States usually contain a provision stating that an association shall be entitled, in the event of a breach or threatened breach of its marketing contract, "to an injunction to prevent the further breach of the contract and to a decree of specific performance thereof." 13

Many cases have been before the courts, involving the right of cooperatives to the remedies of specific performance and injunction on account of the statutory provision in question. In Kansas it was held that the statutory provision was virtually mandatory on the court, at least under normal conditions, and that the legislature was competent to enact a rule of this kind which was binding on the courts.14 In States other than Kansas substantially similar conclusions have been reached in cases involving the right of associations to the remedies of injunction and specific performance under the statutory provision in question.15

In many cases brought by cooperatives against their members to prevent them from violating their contracts, the association in question has asked the court to enjoin the member from disposing of his products to third persons, without asking the court to decree the specific performance of the contract involved. Some of these cases are discussed under the heading "Injunctions."

Independent of a statutory provision entitling a cooperative to the remedy of specific performance, will courts of equity thus compel members of cooperatives to perform their contracts? The fundamental rule with respect to this matter is that no one is entitled to a decree for specific performance, an injunction, or other equitable relief where the remedy at law is plain, adequate, and complete. In general, courts of equity will refuse to grant a decree for specific performance or an injunction if compensation in money for the breach of the contract would constitute full and complete satisfaction. In the case of contracts involving personal property which can be easily purchased in the open market, usually no decree for specific performance will be granted. When a cooperative is restricted by the statute under which it is formed, by its charter, or by its contract, to dealing only with its members, it cannot legally buy products to take the place of those which its members refused to deliver, and this fact has been referred to in some instances by the courts as constituting a reason why an association was entitled to have its contract with a member performed."

16

Even though there is no provision in the law of a State specifically entitling an association to the remedies of specific performance and injunction against

13 See par. (b) of sec. 18 of the Bingham Cooperative Marketing Act of Kentucky, p. 305 of Appendix.

14 Kansas Wheat Growers' Association v. Schulte, 113 Kan. 672, 216 P. 311.

15 Lee v. Clearwater Growers' Association, 93 Fla. 214, 111 So. 722; Texas Farm Bureau Cotton Association v. Stovall, 113 Tex. 273, 253 S. W. 1101, reversing 248 S. W. 1109 (Tex. Civ. App.); South Carolina Cotton Growers' Coop. Association v. English, 135 S. C. 19, 133 S. E. 542; Rifle Potato Growers' Coop. Association v. Smith, 78 Colo. 171, 240 P. 937; Arkansas Cotton Growers' Coop. Association v. Brown, 168 Ark. 504, 270 S. W. 946; McCauley v. Arkansas Rice Growers' Coop. Association, 171 Ark. 1155, 287 S. W. 419; Warren v. Alabama Farm Bureau Cotton Association, 213 Ala. 61, 104 So. 264; Harrell v. Cane Growers' Coop. Association, 160 Ga. 30, 126 S. E. 531; Colma Vegetable Association v. Bonetti, 91 Cal. App. 103, 267 P. 172; Nebraska Wheat Growers' Association v. Smith, 115 Neb. 177, 212 N. W. 39; Brown v. Staple Cotton Coop. Association, 132 Miss. 859, 96 So. 849.

Oregon Growers' Coop. Association v. Lentz, 107 Ore. 561, 212 P. 811; Bishop v. Alabama Farm Bureau Cotton Association, 215 Ala. 388, 110 So. 711; Manchester Dairy System, Inc. v. Hayward, 82 N. H. 193, 132 A. 12; Dark Tobacco Growers' Coop. Association v. Dunn, 150 Tenn. 614, 266 S. W. 308; Kansas Wheat Growers' Association v. Schulte, 113 Kan. 672, 216 P. 311.

its members, the courts in some instances have held that associations were entitled to both these remedies.1

Although most of the cases that have come before the courts involving the right of an association to the remedy of injunction or specific performance, or both, have involved the purchase-and-sale form of contract, the courts have enforced agency contracts by these remedies.18

Associations formed in one State have frequently been held entitled to the remedies of injunction and specific performance in suits brought in other States.1 19

Outside the field of cooperation, the courts have upheld the right of commercial concerns to the remedies of specific performance and injunction with respect to oil,20 tomatoes,211 and pineapples,22 when it appeared that the products named could not be easily obtained in the open market. Some courts will refuse to decree the specific performance of a contract while enjoining the delinquent party from disposing of the products involved to third persons. Thus, the Supreme Court of Washington, independent of statute, in a cooperative case refused under the general principles of equity to decree the specific performance of the contract on the ground that it would call for constant supervision, but enjoined the member from disposing of his cranberries outside the association.23 A similar conclusion was reached by the Supreme Court of Oregon.24

Injunctions

"A palty to do or refrain from doing certain acts." 25 Injunctions are

N INJUNCTION is an order issued by a court of equity, requiring

usually issued to prevent a threatened injury or to restrain the doing of wrongful acts. In general it appears settled that cooperatives are entitled to enjoin their members from disposing of their products to third persons in violation of their contracts. Many of the cooperative statutes contain a provision entitling associations formed under them to the remedy of injunction against their members to prevent the violation by them of their contracts. A number of cases are cited in the preceding section which are directly applicable here. Other cases are here cited in which associations enjoined their members without asking the court to decree the specific performance of the contract involved.26 Independent of statute,

17 Elephant Butte Alfalfa Association v. Rouault, 33 N. M. 136, 262 P. 185; Manchester Dairy System, Inc. v. Hayward, 82 N. H. 193, 132 A. 12.

18

Elephant Butte Alfalfa Association v. Rouault, 33 N. M. 136, 262 P. 185; Elmore v. Maryland & Virginia Milk Producers' Association, Inc., 145 Va. 42, 132 S. E. 521, 134 S. E. 472.

19 Dark Tobacco Growers' Coop. Association v. Dunn, 150 Tenn. 614, 266 S. W. 308; Brown v. Staple Cotton Coop. Association, 132 Miss. 859, 96 So. 849; Elephant Butte Alfalfa Association v. Rouault, 33 N. M. 136, 262 P. 185; Manchester Dairy System, Inc. v. Hayward, 82 N. H. 193. 132 A. 12; Nebraska Wheat Growers' Association v. Norquest, 113 Neb. 731, 204 N. W. 798.

20 Texas Co. v. Central Fuel Oil Co., 194 F. 1. See also American Smelting & Refining Co. v. Bunker Hill & Sullivan Mining Co., 248 F. 172.

21 Curtice Bros. Co. v. Catts, 72 N. J. Eq. 831, 66 A. 935.

22 Hawaiian Pineapple Co., Ltd. v. Saito, 270 F. 749.

23

Washington Cranberry Growers' Association v. Moore, 117 Wash. 430, 201 P. 773, 204 P. 811, 25 A. L. R. 1077.

24 Phez Co. v. Salem Fruit Union, 103 Ore. 514, 201 P. 222, 205 P. 970, 25 A. L. R. 1090.

25 22 Cyc. 740.

26 Tobacco Growers' Coop. Association v. Jones, 185 N. C. 265, 117 S. E. 174, 33 A. L. R. 231; Tobacco Growers' Coop. Association v. Spikes, 187 N. C. 367, 121 S. E. 636; Tobacco Growers' Coop. Association v. Battle, 187 N. C. 260, 121 S. E.

the courts have held in a number of instances that cooperatives were entitled to enjoin their members from disposing of their products outside the association.27

In a few cases involving extraordinary situations, the courts have denied associations the remedies of specific performance and injunction. In an Alabama case 28 the court said that the statutory provisions relative to the equitable remedies under discussion were to "be construed as contemplating the use of such remedies only in case they shall be found to consist with commonly accepted principles of right and justice," and the court, therefore, completely denied the association the remedies in question because of a mortgage held by a third person on the crop.

In a similar case arising in North Carolina 29 the court enjoined the member from disposing of his crop outside the association, subject to the right of a holder of the mortgage on the crop to demand and receive enough tobacco to satisfy the mortgage.

In another North Carolina case 30 the court refused an injunction because the association had not settled with the member in full for a crop previously delivered and it appeared that the member was obliged "to raise money for the necessary supplies of himself and family." In refusing the injunction the court called attention to the rule that under the general principles of equity “an injunction will not usually be granted or continued where 'it will do more mischief and work greater injury than the wrong which it is asked to redress'."

In a Florida case in which an injunction was denied the Chancellor found that

the price of milk allowed and paid by plaintiff to the defendant is below the cost of production as shown by the testimony and that defendant was justified under the circumstances in withdrawing from the plaintiff association, to avoid irreparable loss and injury, and virtual confiscation of her property.

The supreme court of the State affirmed the lower court but held that

629; Tobacco Growers' Coop. Association v. Patterson, 187 N. C. 252, 121 S. E. 631; Potter v. Dark Tobacco Growers' Coop. Association, 201 Ky. 441, 257 S. W. 33; Burley Tobacco Growers' Coop. Association v. Devine, 217 Ky. 320, 289 S. W. 253; Elmore v. Maryland & Virginia Milk Producers' Association, Inc., 145 Va. 42, 132 S. E. 521, 134 S. E. 472; Washington Wheat Growers' Association v. Leifer, 132 Wash. 602, 232 P. 339; Northwest Hay Association v. Hanson, 135 Wash. 47, 236 P. 561; Pierce County Dairymen's Association v. Templin, 124 Wash. 567, 215 P. 352; Washington Coop. Egg & Poultry Association v. Taylor, 122 Wash. 466, 210 P. 806; Minnesota Wheat Growers' Coop. Marketing Association v. Huggins, 162 Minn. 471, 203 N. W. 420; Rifle Potato Growers' Coop. Association v. Smith, 78 Colo. 171, 240 P. 937; Nebraska Wheat Growers' Association v. Norquest, 113 Neb. 731, 204 N. W. 798; Kansas Wheat Growers' Association v. Charlet, 118 Kan. 765, 236 P. 657; Beaulaurier v. Washington State Hop Producers, Inc., 8 Wash. 2d 79, 111 P. 2d 559. Oregon Growers' Coop. Association v. Lentz, 107 Ore. 561, 212 P. 811; Phez Co. v. Salem Fruit Union, 103 Ore. 514, 201 P. 222, 205 P. 970, 25 A. L. R. 1090; Washington Cranberry Growers' Association v. Moore, 117 Wash. 430, 201 P. 773, 204 P. 811, 25 A. L. R. 1077; Grant County Board of Control v. Allphin, 152 Ky. 280, 153 S. W. 417; Owen County Burley Tobacco Society v. Brumback, 128 Ky. 137, 107 S. W. 710; Elephant Butte Alfalfa Association v. Rouault, 33 N. M. 136, 262 P. 185; Manchester Dairy System, Inc. v. Hayward, 82 N. H. 193, 132 A. 12; Tobacco Growers' Coop. Association v. Jones, 185 N. C. 265, 117 S. E. 174, 33 A. L. R. 231. Bishop v. Alabama Farm Bureau Cotton Association, 215 Ala. 388, 110 So. 711, 712. See also Lennox v. Texas Farm Bureau Cotton Association, 16 S. W. 2d 413 (Tex. Civ. App.).

27

28

29 Tobacco Growers' Coop. Association v. Patterson, 187 N. C. 252, 121 S. E. 631. See also Tobacco Growers' Coop. Association v. Harvey & Son Co., 189 N. C. 494, 127 S. E. 545, 47 A. L. R. 928.

30

639.

Tobacco Growers' Coop. Association v. Bland, 187 N. C. 356, 121 S. E. 636, 638,

this would not operate to prevent the association from recovering damages.

In a Colorado case,32 injunction was held unwarranted where the marketing agreement provided for liquidated damages, the dairyman was not bound for a specified time, and he had exercised his right to quit in compliance with the terms of the agreement. The dairyman was allowed to recover on a counterclaim for damages suffered while the temporary restraining order and injunction were in effect, less the amount of liquidated damages due the association.

In a Tennessee case 33 in which the members of the association concerned were not made parties and in which it was not alleged that the third persons who had purchased milk of the members were insolvent, the court refused to enjoin them from buying milk of the members. The court apparently believed that, as the statute under which the association was incorporated specifically authorized associations formed thereunder to enjoin their members from violating their marketing contracts, this operated adversely against an association in seeking an injunction solely against third persons. However, in a Wisconsin case a livestock shipping association was granted an injunction against a third party who had purchased livestock from one of its members, enjoining him from making any further purchases from association members. 34 The statute provided for injunctive relief in such a situation and the court regarded the statute as mandatory. An injunction will not be granted to restrain producers from violating their marketing agreements if the producers cancel the contracts while the suit is pending.35

In Tennessee, Kansas, and Kentucky, the courts have required members of associations to deliver their products thereto (although the holders of mortgages on the crops protested) where it appeared that the holders of the mortgages took them with notice that the members were under contract to deliver their products to the association for marketing.36

In a Nebraska case alleged mismanagement of the association was held to be no defense to a suit for an injunction.3 37 Where a member of a milk cooperative agreed that he would not market milk "for less than the price agreed upon and fixed by the association as the minimum price," it was held that the association was entitled to an injunction to prevent the member from selling milk below such minimum price and that the member could not raise a question as to the constitutionality of the statute under which the association was incorporated, or with respect to the terms of the contract entered into by him with the association.38

Under normal circumstances, the statutory provisions under discussion would appear to be virtually mandatory on the court concerned.

31 Miami Home Milk Producers' Association v. La Course, 117 Fla. 345, 158 So. 117, 118.

32 Marvin v. Pueblo Dairymen's Cooperative, 131 Colo. 601, 284 P. 2d 238, 12 A. L. R. 2d 130.

33 Knoxville Milk Producers' Association v. Blake, 171 Tenn. 283, 102 S. W. 2d 64. 34 Neillsville Shipping Association v. Lastofka, 225 Wis. 350, 274 N. W. 280.

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

36

Dark Tobacco Growers' Coop. Association v. Dunn, 150 Tenn. 614, 266 S. W. 308; Kansas Wheat Growers' Association v. Floyd, and Kansas Wheat Growers' Association v. Robben, 116 Kan. 522, 227 P. 336; Redford v. Burley Tobacco Growers' Coop. Association, 205 Ky. 515, 266 S. W. 24.

38

37 Nebraska Wheat Growers' Association v. Smith, 115 Neb. 177, 212 N. W. 39. Johnson v. Georgia-Carolina Retail Milk Producers Association, 182 Ga. 695, 186 S. E. 824. See also Olympia Milk Producers' Association v. Herman, 176 Wash. 338, 29 P. 2d 676; Owen County Burley Tobacco Society v. Brumback, 128 Ky. 137, 107 S. W. 710.

Prior to 1923 the Supreme Court of California refused to enjoin a producer from disposing of eggs outside the association because of a code provision which forbade the issuance of injunctions to restrain the violation of contracts that could not be enforced specifically.39 A statute was enacted in California in 1923 specifically giving cooperatives the right to the equitable remedies in question. The courts of California have always upheld the right of cooperatives to recover liquidated damages. 41

40

The courts have frequently pointed out the reasons why a judgment in favor of an association for a definite amount of money would not adequately compensate it for the loss suffered through the failure of a member to deliver his products.42 In the case last cited the court said:

Judgment for the loss of the profits which would have accrued to the association solely from the resale of the products withheld by a breaching member would not necessarily measure the damages to the association. If one member may breach his contract with impunity, so might others. With each withdrawal a larger proportionate share of the expenses would fall upon the remaining members. It would be impossible to compute the losses which would thus progressively accrue to the association and its remaining members; nor would this diminution of the proportionate returns, if they could be computed, measure the full extent of the wrong to the association. The influence of the conduct of the breaching member would inevitably tend to promote further withdrawals and impair the ability of the association to secure new members. If indulged in by a sufficient number, it would impair the effective existence of the association, if, in fact, it did not bring about a dissolution. It is plain that an unrestrained breach of member contracts would produce irreparable injury to the association, and, through it, to each of the remaining members.

Owing to the need for prompt action, courts that exercise equity powers generally may issue a restraining order without prior notice to the defendant, upon the submission of a verified complaint, on its face showing applicant entitled thereto. On the issuance of a restraining order a copy of the complaint and order are served on the defendant, and he is notified of a date, usually an early one, on which he may show cause why he should not be enjoined. As a defendant or grower is usually enjoined before he has had an opportunity to be heard, an association, under the recent cooperative statutes, and under the laws and principles generally applicable, must execute a bond to protect the grower in the event it should develop, on the hearing, that a restraining order should not have been issued.

43

Although the cooperative marketing act of a State specifically authorized an association that is incorporated thereunder to obtain an injunction to prevent the breach of its marketing agreement, it was held that an association must proceed in accordance with a subsequently enacted general injunction act in seeking an injunction.*4*

45

In a Mississippi case an association was held liable on its bond to the extent of $100, the amount thereof, because of the erroneous procurement by the association of an injunction.

39

Poultry Producers of Southern California, Inc., v. Barlow, 189 Cal. 278, 208 P. 83; Poultry Producers of Central California, Inc. v. Murphy, 64 Cal. App. 450, 221

P. 962; Poultry Producers of Central California v. Nilsson, 197 Cal. 245, 239 P. 1086. Colma Vegetable Association v. Bonetti, 91 Cal. App. 103, 267 P. 172.

40

41

See cases cited in two preceding footnotes.

42 Kansas Wheat Growers' Association v. Schulte, 113 Kan. 672, 216 P. 311; Dark Tobacco Growers' Coop. Association v. Dunn, 150 Tenn. 614, 266 S. W. 308; Manchester Dairy System, Inc. v. Hayward, 82 N. H. 193, 132 A. 12, 16.

43

See par. (b) of sec. 18 of the Bingham Cooperative Marketing Act of Kentucky, p. 305 of Appendix.

44

Rapides Dairy Dealers' Cooperative Association v. Mathews, 158 So. 247 (La.

App.).

See

45 Staple Cotton Coop. Association v. Borodofsky, 143 Miss. 558, 108 So. 802. also Garden Plain Farmers' Elevator Co. v. Kansas Wheat Growers' Association, 128 Kan. 218, 276 P. 799.