DAN MORALES 

ATSORSEY GENERAL 

QBffice of tly !Zlttornep 

&ate of ;PCexae 

October 25,1993 

Qkneral 

Honorable Rick Perry 

Commissioner 

Texas Department of Agriculture 

P.O. Box 12847 

Austin, Texas 78711 

Qpiion No. DM-266 

Re: Construction of the provisions of 

sections 52.012 and 52.085 of the 

Agriculture Code regarding agricultursl 

cooperative marketing association member 

voting rights (BQ-321) 

Dear Commissioner Perry: 

You ask for our opinion as to the interaction of two provisions of chapter 52 of 

the Agriculture Code, relating to agricultural cooperative marketing association member 

voting rights. The provisions about which you inquire are found in sections 52.012(a) and 

52.085(a) and (b), and provide respectively: 

(a) A marketing association shag be operated for the mutual 

benefit of its members, as producers, and shall conform to one or 

both of the following requirements: 

(1) a member of the association may not have more than 

one vote based on the member’s ownership of stock or 

membership capital in the association; or 

(2) the association may not pay dividends on stock or 

membership capital in excess of eight percent a year. 

Agric. Code 5 52.012. 

(a) Except as provide-d by Subsection (b) of this section, a 

member of a marketing association is entitled to one vote. 

(b) A marketing association may provide in its articles of 

incorporation or bylaws for a member association or group to have 

more than one vote ifthe association providing for the vote: 

(1) is organized primarily for the production, cultivation, 

and care of citrus groves or for processing and marketing citrus 

products; 

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Honorable Rick Perry - Page 2 (DM-266) 

(2) has its principal office in a county that has at least 500 

acres of land planted in citrus groves; and 

(3) includes as members one or more associations or 

groups organized on a cooperative basis. 

Agric. Code 4 52.085. 

We note Srst that the provisions of subsection (a) of section 52.085, quoted above, 

derive from now-repealed article 5750, V.T.C.S. The legislature intended the coditication 

of article 5750 in 1981 to be nonsubstantive. See Acts 1981,67th Leg., ch. 388, at 1015 

(codiig act); Agric. Code 5 1.001(a) (codiication intended to be without substantive 

change). The wording of section 52.085(a), however, differs from that of the predecessor 

provision in at least two respects such that the provision’s import could be substantively 

altered in particular applications. While subsection (a) reads “[elxcept as provided by 

Subsection (b) . o member of a marketing association is entitled to one vote,” the 

counterpart language in the predecessor provision, article 5750, read “[n]o member or 

&&ho&r shall be entitled to more than one wte [except for member groups or member 

associations of certain marketing associations related to the citrus industry].” In 

accordance with the legislative intent, we will construe section 52.085(a) consistently with 

its predecessor provision, repeated article 5750. See Johnson v. City of Fort Worth, 774 

S.W.2d 653 (Tex. 1989) (stating that predecessor statute controls construction of 

nonsubstantive revision provisions in event of cot&t between two provisions). 

The flat one-vote limitation, formerly in article 5750 and now in section 52.085(a), 

has appeared in the state cooperative marketing provisions since the legislature originally 

enacted them in 1921. Acts 1921, 37th Leg., ch. 22, at 45. In 1922 the United States 

Congress adopted the Capper-Volstead Act, found at title 7 of the United States Code, 

sections 291 and 292, which exempts agricultural marketing associations from federal 

anti-trust laws. See Northern Cal. Supennarkts, Inc. v. Central Cal. Lettuce Producers 

Coop., 413 F. Supp 984, 988-89 (ND. Cal. 1976), @‘d, 580 F.2d 369 (9th Cir. 1978). 

cert. denied, 439 U.S. 1090 (1979). Section 291 of title 7 of the United States Code 

requires agricultural marketing associations to conform to the following: 

Pi. That no member of the association is allowed more than one 

vote because of the amount of stock or membership capital he may 

own therein, or, 

Second. That the association does not pay dividends on stock or 

membership capital in excess of 8 per centum per annum. 

And in any case to the following: 

Third. That the association shall not deal in the products of 

nonmembers to an amount greater in value than such as are handled 

by it for members. 

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Honorable Rick Perry - Page 3 (DM-266) 

In 1930 the Texas Legislature amended the state’s cooperative marketing 

provisions to conform to the Capper-Volstead Act by permitting cooperative marketing 

corporations to market nonmembers’ products. Acts 1930, 41st Leg., 4th C.S., ch. 12, 

3 9, at 16. The amendment incorporated verbatim the above-quoted provisions of the 

Capper-Volstead Act, provisions that though somewhat altered in the subsequent 

nonsubstantive codification, now are coditied as Agriculture Code section 52.012, one of 

the two sections at issue here. In our opinion, when the legislature amended article 5738 

in 1930, it lifted the language directly out of the Capper-Volstead Act without intendiig to 

change the one-vote limitation that had been present in the ,cooperative marketing 

provisions Smce 1921. The legislature did not intend by the 1930 amendment to authorize 

a cooperative marketing association to provide any member of its association with more 

than one vote. We note that, by complying with Texas’ one-vote limitation, presently 

articulated in section 52.085(a) of the Agriculture Code, a cooperative marketing 

association also complies with the Capper-Volstead requirements, presently articulated in 

the state law in section 52.012(a) ofthe Agriculture Code. 

The decision of the United States District Court for the Northern District of Texas 

in Etter Grain Gnnpany v. United States, 331 F. Supp. 283 (N.D. Tex. 1971) qfd, 462 

F.2d 259 (5th Cu. 1972), implicitly supports our interpretation of sections 52.012(a) and 

52.085(a) of the Agricuhure Code. See Etter Grain Co., 33 1 F. Supp. 283. The plaintiff 

in Etter Grain Co. claimed that the United States owed it a retimd of income taxes 

because the plaintitf was a cooperative exempt from taxation under section 521 of the 

Internal Revenue Code, which grants an exemption to farmers’ cooperatives. Id. a! 284- 

85. The Etter Grain Co. court found, however, that the plaintiff did not comply with 

article 5750 (now section 52.085(a) of the Agricuhure Code) because the plaintiffs bylaws 

granted some members more than one vote. Id. at 285. Consequently, the court 

concluded that the plaintiff was not a farmers’ cooperative entitled to exemption from 

taxation under section 521 of the Internal Revenue Code. Id. at 286. The fact that the 

court analyzed the plaintiffs status as a cooperating marketing association in tetms of the 

one-vote limitation found in article 5750 without considering whether the plaintiE 

complied with article 5738 (codiied as section 52.012(a) of the Agriculture Code) is, we 

think, instNctive. 

More significantly, in 1979 the legislature amended article 5750 by adding an 

exception to the one-vote limitation for cooperative marketing associations related to the 

citrus industry. See Acts 1979,66th Leg., ch. 667, $1, at 1551. The legislature codified 

this exception as section 52.085(b). The legislature’s acknowledgment in 1979 that it must 

amend the one-vote limitation in article 5750, V.T.C.S., expressly to authorize citrus 

industry-related cooperative marketing associations to offer each member more than one 

vote afIinns our conclusion that the legislature never intended to modify or repeal the onevote limitation by incorporating the Capper-Volstead provisions into state law; the 

legislature believed, instead, that the one-vote limitation remained viable. 

In summary, section 52.085(a) of the Agriculture Code limits each member of a 

non-citrus-related cooperative marketing association to one vote. A citrus-related 
HonorableRickPerry - Page 4 (DM-266) 

cooperative marketing association may, pursuant to section 52.085(b), provide for a 

member association to have more than one vote; if such an association does so, however, 

it must not pay dividends on stock or membership capital in excess of eight percent a year, 

in accordance with section 52.012(a)(2) of the Agriculture Code. 

SUMMARY 

Section 52.085(a) of the Agricuhure Code limits each member 

of a non-citrus-related cooperative marketing association to one 

vote. A citrus-related cooperative marketing association may, 

pursuant to section 52.085(b), provide for a member association to 

have more than one vote; if such an association does so, however, it 

must not pay dividends on stock or membership capital in excess of 

eight percent a year, in accordance with section 52.012(a)(Z) of the 

Agriculture Code. 

DAN MORALES 

Attorney General of Texas 

WILL PRYOR 

Fii Assistant Attorney General 

MARYKELLER 

Deputy Attorney General for Litigation 

RBNBA HJCKS 

State Solicitor 

MADELEINE B. JOHNSON 

Chair, Opinion Committee 

Prepared by Kymberly K. Ohrogge and Wdliam M. Walker 

Assistant Attorneys GeneraJ 

p. 1397