tion, for the purpose of equalizing the returns to members.137

A marketing contract may be so drawn that, even if the grower is given the option of determining when "his products" shall be sold or the price of them "fixed," the association is not required to keep on hand the specific products delivered by the member, but only an equivalent quantity of products of like grade, 138

Some associations use marketing contracts that give their members various options with respect to the pooling and selling of their commodities. 139 Sometimes a member may be given the option to have his commodities sold separately.

When an association was authorized to pool products and proceeds arising from their sale, the relation existing between the association and a member following the sale of the products was that of debtor and creditor and the officers were not liable for conversion, although a receiver was appointed for the association before settlement was made.140

Excess Advances or Payments

Cooperatives frequently make advances or partial "payments" to their members on receipt of their products. The question arises, in the event the advances or payments made exceed the amount to which the member is entitled, after deducting marketing expenses and all other authorized deductions from the sales returns, may the association recover the amount of such excess advances or payments from the member? The answer is "Yes," in most instances. The basis for the recovery is the doctrine that no man shall be allowed to enrich himself unjustly at the expense of another nor shall he be allowed to retain money that in "equity and good conscience" belongs to another. 141

The simplest case in which this question could arise would probably be that of an association that functioned on a commis

137 Stark County Milk Producers' Association v. Tabeling, 129 Ohio St. 159, 194 N. E. 16, 98 A. L. R. 1393 (1934); United States v. Rock Royal Cooperative, Inc., 307 U. S. 533 (1939).

138 Alabama Farm Bureau Cotton Association v. Dale, 223 Ala. 164, 134 So. 646 (1931).

139 Alabama Farm Bureau Cotton Association v. Dale, 223 Ala. 164, 134 So. 646 (1931).

140 Winans v. Brue (Kennewick-Richland Marketing Union), 140 Wash. 56, 248 P. 62 (1926).

141 Jackson v. Creek, 47 Ind. App. 541, 94 N.E. 416 (1911).

sion or brokerage basis; for example, a cooperative livestockselling agency. If a shipper to such an agency should draw a draft against it in connection with a shipment of livestock, and the proceeds from the sale of the livestock, after marketing expenses had been deducted, should be less than the amount of the draft, the cooperative agency could then successfully sue the shipper for the difference between the amount of the draft and the net proceeds received for the livestock.

The right of commission merchants and factors to recover the amount of excess advances made by them is settled, 142 and this right also is possessed by cooperatives that function along the same general lines. Whether the cooperative uses the purchaseand-sale or the agency type of contract, the obligation of the association should be to pay the member the amount received for his products on a pool basis or otherwise, less authorized deductions. If a member, regardless of the type of contract involved, receives more than this amount, the association may recover it. A number of cooperative associations have done so.143

In California Raisin Growers' Association v. Abbott,144 the cooperative, which functioned on an agency basis, successfully brought suit against some 600 growers on account of excess advances made to them, for the purpose of having the money distributed among members of the association who had been underpaid and among certain creditors of the association who were also parties to the suit.

The contracts of a cooperative should be so worded as to show clearly the exact method of disbursement. In a Wisconsin case145 in which the marketing contract provided for advances

142 In re Estate of Joseph P. Murphy Co., 214 Pa. 258, 63 A. 745, 5 L.R.A. (N.S.) 1147 (1906); Newburger-Morris Co. v. Talcott, 219 N.Y. 505, 114 N.E. 846, 3 A.L.R. 287 (1916).

143 "Arkansas Cotton Growers' Coop. Association v. Brown, 179 Ark. 338, 16 S. W. 2d 177 (1929); California Raisin Growers' Association v. Abbott, 160 Cal. 601, 117 P. 767 (1911); Sugar Loaf Orange Growers' Association v. Skewes, 47 Cal. App. 470, 190 P. 1076 (1920); California Bean Growers' Association v. Williams, 82 Cal. App. 434, 255 P. 751 (1927); Lake Charles Rice Milling Co. v. Pacific Rice Growers Association, 295 F. 246 (9th Cir. 1924). See also Farmers' Union Co-op Shipping Association of Natoma v. Schultze, 112 Kan. 675, 212 P. 670 (1923); Davidson v. Apple Growers' Association, 159 Ore. 473, 79 P. 2d 991 (1938); People v. Mills, 41 Cal. App. 2d 260, 106 P. 2d 216 and 628 (1940). 144 160 Cal. 601, 117 P. 767 (1911).

145 Neith Cooperative Dairy Products Association v. National Cheese

but also stipulated "that payment shall be made on the 20th day of each month for cheese shipped by the local during the month before the month which precedes the date of payment," the court held that the disbursements which were made to the local association were made as payments and not as advances and, therefore, that the association was not entitled to recover excess advances. A Minnesota case,146 although it does not cite the Wisconsin case, is essentially consistent with it in theory. That case held that a trustee in bankruptcy for a cooperative creamery could not recover from members and patrons any part of the price paid for products, even though such price may have exceeded the difference between the association's gross receipts from the marketing of such products and its operating expenses during the respective years by periods, because the contractual relationship between the creamery and its patrons was one of purchaser and seller; not that of principal and agent.

The decision in a New Jersey casel47 that an association doing business on "a cash basis" may recover overpayments for products unless the association's losses were occasioned by some negligence, fault, or misconduct of the association itself in marketing the products is also not considered inconsistent in view of the court's statement that by the terms of its charter and bylaws, "the association, in marketing the produce of the farmer members, was acting as agent of the members, and substantially as a clearinghouse

If an association has in fact agreed to pay a minimum price to its members, it has been held that no recovery may be had if the commodities fail to bring the minimum price. 148

When excess advances or payments are made by an association that functions on a pool basis, there is always the strong possibility that some members have received less than they were entitled to; whereas other members have received more than the amount to which they were entitled. This situation would pro

Producers' Federation, 217 Wis. 202, 257 N.W. 624, 98 A.L.R. 1403 (1934). See also Yakima Fruit Growers' Association v. Hall, 180 Wash. 365, 40 P. 2d 123 (1935).

146 Elliott v. Adeckes, 240 Minn. 113, 59 N.W. 2d 894 (1953).

147 Lewis v. Monmouth County Farmers' Cooperative Association, 105 N.J. Eq. 257, 147 A. 550 (1929).

148 Yakima Fruit Growers' Association v. Hall, 180 Wash. 365, 40 P. 2d 123 (1935).

vide an additional reason for allowing an association to recover excess advances. The principles under discussion are applicable, even in cases in which an association in its contract agrees to make an advance of a specified amount to growers, which amount proves to be excessive, because both parties assume that the products will bring a net amount larger than the advance. If this assumption proves to be incorrect, the necessary adjustments are in order. The association contracts to pay to its members only the net amount received by it for their products, minus authorized deductions. If more is paid, a member has received something to which he has no claim. These principles would seem to be as applicable to an unincorporated as to an incorporated association. The members of an unincorporated association have been held liable for overadvances made to them.149

Where an association borrowed money on cottonseed and made advances to its members, the court said: "if the seed is not sold, certainly the association could recover the excess advances to any one member."150

If an association makes advances to its members with borrowed money which prove to be excessive, resulting in the insolvency of the association, the creditors of the association can have the association placed in the hands of a receiver, unless the excess advances are recovered from the members. The receiver can then recover the excess advances from the members, assuming the association could recover, because such excess advances are assets of the association or obligations due it.

Where a mortgagee of rice, with knowledge of the marketing contract entered into by his mortgagor with a cooperative, availed himself of the services of the association, the trustee in bankruptcy of the association was entitled to recover overadvances made to the mortgagee. 151

A cooperative entered into a contract with a commercial firm for the sale by that firm on commission of all the wool which the members of the association consigned or delivered to the association for sale. In pursuance of this contract, the firm advanced money to the association which was advanced by the association on wool as it was received and graded. The wool sold for less than

149 Tomlin v. Petty, 244 Ky. 542, 51 S. W. 2d 663 (1932).

150 Texas Certified Cottonseed Breeders' Association v. Aldridge, 122 Tex. 464, 61 S. W. 2d 79, 84 (1933), reversing 59 S.W. 2d 320 (Tex. Civ. App. 1933). 151 Baird v. Gleason, 53 F. 2d 785 (8th Cir. 1931).

the advances that were made. In a suit to recover such overadvances, it was held that the four members of this incorporated association who had been served with process were not jointly or severally liable for all the overadvances. 152 On the other hand, in a case involving an unincorporated association in which the facts were substantially the same, it was held that the president and all of its members were liable jointly for overadvances. 153

Where an association made overadvances to a tenant who with his landlord had signed a marketing contract with the association, it was held that the landlord was liable for such overadvances, since the court regarded the landlord, under the facts in question, as a guarantor.154

Overadvances have caused the failure of some associations. Even if an association has the legal right to recover overadvances, practical considerations frequently make it undesirable to do so. Lawsuits do not encourage patronage; on the contrary, they encourage withdrawals. In some instances, the amount due an association by a member because of an overadvance is deducted from the proceeds received by the association from products delivered by him in subsequent years. Likewise, associations may offset overadvances against patronage refunds. Of course, the safest course for an association to follow is to avoid making overadvances.

Effect of Breach of Contract

What is the real character of the form of cooperative marketing contract commonly entered into by cooperatives with their members? Do such contracts constitute contracts between and among the members as well as with the association? Is a member relieved from the obligation to deliver his products to the association for marketing because the association has committed a breach of the marketing contract or has failed to abide by its bylaws?

The general rule is that "the party to a contract who commits the first breach is the wrongdoer and thereby absolves the other

152 Mandell v. Cole, 244 N. Y. 221, 155 N.E. 106 (1926). See also Barnett Bros. v. Lynn. 118 Wash. 308, 203 P. 387 (1922); Sullivan v. American Fruit Growers, Inc., 45 Idaho 153, 260 P. 1029 (1927).

153 Mandell v. Moses, 209 App. Div. 531, 205 N.Y.S. 254, affirmed in 239 N.Y. 555, 147 N.E. 192 (1924).

154 McDonald v. Gravenstein Apple Growers Coop. Association, 42 Cal. App. 2d 329, 108 P. 2d 936 (1941).