. 

THEATTORNEYGENERAL 

OF TEXAS 

GERALD C. MANN AUSTIN 11. TEXAS 

*ITORNEYGENERAI. 

Honorable Charles T. Banister 

Criminal District Attorney 

Navarro County 

Corsicana, Texas 

Dear Sir: Opinion No. O-2874 

Re: Application of anti,-trust laws to 

agreement among a group of dairgmen to fix the price of milk. 

We have your letter of October 30th wherein you request 

ouropinion on the following question: 

"Is it a violation for a group of dairymen 

to agree that a certain price for milk is a fair 

price and a fair return for labor expended, and if 

sold at a lesser price it would be at a loss, and, 

as if and when agreed, could they advertise the 

agreed price with each dairyman's name published in 

a local newspaper?" 

The statutes against trusts, monopolies, and restraints 

of trade are contained In Chapter 3 of Title 19 of the Penal Code 

of Texas and in Title 126 of the Revised Civil Statutes of Texas. 

The situation outlined by you above, Is clearly within 

the letter of Article 1632 of the Penal Code and Article 7426 of 

the Revised Civil Statutes. However, Article 1642 of the Penal 

Code, contained in Chapter 3, Title 1.9, expres8ly exempts agricultural products while in the hands of producers, from the operation 

of the criminal provisions of the antic-trust law in the following 

language: 

"No provision of this law shall apply to 

agricultural product8 or live stock while in the 

hands of the producer or raiser." 

In the recent case of Ex Parte Tigner, both the Court of 

Criminal Appeals of Texas (,l32 S.W. (2d) 855) and the United States 

Supreme Court (84 Law Ed. 756) expressly approved the exemption 

of agricultural products in the hands of producers from the Texas 

criminal anti-trust law, and declared that the law was not unconstitutional by reason of such exemption. Under the authority of 

this case, and mindful of the rule that criminal statutes are 

strictly construed, it is our opinion that an agreement among a 
r - 

Honorable Charles T. Banister, page 2 o-2874 

group of dairymen as to the price at which they will sell milk 

produced by them does not constitute a violation of the criminal 

provisions of the anti-trust laws. 

No such express exemption for agricultural product8 is 

to be found in Title 126, of the civil statutes, relating to 

trusts. The Cooperative Marketing Act of 1921, which appear8 

as Chapter 8,'Title 93, Articles 5737 et seq., in the Revised 

Civil Statutes, 1925, contains an express exemption for Cooperative Marketing Associations from the anti-trust laws in Article 

5762 which reads: 

"No association organized hereundershall be 

deemed to be a combination in restraint of trade or 

an illegal monopoly; or an attempt to lessen competition or fix prices arbitrarily; nor shall the 

marketing contracts or agreements between the association and its member8 nor any agreements authorized 

in this chapter, be considered illegal or in restraint 

of,trade." 

In State v. Standard Oil Co., 130 Tex. 313 107 S.W. 

~~",?e5,'~,b",ht;~~l~~~~c~oCcifeton declared Article 5762, quoted 

Fn deference to the holding of the 

United States Supreme Court in Connolly v. Unlon'Sewer Pipe Co., 

184 U.S. 540, 22 S. Ct. 431, 46 L. Ed. 697. A majority of the 

court; however, expressed the view that Article 5762 was not invalid, but that the exemption of Cooperative Marketing associations constituted a reasonable classification of subject matter. 

In this view the United States Supreme Court concurred in Ex 

Parte Tigner, supra; and since that case expressly overruled the 

early Connolly case, there can now be no question but that the 

Cooperative Marketing Act consitutues a valid exemption from the 

anti-trust laws, both civil and criminal. Contracts entered into 

by Cooperative Marketing Associations have been consistently sustained by Texas courts, although such contracts had for their mrpose the stabilization of prices of agricultural commodities, and 

restricted trade therein by members of such associations. See: 

Texas Farm Bureau Cotton Ass'n. v. Stovall, 113 Tex. 273, 253 

S.W. 1101; Lennox v. Texas Cotton Co-op Ass'n. (Tex. Corn. App.) 

55 S.W. (2d) 543; Hollingsworth v. Texas Hay Ass'n. 246 S.W. 1068; 

Central Texas Dairymen's Ass'n. v. Jones, 67 S.W. [2d) 896. In 

each of these cases one of the parties to the contract or agreement before the court was a corporation duly organized under the 

Cooperative Marketing Act. 

In Fisher v. El Paso Egg Producers' Ass'n. 278 S.W. 

262, the El Paso Court of Civil Appeals held a markeiing agreement 

among a group of producers invalid under the anti-trust laws by 

reason of the fact that the producer8 had failed to incorporate 

under the Cooperative Marketing Act and consequently had failed 
- - 

Honorable Charles T. Banister, page 3 O-2874 

to qualify under that act so as to receive immunity from the civil 

anti-trust laws. We quote from the opinion of the court in that 

case: 

"Is the marketing agreement of appellee in violation of the above provisions of our statute? (Section 1 of Article 7796, R.C.S., 1911, which is Article 

7426, R.C.S., 1925) If it is, and not being an incorporated body and exempt from the above as a co-operative marketing association under the provisions of our 

statute above referred to (Coop. Marketing Act), it is 

a 'trust' and its marketing agreement cannot be enforced." 

We conclude that the agreement among the dairymen to fix' 

the price of milk to be sold by them as described in your letter, 

constitutes ti violation of Article 7426, Revised Civil Statutes 

of Texas, 1925, unless such dairymen'have organized a. Coopertive 

Marketing Association, duly incorporated under the provisions of 

Article 5737 et seq., R.C.S., and the agreement described by you 

is in fact the marketing agreement between such association and 

its constituent members. 

Yours very truly 

Attorney General Of Texas 

By s/ Walter R. Koch 

Walter R. Koch 

Assistant 

WRK:BRB:wc 

APPROVED NOV 20, 1940 

s/Gerald C. Mann 

ATTORNEY GENERAL OF TEXAS 

Approved Opinion Committee By s/BWS Chairman