OFFICE OF Ti-iE ATTORNEY GENERAL OF ‘TEXAS 

AUSTIN 
: . 

'icaorsble C&o. Ii. QSm?parb, Psy, 2 

J 
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16 

:icnorable Goo. Es. 3lleppax& Psg3 3 

%‘h% coEtcn l6 to be dellvemd to the Ass+. 

CiSEiQn u1thout anj ~rovzslon f3P its Pet;lm; 

the Asscclatlon ln auth~rlwd to have fib cottca 

baadIed, pmwssed md stored; it is nut'korlzed 

to bomov nunsy oa, pool, sad aoil tba cotton; 

Ln other woti6, Lb Asaoelatlon 16 authorized to 

exerci,se all aota of onmrship cm%2 th.6 cottcn 

after Its delivarg, subject only to tae Vii)thud 

pmsoribed COP d.eteraFTllag its pice.” 
I 

17 / 

lkmorsblo (30. X. Sheppmd, Pajgb 4 

A~~oolatlm at the tlse of the Cellrsr7 of hi3 p&aduce and 

desp1.t~ the fcot that the agreemeAt vlth t!! &3soo5.atlon la 

ccuchsd in tswa of “salr end delivs;r*3,” the Supreme Co& 

has held that contrsota of this klzx3 do not involve an “absolute sale,” a%d *has said Lbt the Asaooiatlon aots xcerol~ 

2.3 a selling. agent sor its ri?erdbeTa. Thus in f3X38 Certified 

Cottonased areedors’ AJmoclatlcm V. Aldr1dge, 61 3. Y. (2d) 

‘79, tb Court said at pp. 824333 

WI0 oon8t;ruotioA of this CoAtraot osy be 

based upon ore oardlnal rule; viz., What VW 

t?le Intentian of the partlea thereto vhexl oonmw8d in cmneation vith the hiszorg 0r the 

class of legislation and the puqmsea sou&xt 

to be nttsined? that is the natme of the 

title by vhLch an J88OOihtiXl holds proprty’ 

vhlch it la narkshlsl3 for its hmnbers? To 

Vhat CZ’tent do%8 it act in its OVX' Corporate 

r:zht aid to w&t extent Is a fZduc%aq cap 

city? 9x3 l.At?ultlon of the parties to J contreat vlll oontml. If necesaaq?, to g1ob effoot to the Intention of the ptwtier courhl 

will brush saida mere foam and e.xaMne the instmrment aa a vhols), in the 1-t 017 the naturs and csxoumst8nces of ths tPans~tloll, w1t.b 

a villv of ascertaining the true int8Atlnu of 

the paW.es esFcw%d in the instrumant. CoO~eMtivs zlil&rbting a8soaletloAa and t.blr 

o_p9ration8 have brought th8l.r share of mzf 

groblwm , TPx9y have taken thsFt* place IA the 

bua~~ess vorld, rrnd deslox-a, mmf?~~tu~bre, 

cr.0 busk~e88 m%n in @A@'- XY wlp;r tb%iP 

cca;rrsodditles. The low and t!z% contracts srecutad tkemmnder authorize the oraociatian to 

rcnrk0k end se11 ‘co ayloultural prcdmtr of 

1ta Denlb%r8. The asaoblatlozl IS zads the 

tigSAt Of 1:s WSFI~~I'S t0 -S th8fP >FO&IOtS; 

it is given the autioritj to borrov nor?q on 

the prodzrots and to pledge 8am an aeourit-jy 

Sor ails of Ita obllgatlona, It also haa thb 

rl$t to diotrlbute the noney so box-ored a8 

adva~css equitably among the b--ceders ia ?coportion tp tbelr delivery to the assool3tlon, 

. 

J 
: 

m.noraSle Gee. II. Seapazd, page 5 

OS say us4 6iay prt tbreof in it3 busbmss 

oper6tioAa. The tlttt.4 of the ccaimcdltlea In 

pl.acsd Sa the as8oalatlon to carry out thesfi 

yarpor4s. The authority 0an5wred upon t&a 

as8ool8tlm Is A4c4saapg for it to operata 

erzd function auco4safully~ It ha8 no ss8sta 

axcepk the canmoditles dellvwred to it by the 

msmbsss of the aaeooiatlcxa. It i8 8 AOAstock ti nonprofit ooncern, and ltmunt depccnd Solirly for its existonce upon the contmiota tie tith its ambern. '30 acoa@.Lsh 

this ad, the I,qs$slotum has announced that 

ftuusth8Adls 0Aly th4 psoduota of :tslR4mbms, and will not couqttma~ce a dItied a~ervice ‘by potitt* it to h8Adlo th+ produoto 

or noAuleIabers. 

'The afd of the gwt f"2n*nclsl instltl.ltions of tzIt3 country in essential to the 

auccesa oi these nsaociations. The sasoaiatlonnust have fln6nof3l aasI.stanoe before 

It can fonotfon, Fmd the ageA must hsve 

paver to pool ?md as11 tba ocasxx3lt~.w it 

osfosa SOS sale or plsdgs Sara4 a8 34cur4ty. 

30s “si4sa pusperer there 18 no 1lalt8t1cn 

65 to the suthosltq conferred upon th0 s3sociotian. Thw Saxxiess 33 a gsoup Som th4 

a~soo?atfon, 6ucj sppolnt It to aot 8a thalr 

aelmlg qe+nt. TheJ tun OYDS t0 th0 8SSO- 

~lntlon thefs coansoditl.es to be pooled zmd 

Sold sn the z#rket to tb beat sdvantages. 

Sov(~ver, the 0PSicera 0P the ssaoolation 

have the oontsolllxq deci~1or.a as to when 

a?&hov the asle Shall be EL%%. %-I.28 p4l~ 

nits t.343 assooL3tlcm to glace the oomaodlif%8 in iia hands for SSl4 Vhan the cOndftlms ore Ssvorable, and arevents a dzqkg on the market of commoditisl for vhLch 

them la no demand. 

'by t% tams OS the oontmat the grover hss surm~oxwd control over the o&e of 

hi3 grxhct, .Szd t&F&y to this 4Xt4At ha3 

18 
pw 6 

¶.laportant element of 

.._ ..m 
20 

lnten!Aox.iof themmben tocreateat2wecooperative markatZ.ii assooiation, under tlio 

potters tuuaueralxxl by inu and by tSe cootnatrr, 

t-2 perfarm certain aervicsa exolusllrelg for 

its members, and to hold l-3 tao rsos or t 

Isltentlon that tha delivery of the need co t?ze 

aosooFation was an absoluco aa30 would aestroo 

It as A co-oporatin Ixum!Cet~ aasoufation. 

The menbe~~ hsvs oonrerrttd on this cusoolatlcll, 

es ttrsitr eelU3lg a@&, such title to the cotton3eed vzth ~lwlary povem to handls and bie,pore 

of aamo, but the sssoal3t’%on barrdIes tlas, procoeds theroof for the ‘behsflt of itseU axl its 

mt3a ~ra l see sohlBon Y. staple cotton cw-op. 

Asa%, 142 ‘mar. 312, 107 so. 2; T~bCbCCO Grimers* Cc-o& Ararn ww Sow%, ~185 33. C. 255, Xl7 

5. 23. 174 , 33 A. L. R. 231; ~Darpartnne V. 

ihttsr Ii111 Z'mit iPnr9m' Asr‘n, 122 8%. 138, 

119 A. ll61 Phar: Co. v. Ss1e.m F-t Won, Icl3 

or. 514, 201 P. 222, 205 P. 970, 25 h. L. 33. 

10900; c~hdga~.uv .SBV~~W r0r abma;?3r, 1923, 

p* 91.# (Xi@aals added) 

Sootion 19 of Arc;Zola VIII of our ConsWtuutlnn pro.. 

vlder 3 

“arm produots in tha t?anda Of the prs 

,ducer, snd fl3ullly aupplled for hgpe &LJId iparn 

use, a.ro exempC from all taxatiaz.8 3zM.l othe.rvlss direated by a two-thirda vote of all tie 

iaf#d%WB @?b?diOd tQ both hOUB%B Of the L.CQiSbbturs." 

Fl-z?a L.egislaturo ha8 never by e tuc-th%rda vote of all srerPbers 

OP bid21 hou~fi~ 3.mpo~eds tax on rim imnhcts in the handr 0r 

the producer, 

In vit!in of t5a owst~otlm giV#Zt by OUT CoUrta to 

arranomento of the tgpe mds~ ~onsldaration, ve feel that t%e 

p?easlts tivolv9d irt Lao hstsnt qumJtim a.re still *ran% pmducts in the hsnde of the producsr~ withIn the me- of the 

&wre-quoted prorisiorr snd a3 such my not be tcwed. The obvious purf;we 0i seeti0n 19 WBB t0 gmv=t th ii320dtion 0r 
Honorable ~0. H. &sppwd~ ~a~3 8 

3 tax on ,40x-u producta vhen swh tax vould beti dlmmUy 

upon the producer of such products. This purpose cannot 

be accompl3.shed if ttuea are levted upon goods held aa ars 

the peanut-s i.n the instantaituation, for the burdenof 

such taxes vould inll dirmtly qnm the ~raducem of such 

goodal. Coneaquently, notuithrt~ th3 faut thst lags1 

.tltla to the peanuto Is vsstsd in the corporation mther 

than .tn t&3 pPDdu~~)rs, you are xwspectfully advised that 

tha mwmto are r,ot subject to taxation axid your westion 

ia ivlsversd In the nega?civa. 

Wua)tU that tha furegokqx sntisfactor%lp 

pour i.lquFrJ, v9 -Peaah 

YOUM very truly 

ansY3rs