Because a person's acts usually speak louder than his words, where a representative of an association took possession of warehouses covered by a contract, declarations made by the representative that the possession taken was only a qualified one did not have the effect of modifying the original contract."1

Whether money left with a bank results in the relation of bailor and bailee, or in that of debtor and creditor, depends upon the terms and conditions under which the money was left with the bank. 12 In the first instance, the association would be entitled to priority in the event of insolvency of the bank, while in the second case it would not; and an agreement for the bank to pay interest indicates a debtorcreditor relationship. 13

While it has been held that a milk association may be enjoined from injuring a milk distributor in the operation of his business, 14 in another case, a court held that a milk distributor had no cause of action against a milk association for diverting milk from the milk distributor, unless the milk distributor could show that but for the acts of the association he would have obtained a sufficient supply of milk to meet his needs. 15

Where a member of an association assigned his claim against the association for commodities delivered by him under his marketing contract, the member no longer had

11 Tri-State Terminal Company v. Washington Wheat Growers' Association, 134 Wash. 519, 236 P. 75 (1925).

12 Bank of Aurora v. Aurora Co-op Fruit Growing & Marketing Association, 91 S.W. 2d 177 (Mo. App. 1936); Oak Grove Farmers' Mutual Ins. Co. v. Almena State Bank of Almena, 216 Wis. 182, 256 N.W. 696 (1934); California Livestock Commission Co. v. Button, 40 Ariz. 65, 9 P. 2d 414 (1932); Florida Citrus Exchange v. Union Trust Co. of Rochester, 244 App. Div. 68, 278 N.Y.S. 313 (1935).

13 Lewis v. Dark Tobacco Growers' Cooperative Association, 247 Ky. 301, 57 S.W. 2d 8 (1933).

14 Pure Milk Producers Association of Greater Kansas City Territory v. Bridges, 146 Kan. 15, 68 P.2d 658 (1937). See also North Texas Producers Ass'n v. Young, 308 F. 2d 325 (5th Cir. 1962), certiorari denied, 372 U.S. 929 (1963), and other cases discussed under "Antitrust LawsTreble Damages," supra, at p. 284.

15 Hy-Grade Dairies v. Falls City Milk Producers' Association, 261 Ky. 25, 86 S.W.2d 1046 (1935).

an interest in the claim which was subject to attachment. 16 A cooperative as a debtor can assert against an assignee of the debt a counterclaim based on the obligation of his assignor maturing subsequent to the assignment but before notice to the association of the claim. 17

An association which is not a member of another cooperative may by contract become liable for obligations incurred by the other cooperative. 18

In a case that illustrates the flexibility of the law of contracts, certain persons sold a stock of merchandise to a cooperative and agreed to look for payment only to the proceeds derived from sale of the merchandise which was to be sold "as rapidly as possible." The contract of sale was held valid. 19

A jury found that a chick association had agreed to bear all losses which might arise from the purchase of chicks in case they developed a disease. Thus, the purchaser had the right to recover not only the purchase price of the chicks after their return, but also all other losses arising from their purchase. 20

Hedging

Inasmuch as hedging is so widely practiced by cooperatives which handle agricultural commodities that are dealt in on futures markets or exchanges, a brief explanation of hedging appears in order. Hedging is regarded as a type of

16 Stivers v. Steele (Burley Tobacco Growers Association), 230 Ky. 700, 20 S. W. 2d 717 (1929).

17 Maryland Cooperative Milk Producers v. Bell, 206 Md. 168, 110 A. 2d 661 (1955).

1* New York Canning Crops Co-op Association, Inc. v. Slocum, 126 Misc. Rep. 30, 212 N.Y.S. 534 (1925).

19 In re Blue Earth County Cooperative Company, 139 Minn. 231, 166 N.W. 178 (1918).

20 Letres v. Washington Cooperative Chick Association, 8 Wash. 2d 64, 111 P.2d 594 (1941).

insurance. When an association or a producer2 of grain, for instance, desires to effect a hedge with respect to spot grain, or with respect to grain which is being produced, a sale is made of substantially a corresponding amount on a grain futures market or exchange. The spot grain, or the grain that is being produced, might be used for the making of delivery of the grain sold in the futures market, but this is seldom done.

Ordinarily, on the sale of the actual grain, the seller buys an amount of grain in the futures market equal to that previously sold in that market and thus the transaction in futures is closed. Normally, it is expected that if the price of grain declines, the "profits" made on the grain sold in the futures market will approximate the "loss" taken on the actual grain, so that the transaction in theory results in the seller obtaining a net price for his actual grain approximating the price at which the grain was sold in the futures market. When a handler of grain has contracted to deliver actual grain at a given time which he expects to acquire in the meantime, he may purchase a like amount of grain on a futures market and then on the purchase of the actual grain by him he sells the grain which he purchased in the futures market. In general, hedging contracts are valid.3

Futures markets, sometimes called commodity exchanges, have strict rules and regulations governing trading and all related matters. Also, the Secretary of Agriculture, under the Commodity Exchange Act, regulates futures trading in agricultural commodities through the Commodity Exchange Authority.

'Fraser v. Farmers' Cooperative Company, 167 Minn. 369, 209 N.W. 33, reargument denied, 167 Minn. 369, 209 N. W. 913 (1926); BensonStabeck Company v. Reservation Farmers' Grain Co., 62 Mont. 254, 205 P. 651 (1922).

2Edgeley Cooperative Grain Company v. Spitzer, 48 N.D. 406, 184 N. W. 880, 20 A.L.R. 1417 (1921).

Annotation "Nature and validity of 'hedging' transactions on the commodity market," 20 A.L.R. 1422. See also Makeever v. Barker, 85 Ind. App. 418, 154 N.E. 692 (1926); Clark v. Murphy, 142 Kan. 426, 49 P. 2d 973 (1935); South Carolina Cotton Growers' Co-op Association v. Weil, 220 Ala. 568, 126 So. 637 (1929); Fagerberg v. Phoenix Flour Mills Co., 50 Ariz. 227, 71 P.2d 1022 (1937).

Unincorporated Associations

Because some cooperatives are unincorporated, a discussion of their legal status and the rights and liabilities of their members is useful. An unincorporated association may be defined as a body of persons acting together, without a charter, but employing to a greater or less extent the forms and methods used by incorporated corporations, for the prosecution of some common enterprise.'

Characteristics

The liability of members of an unincorporated business association to third persons is the same as that of partners. A voluntary association, "composed of many members, adopting bylaws, having an associate name, and providing for certain officers and prescribing their duty, was but a partnership in the eyes of the law."2 In the absence of a contractual provision or a statute on the subject, the death or withdrawal of a member does not dissolve the association. A partnership, on the contrary, under such circumstances is dissolved by the death or withdrawal of a member.4

A corporation may sue or be sued in its own name. On the other hand, at common law, and in the absence of a statute, an unincorporated association cannot maintain an action in its own name but must sue in the names of all the members composing it, however numerous they may be."

17 C.J.S. Associations, §1.

2 Houghton v. Grimes, 100 Vt. 99, 135 A. 15, 18 (1926).

3 Burke v. Roper, 79 Ala. 138 (1885); Lindemann & Hoverson Co. v. Advance Stove Works, 170 Ill. App. 423 (1912); Hossack v. Ottawa Dev. Association, 244 III. 274, 91 N.E. 439 (1910).

4Scholefield and Taylor v. Eichelberger, 32 U.S. 586 (1833).

"St. Paul Typothetae v. St. Paul Bookbinders' Union No. 37, 94 Minn. 351, 102 N.W. 725 (1905); Newton County Farmers' & Fruit Growers' Exchange v. Kansas City Southern Railway Co., 326 Mo. 617, 31 S.W. 2d 803 (1930); Old River Farms Company v. Roscoe Haegelin Company, 98 Cal. App. 331, 276 P. 1047 (1929). If an unincorporated association fails to comply with statutory requirements for bringing suit under the association name, it lacks capacity to sue in this form. Kadota Fig Association of Producers v. Case-Swayne Co., 73 Cal. App. 2d 815, 167 P.2d 518 (1946). Nor can it file a cross complaint in an action filed against it. Case

Likewise, such an association in the absence of a statute cannot be sued in its name. The individual members must be sued.6

A corporation may take title to property in its own name, but an unincorporated association, in the absence of a statute, is ordinarily incapable as an organization of taking or holding either real or personal property in its name.'

How Formed

Statutes have been passed in some States expressly authorizing individuals to unite as a voluntary association under a distinctive name. However, as a rule, unincorporated or voluntary associations are organized independent of statute. They are generally formed under the common law right of contract. Just as A and B may enter into a contract with reference to doing some lawful act, so a larger number may associate for the accomplishment of a lawful objective.

Provision may be made for any matter that is a legitimate subject of contract. The qualifications of members may be prescribed, and causes for expulsion may be specified. A constitution is usually adopted which states the purposes of the association and other fundamental propositions relative to the organization. Bylaws are also usually adopted which prescribe the operating rules and the manner in which the objectives of the association are to be attained. The constitution and the bylaws, or either of them, constitute a contract binding all those who agree to them.

"The articles of agreement of such an association, whether called a 'constitution,' 'charter,' 'bylaws,' or any

v. Kadota Fig Association of Producers, 207 P.2d 86 (Cal. D.C. of App. 1949).

"Allis-Chalmers Co. v. Iron Molders' Union No. 125, 150 F. 155 (E.D. Wis. 1906); Board of Railroad Commissioners v. Reed, 102 Mont. 382, 58 P. 2d 271 (1936).

'Philadelphia Baptist Association v. Hart's Executors, 4 Wheat. I, 17 U.S. I (1819); Idaho Apple Growers Association v. Brown, 50 Idaho 34, 293 P. 320 (1930), 51 Idaho 540, 7 P.2d 591 (1932). See also Annotation, Power and capacity of members of unincorporated association, lodge, society, or club to convey, transfer, or encumber association property, 15 A.L.R. 2d 1451.