treasury Department relative to the collection of income taxes 
under the act, which are here given. 
Under the revenue act of 1921, any corporation, and any organiza- 
tion, cooperative or otherwise, which properly is comprehended 
within the meaning of the term “association,” is held to be subject 
to income tax unless such organization comes within one of the 
classes of organizations specifically exempted from taxation under 
section 231 of the act. That section provides in part that the fol- 
lowing organizations shall be exempt from taxes under this title: 
(10) Farmers’ or other mutual hail, cyclone. or fire insurance companies, 
mutual ditch or irrigation companies, mutual or cooperative telephone com- 
panies, or like organizations of a purely local character, the income of which 
consists solely of assessments, dues, and fees collected from members for the 
sole purpose of meeting expenses; 
(11) Farmers’, fruit growers’, or like associations, organized and operated 
as sales agents for the purpose of marketing the products of members and 
turning back to them the proceeds of sales, less the necessary selling ex- 
penses, on the basis of the quantity of produce furnished by them; or organized 
and operated as purchasing agents for the purpose of purchasing supplies and 
equipment for the use of members and turning over such supplies and equip- 
ment to such members at actual cost, plus necessary expenses. 
5 Cjncinnati-Louisville Theater Co. v. Masonic W. & O. H. and I., 272 Fed. 637: 
Washington Cranberry Growers’ Ass’n. v. Moore, (Wash.) 201 Pac. 773, 204 Pac. 811. 
