conditions, rules, and regulations under and by which the shareholders or employees, or cooperating nonshareholders may participate in the earnings of the association.

Unless and until otherwise ordered by the association at any general or special meeting the board of directors shall annually apportion the net earnings by first paying dividends on the paid-up capital stock not exceeding 8 per centum per annum, and by then setting aside not less than 10 per centum of the remaining net earnings for a reserve fund until an amount has accumulated in said reserve fund equal to 30 per centum of the paid-up capital stock, and 5 per centum of the then remaining net earnings for an educational fund to be used in teaching cooperation; and shall apportion the remainder of said net profits by uniform dividends to its shareholders upon the amount of purchases of said association from its shareholders, and sales by the association to its shareholders or for their account, and upon the wages and salaries of employees, and onehalf of such uniform dividend to cooperating nonshareholders unless otherwise provided by the bylaws of said association as follows: If the association be engaged in the mercantile business, then to the extent the business is so conducted, dividends, except as hereinafter otherwise provided, shall be paid to the cooperating nonshareholders and upon the amount of their purchases, and not upon the purchases made by the said association. If the association be engaged to any extent in the purchase and sale of products of farm or orchard or as selling agent of such products, or if the association be a productive association, such as a creamery, cannery, or factory, and the like, dividends to such extent shall be paid to the persons so furnishing such products and upon the amounts so furnished, and not upon sales by the association.

(e) Any such association may, either in its charter or bylaws, provide and require that no share of its stock shall be issued to or voted by any person not a member of a nonstock corporation or nonstock corporations named or designated in such charter or bylaws, or may in like manner provide that shares of its stock may be issued to or owned by persons not members of such designated nonstock corporation or nonstock corporations, but that when so owned such stock shall have no voting power.

(f) No corporation or association hereafter organized or doing business for profit in this State shall be entitled to use the term "cooperative" as part of its corporate or other business name or title, unless it has complied with the provisions of this section; 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 stockholder of any association legally organized hereunder.

(g) Any cooperative marketing association or corporation incorporated under chapter 48, acts of general assembly 1922,2 or under the general corporation laws 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 provisions, restrictions, and limitations thereof by amending their articles of association or incorporation in the same manner as set out in section 24, chapter 48, acts of general assembly 1922, in cases of such associations and corporations existing under chapter 48, acts of assembly 1922, either by original incorporations

or by amendment, and in cases of such associations and corporations existing under the general corporation laws by amending according to the provisions of section 3780, Code of Virginia 1919; but when such amendment is had in the case of a corporation or association existing under provisions of chapter 48, acts of assembly 1922, all special privileges under chapter 48, acts of assembly 1922, are thereby surrendered. (1914, p. 627; 1920, p. 568; 1928, pp. 596-598.)

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See section 1265 (21) of the Cooperative Marketing Act (Code 1936, secs. 1265 (1)-1265 (37)) which provides: "No person, firm, corporation, or association, unless it is organized under, or has adopted, the provisions of this act, shall use as its corporate or trade name or title, or as a part thereof, the word 'cooperative'; neither shall any foreign corporation having as its corporate or trade name or title, or as a part thereof, the word 'cooperative', be licensed to do business in this State, unless such association is organized under an act of a foreign State, enacted therein for the purposes similar to those of this act. This section shall not apply to any person, firm, corporation, or association having the word 'cooperative' as its corporate or trade name, or title, or as part thereof, lawfully doing business in this State prior to the 1st day of March 1930. Any one violating the provisions of this section shall be subject to a finė not exceeding $50. For the purpose of this act each day's violation may be considered a separate offense." (Adopted, Acts 1922, p. 50.) 'The Cooperative Marketing Act.

§ 3855a. Cooperative associations may give deeds of trust or chattel mortgages on rotating stocks for certain purpose.-Any cooperative association or corporation organized under the laws of this State, or under the laws of the United States, or qualifying as a cooperative association under the laws of the United States, may give as security for any loan or loans obtained from any bank for cooperatives organized under the act of Congress approved June 16, 1933, known as the Farm Credit Act of 1933, a chattel mortgage or deed of trust covering stocks of goods or other things in bulk, but changing in specifics, in which case the lien of such mortgage or deed of trust shall be lost as to all articles disposed of by the mortgagor up to the time of foreclosure, but shall attach to the articles purchased to supply their places: Provided, however, No stock of goods shall be pledged by a cooperative association unless such stock has been fully paid for and is owned by the association without incumbrance at the time it is so pledged. (1934, p. 311.)

WASHINGTON

Remington's Revised Statutes 1932

COOPERATIVE ASSOCIATIONS

§ 3904. Cooperative associations; who may organize; purposes.-Any number of persons, not less than five, may associate themselves together as a cooperative association, society, company, or exchange for the transaction of any lawful business on the cooperative plan. For the purposes of this act the words "association", "company", "exchange", "society", or "union" shall be construed the same. 1913, p. 50, § 1.)

(L.

§ 3905. Articles; contents.-Every association formed under this act shall prepare articles of association in writing, which shall set forth: 1. The name of the association.

2. The purpose for which it was formed.

3. Its principal place of business.

4. The term for which it is to exist, which shall not exceed 50 years. 5. The amount of capital stock, the number of shares and the par value of each share.1 (L. 1913, p. 50, § 2.)

'Although nothing in this section prohibits the issuance of preferred stock, the language of section 3916 is inconsistent with such power. (1927-28) 40.)

(Op. Atty. Gen.

§ 3906. Articles; verification; filing; when legally organized.—The original articles of associations organized under this act or a true copy thereof verified to be such by the affidavits of two of the signers thereof, shall be filed with the secretary of state. Whenever a certified copy of the same accompanied by a certificate of the secretary of state showing that the same has been filed in his office, is filed with the county auditor of the county in which is located the principal place of business of said association, the said association shall be deemed to be legally organized. (L. 1913, p. 50, § 3.)

§ 3907. Filing fees. For filing articles of association organized under this act there shall be paid to the secretary of state the sum of $25 and for the filing of an amendment of such articles there shall be paid the sum of $10. For recording such articles of association or an amendment thereto, the county auditor shall charge the sum of 15 cents for each 100 words thereof, and 15 cents for filing and indexing the same. Associations organized under this act shall not be subject to any corporation license fees excepting the fees hereinabove enumerated. (L. 1913, p. 51, § 4; L. 1925, Ex. Sess., p. 149, § 1.)

§ 3908. Trustees; election; duties; election of officers.-Every such association shall be managed by a board of not less than three trustees. The trustees shall be elected by and from the stockholders of the association at such time and for such term of office as the bylaws may prescribe, and shall hold office during the term for which they

were elected and until their successors are elected and qualified; but a majority of the stockholders shall have the power at any regular or special meeting, legally called for that purpose to remove any trustee or officer for cause, and fill the vacancy. The officers of every such association shall be a president, one or more vice presidents, a secretary, and a treasurer who shall be elected annually by the trustees. Each of said officers must be a member of the association. All elections shall be by ballot. (L. 1913, p. 51, § 5.)

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§ 3909. Amendments; how adopted; recording.-The articles of association may be amended by a majority vote of the stockholders at any regular stockholders' meeting or at any special stockholders' meeting called for that purpose, on 20 days' written notice being given to the stockholders. Said power to amend shall include the power to increase or diminish the amount of capital stock and the number of shares: Provided, The amount of the capital stock shall not be diminished below the amount of the paid-up capital stock at the time such amendment is adopted. Within 30 days after the adoption of an amendment to its articles of association, the association shall cause a copy of such amendment adopted to be recorded in the affice of the secretary of state and of the county auditor of the county where its principal place of business is located. (L. 1913, p. 51, § 6.)

1See section 6 of the State constitution which provides: "Corporations shall not issue stock, except to bona fide subscribers therefor, or their assignees; nor shall any corporation issue any bond or other obligation for the payment of money, except for money or property received or labor done. The stock of corporations shall not be increased, except in pursuance of a general law, nor shall any law authorize the increase of stock, without the consent of the person or persons holding the larger amount in value of the stock, nor without due notice of the proposed increase having been previously given in such manner as may be prescribed by law. All fictitious increase of stock or indebtedness shall be void."

§ 3910. Business authorized to be conducted; lawful business defined.An association created under this act, being for mutual welfare, the words "lawful business" shall extend to every kind of lawful effort for business, agricultural, dairy, mercantile, mining, manufacturing or mechanical business, on the cooperative plan. (L. 1913, p. 52, § 7.) § 3911. Stock; issues; limit; vote. No stockholder in any such association shall own more than one-fifth of the stock of the association. For the purpose of equalizing the stock ownership of its stockholders any such association may from time to time purchase the stock in whole or in part of any stockholder. Such association may also purchase the stock of any stockholder who ceases to produce for the association any of the commodities in which it deals. Payment for any stock purchased may be made out of any available funds whether surplus or not, but such association shall in no event pay more than par for such stock.

No stockholder at any meeting shall be entitled to more than one vote.1 (L. 1913, p. 52, § 8; L. 1925, Ex. Sess., p. 149, § 2.)

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See the constitutional provision as to voting an increase in stock quoted in annotation to section 3909.

§ 3912. Subscription of stock in other associations.-At any regular meeting or any regularly called special meeting at which at least a

majority of all the stockholders shall be present, or represented, an association organized under this act may by a majority vote of the stockholders present or represented, subscribe for shares and invest its reserve fund or any part thereof in the capital stock of any other cooperative association. (L. 1913, p. 52, § 9.)

§ 3913. Purchasing business of other associations; payment; stock issued. Whenever an association organized under this act shall purchase any stock of another association or the interest or any part thereof of any person or persons, firm, or partnership engaged in any lawful business as defined in section 3910, it may pay for the same in whole or in part by issuing to the selling association or person, firm or partnership, shares of its capital stock to an amount which at par value, would equal the fair market value of the stock or interest so purchased and in such case the transfer to the association of such stock or interest so purchased at such valuation shall be equivalent to payment in cash for the shares of stock so issued. (L. 1913, p. 52, § 10.)

§ 3914. Certificates of stock; when held in trust; issued.-In case the cash value of such stock or interest so purchased exceeds one-fifth of the par value of the purchasing association, the trustees of the purchasing association are authorized to hold the shares in excess of one-fifth of the par value of the purchasing association, in trust for the vendor and dispose of the same to such person or persons and within such time as may be mutually agreed upon by the parties in interest, and shall pay the proceeds thereof as currently received to the former owners thereof. Certificates of stock shall not be issued to any subscriber until fully paid for, but the bylaws of the association may allow subscribers to stock to vote as stockholders: Provided, That one-fifth of the stock subscribed for has been paid for by such subscriber. (L. 1913, p. 53 §11.)

§3915. Stockholders may vote by mail.-At any regular called general, or special meeting of the stockholders, a written vote received by mail from any absent stockholder and signed by him may be read in such meeting and shall be equivalent to a vote of each of the stockholders so signing: Provided, He has been previously notified in writing of the exact motion or resolution upon which such vote is taken and a copy of same is forwarded with and attached to the vote so mailed by him. (L. 1913, p. 53, § 12.)

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§ 3916. Earnings; apportionment. The trustees shall apportion the net earnings by first paying dividends on the paid-up capital stock 1 at a rate not exceeding 8 percent per annum; then setting aside not less than 10 percent nor more than 25 percent of the remainder annually of the net profits for a reserve fund and the remainder of said net profits by dividends proportioned upon the amount of business transacted with said association and proportioned upon the wages and salaries of employees: Provided, That nonshareholders shall only be entitled to one-half as much dividends from said net profits as shareholders: And provided further, That no dividend shall be paid out or declared on any business transacted with the association by any person, persons, firm, or corporation engaged in the buying, selling, or handling of agricultural products for profit or on any sale to said association by any person or persons, firm, or corporation engaged as a wholesaler or jobber in the distribution of