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2. The bylaws or the marketing contract may fix, as liquidated damages, which shall not be regarded as penalties, specific sums to be paid by the members to the association upon the breach of any provision of the marketing contract regarding the sale or delivery or withholding of products; and may further provide that the member who breaks his contract will pay all costs, premiums for bonds, expenses and fees, in case any action is brought upon the contract by the association.

3. In the event of any breach or threatened breach of such marketing contract by a member, the association shall be entitled to an injunction to prevent the further breach of the contract and to a decree of specific performance thereof. Pending the adjudication of such an action and upon filing a verfied complaint showing the breach or threatened breach, and upon filing a bond in such form and amount as may be approved by the court, the association shall be entitled to a temporary restraining order and preliminary injunction against the member. (L. 1932, ch. 383.)

§ 96. Foreign corporations. No foreign corporation shall do business as a cooperative corporation in this State unless it shall have been organized under, and is doing business in accordance with the cooperative laws of the State from which it received its charter, nor unless its business within this State is conducted in accordance with section 85. (L. 1926, ch. 231; L. 1932, ch. 383.)

§ 97. [Renumbered as § 99, by L. 1932, ch. 383.]

§ 98. Credit corporations.-No loan shall be made for more than 3 years nor for other than agricultural, dairy, or horticultural purposes of the borrower. In all cases there shall be a written statement by the borrower in the note, collateral agreement, if any, or signed application for the loan to the effect that the loan will be used only for such purposes; and such statement may be relied on by the credit corporation. Such notes, with the guaranty or endorsement of credit corporations organized under this article may be rediscounted with a Federal intermediate credit bank or pledged as security for loans by that bank. A cooperative credit corporation organized under this article may invest its capital funds in bonds or obligations of the United States or of any State or municipality and such other bonds as are authorized for investment by a savings bank, or Federal intermediate credit bank obligations, and may deposit or hypothecate such securities with a Federal intermediate credit bank as security for notes discounted by it. (L. 1,932, ch. 383.) § 99. Violation.-It shall be unlawful for any corporation formed under the provisions of this article to carry on business contrary to or outside of the purpose for which it is formed, or to conduct business under this article otherwise than as a cooperative corporation. Any person or corporation violating any of the provisions of this article shall be guilty of a misdemeanor, punishable by a fine of not more than $500, or by imprisonment for not more than 1 year, or by both. (Formerly § 97 of L. 1926, ch. 231; re-en. as § 99 by L. 1932, ch. 383.)

ARTICLE 8

[Article 8 deals with cooperative marketing corporations and has, therefore, been omitted.]

ARTICLE 8-A-COOPERATIVE AGENCY CORPORATIONS; CREDIT

CORPORATIONS

§ 131. Purposes for which corporation may be formed.-(a) A cooperative corporation may be created under this article to act as an agency for or subsidiary of or to assist cooperative corporations formed under the provisions of articles 4, 7, or 8 of this chapter for the purpose of manufacturing, distributing, warehousing, handling, processing, canning, packing, grading, shipping, marketing, or otherwise utilizing products of such other cooperative corporations and of assisting such other cooperative corporations to carry on the business and purposes for which they are organized; the selling or supplying to its members or stockholders or corporations in which it is interested, of machinery, equipment, or supplies; the financing of the above cooperatives; to act as a holding corporation of the properties of such cooperative corporations; or any one or more of said

purposes.

(b) A cooperative credit corporation may be organized under this article solely for the purpose of acting as an agency to enable cooperative corporations, organized or operating under this chapter and the members or stockholders thereof, to obtain loans from the Federal intermediate credit bank under and pursuant to an act of Congress approved March 4, 1923, known as the Agricultural Credits Act of 1923, same being chapter 8 of title 12 of the code of laws of the United States as adopted by Congress June 30, 1926, and amendments thereto. A cooperative credit corporation shall not have power to engage in any of the activities set forth in paragraph (a) hereof. (L. 1930, ch. 204; L. 1932, ch. 239.)

§ 132. Incorporation.-Five or more persons who are members of any of the cooperative corporations organized or operating under the provisions of articles 4, 7 and 8 of this chapter may form a corporation under this article by making, acknowledging and filing a certificate pursuant to section 10 of this chapter. (L. 1930, ch. 204.) § 133. Stock and stockholders.-A corporation organized under the provisions of this article may issue common and preferred stock. All the common stock must be owned by one or more cooperative corporations organized or operating under the provisions of this chapter. Preferred stock may be sold to any person, firm, or corporation and may be redeemable or retirable by the corporation on such terms and conditions as may be provided for by the certificate of incorporation and printed on the stock certificate.

At any time as specified in the bylaws, except when its capital is impaired thereby and the debts of the corporation exceed 50 per centum of the assets thereof, the corporation may purchase its preferred stock at the book value thereof as conclusively determined by the board of directors and pay for the same in cash within 1 year thereafter.

Preferred stock shall not be entitled to dividends in excess of 7 per centum per annum except that such stock may be cumulative as to dividends and preferred on distribution of assets. (L. 1930, ch. 204.) § 134. Directors; officers.-Every such corporation shall be managed by a board of not less than three directors. The directors shall be members or stockholders of one or more of the cooperative corporations which own the common stock. Cooperative corporations own

ing stock may vote such stock at corporate meetings of corporations organized under this article by proxy, and directors shall hold office until their successors are elected and shall enter upon the discharge of their duties. Such directors shall be elected for such term as the bylaws may prescribe. The officers of every such corporation shall be a president, one or more vice presidents, a secretary, and a treasurer, who shall be elected annually by the directors. The president and each vice president must be a director. The offices of secretary and treasurer may be combined and the holder of either or both such offices may or may not be a director. Any director or officer for cause may be removed at any regular or special meeting duly called by vote of a majority of the stock and the vacancy may be filled. (L. 1930, ch. 204.)

2 See the annotation to section 53.

§ 135. Purchase of stock, assets or business of other corporations. Such a corporation may purchase stock or property or any interest in any property of any person, firm or corporation, or association and may discharge the obligations 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 the fair market value of the stock or interest so purchased as determined by the board of directors.

A corporation organized under the provisions of this article shall have the right to hold, own, and exercise all rights of ownership in, and to sell, transfer or pledge shares of capital stock or bonds of any corporation engaged in any related activity to the purposes and operations of said corporation, including but not thereby limiting such powers, the warehousing, handling or marketing, in whole or in part of any of the products handled by the corporation. (L. 1930, ch. 204.)

§ 136. (Repealed by L. 1932, ch. 383.)

§ 137. Credit corporations. Any credit corporation organized under the provisions of this article may make loans to members or stockholders of a cooperative corporation which is the owner in whole or in part of the stock of the credit corporation, and no loans shall be made except to such person or to such cooperative corporations. No loan shall be made for more than 3 years, nor for other than agricultural, dairy, or horticultural purposes of the borrower, and in all cases there shall be a written statement by the borrower in the note, collateral agreement, if any, or signed application for the loan to the effect that the loan will be used only for such purposes; and such statement may be relied upon by the credit corporation. A credit corporation organized under this article may discount or pledge such notes with a Federal intermediate credit bank with its guaranty or endorsement. A credit corporation may invest its capital funds in bonds or obligations of the United States or of any State or municipality, or such other bonds as are authorized for investment by a savings bank or in Federal intermediate credit bank obligations, and may deposit or hypothecate such securities with a Federal intermediate credit bank as security for notes discounted by it. (L. 1932, ch. 239.)

§ 138.1 Reincorporation of other corporations.-Any business corporation organized under the laws of the State of New York, all of the capital stock of which is owned by one or more of the cooperative corporations organized or operating under the provisions of this chapter may file a certificate which shall be in the form prescribed by section 10 of this chapter, except that subdivisions 8 and 9 of such section shall not apply. The certificate shall be signed by an officer of the corporation thereunto duly authorized by its board of direc tors. Thereupon such corporations shall be authorized to operate under the provisions of this article for the purposes and with all the powers and subject to all the restrictions, limitations and obligations of a corporation organized under this chapter and pursuant to the provisions of this article. The name of the corporation as set forth in such certificate shall include the word "cooperative." (L. 1932, ch. 239.)

'There is no section 139. of later additions to the law.

The numbering is a matter of convenience in case

ARTICLE 9.-LAWS REPEALED; SAVING CLAUSE; EFFECT

§ 140. Laws repealed.-Article 12, sections 120 to 134, both inclusive, of chapter 61 of the laws of 1909, entitled, "An act relating to stock corporations constituting chapter 59 of the consolidated laws", as amended by chapter 787 of the laws of 1923; article 13-a, sections 198 to 209–i, both inclusive, as added by chapter 655 of the laws of 1918, and article 21, sections 310 to 330, both inclusive, as added by chapter 166 of the laws of 1920, of chapter 40 of the laws of 1909, entitled, "An act relating to membership corporations, constituting chapter 35 of the consolidated laws"; and chapter 616 of the laws of 1924, entitled "An act authorizing the formation of nonprofit cooperative associations, with or without capital stock to promote the orderly marketing of the agricultural products through cooperation, and defining their powers and duties", and all acts amendatory thereof, are hereby repealed. (L. 1926, ch. 231.)

§ 141. Saving clause. Any action or proceeding begun before this chapter takes effect, under or pursuant to any section, article, or act repealed by this chapter may be conducted and completed in the manner heretofore provided by the section, article, or act repealed. (L. 1926, ch. 231.)

§ 142. Existing cooperative corporations or associations. A cooperative corporation or association heretofore formed under or subject to a law repealed by this chapter or under article 3 of the business corporations law heretofore repealed shall be subject to the provisions of this chapter as if incorporated hereunder, under the appropriate article or articles, and the provisions of the appropriate article or articles shall apply thereto, and such corporation or association may continue its corporate existence and name, subject to such provisions. (L. 1926, ch. 231.)

NORTH CAROLINA

Code of 1935

§ 5242. Nature of the association.1-Any number of persons, not less than five, may associate themselves as a mutual association, society, company, or exchange, for the purpose of conducting any agricultural, horticultural, forestry, dairy, mercantile, mining, manufacturing, telephone, electric light, power, storage, refrigeration, flume, irrigation, water, sewerage, or mechanical business on the mutual plan. For the purposes of this subchapter, the words association, company, corporation, exchange, society, or union shall be construed to mean the same; Provided, That the membership of agricultural organizations incorporated under this subchapter shall consist of producers of agricultural products, handled by such organizations or by organizations owned and controlled by such producers. (L. 1915, ch. 144, § 1; L. 1925, ch. 179, §§ 1, 2; L. 1931, ch. 447.)

1

1A cooperative association organized under the cooperative law of 1915 (L. 1915, ch. 144) cannot become an ordinary business corporation merely by amending its charter. (Op. Atty. Gen. (1918-20) 64.)

§ 5243. Use of term restricted. No corporation or association hereafter organized for doing business for profit in this State shall be entitled to use the term "mutual" as part of its corporate or other business name or title, unless it has complied with the provisions of this subchapter; and any corporation or association violating the provisions of this section may be enjoined from doing business under such name at the instance of any shareholder of any association. legally organized under this subchapter. (L. 1915, ch. 144, § 18; L. 1925, ch. 179, §1.)

'Prior to 1925 the word "cooperative" was used instead of "mutual." At that time it was declared in Op. Atty. Gen. (1921-22) 69, that it was the intent of the act that the word "cooperative" should appear in the title of all cooperative associations. However, by chapter 179, P. L. 1925, this and the other sections were amended by striking out the word "cooperative" whereever it occurred and inserting in lieu thereof the word "mutual." The use of the word "cooperative" is restricted by the North Carolina Cooperative Marketing Act (Code 1935, sec. 5259k) to cooperatives organized under its provisions. The section provides: "No person, firm, or corporation or association hereafter organized or doing business in this State shall be entitled to use the word 'cooperative' as part of its corporate or other business name or title unless it has complied with the provisions of this subchapter. Any person, firm, corporation or association now organized and existing or doing business in this State, and embodying the word 'cooperative' as part of its corporate or other business name or title, and which is not organized in compliance with the provisions of this subchapter, must, within 6 months from the date at which this act goes into effect, eliminate the word 'cooperative' from its said corporate or other business name or title."

§ 5244. Articles of agreement. The persons desiring to organize such association shall sign and acknowledge written articles which shall contain the name of the association and the names and residences of the persons forming the same. Such articles shall also contain a

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