.

THEATTORNEYGENERAL

OF TEXAS

GERALD C. MANN AUSTIN 11. TEXAS
*ITORNEYGENERAI.

Honorable Charles T. Banister CriminalDistrict Attorney Navarro County Corsicana,Texas
Dear Sir: OpinionNo. 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 30thwherein 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 itwould be at a loss, and, as if and when agreed, could they advertise the agreed price with each dairyman'sname published in a local newspaper?" The statutesagainst 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 theRevised Civil Statutes of Texas.

The situation outlinedby you above, Is clearlywithin 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 exemptsagricultural productswhile in the hands of producers, from the operation of the criminal provisions of the antic-trust law in the following language:
"Noprovision of this law shall apply to agriculturalproduct8 or live stockwhile in the hands of the producer or raiser."
In the recent case of Ex Parte Tigner, both the Court of CriminalAppeals of Texas (,l32 S.W. (2d) 855) and the United States Supreme Court (84 Law Ed. 756) expresslyapproved the exemption of agricultural products in the hands of producers from the Texas criminal anti-trust law, and declared that the law was notunconstitutionalby 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 ar -

Honorable Charles T. Banister, page 2 o-2874

group of dairymen as to the price at which they will sellmilk produced by them does not constitute a violation of the criminal provisions of the anti-trust laws.

No such express exemption for agriculturalproduct8 is to be found in Title 126, of the civil statutes,relating to trusts. The CooperativeMarketingAct 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 MarketingAssociations from the anti-trust laws in Article 5762 which reads:

"Noassociation organized hereundershallbe deemed to be a combination in restraint of trade or an illegalmonopoly; or an attempt to lessen competition or fix prices arbitrarily;nor shall the marketing contracts or agreementsbetween the association and itsmember8 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 declaredArticle 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, expressedthe view thatArticle 5762 was not invalid,but that the exemption of Cooperative Marketing associations constituteda reasonable classification of subjectmatter. In this view theUnited States Supreme Court concurred in Ex Parte Tigner, supra; and since that case expresslyoverruled the early Connolly case, there can now be no questionbut that the CooperativeMarketingAct consitutuesa valid exemption from the anti-trust laws, both civil and criminal. Contracts entered into by CooperativeMarketing Associationshavebeen consistently sustained by Texas courts, although such contracts had for their mrpose the stabilizationof prices of agricultural commodities,and restricted trade thereinby members of such associations. See: Texas Farm Bureau CottonAss'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 corporationduly organizedunder the CooperativeMarketingAct.

In Fisher v. El Paso Egg Producers'Ass'n. 278 S.W. 262, the El Paso Court of CivilAppeals held a markeiing agreement among a group of producers invalidunder the anti-trust laws by reason of the fact that the producer8 had failed to incorporate under the CooperativeMarketingAct and consequentlyhad failed- -

Honorable Charles T. Banister, page 3 O-2874

to qualifyunder 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 isArticle 7426, R.C.S., 1925) If it is, and not being an incorporated body and exempt from the above as a co-operativemarketing associationunder the provisions of our statute above referred to (Coop.MarketingAct), it is a 'trust'and itsmarketing 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 ofArticle 7426, Revised Civil Statutes of Texas, 1925,unless such dairymen'have organized a.Coopertive Marketing Association, duly incorporatedunder the provisions of Article 5737 et seq.,R.C.S., and the agreement describedby you is in fact the marketing agreement between such association and its constituentmembers.
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 CommitteeBy s/BWS Chairman