secretary of state a copy of its charter or articles of incorporation, duly certified and authenticated by the officer who issued the original, or the officer with whom the original was filed or recorded. * * *

(3) The secretary of state, upon the admission of such foreign corporation to do business in the State of Indiana, shall issue a certificate and shall state in such certificate of authority to do business issued by him the powers and objects of said corporation which may be exercised in this State, and no corporation shall by this certificate of the secretary by [be] authorized to transact any business in this State for the transaction of which a corporation can not be organized under the laws of Indiana.

The Dark Tobacco Growers' Cooperative Association, incorporated under the Cooperative Act of Kentucky, applied for and received a license to do business in Indiana. It successfully brought suit on the contract it had entered into with a producer in Indiana.39 One of the defenses interposed was that an association similar to the Dark Tobacco Growers' Cooperative Association could not have been organized in the State of Indiana and hence that the license to do business in the State that had been issued to the association was void. It will be observed that the statutory provisions quoted above authorize the granting of licenses to do business in the State to associations of a type that could have been formed in the State of Indiana.

In the case under discussion it was claimed that the association was engaged in interstate commerce, but the court pointed out that the application for a license appeared to be an admission that the association was not engaged in such commerce. The court further pointed out that there was no allegation in the complaint of the association that the contract sued on was a part of an interstate commerce transaction. The court, however, said: "If the contract entered into had been a part of a transaction connected with interstate commerce, such license would not have been necessary."

If a California corporation ships a carload of fruit to a commission merchant in New York to be sold by him on agreed factorage, is the California corporation doing business in New York within the meaning of its statutes of this character? If it contracts to ship 1,000 carloads during the year on the same terms, is it violating the statutes of New York, unless it obtains a license to do business there?

40

The answer to the foregoing questions is "No." In addition, a number of the State courts, independent of interstate commerce, have held that their laws respecting foreign corporations do not apply when the corporations only ship goods into their States to be sold by factors or commission The answers just given will be amplified later.

men.

The general statute of each State regarding the right of a corporation formed in another State to do business within its borders is as applicable to incorporated cooperatives as to other corporations, unless the language of a particular statute is not broad enough to cover them, the associations are engaged in interstate commerce, or for some other reason such statutes are not by their terms applicable to them.

Generally, application to do business in a State (other than the one of incorporation) must be made to the secretary of state of that State. Usually before permission to do business in the new State can be obtained, it must appear that a corporation could be formed in that State to engage in the business in which the applicant is engaged. Other usual requirements are a known place of business and a designated person upon whom process may be served.

39 Dark Tobacco Growers' Coop. Association v. Robertson, 84 Ind. App. 51, 150 N. E. 106, 110.

40 Butler Bros. Shoe Co. v. United States Rubber Co., 156 F. 1, 6.

41

A State has the right to exclude the corporations of other States 11 except that a State may not exclude or impose conditions on a corporation that is engaged in interstate or foreign commerce.42 As a part of interstate commerce, a corporation of one State has the right to ship goods into another State and there sell them in the original packages without the leave or license of that State. Again, a corporation of one State may purchase goods in one State for shipment to another without the consent of the latter State.43 A single isolated act or transaction does not constitute doing business in a State.**

It is immaterial how a cooperative markets its products in another State provided they are sold in the original packages or are shipped into the State in response to orders previously obtained for them.45

In a leading case decided by the United States Supreme Court 46 it appeared that the State of Michigan imposed an annual tax of $300 upon the business of selling brewed or malt liquors. Citizens of Wisconsin, engaged in manufacturing such liquors in that State, owned a warehouse in Michigan to which they shipped and in which they stored their liquor for sale in the original packages. Neither they nor their agent paid the tax, but the agent sold the liquor and was arrested and convicted for a violation of the law. The Supreme Court, in holding that the State of Michigan did not have the right to impose the tax, either on the citizens of Wisconsin or upon their agent in Michigan, said:

We have repeatedly held that no State has the right to lay a tax on interstate commerce in any form, whether by way of duties laid on the transportation of the subjects of that commerce, or on the receipts derived from that transportation, or on the occupation or business of carrying it on, for the reason that such taxation is a burden on that commerce, and amounts to a regulation of it, which belongs solely to Congress.

In another case, the Supreme Court of the United States said:

We have repeatedly decided that a State law is unconstitutional and void which requires a party to take out a license for carrying on interstate commerce, *** It will be appreciated that the term "original packages" refers to the barrels, boxes, or other containers in which substantial quantities of the product involved are transported.

Entirely independent, apparently, of the fact that interstate commerce was involved, a number of the supreme courts have held that a foreign corporation was not doing business in the State when it appeared that the foreign corporation consigned products to a commission merchant or factor in the State to be sold.4 48 These cases apparently were decided upon the

41

Pembina Consolidated Silver Mining & Milling Co. v. Pennsylvania, 125 U. S. 181, 8 S. Ct. 737, 31 L. Ed. 650.

42

Dahnke-Walker Milling Co. v. Bondurant, 257 U. S. 282, 42 S. Ct. 106, 66 L. Ed. 239.

43

44

Ibid., n. 42.

1137.

45

46

48

Cooper Manufacturing Co. v. Ferguson, 113 U. S. 727, 5 S. Ct. 739, 28 L. Ed.

Caldwell v. North Carolina, 187 U. S. 622, 23 S. Ct. 229, 47 L. Ed. 336.

Lyng v. Michigan, 135 U. S. 161, 166, 10 S. Ct. 725, 34 L. Ed. 150.

Crutcher v. Kentucky, 141 U. S. 47, 58, 11 S. Ct. 851, 35 L. Ed. 649.

Allen v. Tyson-Jones Buggy Co., 91 Tex. 22, 40 S. W. 393; In re Hovey's Estate, 9 Pa. Dist. Rep. 183, affirmed in 198 Pa. 385, 48 A. 311; Cooper Rubber Co. v. Johnson, 133 Tenn. 562, 182 S. W. 593; Bertha Zinc & Mineral Co. v. Clute, 27 N. Y. S. 342, 7 Misc. Rep. 123, 57 N. Y. St. Rep. 70; Badische Lederwerke v. Capitelli, 155 N. Y. S. 651, 92 Misc. Rep. 260. See also Patent Royalties Corporation v. Land O'Lakes Creameries, Inc., 11 F. Supp. 103; Universal Oil Corporation v. Falls Rubber Co., 188 Okla. 401, 110 P. 2d 296.

theory that it was the factor or commission man that was engaged in business in that State and not the foreign corporation.

It is submitted that a cooperative formed in one State, and marketing its products in another, cannot be required to comply with the laws of the latter State respecting foreign corporations if it sells its products in the original packages in which they are shipped into the State through a commission man, factor, or broker, or through the medium of its own exclusive agent located in that State. Nor may the latter State impose a tax for doing business, either on the cooperative or upon its agent, on account of such business.

Generally, a State has the right to oust a corporation for violating its laws. The Burley Tobacco Growers' Cooperative Association, incorporated under the laws of Kentucky, complied with the laws of Tennessee relative to foreign corporations and began to do business in that State. Later the State of Tennessee instituted ouster proceedings against it on the ground that the association had been guilty of coercion in obtaining contracts and was seeking to restrain trade unreasonably. It was held, however, that the association was not guilty of the things charged and that it was entitled to do business in Tennessee.49

A distinction should be drawn between the right of a State to tax physical property within its borders as contrasted with the right of an individual or corporation to engage in interstate commerce within the State. Physical property, such as commodities,50 trucks, buildings, or equipment, owned by a cooperative in a State other than that in which it is organized, or similar property owned by the agent of the association in that State, is subject to the normal and customary property taxes free from discrimination within that State.51

If a cooperative or other corporation is doing an intrastate business in a State other than that in which it is organized, it is a serious matter for it to fail to comply with the laws of that State regarding foreign corporations. In many States an association could not sue in the courts of the State, nor could it enforce its obligations in the Federal courts if it had failed to comply with such laws.52 In Tennessee, the shareholders of a foreign corporation, under the circumstances in question, were held liable as partners. 53 In Colorado and some other States the officers and agents of such a corporation are by statute made personally liable.54

When a cooperative formed in one State is operating in another, the existence and extent of the right of its members to control the actions of its officers or agents and the relation of the members to the association are determined by the law of the State in which it was incorporated, even though this question arises in the latter State.55

As a general rule, the courts of one State will not take jurisdiction of the internal affairs of a corporation incorporated in a different State.56

49 Tennessee v. Burley Tobacco Growers' Coop. Association, 2 Tenn. App. Rep. 674. 50 Sonneborn Bros. v. Cureton, 262 U. S. 506, 43 S. Ct. 643, 67 L. Ed. 1095. 51 Southern Ry. Co. v. Kentucky, 274 U. S. 76, 47 S. Ct. 542, 71 L. Ed. 934. 52 Woods v. Interstate Realty Co., 337 U. S. 535, 69 S. Ct. 1235, 93 L. Ed. 1524. 53 Cunnyngham v. Shelby, 136 Tenn. 176, 188 S. W. 1147, L. R. A. 1917B 572. 54 Fritts v. Palmer, 132 U. S. 282, 10 S. Ct. 93, 33 L. Ed. 317; 51 A. L. R. 376, 389. 55 Farmers Educational and Cooperative Union of America, Minnesota Division v. Farmers Educational and Cooperative Union of America, 207 Minn. 80, 289 N. W. 884; Schwabe v. American Rural Credits Association, 104 Neb. 46, 175 N. W. 673. 56 Farmers Educational and Cooperative Union of America, Minnesota Division v. Farmers Educational and Cooperative Union of America, 207 Minn. 80, 289 N. W. 884.

The Supreme Court of the United States has said:

In order to hold a foreign corporation not licensed to do business in a state responsible under the process of a local court the record must disclose that it was carrying on business there at the time of attempted service.57

If an association is doing business in a State, it may be sued therein.5

IF

Associations and Third Persons

F PRODUCTS in the custody of an association are damaged, for instance, by fire caused by the negligence of a third person, an association may bring suit for the recovery of the damages in question.59 Again, if a person has entered into a contract with an association to buy a specified quantity of products, the association may sue for failure to comply with the contract. 60 Conversely, if a cooperative enters into a contract to sell a specified quantity of products, ordinarily it may be sued successfully for failure to abide by the contract.61 Cooperatives like other concerns may be compelled through the remedy of specific performance to perform contracts which they have made; and in a certain case a cooperative was given the alternative of delivering its preferred stock in payment for warehouses or of responding in damages. 62 It should be remembered that if an association makes an unconditional contract to sell a specified quantity of products, the contract is binding, and damages may be recovered for its breach unless its performance was prevented by law, an act of God such as floods, or the other party. An association should include exceptions in its selling contracts covering contingencies such as strikes which may prevent the association from performing its contracts.

Cooperatives like other business concerns, should exercise care to have the contracts they enter into with third persons clear and definite. That ambiguous contracts may lead to legal difficulties is well illustrated by a Washington case in which the facts were somewhat equivocal.63 In this case a cooperative successfully contended that the defendant had purchased a carload of strawberries from it and was not acting simply as a broker in the sale of the strawberries. It was held also that a check which was received and cashed by the association from the defendant did not amount to an accord and satisfaction of the obligation because it was not submitted as "payment in full, nor was the remittance accompanied by any act or declaration which would amount to a condition that the money tendered, if accepted, would be accepted as a satisfaction in full.”

57 International Harvester Co. v. Kentucky, 234 U. S. 579, 34 S. Ct. 944, 58 L. Ed. 1479. See also Farmers' Union Livestock Commission, Inc. v. District Court of Seventh Judicial District, 93 Utah 181, 72 P. 2d 448.

58 Patent Royalties Corp. v. Land O' Lakes Creameries, Inc., 11 F. Supp. 103; Eastern Livestock Cooperative Marketing Association v. Dickenson, 107 F. 2d 116. 59 Louisville & Nashville Railroad Co. v. Burley Tobacco Society, 147 Ky. 22, 143 S. W. 1040.

60 National Importing Co. v. California Prune and Apricot Growers, Inc., 85 Ind. App. 315, 151 N. E. 626; Tustin Fruit Association v. Earl Fruit Company, 6 Cal. Unrep. 37, 53 P. 693; Consumers Cooperative Association v. Sherman, 147 Neb. 901, 25 N. W. 2d 548.

61 Eskew v. California Fruit Exchange, 203 Cal. 257, 263 P. 804.

62 Tri-State Terminal Company v. Washington Wheat Growers' Association, 134 Wash. 519, 236 P. 75.

63 Three Rivers Growers' Association v. Pacific Fruit and Produce Company, 159 Wash. 572, 294 P. 233, 235. See also on the question whether a check is satisfaction of an indebtedness, Staples v. Growers' Finance Corporation, 44 Ga. App. 451, 161 S. E. 675; Work v. Associated Almond Growers of Paso Robles, 102 Cal. App. 232, 282 P. 965; Blue Ribbon Creamery v. Monk, 168 Miss. 130, 147 So. 329, 782.

412528°

-58

-16

233

In another case a seller of livestock unsuccessfully contended that an association had bought his livestock and had not acted as agent for their sale.64

Generally speaking, if an agent exceeds his authority his principal is not bound. An association entered into a sales-agency contract with a distributor, covering the disposition of onions received by the association from its members. The distributor then entered into a contract with another party, purporting to authorize this party to make sales of onions. The association was not bound by this contract, as the distributor exceeded his authority as specified in the sales-agency contract, and the association, on learning of this fact, refused to acquiesce therein.65

If a cooperative is purchasing a business, including its goodwill, a stipulation should be included in the contract of purchase precluding the seller from engaging in the same business in the same town if the association desires to prevent the seller from doing so,66 otherwise, the general rule is that the seller is not barred from again engaging in business in the same town.67

In a number of cases contracts entered into by milk bargaining cooperatives with milk distributors for the purpose of bringing about a market pool so that all producers similarly situated will be paid the same price for their milk have been held valid.68

As a person's acts usually speak louder than his words, where a representative of an association took possession of warehouses covered by a contract, declarations made by the representative that the possession taken was only a qualified one did not have the effect of modifying the original contract.69

Whether money left with a bank results in the relation of bailor and bailee, or in that of debtor and creditor, depends upon the terms and conditions under which the money was left with the bank.70 In the first instance the association would be entitled to priority in the event of insolvency of the bank, while in the second case it would not; and an agreement for the bank to pay interest indicates a debtor-creditor relationship.71

While it has been held that a milk association may be enjoined from

64 Eastern Livestock Cooperative Marketing Association v. Dickenson, 107 F. 2d

.116.

65 Eck Company v. Coachella Valley Onion Growers' Association, 102 Cal. App. 1, 282 P. 408.

66

Dairymen's League Coop. Association, Inc. v. Weckerle, 160 Misc. 866, 291 N. Y. S. 704.

67 Farmers' Cooperative Elevator of Fowler v. Sturgis & Sons, 226 Mich. 437, 198 N. W. 191.

68 Stark County Milk Producers' Association v. Tabeling, 129 Ohio St. 159, 194 N. E. 16, 98 A. L. R. 1393; Dairy Cooperative Association v. Brandes Creamery, 147 Ore. 488, 30 P. 2d 338, 147 Ore. 503, 30 P. 2d 344; United States v. Rock Royal Cooperative, Inc., 307 U. S. 533, 59 S. Ct. 993, 83 L. Ed. 1446; Hood & Sons, Inc. v. United States, 307 U. S. 588, 59 S. Ct. 1019, 83 L. Ed. 1478; Connecticut Milk Producers' Association v. Brock-Hall Dairy Co., Inc., 122 Conn. 482, 191 A. 326.

69 Tri-State Terminal Company v. Washington Wheat Growers' Association, 134 Wash. 519, 236 P. 75.

70 Bank of Aurora v. Aurora Coop. Fruit Growing & Marketing Association, 91 S. W. 2d 177 (Mo. App.); Oak Grove Farmers' Mutual Ins. Co. v. Almena State Bank of Almena, 216 Wis. 182, 256 N. W. 696; California Livestock Commission Co. v. Button, 40 Ariz. 65, 9 P. 2d 414; Florida Citrus Exchange v. Union Trust Co. of Rochester, 244 App. Div. 68, 278 N. Y. S. 313.

Lewis v. Dark Tobacco Growers' Cooperative Association, 247 Ky. 301, 57 S. W. 2d 8.