does not allow them to federate or combine to form a nonstock cooperative. The earlier nonstock cooperative statute (sec. 8499 of ch. 390) permits nonstock cooperatives to federate or combine, but only with each other. (Op. Atty. Gen. (1928) 183). Note: Concerning the federation of both stock and nonstock cooperatives under this act, see section 8512-g13.

§ 8512-g8. Contracts authorized. An agricultural association may contract with any member for his exclusive sale to or through it, of all or any part of his agricultural products or other designated commodities. Such contracts may permit the association to take and sell the property without acquiring title thereto, and pay the member the sale price less costs and expenses of selling, which may include the member's pro rata portion of the association's annual outlay for overhead, interest, preferred dividends, reserves or other specified charges. Such contracts must be for a specified time, not less than 1 year. Each contract shall fix a period of at least 10 days during each year after the first, within which either party may terminate it without affecting any liability previously accrued. (G. A. 1935, ch. 94, § 8.)

§ 8512-g9. Penalties; performance; injunction; arbitration.-Contracts permitted by section 8512-g8 may provide that the member pay the association any sum, fixed in amount or by a specified method of computation, for each violation thereof; also all the association's expenses of any suit thereon, including bond premiums and attorney's fees. All such provisions shall be enforced as written, whether at law or in equity, and shall be deemed proper measurement of actual damages, and not penalties or forfeitures.

The association may obtain specific performance of any such contract, or enjoin its threatened or continued breach, despite the adequacy of any legal or other remedy.

If the association files a verified petition, showing an actual or threatened breach of any such contract and seeking any remedy therefor, the court or any judge thereof shall, without notice or delay but on such bond as it deems proper, issue a temporary injunction against such breach or its continuance.

The parties to such contracts may agree to arbitrate any controversy subsequently arising thereunder, and fix the number of arbitrators and method of their appointment. Such agreements shall be valid and irrevocable, except on such grounds as invalidate contracts generally. If they specify no method for appointing arbitrators, or if either party fails to follow such method, or if for any reason arbitrators are not named or vacancies filled, either party may apply to the district court to designate the necessary arbitrator, who shall then act under the agreement with the same authority as if named in it. Unless otherwise agreed, there shall be but one arbitrator. (G. A. 1935, ch. 94, § 9.)

§ 8512-g10. Cooperative agreements.-Any association may make any agreement or arrangements with any other association or cooperative organization for the cooperative or more economical carrying on of any of its business. Any number of such associations or organizations may unite to employ or use, or may separately employ or use, the same methods, means, or agencies for conducting their respective businesses. (G. A. 1935, ch. 94, § 10.)

§ 8512-g11. Legality declared.-No association, contract, method, or act which complies with this chapter shall be deemed a conspiracy or

combination in restraint of trade or an illegal monopoly, or an attempt to lessen business or fix prices arbitrarily, or to accomplish any improper or illegal purpose.1 (G. A. 1935, ch. 94, § 11.)

1

Although there was no express provision in the earlier statute exempting cooperatives from the operation of the antitrust law, it was held that section 8503, giving a cooperative the power to require its members to deal exclusively through it, was not rendered null and void by a prior antitrust statute (Code of 1924, sec. 9915) prohibiting price-fixing, combinations and interference with competition. The exact relation between the two statutes was not specifically decided. (Clear Lake Coop. Live Stock Shipping Ass'n. v. Weir, 200 Iowa 1293, 206 N.W. 297 (1925).)

§ 8512-g12. Exemption of private property.-The private property of the members or stockholders shall be exempt from execution for the debts of the corporation. (G. A. 1935, ch. 94, § 12.)

§ 8512-g13. Membership; eligibility. No membership or share of common stock shall ever be issued to, or held by, any party not eligible to membership in the association under its articles. Individuals may be made eligible only if they are engaged in producing products marketed by the association, or if they customarily consume or use the supplies it renders. Farm tenants, and landlords who receive a share of agricultural products as rent, may be made eligible to membership in agricultural associations as producers. Other associations engaged in any directly or indirectly related activity may be made eligible to membership. Federated associations may be formed whose membership is restricted to cooperative associations.1 (G. A. 1935, ch. 94, § 13.)

1 See annotation to section 8512-g7.

§ 8512-g14. Membership in nonstock associations. Membership in associations without capital stock may be acquired by eligible parties in the manner provided in the articles, which shall specify the rights of members, the issuing price of membership, and what, if any, fixed dividends accrue thereon. If the articles so provide, membership shall be of two classes, voting and nonvoting. Voting members shall be agricultural producers, and all other members shall be nonvoting members. Nonvoting members shall have all the rights of membership except the right to vote. (G. A. 1935, ch. 94, § 14.)

§ 8512-g15. Contents of certificates.-The association shall issue certificates of membership or stock, each of which state the fixed dividends, if any, and the restrictions or limitations upon its ownership, voting, transfer, redemption, or cancelation (G. A. 1935, ch. 94, § 15.)

§ 8512-g16. Subscriptions; issuing certificates.—If the articles permit, any eligible subscriber for common stock or membership may vote and be treated as a member, after making part payment therefor in cash and giving his note for the balance. Such subscriptions may be forfeited as provided in section 8512-g32. No stock or membership certificate shall be issued until fully paid for. No subscriber shall hold office until his certificate has been issued. (G. A. 1935, ch. 94, § 16.)

§ 8512-g17. Transfer of stock or membership.-No common stock shall be transferable, unless the articles expressly provide for transfer to others eligible for membership. Such provision may require that

the transfer be preceded by an offer to the association, or be otherwise restricted. No nonstock membership shall be transferable, and all certificates thereof shall be surrendered to the association on the member's voluntary withdrawal. (G. A. 1935, ch. 94, § 17.)

§ 8512-g18. Expulsion of members. The directors may expel any member if he has attempted to transfer his membership or stock in violation of its terms, or has wilfully violated any article or bylaw which provides for such penalty. (G. A. 1935, ch. 94, § 18.)

§ 8512-g19. Cancelation of membership or stock. If a common stockholder or member dies, or becomes ineligible, or is expelled, his stock or membership shall forthwith be canceled. In cases of expulsion the association shall pay him its value as shown by the books on the date of cancelation, but not more than its original issuing price, within 60 days thereafter. In cases of death or ineligibility, it shall pay such value to him or his personal representative within 2 years thereafter, without interest. (G. A. 1935, ch. 94, § 19.)

§ 8512-g20. Withdrawal of members. The articles may permit and regulate voluntary withdrawal of members and the resulting cancelation of their common stock and memberships. (G. A. 1935, ch. 94, § 20.)

§ 8512-g21. Obligations not affected. The death, expulsion, or withdrawal of a member shall not impair his contracts, debts, or obligations to the association. (G. A. 1935, ch. 94, § 21.)

§ 8512-g22. Capital stock.-Associations with capital stock may divide the shares into common and preferred stock. Par value stock shall not be issued for less than par. The general corporation laws shall govern the consideration for which no-par stock is issued. If the articles so provide, common stock may be issued in two classes, voting and nonvoting. Voting stock shall be issued to all agricultural producers and nonvoting stock to all other members. Nonvoting stock shall have all privileges of membership except the right to vote. Preferred stock held by nonmembers shall not exceed in amount that held by members. (G. A. 1935, ch. 94, § 22.)

§ 8512-g23. Dividends on common stock.-Unless the articles provide that common stock shall receive no dividends, the directors may declare noncumulative dividends thereon at such rate as they may fix, not exceeding 8 percent per annum. (G. A. 1935, ch. 94, § 23.)

§ 8512-g24. Preferred stock.-Preferred stock shall bear cumulative or noncumulative dividends as fixed by the articles, not exceeding 8 percent per annum. It shall have no vote. It shall be issued and be transferable without regard to eligibility or membership, and be redeemable on terms specified in the articles. The directors shall determine the time and amount of its issue. (G. A. 1935, ch. 94, § 24.)

§8512-g25. Issuing preferred stock in purchases. An association may discharge all or any part of obligations incurred in purchasing any business, property or stock, or an interest therein, by issuing its authorized preferred stock in an amount not exceeding the fair market value of the thing purchased. Issuance of such stock in an amount exceeding $25,000 shall be governed by the law as found in sections 8413 and 8414. Issuance of such stock in amounts smaller than $25,000 shall be upon the fair market value of the property purchased, as determined through an appraisal made by the directors or

a competent appraiser employed by the directors. Within 30 days after such issue, the association shall file with the secretary of state a verified report containing an accurate detailed description of the thing purchased, the valuation thereof by the directors, and the amount of preferred stock thus issued. Such preferred stock shall be valid as though paid for in cash. (G. A. 1935, ch. 94, § 25.)

§ 8512-g26. Service charges.-Unless the articles otherwise provide, the bylaws or the directors may prescribe charges to be made to each member for services rendered him or upon products bought from or sold to him, and the time and manner of their collection. (G. A. 1935, ch. 94, § 26.)

§ 8512-g27. Meetings.-Regular meetings of members shall be held at least once each year, the first of which shall be on the date specified in its articles. Unless otherwise provided in the articles or bylaws, subsequent meetings shall be on the same date in each succeeding year.

Unless otherwise provided in the articles, the directors may call special meetings of members, and must do so upon written demand of 20 percent of the members.

Unless he waives it in writing, each member shall have 10 days' written notice of the time and place of all meetings, and of the purpose of all special meetings. Such notice shall be given to him in person or by mail directed to his address as shown on the books of the association, or if the articles so provide, by publication in a regular publication of general circulation among its members, or a newspaper of general circulation published at the principal place of business of the association. (G. A. 1935, ch. 94, § 27.)

§ 8512-g28. Number of votes.-No member may own more than one membership or share of common stock. Each voting member shall be entitled to one vote and no more at all corporate meetings. (G. A. 1935, ch. 94, § 28.)

§ 8512-g29. Manner of voting.-Votes shall be cast in person, and not by proxy. The vote of a member association shall be cast only by its representative duly authorized in writing. If the articles or bylaws permit, an absent member may cast his signed written vote upon any proposition of which he has been previously notified in writing, and of which a copy accompanies his vote. (G. A. 1935, ch. 94, § 29.)

§ 8512-g30. Distribution of earnings. The directors shall annually dispose of the earnings of the association in excess of its operating expenses as follows:

To provide a reasonable reserve for depreciation, obsolescence, bad debts, or contingent losses or expenses.

At least 10 percent of the remaining earnings must be added to surplus until surplus equals either 30 percent of the total of all capital paid in for stock or memberships, plus all unpaid patronage dividends, plus certificates of indebtedness payable upon liquidation, or $1,000, whichever is greater. No additions shall be made to surplus whenever it exceeds either 50 percent of such total, or $1,000, whichever is greater.1

Not less than 1 percent nor more than 5 percent of such earnings in excess of reserves may be placed in an educational fund, to be

used as the directors deem suitable for teaching or promoting cooperation.

After the foregoing, to pay fixed dividends on stock or member

ships, if any.

All remaining net earnings shall be allocated to a revolving fund and shall be credited to the account of each member including subscribers described in section 8512-g16 ratably in proportion to the business he has done with the association during such year. Such credits are herein referred to as "deferred patronage dividends.” 2 (G. A. 1935, ch. 94, § 30.)

'The reserve fund provided for in section 8507 of the earlier statute (similar to the surplus fund provided for here) cannot be used as capital in the business. (Op. Atty. Gen. (1928) 298.)

2 The Board of Tax Appeals has held that a cooperative creamery and purchasing association organized under the earlier statute, whose bylaws obligated it to pay patronage dividends when possible, may deduct the amount of such due dividends in computing its Federal income tax, even though the dividends had not actually been paid during that taxable year. (Anamosa Farmers' Creamery Co. v. Commissioner of Internal Revenue, 13 B. T. A. 907 (1928).) Note: The earlier statute did not embody the deferred maturity directors shall provided for here. It merely provided: educational fund

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set aside reserve fund the remainder to be returned to the members as a patronage dividend." The distribution of patronage dividends under the earlier statute is mandatory upon the directors rather than discretionary, though members may waive their right to such dividends, which may then be left in the capital and surplus fund to be used in the business. (Op. Atty. Gen. (1928) 298.) The lack of specific provision for the payment of dividends in stock, and the usual interpretation of the word "dividend" by courts, prevent cooperatives from paying dividends in that form. (Op. Atty. Gen. (1925) 375.)

§ 8512-g31. Control of allocation by members. The members may at any meeting control the amount to be allocated to surplus or educational fund, within the limits specified in section 8512-g30, or the amount to be allocated to reserves. (G. A. 1935, ch. 94, § 31.)

§ 8512-g32. Patronage dividends of subscribers.-Patronage dividends to subscribers whose stock or membership is not fully paid in cash shall be applied toward such payment until it is completed. If the articles or bylaws so provide, subscriptions not fully paid within 2 years may be canceled and all payments or patronage dividends thereon forfeited. (G. A. 1935, ch. 94, § 32.)

§ 8512-g33. Use of revolving fund. The directors may use the revolving fund to pay the obligations or add to the capital of the association or retire its preferred stock. In such event the deferred patronage dividends credited to members shall constitute a charge on the revolving fund and future additions thereto, and on the corporate assets, subordinate to creditors and preferred stockholders then or thereafter existing. Deferred patronage dividends for any year shall have priority over those for any subsequent year. (G. A. 1935, ch. 94, $33.)

§ 8512-g34. Patronage dividend certificates. If its articles or bylaws so provide, an association may issue transferable or nontransferable certificates for deferred patronage dividends. (G. A. 1935, ch. 94, § 34.)

§ 8512-g35. Time of payment.-Credits or certificates referred to in sections 8512-g33 and 8512-g34 shall not mature until the dissolu