Chap. 48.—An ACT to encourage the co-operative marketing of farm products
in Virginia, to provide for and authorize the incorporation of co- operative
marketing associations or exchanges and the licensing to do business in

Virginia of similar corporations created in other States unde: similar laws.
[H B 61]

Approved February 18, 1922.

1. Be it enacted by the general assembly of Virginia, That:

Declaration of policy.—In order to promote, foster and encourage
the intelligent and orderly marketing of agricultural products
through co-operation; and to eliminate speculation and waste; and
to make the distribution of agricultural products between producer
and consumer as direct as can be efficiently done; and to stabilize
the marketing of agricultural products, this act 1s passed.

2. Definitions as used in this act:

(a) The term “agricultural products” shall include horticultural,
viticultural, forestry, dairy, live stock, poultry,.bee, and any other
farm products ;

(b) The term “member” shall include actual members of asso-
ciations without capital stock and holders of common stock in associa-
tions organized with capital stock;

(c) The term “association” means any corporation organized
under this act; and

(d) The term “person” shall include individuals, firms, partner-
ships, corporations, and associations.

Associations organized hereunder shall be deemed non-profit, in-
asmuch as they are not organized to make profits for themselves,
as such, or for their members, as such, but only for their members
as producers.

This act shall be referred to as the “co-operative marketing act.”

3. Who may organize.—Five (5) or more persons engaged in the
production of agricultural products may form a non-proft, co-opera-
tive association, with or without capital stock, under the provisions
of this act.
4. Purposes.—An association may be organized to engage in
any activity in connection with the marketing or selling of the agri-
cultural products of its members, or with the harvesting, preserving,
drying, processing, canning, packing, storing, handling, shipping, or
utilization thereof, of the manufacturing or marketing of the by-
products thereof; or in connection with the manufacturing, selling,
or supplying to its members of machinery, equipment, or supplies ;
or in the financing of the above enumerated activities ; or in any one
or more of the activities specified herein.

5. Preliminary investigation—Every group of persons contem-
plating the organization of an association under-this act is urged to
communicate with the director of the division of markets of the State
department of agriculture, and the director of extension division,
of the State college of agriculture, who will inform it whatever a
survey of the marketing conditions affecting the commodities to be
handled by the proposed association indicates regarding probable
success.

6. Powers.—Each association incorporated under this act shall
have the following powers:

(a) To engage in any activity in connection with the marketing,
selling, harvesting, preserving, drying, processing, canning, packing,
storing, handling, or utilization of any agricultural products produced
or delivered to it by its members; or the manufacturing or marketing
of the by-products thereof or in connection with the purchase, hiring,
or use by its members of supplies, machinery or equipment; or in the
financing of any such activities; or in any one or more of the activities
specified in this section. No association, however, shall handle the
agricultural products of any non-member.

(b) To borrow money and to make advances to members.

(c) To act as the agent or representative of any member or
members in any of the above mentioned activities.

(d) To purchase or otherwise acquire, and to hold, own, and ex-
ercise all rights or ownership in, and to sell, transfer, or pledge
shares of the capital stock or bonds of any corporation or association
engaged in any related activity or in the handling or marketing of
any of the products handled by the association.

(e) To establish reserves and to invest the funds thereof in
bonds or such other property as may be provided in the by laws.

(f) To buy, hold, and exercise all privileges of ownership, over
such real or personal property as may be necessary or convenient
for the conducting and operation of any of the business of the as-
sociation, or incidental thereto.

(g) To do each and everything necessary, suitable, or proper
for the accomplishment of any one of the purposes or the attain-
ment of any one or more of the objects herein enumerated; or con-
ducive to or expedient for the interests or benefit of the association:
and to contract accordingly, and in addition, to exercise and possess
all powers, rights, and privileges necessary or incidental to the pur-
poses for which the association is organized or to the activities in
52 ACTS OF ASSEMBLY. [VA.

which it is engaged; and in addition, any other rights, powers, and
privileges granted by the laws of this State to ordinary corporations,
except such as are inconsistent with the express provisions of this
act; and to do any such thing anywhere.

7. Members.—(a) Under the terms and conditions prescribed
in its by-laws, an association may admit as members, or issue common
stock, only to persons engaged in the production of the agricultural
products to be handled by or through the association, including the
lessees and tenants of land used for the production of such products
and any lessors and landlords who receive as rent part of the crop
raised on the leased premises.

(b) Ifa member of a non-stock association be other than a natu-
ral person, such member may be represented by any individual, as-
sociate, officer, or member thereof, duly authorized in writing.

(c) One association organized hereunder may become a member
or stock holder of any other association or associations, organized
hereunder.

8. Articles of incorporation.—Each association formed under this
act must prepare and file articles of incorporation, setting forth:

(a) The names of the association.

(b) The purposes for which it is formed.

(c) ‘The place where its principal office in this State is to be
located.

(d) The period, if any, limited for the duration of the association.

(e) The number of cirectors thereof, which: must not be less than
five (5), and may be any number in excess thereof, their names and
addresses and the term of office of such directors.

(f{) If organized without capital stock, whether the property
rights and interests of each member shall be equal or unequal; and
if unequal, the articles shall set forth the general rule or rules appli-
cable to all members by which the property rights and interests, re-
spectively, of each member may and shall be determined and fixed ;
and this association shall have the power to admit new membsrs
who shall be entitled to share in the property of the association with
the old members, in accordance with such gencral rule or rules. This
provision of the articles of incorporation shall not be altered, amended,
or repealed except by the written consent or the vote of two-thirds
of the members.

(¢) If organized with capital stock, the amount of such stock and
the number of such shares into which it is divided and the par value
thereof. The capital stock may be divided into common and pre-
ferred stock. If so divided, the articles of incorporation must contain
a statement of the number of shares of stock to which preference
is granted and the nature and extent of the preference and privileges
granted to each.

The articles must be subscribed by the incorporators and ac-
Kkhowledged by them before an officer authorized by the law of this
State to take and certify acknowledgment of deeds and conveyances ;
and shall be filed in accordance with the provisions of the general
corporation law of this State; and when so filed the said articles of
incorporation, or certified copies thereof, shail be received in all the
courts of this State, and other places, as prima facie evidence of the
facts contained therein, and of the due incorporation of such as-
sociation. A certified copy of the articles of incorporation and by-laws,
and amendments, shall also be filed with the director of the division
of markets, of the State department of agriculture, and the director
of extension division of the State agricultural college.

9. Amendments to articles of incorporation.—The articles of 1n-
corporation may be altered or amended at any regular meeting or
any special meeting calléd for that purpose. An amendment must be
approved by two-thirds of the directors, and then adopted by a vote
representing a majority of all the members of the association, except
as herein otherwise provided. Amendments to the articles of incor-
poration, when so adopted, shall be filed in accordance with the pro-
visions of the general corporation law of this State.

10. By-laws.—Each association incorporated under this act, must,
within sixty (60) days after its incorporation, adopt for its govern-
ment and management a code of by-laws, not inconsistent with the
powers granted by this act. A majority vote of the members or stock-
holders, or the written assent, is necessary to adopt such by-laws.
Each association under its by-laws may also provide for any or all of
the following matters:

(a) The time, place, and manner of calling and conducting its
meetings.

(b) The number of stockholders or members constituting a
quorum.

(c) The right of members or stockholders to vote by proxy or
by mail, or by both, and the conditions, manner, form, and effects of
such votes.

(d) The number of directors constituting a quorum.

(e) The qualifications, compensations, and duties and terms of
office of directors and officers ; time of their election, and the mode and
manner of giving notice thereof.

(f) Penalties for violations of the by-laws.

(g) The amount of entrance, organization, ard membership. fces,
if any, the manner and method of coll2ction of he same,'and the pur-
poses for which they may be used. an ne ‘

(h) The amount which each member Or steckhqaldér shail be re-
quired to pay annually or from time to time, if at ali. to carry on the
business of the association, the charge, if any, to be paid by each
member or stockholder for services rendered by the association tc
him, and the time of payment and the manner of collection; and the
marketing contract between the association and its members or stock-
holders which every. member or stockholder may be required to sign.

(1) The number and qualifications of members or stockholders
of the association and the conditions precedent to membership or
ownership of common stock; the method, time and manner of per-
mitting members to withdraw or the holders of common stock tc

& we
transfer their stock; the manner of assignment and transfer of the
interest Of members and of the shares of common stock; the condi-
tions upon which, and time when membership of any member shall
cease; the automatic suspension of the rights of a member when
he ceases to be eligible to membership in the association, and mode,
manner, and effect of the expulsion of a member; manner of deter-
mining the value of a member’s interest and provision for its pur-
chase by the association upon the death or withdrawal of a member
or stockholder, or upon the expulsion of a member or forfeiture of his
membership, or at the option of the association, by conclusive ap-
praisal by the board of directors. In case of the withdrawal or ex-
pulsion of a member the board of directors shall equitably and con-
clusively appraise his property interests in the association, and shall
fix the amount thereof in money, which shall be paid to him within
one year after such expulsion or withdrawal.

11. General and special meetings; how called—In its by-laws
each, association shall provide for one or more regular meetings an-
nually. The board of directors shall have the right to call a special
meeting at any time, and ten per centum of the members or stock-
holders may file a petition stating the specific business to be brought
before the association, and demand a special meeting at any time.
Such meetings must thereupon be called by the directors. Notice of all
meetings, together with a statement of the purposes thereof, shall be
mailed to each member at least ten days prior to the meeting; pro-
vided, however, that the by-laws may require instead that such notice
may be given by publication in a newspaper of general circulation,
published at the principal place of business of the association.

12. Directors; election—(a) The affairs of the association shall
be managed by a board of not less than five directors, elected by the
members or stockholders from their own number. The by-laws may
provide that ‘the territory in which the association has members shall
be divided into districts, and that the directors shall be elected accord-
ing to such districts. In such case the by-laws shall specify the number
of directors to be elected by each district, the manner and method
of reapportioning the directors and of redistricting the territory
covered py -the- association, -The by-laws may provide that primary
elections: should be held in, each district to elect the directors appor-
tioned’ té Stich districts, and the result of all such primary elections
myst :be ratified’ by-the next regular meeting of the association.

-“(b):" The by-kivs.shall provide that one or more directors shall be
appointed by the director of agricultural extension or any other public
official or commission. The directors so appointed need not be members
or stockholders of the association, but shall have the same powers
and nghts as other directors.

(c) An association may provide a fair remuneration for the time
actually spent by its officers and directors in its service. No director,
during the term of his office, shall be a party to a contract for profit
with the association differing in any way from the business relations
accorded regular members or holders of common stock of the associa-
‘ion, or to any other kind of contract differing from terms generally
current in that district. '

(d) When a vacancy on the board of directors occurs, other than
by expiration of term, the remaining members of the board, by a
majority vote, shall fill the vacancy, unless the by-laws provide for
an election of directors by district. In such case the board of direc-
tors shall immediately call a special meeting of the members or
stockholders in that district to fill the vacancy; provided, that this
subsection shall not apply to the director or directors appointed
inder the provisions of subsection (b) of this section; provided
further, that any vacancy occuring in the office of a director appointed
under subsection (b) of this section shall be filled in the same manner
as the original appointment was made.

13. Election of officers—The directors shall elect from their
number a president and one or more vice-presidents. They shall
also elect a secretary and treasurer, who need not be directors or
members, and they may combine the two latter offices and designate
the combined office as secretary-treasurer. The treasurer may be a
bank or any depository, and as such shall not be considered an officer,
but as a function of the board of directors. In such case the secretary
shall perform the usual accounting duties of the treasurer, excepting
that the funds shall be deposited only as authorized by the board of
directors.

14. Stock; membership certificates; when issued; voting; lia-
bility ; limitation on transfer of ownership—(a) When a member
of an association established without capital stock has paid his mem-
bership fee in full, he shall receive a certificate of membership.

(b) No association shall issue stock to a member until it has
been fully paid for. The promissory notes of the members may be
accepted by the association as full or partial payment. The asso-
ciation shall hold the stock as security for the payment of the note,
but such retention as security shall not affect the member’s right
to vote.

(c) Except for debts lawfwly contracted between him and the
association, no member shall be liable for the debts of the association
to an amount exceeding the sum remaining unpaid on his member-
ship fee or his subscription to the capital stock, including any unpaid
balance on any promissory notes given in payment thereof.

(d) No stockholder of a co-operative association created under
this act shall own more than one-twentieth of the common stock
of the association; and an association, in its by-laws, may limit the
amount of common stock which one member may own to any amount
less than one-twentieth of the common stock.

(e) No member or stockholder shall be entitled to more than
one vote.

(f) Any association organized with stock under this act may
issue preferred stock, with or without the right to vote, such stock
may be redeemable or retirable by the association on such terms and
conditions as may be provided for by the articles of incorporation
and printed on the face of the certificate.

(g) The by-laws shall prohibit the transfer of the common stock
of the association to persons not engaged in the production of the
agricultural products handled by the association, and such restrictions
must be printed upon every certificate of stock subject thereto.

(h) The association may at any time, except when the debts of
the association exceed fifty per centum (50%) of the assets thereof,
buy in or purchase its common stock at book value thereof as con-
clusively determined by the board of directors, and pay for it in
cash within one (1) year thereafter.

15. Removal of officer or director—Any member may bring
charges against an officer or director by filing them in writing with
the secretary of the association, together with a petition signed by
ten per centum of the members, requesting the removal of the officer
or director in question. The removal shall be voted upon at the next
regular or special meeting of the association, and by a vote of a
majority of the members, the association may remove the officer
or director and fill the vacancy. The director or officer against whom
such charges have been brought shall be informed in writing of the
charges previous to the meeting, and shall have an opportunity at
the meeting to be heard in person or by counsel, and to present
witnesses ; and the person or persons bringing the charges against him
shall have the same opportunity.

In case the by-laws provide for election of directors by districts
with primary elections in each district, then the petition for removal
of a director must be signed by twenty per centum of the members
residing in the district from which he was elected. The board of
directors must call a special meeting of the members residing in that
district to consider the removal of the director. By a vote of the
majority of the members of that district, the director in question shall
be removed from office: Provided, that this section shall not apply to
directors appointed under subsection (b) of section twelve of this act.

16. Referendum.—The by-laws may provide that upon demand
of one-third of the entire board of directors, any matter that has
been approved or passed by the board must be referred to the entire
membership or the stockholders for decision at the next special
or regular meeting; provided, however, that a special meeting may
be called for the purpose.

17. Marketing contract—(a) The association and its members
may make and execute marketing contracts, requiring the members
to sell, for any period of time, not over ten years, all or any specified
part of their agricultural products or specified commodities exclu-
sively to or through the association or any facilities to be created
by the association. The contract may provide that the association
may sell or resell the products delivered by its members, with or
without taking title thereto, and pay over to its members the resale
price, after deducting all necessary selling overhead, and other costs
and expenses, including interest or dividends on preferred stock,
not exceeding eight per centum per annum, and reserves for retiring
the stock, if any ; and other proper reserves; and interest or dividends
not exceeding eight per centum per annum upon common stock.

(b) The by-laws and the marketing contract may fix, as liqui-
dated damages, specific sums to be paid by the member or stock-
holder to the association upon the breach by him of any provision
of the marketing contract regarding the sale or delivery or with-
holding of products; and may further provide that the member will
pay all costs, premium for bonds, expenses and fees in case any
action is brought upon the contract by the association; and any
such provision shall be valid and enforceable in the courts of this
State.

(c) In the event of any such breach or threatened breach of
such merketing contract by a member, the association shall be en-
titled to an injunction to prevent the further breach of the contract,
and to a decree of specified performance thereof. Pending the ad-
judication of such an action, and upon filing a verified complaint
showing the breach or threatened breach, and upon filing a sufficient
bond, the association shall be entitled to a temporary restraining
order and preliminary injunction against the member.

18. Purchasing business of other associations, persons, firms, or
corporations; payment; stock issued—Whenever an association or-
ganized hereunder with preferred capital stock, shall purchase the
stock or any property, or any interest in any property of any person,
firm, or corporation or association, it may by agreement with the
other party or parties to the transaction discharge the obligation
so incurred, wholly or in part, by exchanging for the acquired interest
shares of its preferred capital stock to an amount which at par value
would equal a fair market value of the stock or interest so purchased,
as determined by the board of directors. In that case the transfer
to the association of the stock or interest purchased shall be equiva-
lent to payment in cash for the shares of stock issued.

19. Annual reports—Each association formed under this act
shall prepare and file annually with the State corporation commission
and with the division of markets of the State department of agricul-
ture, on forms furnished by the State corporation commission, a
report containing the names of the association, its principal office,
and a general statement of its business operations during the fiscal
year, showing the amount of capital stock paid up, and the number
of stockholders of a stock association or the number of members and
amount of membership fees received, if a non-stock association; the
total expenses of operations; the amount of its indebtedness, or
lability and its balance sheets.

20. Conflicting laws not to apply—Any provisions of law which
are in conflict with this act shall not be construed as applying to the
associations herein provided for.

21. Limitation of use of term “co-operative.”—No person, firm,
corporation, or association hereafter organized or doing business in
this State, as an agricultural producers co-operative marketing ac-
tivity, shall be entitled to use the word “co-operative” as part of |
corporate or other business name or title unless it has complied wi
the provisions of this act. Any person, firm, corporation, or associati«
now organized for or doing an agricultural producers co-operati'
marketing business in this State, and embodying the word ‘‘co-ope
ative” as part of its corporate or other business name or title, ar
which is not organized in compliance with the provisions of this ac
must, within six months from the date at which this act goes int
cflect, eliminate the word “‘co-operative” from its said corporate c
other business name or title. :

22. Interest in other corporations or associations.—An associatio
may organize, form, operate, own, control, have interest in, own stoc
of, or be a member of any other corporation or corporations, wit!
or without capital stock, and engaged in preserving, drying, process
ing, canning, packing, storing, handling, shipping, utilizing, manu.
facturing, marketing, or selling or buying of the agricultural products
handled by the association, or the by-products thereof. If such cor
porations are warehousing corporations, they may issue legal ware-
house receipts to the association, or to any other person, and such
legal warehouse receipts shall be considered as adequate collateral
to the extent of the current value of the commodity represented
thereby. In case such warehouse is licensed or licensed and bonded
under the laws of this State or the United States, its warehouse
receipt shall not be challenged or discriminated against because of
ownership or control, wholly or in part, by the association.

23. Contracts and agreement with other associations.—Any asso-
ciation may, upon resolution adopted by its board of directors enter
into all necessary and proper contracts and agreements, and make
all necessary and proper stipulations, agreements and contracts and
arrangements with any other co-operative corporation, association,
or associations, formed in this or in any other State, for the co-opera-
tive and more economical carrying on of its business, or any part
or parts thereof. Any two or more associations may, by agreement
between them, unite in employing and using or may separately employ
and use the same methods, means, and agencies for carrying on and
conducting their respective business.

Sec. 24. Associations heretofore organized may adopt the pro-
visions of this act. Any co-operative marketing association or cor-
poration organized under the general corporation laws of this State,
or under previously existing statutes of this State, may be brought
under the provisions of this act and be entitled to all the benefits
thereof, and be subject to all the provisions, restrictions and limita-
tions thereof, in the following manner:

The board of directors or other managing body of such association
or corporation shall, at a duly convened meeting; adopt a resolution
finding it advisable that such association or corporation be brought
under the provisions of this act, and calling a meeting of the stock-
holders or members to take action thereon. The meeting of the mem-
bers of the stockholders shall be held pursuant to notice given in

aadicitinarlnle OOQGLE ene
accordance with the laws of the State of Virginia, under which
such corporation then exists, and the by-laws of the corporation.
If a majority in number of the stockholders or members of such
association or corporation shall vote in favor of bringing such asso-
ciation or corporation under the provisions of this act, a certificate
thereof shall be made by the president or one of the vice-presidents,
under the seal of the corporation, attested by its secretary, and
acknowledged by them before an officer authorized by the laws of this
State to take acknowledgments of deeds, which certificate, together
with the articles of incorporation, made pursuant to section eight
of this act (except that such articles ef incorporation shall be signed
by the president, or one of the vice-presidents, under the seal of the
corporation, attested by its secretary, and acknowledged by them
before an officer authorized by the laws of this State to take acknow-
ledgments of deeds), and the receipt for the payment of any fee to
the State that may be imposed thereon by law, shall be presented to
the State corporation commission, which shall ascertain and declare
whether the applicants, by complying with the requirements of the
law, have entitled themselves to the provisions of this act, and
shall issue or refuse same accordingly.

If the same be issued, the certificate and the articles of incorpo-
ration, with the order thereon of. the commission, shall be certified
and recorded in the same manner providing for the certification and
recordation of charters granted under the general corporation laws
of this State; and as soon as the said certificate and the articles of
incorporation are lodged with the secretary of the Commonwealth,
the association or corporation shall be a corporation organized and
existing under the provisions of this act, and shall be entitled to all
the benefits and subject to all the provisions, limitations and re-
strictions thereof. The filing fee, if any, shall be the same as for
filing an amendment to articles of incorporation.

Sec. 25. Inducing breach of marketing contract; damages;
spreading false reports about the finances or management of co-
operative association, misdemeanor.—Any person who knowingly in-
duces any member or stockholder of an association or corporation
organized hereunder to breach his marketing contract with the as-
sociation or corporation shall be liable to the association or corpora-
tion for the full amount of damages sustained by it by reason of such
breach ; and any person who maliciously and knowingly spreads false
reports about the finances or management of any such association or
corporation shall be liable to the association or corporation aggrieved
in a civil suit for the actual damage which it may sustain by reason
of such false reports, and also in the penal sum of five hundred
($500.00) dollars for each such act, which may be recovered in the
same action.

26. Associations not in restraint of trade—No association
organized hereunder shall be deemed to be a combination in restraint
of trade or an illegal monopoly; or an attempt to lessen competition
or fix prices arbitrarily, nor shall the marketing contracts or agree-
ments between the association and its members, or any agreements
authorized in this act be considered illegal or in restraint of trade.

27. Constitutionality—If any section of this act shall be declared
unconstitutional for any reason, the remainder of the act shall not
be affected thereby.

28. Application of general corporation laws.—The provisions
of the general corporation laws of this State, and all powers and
rights thereunder, shall apply to the associations organized here-
under, except where such provisions are in conflict with or incon-
sistent with the express provisions of this act.

Sec. 29. Associations in other States authorized to do business
in this State—Agricultural producers and co-operative corporations
or marketing associations, organized in other States under the laws
similar to this act, shall be licensed to do business in this State when
they shall have complied with the general laws of this State, pre-
scribing the terms and conditions upon which foreign corporations
may be licensed to do business in this State; provided, however,
they shall be required to pay only the license fees and filing fees pre-
scribed by this act for corporations and associations organized here-
under.

30. Annual license fees—Each association organized hereunder
shall pay an annual license fee of ten dollars ($10) but shall be
exempt from all license taxes, or taxes upon capital stock or reserve
funds held by it.

31. Filing fees—For filing articls of incorporation, an association
organized hereunder with capital stock shall pay such fees as con-
form to the general law governing corporations, but where organized
without capital stock shall pay ten dollars ($10); and for filing an
amendment to the articles, two dollars and one-half ($2.50).

Sec. 32. Associations to which this act shall not apply.—This
act shall not apply to any corporation, association or organization
of farmers, heretofore organized, or any exchange now in existence,
organized for mutual help in the marketing of agricultural products
and not for profit, unless and until such corporation, association,
organization or exchange adopts the provisions hereof, in the manner
hereinbefore in section 24 provided.

33. Emergency existing.—An emergency existing, this act shall
be in force from its passage.