Where the chairman of the organization committee was required to sign a written statement to the effect that all conditions requisite to putting the marketing contract into effect had been performed and he had failed to do so, this was held to be a good defense to a suit against a member on his marketing contract.13

In view of the fact that a member of an organization committee did not investigate the correctness of a report made by a subcommittee, he was held estopped from showing that the preorganization requirements had not been met.44

In a certain case,45 it appeared that at the time a producer signed a marketing agreement with a cooperative, it was understood that the marketing agreement was not to become effective until the expiration of a prior contract with a commercial distributor, and, therefore, the association could not regard the producer as a member for all purposes and could not enforce the marketing agreement against him.

In an Illinois case 46 in which the contract was not to become effective unless 55 percent of the grain producers in the "township or trade territory" signed the marketing contract, it was contended that this term was ambiguous and uncertain and that the contract was consequently void, but the court held that the term "township or trade territory" was not ambiguous since under the bylaws the boundaries of the territory were to be determined by the association.

If the contract specifies that a notice advising that the required sign-up has been effected will be mailed to each producer signing the contract and the notice is not mailed, the contract is not effective 47 unless notice is waived.48

In a Tennessee 49 case, it was said:

Complainant and defendant having agreed that the contract should be treated as accepted by complainant as of the date of mailing such notice, and the fact of acceptance by the association deemed conclusive upon the mailing of the notice, it must be held that the contract became effective on the date that the notice was mailed to defendant, and not before.

A contract may specify that public notice shall be given when the required sign-up is effected, and then notice may be given in the public press of the district.

Ordinarily it would appear preferable to have the contract so drawn that it is effective and binding from the signing thereof but subject to cancelation in the event the required sign-up is not effected by a certain time. In this way questions regarding the status of the contract prior to the giving of the notice that the necessary sign-up has been obtained are eliminated. In preparing marketing agreements which are to become effective only upon the happening of prescribed conditions, care should be exercised to employ a simple, clear and conclusive procedure for making the required determination.

43

44

Kansas Wheat Growers' Association v. Bridges, 133 Kan. 397, 1 P. 2d 265. Kansas Wheat Growers' Association v. Windhorst, 129 Kan. 528, 283 P. 638, 131 Kan. 423, 292 P. 777, 132 Kan. 21, 294 P. 928.

45 Cooperative Dairymen's League v. Hansen, 23 Cal. App. 2d 493, 73 P. 2d 627. 46 Farmers' Educational and Cooperative Union of America, Illinois Division v. William Langlois, 258 Ill. App. 522.

47

Idaho Grimm Alfalfa Seed Growers' Association v. Stroschein, 42 Idaho 12, 242 P. 444, 47 A. L. R. 916.

48 Wenatchee Dist. Coop. Association v. Thompson, 143 Wash. 657, 255 P. 918. 49 Dark Tobacco Growers' Coop. Association v. Mason, 150 Tenn. 228, 263 S. W. 60, 66.

Duration of Marketing Contracts

For what period of time may a cooperative marketing contract be entered into? Many cooperative statutes 50 prescribe the maximum number of years, frequently 10, that may be covered in a contract, and if the statute under which an association is formed contains such a provision it should be observed. If there is no restrictive provision on the subject in the law of the State or the charter of the association, then an association and its members are free to enter into marketing contracts for any period that may be agreed upon.

Provisions may be inserted in marketing contracts (unless the length of time a contract may run is restricted by law or by the charter of the association) providing that the contract shall continue from year to year unless canceled on or before a certain date.

In some instances cooperatives attempt to make their marketing contracts continuous although the statutes under which the associations are incorporated prescribe maximum periods such contracts may run.

In a Washington case 51 the statute restricted the period for which marketing contracts might run to 10 years and the contract provided that it should run—

for a period of 10 years from the date hereof, and from year to year thereafter continuously; Provided, however, that the dairyman may cancel this contract 2 years after the date hereof by giving notice in writing to the association, * * *.

With respect to the contention that the marketing agreement was invalid because it exceeded the 10-year restriction, the court said:

Clearly the contract here under consideration is good for a period of ten years from its date and whether or not the language which purports to continue it in effect thereafter is binding cannot in any way affect the present situation. If that language be ineffectual, then it is surplusage only, and surplusage does not vitiate. If it be effectual, the courts will enforce it when the time comes. In the meantime, the act may be repealed or amended, and we cannot undertake to decide questions which may never arise.

The holding in the foregoing case is believed to be sound, particularly as the provision in the Washington statute, like such provisions generally, did not provide that marketing contracts which exceed the statutory limitation are void. It has been held that a third person may not successfully contend that marketing agreements are void "because they were not made to terminate within 10 years as provided in the statute," and that "the claim that the agreements are ultra vires can be raised only by the State or by some member of the complainant association.” 52

Cases arising under statutes which declare invalid contracts or leases made for a period in excess of that specified by statute are not directly in point in determining the validity of marketing contracts which exceed the statutory period; but in some instances instruments which exceeded the statutory period therefor, although the statute did not provide that they were invalid, have been held void. 54

53

50 See sec. 17 of Bingham Cooperative Marketing Act of Kentucky, p. 305 of Appendix.

Olympia Milk Producers' Association v. Herman, 176 Wash. 338, 29 P. 2d 676, 678. See also Robertson v. Hayes, 83 Ala. 290, 3 So. 674; McCullough v. Smith,

243 F. 823.

52

Local Dairymen's Cooperative Association v. Potvin, 54 R. I. 430, 173 A. 535.

53 Waldo v. Jacobs, 152 Mich. 425, 116 N. W. 371, 15 Ann. Cas. 343; Wegner v. Lubenow, 12 N. D. 95, 95 N. W. 442.

B4

Perry v. Missouri-Kansas Pipe Line Company, 191 A. 823 (Del. Ch.).

It is believed that if it is desired to provide for the continuation of a contract beyond the statutory period therefor, it should be possible to accomplish this purpose through provision that if the parties fail to terminate the contract during a specified period each year this fact shall operate to renew the same, thus making the contract one from year to year. would not appear to be in derogation of the statute but in recognition thereof.

In a Colorado case 55 it was said:

This

Defendant association enters into a separate agreement with each of its members, by which he constitutes it his sole agent for the purpose of marketing and contracting for sale all sugar beets to be grown by him or for him within the state during each year, and from year to year thereafter, subject to the right of either party to the contract, at the end of any year, by written notice delivered to the other party on or before November 1 of each year, to terminate the same. In legal effect it is a 1-year contract at the option of either party.

The Cooperative Marketing Act of Colorado, under which this association was incorporated, restricted the period for which a marketing contract might be entered into to 10 years. Failure to terminate such a contract would appear to be the equivalent of a renewal thereof as the contract remains in effect only becauses the parties will that it shall do so; and such a contract does not appear to be contrary to statutory provisions restricting the period for which marketing contracts may be made.

In the case just referred to, a sugar company, the only buyer of sugar beets in the territory, refused to enter into a contract with the association because of a stipulation requiring the sugar company to make another contract for 3 additional years. The court expressed the view that, since the contract of the association with its members covered only the production of 1 year, the association was not in a position to insist that purchasers of the members' crops obligate themselves to accept these crops over a period of 4 years; and that, under the circumstances, a member was entitled to have his marketing contract with the association canceled.

With respect to the right to renew a contract in the manner outlined above, the following is pertinent:

The parties made their own contract, and we perceive no reason why they could not provide for extensions of the life of the contract, without further notice to defendant, if they saw fit to so agree at the time they made such contract. Such an agreement, so far as we know, violates no settled principle of law or public policy."

56

Provision in a marketing contract permitting a member or the association to terminate it is valid. Such provisions, insofar as the members are concerned, are usually referred to as withdrawal provisions. A provision authorizing either party to terminate a contract does not affect its binding character. It affects only the length of time the contract may run. Unless the conditions for the termination of a contract are met, however, the cancellation of the contract concerned is not effected. In other words, there is no termination unless conditions relative thereto are complied with. For instance, if a withdrawal provision permits a member to withdraw by giving 30 days' notice prior to a certain day, a notice that fails to give the full 30 days is void and the attempt to withdraw fails.57

55 Mountain States Beet Growers' Marketing Association v. Monroe, 84 Colo. 300, 269 P. 886, 887. See also Loomis Fruit Growers' Association v. California Fruit Exchange, 128 Cal. App. 265, 16 P. 2d 1040.

Yerxa, Andrews & Thurston v. Randazzo Macaroni Manufacturing Company, 315 Mo. 927, 288 S. W. 20, 33.

57 Mosher Grain v. Kansas Coop. Wheat Marketing Association, 136 Kan. 269, 15 P. 2d 421; Grays Harbor Dairymen's Association v. Engen, 130 Wash. 169,

It is generally recognized that if an agreement provides the terms and conditions under which it may be canceled this method is exclusive.58

The period for which the marketing agreements of an association may run without a right on the part of producers to terminate them may become important in the enforcement of such contracts because, if marketing agreements are terminated while a suit to enjoin the violation of them is pending, the suit will be dismissed; and, if the marketing agreements may be terminated by the producers so as to virtually nullify the effect of an injunction prohibiting their breach, such relief may be denied.59

Signing Marketing Contracts

Even though a contract is signed without being read by persons capable of reading it, and although the claim is made that its contents were misrepresented, it is valid and enforcible if signed under normal conditions.60 The law proceeds upon the theory that a person must use some care and caution to protect himself and that he cannot complain of situations made possible by his own carelessness.

If the signer of a contract is illiterate and the contract is misrepresented to him it may be rescinded.61 If a contract is signed with the understanding that it is not to become effective until the happening of a certain event, such as obtaining the approval of a third person, the contract fails if the approval is not obtained,62 or if the delivery of the contract was conditional and the grower was to have an opportunity of reading it before the contract became effective, it fails if this opportunity is not given.63 Close questions of fact may arise under circumstances like these, and in a Virginia case the court refused to believe testimony that the contract had been conditionally delivered and hence held it binding.64

A wife or husband is not by virtue of the marriage relationship alone the agent of the other to sign a marketing contract; 65 but if either had been given or had been represented by the other as having authority to market the crops grown, a marketing contract signed by the husband or the wife, as the case might be, would be binding on the other.6

Contracts Obtained by Force or Fraud

If solicitors, in seeking to get producers to sign contracts, make statements which are material and false relating to the affairs of the association,

226 P. 496; Egyptian Seed Growers' Exchange v. Hollinger, 238 Ill. App. 178; Meyer v. California Prune & Apricot Growers' Association, 42 Cal. App. 2d 632, 109 P. 2d 726. But see Taresh v. California Canning Peach Growers, 3 Cal. 2d 686, 45 P. 2d 964.

58

Meyer v. California Prune & Apricot Growers' Association, 42 Cal. App. 2d 632, 109 P. 2d 726.

59

Pure Milk Producers' Association of Greater Kansas City Territory v. Bridges, 146 Kan. 15, 68 P. 2d 658.

80 Pittman v. Tobacco Growers' Coop. Association, 187 N. C. 340, 121 S. E. 634; Tobacco Growers' Coop. Association v. Chilton, 190 N. C. 602, 130 S. E. 312; Barron G. Collier, Inc. v. Stebbins, 236 Mich. 147, 210 N. W. 264.

Dunbar v. Tobacco Growers' Coop. Association, 190 N. C. 608, 130 S. E. 505; Simpson v. Tobacco Growers' Coop. Association, 190 N. C. 603, 130 S. E. 507. Tobacco Growers' Coop. Association v. Battle, 187 N. C. 260, 121 S. E. 629.

62

63 Georgia Cotton Growers' Coop. Association v. Smith, 163 Ga. 761, 137 S. E. 233. 64 Elmore v. Maryland & Virginia Milk Producers' Association, Inc., 145 Va. 42, 132 S. E. 521, 134 S. E. 472.

65

Waken v. Davis, 112 Okla. 23, 239 P. 659; Sladkin v. Ruby, 103 N. J. Law 449, 135 A. 880.

68 Dark Tobacco Growers' Coop. Association v. Garth, 218 Ky. 391, 291 S. W. 367.

contracts thus obtained may be set aside by the producers in suits promptly brought for this purpose. Also if such producers after discovery of the fraud promptly give notice to the association that they regard the contracts as invalid because of fraud and then refuse to recognize them in any way, they may defend suits brought against them by the association for failure to abide by the contracts by showing fraud in their procurement.67 Probably in some jurisdictions, although no notice of the fraud was given by the producers to the association, they could defend suits brought against them by the association by showing fraud in the procurement of the contracts.

If duress, force, or intimidation is used to obtain a contract, the producer concerned may have it set aside or may defend when sued thereon, by showing the facts under which it was obtained.69

In California the failure to exhibit a permit issued under the blue sky laws of that State, and as required by such laws, to a prospective member was held to constitute fraud and to justify the cancelation of the marketing contract entered into with a producer.70

Although force or fraud is involved in the procurement of a contract, if the producer recognizes the contract in any way after discovery of the fraud or the cessation of the force such as by making deliveries under it, or if he executes a proxy, thus asserting that he is a member of the association, when membership, if it exists, is by reason of the marketing contract or as a part thereof, or if by any other act a producer recognizes the contract as binding although procured by force or fraud, he will be deemed to have waived the force or fraud, as the case may be, and the contract may be enforced against him.71

For statements made by solicitors or others in the procurement of contracts to amount to such fraud or misrepresentation as would authorize a rescission of a contract, the statements made must relate either to past or to present conditions or situations affecting the association, because a prophecy made or opinion expressed as to the things that will be accomplished by the association are all matters in the realm of conjecture, and whether they will or will not come to pass is known by all concerned to be uncertain." In some jurisdictions, however, parties making statements, or expressing opinions concerning the future must honestly believe them.73 If the person to whom false statements are made to induce him to sign a contract knows that the statements are false, he cannot rescind the contract because of them." Oral statements or agreements made prior to the

72

74

67 Kansas Wheat Growers' Association v. Vague, 118 Kan. 246, 234 P. 964; Kansas Wheat Growers' Association v. Massey, 123 Kan. 183, 253 P. 1093; Kansas Wheat Growers' Association v. Rowan, 123 Kan. 169, 254 P. 326; Burley Tobacco Growers' Coop. Association v. Rogers, 88 Ind. App. 469, 150 N. E. 384; Placentia Coop. Orange Growers' Association v. Henning, 118 Cal. App. 487, 5 P. 2d 444.

68 For a discussion of fraud in the procurement of stock subscriptions see p. 44. 69 Sun-Maid Raisin Growers of California v. Papazian, 74 Cal. App. 231, 240 P. 47; Commonwealth (Burley Tobacco Society) v. Reffitt, 149 Ky. 300, 148 S. W. 48, 42 L. R. A. (N. S.) 329.

10 Klombies v. Weeks Poultry Community, Inc., 121 Cal. App. 175, 8 P. 2d 940. "Kansas Wheat Growers' Association v. Massey, 123 Kan. 183, 253 P. 1093; Kansas Wheat Growers' Association v. Rowan, 123 Kan. 169, 254 P. 326; Dairy Cooperative Association v. Brandes Creamery, 147 Ore. 488, 30 P. 2d 338, 147 Ore. 503, 30 P. 2d 344; Beaulaurier v. Washington State Hop Producers, Inc., 8 Wash. 2d 79, 111 P. 2d 559.

12 South Carolina Cotton Growers' Coop. Association v. English, 135 S. C. 19, 133 S. E. 542; Burley Tobacco Growers' Coop. Association v. Rogers, 88 Ind. App. 469, 150 N. E. 384; Hilgendorf v. Schuman, 232 Wis. 625, 288 N. W. 184.

73 Texas Farm Bureau Cotton Association v. Craddock, 285 S. W. 949 (Tex. Civ. App.); Dunbar v. Tobacco Growers' Coop. Association, 190 N. C. 608, 130 S. E. 505. Simpson v. Tobacco Growers' Coop. Association, 190 N. C. 603, 130 S. E. 507.