although the rights of creditors were not involved, on the liquidation of the company, the purchaser was held liable for the unpaid balance on the note, notwithstanding that it was originally understood that the note would be paid out of dividends. 20

A person gave an unconditional promissory note for stock in a cooperative. The fact that it was represented to him at the time he signed the note that it would be paid by applying 8 percent of the amount of purchases made by him from the association was held to be immaterial and did not operate to relieve him from liability on the note.21

Normally, if an association borrowed money on its own note, which was signed on its behalf by its proper officers, the officers would not be personally liable for the amount involved. However, in a Louisiana case, a cooperative executed a note and each of its directors placed his name upon the back of the note. They contended that they had thus signed only for the purpose of showing that the president and secretary of the association were authorized to issue the note, but this was disputed and they were held to be individually liable as endorsers.22

An officer, in signing an association note, should make it entirely clear on the face of the note that he is signing in his official and not in his personal capacity. The normal way is for the name of the association to be affixed to the note by a proper officer, with a statement thereunder that it was affixed thereto "by" him, followed by his title.23 Although members of an association are not liable for its debts under the statute under which an association is formed, this does not prevent members from giving or endorsing notes to or for the association on which they may be held liable. Likewise, it does not prevent members of an association from agreeing among themselves to furnish money to enable the association to pay its debts.24

20 Dealers Finance Company v. Woodard, 151 So. 145, reversing 147 So. 556 (1933).

21 Bushnell v. Elkins, 34 Wyo. 495, 245 P. 304, 51 A.L.R. 13 (1926).

22 Herring v. Farmers' Cooperative Association, 148 La. 557, 87 So. 271 (1921).

23 Agricultural Bond & Credit Corporation v. Courtenay Farmers' Cooperative Association, 64 N.D. 253, 251 N.W. 881 (1933).

24 Farmers' Co-op Union of Lyons v. Reynolds, 127 Kan. 16, 272 P. 108 (1928); Thomas County Cooperative Business Association of Colby v. Pearson, 124 Kan. 430, 260 P. 623 (1927).

Agency

As a general rule, whatever an individual may do in person he may do through an agent. And the doctrine is well established that one who acts through an agent acts himself. An agent derives all his authority from his principal-the one for whom he is acting.

Cooperatives as Agents

Cooperatives frequently act as agents for members in the sale of produce or the purchase of supplies. It is therefore important to consider the rights and liabilities of such associations and of their members under these circumstances.

A cooperative that is acting as an agent may sue in its own name for a breach of a contract entered into by it with a third person. Likewise, where an association was the sole agent of growers for the handling and marketing of their tobacco, the association could have maintained a suit in its own name for the recovery of damages for the negligent destruction of tobacco without joining any of the growers.2

A peach growers' association entered into a contract in its name covering the sale and delivery of fruit of its members. Certain of the members of the association delivered a part of their fruit to the plaintiff, but sold and disposed of a quantity of fruit to another dealer.

Plaintiff brought suit against the members in question to recover an amount equal to the "profits" which it claimed it would have made if the members had delivered all the fruit in accordance with the contract. The contract, as stated, was with the fruit growers' association and did not state that it was made for the benefit of the members. Defendants claimed that for this reason they could not be sued on the contract. The court held that plaintiff could maintain a suit against the defaulting members because they had delivered some fruit to plaintiff under the contract. The court said:

'Tustin Fruit Association v. Earl Fruit Company, 6 Cal. Unrep. 37, 53 P. 693 (1898).

2 Louisville & Nashville Railroad Company v. Burley Tobacco Society. 147 Ky. 22, 143 S.W. 1040 (1912). See also Dairymen's League Co-op Association, Inc. v. Hartford Accident and Indemnity Company, 252 App. Div. 527, 300 N.Y.S. 431 (1936).

* if a principal not disclosed by a contract made by and in the name of his agent subsequently claims the benefit of the contract, it thereby becomes his own to the same extent as if his name had originally appeared as the contracting party.3

A companion case involving the same contract was decided at the same time. In this case, the members sued had not delivered any fruit under the contract, and hence it could not be said (as was said in the other case) that they had claimed the benefit of the contract. It was held that the plaintiff could not maintain a suit against the members involved, and that if any suit was to be maintained it would have to be against the fruitgrowers' association. In either of these cases, the buyer of the fruit could have sued the fruitgrowers' association for the loss sustained through failure to deliver all the fruit contracted for. If the contract with the buyer had stipulated that it was with the association exclusively, the members could not have been successfully sued in either case.

A provision in the contract of an association with its members cannot be invoked to relieve the members of liability to third persons under circumstances similar to those involved in the cases just discussed, unless the provision was brought to the attention of the persons with whom the association had prior contracts. The Supreme Court of the United States has said: "The contract of the agent is the contract of the principal, and he may sue or be sued thereon, though not named therein."6

In other words, the general rule appears to be that where a contract is entered into with an agent, the agent contracting in his own name, the person for whom the agent is acting, the principal, may sue the other party on the contract, and in turn the principal may be sued by such party. The fact that the existence of the principal is known or unknown to the opposite party at the time the contract is made is immaterial. Of course, a cooperative could include a provision in its contract with one with whom it was dealing that would control the situation.

3 Barnett Bros. v. Lynn, 118 Wash. 315, 203 P. 389, 390 (1922). See also Phez Co. v. Salem Fruit Union, 103 Ore. 514, 201 P. 222, 25 A.L.R. 1090 (1921), 205 P. 970 (1922).

4 Barnett Bros. v. Lynn, 118 Wash. 308, 203 P. 387 (1922).

"Kruse v. Seiffert & Weise Lumber Co., 108 Iowa 352, 79 N. W. 118 (1899). "Ford v. Williams, 62 U.S. 287, 289 (1858).

1Chapman v. Java Pac. Line, 241 F. 850 (9th Cir. 1917), and cases cited.

Members of an association are liable to suit, or they may sue, not because they are members of the association, but because they are the principals for whom the association acted. As already noted, an incorporated cooperative is an artificial entity, separate and apart from its members.

The essence of this matter can be readily understood when one bears in mind that a person is liable, as a general rule, for all acts of his agent while the agent is acting within the scope of his employment. The character of the agent, whether an individual, partnership, or incorporated association, is immaterial. It is upon this theory that automobile owners, whether individuals or corporations, are held liable for injuries to others caused by the negligent driving of their cars by their agents or employees. It is no answer that an agent was not authorized to do the particular act which caused injury or loss if it was done while in the course of the business of his principal or employer.

In a California case10 involving application of an apportionment of income statute for corporation franchise tax purposes, it was held that a farming corporation which marketed some of its produce through cooperatives of which it was a member was not doing business outside the State simply because the associations, although acting as marketing agents, made sales outside the State. This would appear to be a somewhat restrictive interpretation for purposes of the tax statute. However, as pointed out in the opinion, the handling of commodities for a foreign corporation by factors or commission merchants does not ordinarily cause the foreign corporation to be doing business in the State in which such factors or commission merchants are located; and they function as agents.

Cooperatives Liable for Acts of Agents

Incorporated cooperatives, like other corporations, are liable for the acts of their agents while such agents are acting within the scope of their employment." A corporation may be liable for

8 Hudson Co-operative Loan Association v. Horowytz, 116 N.J. Law 605, 186 A. 437 (1936).

9 Alabama Power Co. v. Bodine, 213 Ala. 627, 105 So. 869 (1925); New York Trust Co. v. Carpenter, 250 F. 668 (6th Cir. 1918).

10 Irvine Co. v. McColgan, 26 Cal. 2d 160, 157 P. 2d 847 (1945).

11 Farmers Union Warehouse Co. v. Barnett Bros., 223 Ala. 435, 137 So. 176 (1931); Ely, Salyards & Co. v. Farmers' Elevator Company of Nohle, 69 Mont. 265, 221 P. 522 (1923); Federal Chemical Company v. Farmers Produce

assault and battery, conversion, nuisance, trespass, libel12 and slander,13 malicious prosecution, wrongful arrest, false imprisonment, fraud and deceit.14 It may also be guilty of crimes.15 It is apparent that all the acts enumerated would have to be done by the officers, agents, or employees of a corporation, because a corporation can act in no other way.

There is nothing in the nature of an incorporated cooperative to relieve it from liability under circumstances in which any other type of corporation would be liable, and undoubtedly such associations may be held liable in a proper case for any of the matters mentioned above. For instance, in a California case, it appeared that the Escondido Citrus Union fumigated the orchard of one of its members without his consent, and in a negligent manner. As a result, the orchard was badly damaged. The member then brought suit against the union and recovered a judgment for $2,250.16 In another California case, officers of a corporation unlawfully entered vineyards and removed grapes. The corporation was held liable for their acts.17

It is true that an electric cooperative in Arkansas was held not liable for the tort of one of its agents while he was apparently acting within the scope of his employment;18 but this case is

Exchange, 123 S. W. 2d 612 (Mo. App. 1938); Co-operative Stores Company v. Marianna Hotel Company, 128 Ark. 196, 193 S. W. 529 (1917); Kasch v. Farmers' Gin Company, 3 S. W. 2d 72 (Tex. Com. App. 1928); Pacific Wool Growers v. Draper & Co., 158 Ore. 1, 73 P. 2d 1391 (1937); Seaman v. Big Horn Canal Association, 29 Wyo. 391, 213 P. 938 (1923); Leonard v. North Dakota Cooperative Wool Marketing Association, 72 N.D. 310, 6 N. W. 2d 576 (1942).

12 Aetna Life Insurance Company v. Mutual Benefit Health & Accident Association, 82 F. 2d 115 (8th Cir. 1936). See Pure Milk Producers Association of Greater Kansas City Territory v. Bridges, 146 Kan. 15, 68 P. 2d 658 (1937). 13 Buckeye Cotton Oil Co. v. Sloan, 250 F. 712 (6th Cir. 1918).

14 Hill v. Associated Almond Growers of Paso Robles, 90 Cal. App. 291, 265 P. 873 (1928); Vest v. Farmers' Cooperative Elevator Co. of Riverdale, 108 Neb. 407, 187 N.W. 892 (1922); Placentia Co-op Orange Growers' Association v. Henning, 118 Cal. App. 487, 5 P. 2d 444 (1931); 10 Fletcher, Cyc. Corp. (Perm. Ed.) § 4876 et seq.

1510 Fletcher, Cyc. Corp. (Perm. Ed.) § 4944.

16 Andreen v. Escondido Citrus Union, 93 Cal. App. 182, 269 P. 556 (1928). 17 California Grape Control Board, Ltd. v. Boothe Fruit Company, 220 Cal. 279, 29 P. 2d 857 (1934).

18 Arkansas Valley Cooperative Rural Electric Co. v. Elkins, 200 Ark. 883, 141 S.W. 2d 538 (1940). Contra, as to tort liability, Consolidated Electric Cooperative v. Panhandle E. Pipeline Co., 189 F. 2d 777 (8th Cir. 1951); Byrd v. Blue Ridge Rural Electric Cooperative, 215 F. 2d 542 (4th Cir. 1954); Bush v. Aiken Electric Cooperative, 226 S.C. 421, 85 S.E. 2d 716 (1955).