cases. The courts have held that marketing contracts do possess mutuality.78 Inasmuch as marketing contracts universally require the association to do certain things, while obligating the members to do certain other things, the mutuality of such contracts appears to be beyond question.

The Supreme Court of Wisconsin has held that the language of the cooperative marketing act of that State is such that the marketing contracts of associations formed under it need not possess mutuality.79

A contract should be in writing and signed by both parties. It should clearly and fully set forth the rights, duties, and obligations of each of the parties. Particular care should be taken to make certain that the contract is clear upon every point involved. For when parties to a contract have apparently set forth in writing the understanding between them with reference to the matter involved, it is presumed to represent the entire agreement of the parties thereto, and ordinarily it cannot be successfully disputed by oral evidence.80

There are circumstances, however, in which oral testimony may be introduced to show the real character of a contract. Thus where the financial return to a renter member was substantially larger per unit than that of a regular member, it was held that a grower who had signed a regular member's marketing agreement on the back of which was placed the words "renter member," although the contract on its face did not contain any such term, could introduce oral evidence for the purpose of showing what was meant by the term "renter member," and have his rights determined accordingly.si Under similar circumstances, where it appeared that the association and the grower at the time a regular member's marketing agreement was signed both understood that the grower was to be a renter member, it was held that the marketing agreement could be reformed to accord with this fact.82 Again when it appeared that the marketing contract had been orally modified to guarantee a member a given amount of money for prunes "and pay in addition thereto such sum per ton as the prunes might bring net above $15" it was held that the contract as modified was binding on the association and that, as the association had not pleaded that the contract was ultra vires, it was barred from making this defense.83 Also, where the parties to a marketing contract consistently followed a method of payment from the outset for milk delivered which was different from that set forth in the written contract, it was held that they had modified

TS Warren v. Alabama Farm Bureau Cotton Association, 213 Ala. 61, 104 So. 264: Rifle Potato Growers' Coop. Association v. Smith, 78 Colo. 171, 240 P. 937; Milk Producers' Marketing Co. v. Bell, 234 Ill. App. 222; Burley Tobacco Growers' Coop. Association v. Rogers, 88 Ind. App. 469, 150 N. E. 384; Louisiana Farm Bureau Cotton Growers' Coop. Association v. Clark, 160 La. 294, 107 So. 115; Minnesota Wheat Growers' Coop. Marketing Association v. Huggins, 162 Minn. 471, 203 N. W. 420; Oregon Growers' Coop. Association v. Riddle, 116 Ore. 562, 241 P. 1011; Dark Tobacco Growers' Coop. Association v. Mason, 150 Tenn. 228, 263 S. W. 60.

Watertown Milk Producers' Coop. Association v. Van Camp Packing Co., 199 Wis. 379, 225 N. W. 209, 226 N. W. 378, 77 A. L. R. 391.

60 Dark Tobacco Growers' Coop. Association v. Mason, 150 Tenn. 228, 263 S. W. 60: Elmore v. Maryland & Virginia Milk Producers' Association, Inc., 145 Va. 42, 132 S. E. 521, 134 S. E. 472.

81

California Canning Peach Growers v. Williams, 11 Cal. 2d 221, 78 P. 2d 1154, 11 Cal. 2d 233, 78 P. 2d 1161.

82

Stafford v. California Canning Peach Growers, 11 Cal. 2d 212, 78 P. 2d 1150. See also California Canning Peach Growers v. Harkey, 11 Cal. 2d 188, 78 P. 2d 1137. 83 Yakima Fruit Growers' Association v. Hall, 180 Wash. 365, 40 P. 2d 123. See also California Canning Peach Growers v. Harkey, 11 Cal. 2d 188, 78 P. 2d 1137; California Canning Peach Growers v. Williams, 11 Cal. 2d 221, 78 P. 2d 1154, 11 Cal. 2d 233, 78 P. 2d 1161; Stafford v. California Canning Peach Growers, 11 Cal. 2d 212, 78 P. 2d 1150.

the written contract by mutual agreement and the written provision was not enforcible.84 But where an association, in its marketing contract, agreed to pay a grower an additional amount in the event the prunes sold for net prices higher than those paid at the time of delivery, the promise to pay an additional amount was conditional and the failure to make such a payment did not relieve a grower from his obligation to deliver under his contract.85 If a contract contains a trade term, oral testimony is admissible to show its meaning and when a marketing contract did not define the term "optional pool" testimony was admissible to do so.86

87

The statement in a marketing contract that the association was to sell the commodities "at the best prices obtainable by it under market conditions" did not "mean the best prices that could be obtained by it in any one year or on several different dates during the same season" and it was held that the foregoing requirement was met if the officers of the association acted in good faith and in a reasonable manner. When a contract or any provision thereof is ambiguous, the courts will adopt the practical construction which the parties have placed thereon and, in a certain case in which it was contended that a producer who had breached his contract was liable to a penalty of $25 for each day the breach continued, the court restricted the association to recovering only $25, because in previous instances this was the amount that members had been required to pay.8 Subject to restrictions contained in the statute under which an association is formed or in its charter, an association has wide latitude with respect to the provisions it may include in its marketing contract. It may provide for any plan or device that is not contrary to law. For instance, an association may provide in its contract that it has the right to enter into contracts with producers different from the one in question.89 Likewise an association has wide latitude as to the manner in which it contracts with its members. It has been said

88

There is no reason why persons sui juris may not agree to be bound by the articles, bylaws, rules, and regulations of the association of which they are members.

90

If an association is entering into a long-term contract with members, it is advisable to include therein a provision permitting the association to enter into contracts in the future, with other producers, different from the instant ones. By this means, new contracts may be made which embody improvements and changes deemed desirable without the necessity of "signing up" the producers who sign the original contract; but the old members should be given an opportunity of signing the new contracts if they wish to do so. Thus the provision in the old contract authorizing the making of contracts different from the original one should specify that producers who have signed the same on request may sign the new contract.

Matanuska Valley Farmers Cooperative Association v. Monaghan, 188 F. 2d 906. California Prune & Apricot Growers, Inc. v. Baker, 77 Cal. App. 393, 246 P.

1081.

Burch v. South Carolina Cotton Growers' Coop. Association, 181 S. C. 295,

187 S. E. 422.

Arkansas Cotton Growers' Coop. Association v. Brown, 179 Ark. 338, 16 S. W. 2d 177.

Fort Dodge Cooperative Dairy Marketing Association v. Ainsworth, 217 Iowa 712, 251 N. W. 85. See also Loomis Fruit Growers' Association v. California Fruit Exchange, 128 Cal. App. 265, 16 P. 2d 1040; Wheelwright v. Pure Milk Association, 208 Wis. 40, 240 N. W. 769, 242 N. W. 486; Mosher Grain v. Kansas Coop. Wheat Marketing Association, 136 Kan. 269, 15 P. 2d 421.

89

See Cooperative Milk Service, Inc. v. Hepner, 198 Md. 104, 81 A. 2d 219. Watertown Milk Producers' Coop. Association v. Van Camp Packing Co., 199 Wis. 379, 225 N. W. 209, 226 N. W. 378, 380, 77 A. L. R. 391.

Cooperatives, as well as their members, should carefully observe the contracts entered into by them. In a Michigan case in which members of an association alleged that the association had violated the terms of the marketing agreement entered into with them and had diverted money due them, it was held they were entitled to maintain an action against the association for an accounting. When a milk association entered into marketing agreements with its members, providing the basis on which the association would account to its members for their milk, the board of directors of the association could not, at least against a member who had not consented thereto, provide for a different method of accounting to members for their milk.92

Long before the advent of cooperative marketing, the courts enforced crop contracts under which the seller agreed to deliver to the buyer the crop to be grown on his farm or on certain land, so that, aside from the cooperative feature, there is nothing inherently new in the idea of a producer entering into such a contract.

Provisions are sometimes included in marketing contracts which permit members, with the approval of the association, to dispose of products covered thereby outside the association. In upholding the validity of such a provision and of the action of the association thereunder, the Supreme Court of Washington said "4_

94

it now may be considered settled law that, in the absence of arbitrary action, unfair discrimination, fraud, or something of like nature, the general control conferred upon the association by the contract will not be interfered with by the courts.

Under provisions like that under discussion, inasmuch as an association could refuse permission to a member to sell products to third persons, the permission of the association may be conditioned on the member complying with or meeting terms which it specifies.

Where a grower was under contract to market all his produce (subject to certain exceptions) through an association and on account of adverse marketing conditions the association was not able to market such produce, it was held that the association was justified in refusing to accept the produce tendered. On the other hand, it was held that the association, in refusing to permit the grower to market his produce through other channels, thereby breached its marketing agreement.95 In another case,96 involving a milk association, it was held a demand made by the association, that a member install expensive appliances on his premises for the proper cooling of milk "and imposing upon him an expense which made it impossible for him to comply with the contract" which he had entered into with the association, might relieve the member of his obligation to do so. Apparently the member had not obligated himself in his contract to install appliances of the type in question.

Pedowski v. Southern Michigan Fruit Association, 261 Mich. 271, 246 N. W. 58. 2 Rhodes v. Little Falls Dairy Company, Inc., 230 App. Div. 571, 245 N. Y. S. 432, affirmed in 256 N. Y. 559, 177 N. E. 140; Fietz v. Central Milk Producers Coop. Association, Inc., 32 N. Y. S. 2d 574.

93

Briggs v. United States, 143 U. S. 346, 12 S. Ct. 391, 36 L. Ed. 180; Butt v. Ellett, 19 Wall. 544, 86 U. S. 544, 22 L. Ed. 183; Dickey v. Waldo, 97 Mich. 255, 56 N. W. 608, 23 L. R. A. 449.

94

Olympia Milk Producers' Association v. Herman, 176 Wash. 338, 29 P. 2d 676, See also Washington Coop. Egg & Poultry Association v. Taylor, 122 Wash. 466, 210 P. 806.

679.

Guglielmelli v. Walla Walla Gardeners' Association, 157 Wash. 109, 288 P. 251, 77 A. L. R. 385.

Watertown Milk Producers Coop. Association v. Van Camp Packing Co., 199 Wis. 379, 225 N. W. 209, 226 N. W. 378, 77 A. L. R. 391.

A member of a marketing cooperative was evacuated from leased premises and executed a power of attorney which designated the association to care for growing crops during one year but did not provide for growing or marketing crops in subsequent years. It was held that he ceased to be a producer upon his evacuation and his failure to return after his release constituted a voluntary abandonment of his membership in the association.97 In a case involving a milk bargaining cooperative, the marketing agreement of the association permitted its members to market milk in a given market, provided the milk was not sold "for less than the price agreed upon. and fixed by the association as the minimum price." This contract was held valid. On the other hand where a marketing contract provided that "the association agrees to buy and the producer agrees to sell to it all milk produced or acquired by the producer" but the association in fact handled no milk, it was held that a producer was entitled to have his milk contract canceled when the association refused to receive his milk.99

98

If under a marketing agreement an association is required to consult with its members prior to the sale of their products, an association may be liable for damages if it fails to consult with them before effecting a sale.1 An association which agrees in its marketing contract to pick, harvest, and market crops, at such time as shall be mutually agreed upon, is liable in damages to the grower if it fails to do so at the time agreed upon.2

A producer, who was a member of a milk marketing association and had received from it a basic milk allotment, sold one-half of his herd of dairy cows to a person who had previously been entitled to receive from the producer one-half of the proceeds realized from the sale of milk. The producer contended, following the sale of one-half of his dairy cows, that he was entitled to have the association compute the amount to be paid him for milk delivered to the association "upon the basic average that would have been used to make such computation had the herd not been divided." It was held, however, that under its bylaws, which were specifically made a part of the marketing agreement, the association had the right to readjust the basic allotment of the producer, following the sale of one-half of the herd.3

Where cotton was received by an association to be sold only on instructions from the member in accordance with rules and regulations established by the board of directors of the association giving its members various options with respect to the sale of cotton delivered by them, it was held that the association was not guilty of conversion because it sold cotton, without instructions from the member, as the contract was construed to mean that such sales could be made provided an amount of cotton of equal grade and quality was kept on hand by the association.*

In some instances marketing contracts contain provisions for the payment of attorney fees to the association, in the event it enforces the contract through a suit. Many of the cooperative statutes specifically author

Hiroshi Kaneko v. Jones, 235 P. 2d 768 (Ore.).

Johnson v. Georgia-Carolina Retail Milk Producers Association, 182 Ga. 695, 186 S. E. 824.

90 Central Texas Dairymen's Association v. Jones, 67 S. W. 2d 896 (Tex. Civ. App.). 1 Texas Cotton Cooperative Association v. Lennox, 55 S. W. 2d 53 (Tex. Com. App.), reversing 37 S. W. 2d 331.

Winter Garden Citrus Growers' Association v. Willits, 113 Fla. 131, 151 So. 509. 3 Rhoten v. Dairy Cooperative Association, 155 Ore. 402, 64 P. 2d 523.

Alabama Farm Bureau Cotton Association v. Dale, 223 Ala. 164, 134 So. 646. See also South Carolina Cotton Growers' Coop. Association v. Weil, 220 Ala. 568, 126 So. 637.

Kansas Wheat Growers' Association v. Windhorst, 129 Kan. 528, 283 P. 638, 131 Kan. 423, 292 P. 777, 132 Kan. 21, 294 P. 928.

ize the inclusion in the bylaws of an association, or in its marketing contracts, of a stipulation for the payment of attorney fees. It has been held that a marketing contract may continue in effect after membership in an association has ceased."

An association or a member thereof may waive rights or conditions provided for in marketing contracts. For instance, where an association was authorized to sell rice, at such price as it might determine in the absence of a written notice from a member, the requirement that such a notice be in writing was waived when the member refused to approve a sale of his rice at a price submitted by the association and a sale at such price by the association was held invalid."

If marketing contracts entered into by producers with a cooperative provide that they may be assigned by the cooperative to another association, such a provision is valid, but if it is intended to have such contracts assigned care should be exercised to provide procedure for making the producers members of the assignee association. In two California cases in which marketing contracts were assigned, it was held that the producers were not members of the association to which their contracts had been assigned.

When May Cooperative Marketing Contracts Be Made?

How early in the formation of a cooperative may producers enter into marketing contracts? May producers prior to the actual incorporation of an association make valid marketing contracts with it? According to the weight of authority, producers may sign marketing contracts which constitute an offer to contract with the proposed cooperative before its incorporation, and on the acceptance of this offer by the cooperative after its incorporation a binding contract results."

A producer may withdraw his offer to contract prior to its acceptance and thus prevent a binding obligation from coming into existence, unless the language of the contract shows that each producer signs because others have done so and for the purpose of inducing still others to sign contracts. But if the language of the contract is framed along the lines indicated or contains language showing that each producer receives some consideration for keeping his offer to contract open, then according to the weight of authority the offer may not lawfully be withdrawn.10 Of course, after an association is incorporated it may freely contract.

Kinds of Cooperative Marketing Contracts

What kinds of marketing contracts may producers make with their cooperatives? Any kind that is consistent with law, but, to be more specific, the

7

See

6 Milk Producers' Association v. Webb, 97 Cal. App. 650, 275 P. 1001. Standard Rice Milling Company v. Scott, 174 Ark. 1180, 295 S. W. 401. also Yakima Fruit Growers' Association v. Hall, 180 Wash. 365, 40 P. 2d 123; California Prune & Apricot Growers Inc. v. Baker, 77 Cal. App. 393, 246 P. 1081; Producers' Fruit Company of California v. Goddard, 75 Cal. App. 737, 243 P. 686.

Sun-Maid Raisin Growers of California v. Paul A. Mosesian & Son, Inc., 90 Cal. App. 1, 265 P. 828; Sun-Maid Raisin Growers of California v. K. Arakelian, Inc., 90 Cal. App. 10, 265 P. 832.

"Hart Potato Growers' Association v. Greiner, 236 Mich. 638, 211 N. W. 45; Washington Wheat Growers' Association v. Leifer, 132 Wash. 602, 232 P. 339; Burley Tobacco Growers' Coop. Association v. Rogers, 88 Ind. App. 469, 150 N. E. 384; Jefferson County Farm Bureau v. Stewart, 235 Ill. App. 370; Texas Farm Bureau Cotton Association v. Lennox, 257 S. W. 935 (Tex. Civ. App.); Meyers v. Wells, 252 Wis. 352, 31 N. W. 2d 512; 14 C. J. 257, 17 R. C. L. 81.

10 Collins v. Morgan Grain Co., 16 F. 2d 253; Coleman Hotel Co. v. Crawford, 3 S. W. 2d 1109, 61 A. L. R. 1459 (Tex. Com. App.).