WILL WII%ON 

Ax=rORNmcY GSNFXZAX. November 22, 1957 

Honorable John C. White 

Commlaaioner, Texas 

Department of Agriculture 

Austin, Texas 

Opinion No. UW-303 

Rer Interpretation of the 

Cooperative Marketing 

Act, Chapter 8, Articles 

5737 through 5764, Texas 

Civil Statutes, relating 

to non-farmers living in 

a rural agrarian community being charter members 

of cooperative associations under the above 

chapter with equal rights 

and privileges as the 

farming members of the 

association, and other 

Dear Commissioner White: questions. 

You have requested an Interpretation from this Department on the Cooperative Marketing Act, Chapter 8, Articles 5737- 

5764, Texas Civil Statutes (Vernon, 1948), as such Act relates 

to the following questions: 

"1 . Can non-farmera living in a rural 

agrarian community, such as the bank, grocery 

store and blacksmith shop, be charter members 

of cooperative associations under this Chapter 

with equal rights and privileges as the farming 

members of the association? 

"2. Is the supplying of water to the 

members of an association organized for this purpose covered by this Chapter, and is this type of 

association allowable under this Chapter? 

"3 . Does a cooperative type association 

or corporation, organized under Chapter 3, Articles 

5578 through 561.1, or under Chapter 8, Articles 

5737 through 5764, Vernon's Statutes, have the power 

to execute 011 and gas leases covering lands owned 

by it in fee?" 
Honorable John C. White, page 2. (ww-303) 

Regarding your first question, the Cooperative 

Marketing Act, Article 5743, Tex.Clv.Stat. (Vernon, 1948), 

provides : 

"(a) Under the terms and oondltlona 

prescribed in Its by-laws, an association 

may admit as members, or issue common stock, 

only to persons engaged In the production 

of the agrioultural products to be handled 

by or through the association, Including the 

lessees and tenants of land used for the 

production of such products and any lessors 

and landlords who receive as rent part of 

the crop raised on the leased premises. 

(b) If a member of a non-stock association 

be other than a natural person, such member 

may be presented by any Individual, associate 

officer or ,member thereof, duly authorized In 

writing. (c) Any association as defined in 

Article 5738(c) may become a member or stockholder of any other association or associations organized hereunder." 

It Is obvious that under the above quoted statute 

non-farmers living in a rural agrarian community, e. g., the 

bank, grocery store or blacksmith shop, are not eligible for 

membership in any cooperative association organized under this 

Act, unless such non-farmer is: (a) engaged In the production 

of agricultural products to be handled by or through the association, including lessees and tenants of land used for producing such products; or Is (b) a lessor or landlord who receives 

as rent a part of the crop raised on the leased premises; or is 

(c) a corporation organized under this Act or an association 

organized under the Cooperative Marketing Acts of any other 

state of the United States, provided such foreign association 

is composed of persons engaged in the production of agricultural products as farmers, planters, ranchmen, dairymen, or 

nut or fruit growers. See Tex.Civ.Stat. (Vernon, 1948), 

Art. 5738. Whether or not any non-farmer living In a rural 

agrarian community would be eligible for membership of an 

association organized under this Act on the basis of the above 

stated qualifications is a question of fact, which must be determined in each particular case. 

Your second question relates to the organization of 

an association under this Chapter, the purpose of which Is to 

supply water to the members of such association. Art. 5740, 

Tex. Civ. Stat. (Vernon, 1948), as amended, provides: 
. - 

Honorable John C. White, Page 3 (w-303) 

"An Association may be organized to 

engage in any activity in conn&tlon with 

the production, cultivation and care of 

citrus groves or the marketing or selling 

of~agricultural products and citrus fruits 

produce q 

or In the harvesting, preserving, drying, 

processing, canning, storing, handling, 

shipping or utll.lzatlon thereof, or the 

manufacturing, or marketing of the byproducts thereof; or in connection with the 

manufacturing, selling or supplying to its 

members of machinery, equipment or supplies; 

or in the financing of the above enumerated 

activities; or In any one or more of the activities specified herein. Provided, however, any 

such activities may extend to non-members and 

to the production, cultivation and care of lands 

owned or cultivated by them and their products 

limited by Article 5738 as heretofore amended." 

(Emphasis-added). 

Article 5742, Tex. Civ. Stat. (Vernon, 1948), as 

amended, provides in part as follows: 

"(a) To engage in any activity In connection with the production, cultivation and care 

of citrus groves and the marketing, selling, 

harvesting, preserving, drying, processing, 

canning, packing, storing, handling or utillzatlon of any agricultural products produced 

OP delivered,to it by its members, or the production, manufacturing or marketing of the byproducts thereof; . e .'I 

Article 5742 (g), Tex. Civ. Stat. (Vernon, 1948), 

provides In part: 

"(g) To do each and everything necessary, 

suitable or proper for the accomplishment of 

any one of the purposes or the attainment of 

any one or more of the objects herein enumerated; 

or conducive to or expedient for the interest or 

benefit of the association; . . .' 

The principal rule that has been formulated for the 

Interpretation of charter powers Is that only such powers are 

given as are clearly embraced In the words of the Act or charter, or derived therefrom by necessary implication In view of 
Honorable John C, White, page 4. (Ww-303) 

T;;4;bJects of the grant. Attorney General's Opinion O-6045 

In every grant of corporate powers there Is implied a 

power to do whatever Is necessary, reasonable, or appropriate 

to the exercise of the authority expressly conferred. 

We are of the opinion that the organization of the 

association to supply water to Its membel;s is an Sfotlvlty 

which Is "necessary, suitable and proper to the production, 

cultivation and care of citrus groves', provided such association is organized to supply water to its members for use 

In producing and cultivating the citrus trees. If, however, 

the water is to be supplied to the members of the association 

for some use other than the production, cultivation or care 

of the citrus trees, such association could not be properly 

formed and be consistent with the purposes of any association 

under this Act. We can perceive of no instance In which the 

water could be used in the production, cultivation and care 

of citrus groves except for the irrigation of the trees. 

We are of the further opinion that the language in 

Article 5740, which provides for the organization of an association to engage in any activity In connection with the 

"marketing or selling of agricultural products and citrus 

'fruits produced by and marketed by its members" will not allow 

an association to be organized for the purpose of supplying 

water to its members who are engaged in producing all agricultural products other than citrus groves. Since an association 

may not be formed for any activity which is not in connection 

with the marketing or selling of the products, we do not believe that an association to supply water for the production 

or cultivation of the products bears any reasonable relation to 

the activity allowed by the statute, i.e., marketing or selling 

of the products. 

Regarding your third question, Article 5742 (f), Tex. 

Civ.Stat. (Vernon, 1948), empowers any association incorporated 

under the Cooperative Marketing Act: 

"(f) To buy, hold and exercise all 

privileges of ownership over such real or 

personal property as may be neoessary or 

convenient for the conducting and operation 

of any of the business of the association 

or incidental thereto." 

We are of the opinion that the power to own real property 

with "all privileges of ownership" necessarily implies a 

power to do any act which Is consistent with the usual incidents and privileges of ownership. This Includes the 

power to execute oil and gas leases covering lands which 

such association owns in fee, 
Honorable John C, White, page 5 (W-303) 

As to associations organized under the Marketing and 

Warehouse Corporations Act, Chapter 3, Articles 5578 through 

5611, Tex. Clv. Stat. (Vernon, 1948), ArtioIe 5579, in stating 

the powers of such associations, provides In part: 

” They may erect, 

and op&& warehouses, bul 

chase or lease, 

g, e3Ievator6, 

gins, storage tanks, silos, and euoh other 

places.of storage and securlty,ar may be neoeaeary for the storage, grading, weighing and 

classification of cotton, and all farm products, 

and for the purpose of preparing such products 

for the market. (Emphasis added). 

The power to purchase such facilities is, of course, the power 

to own them; likewise, the power to own the enumerated facilities of storage must necessarily imply the power to own the 

land upon which they are located. It Is evident, therefore, 

that the power in such association to own land In fee carries 

with It the authority to use the land to its best advantage, 

exercising all the normal privileges of ownerahlp, including 

the power to execute 011 and gas leases coverlng such lande. 

Of course, this Is subject to the limitations placed upon corporate ownership of land under the general corporation law8 

of the State of Texas. 

SUMMARY 

Non-farmers living in a rural agrarian 

community may not be members of an association organized under the Cooperative 

Marketing Act, Chapter 8, Articles 5737, 

through 5764, Tex, Civ. Stat. (Vernon, 

1948), unless such non-farmer qualifies 

for membership under the provisions of 

Article 5743, Tex. Civ. Stat. (Vernon, 

1948) and such qualification is always 

a question of fact. An association may 

be organized under this Act to supply 

water to its members only for the production and cultivation of citrus groves; 

however, no such association may be 

organized to supply water to those engaged In the production of other agrlcultural products. A cooperative association 
Honorable John C. White, page 6. (WW-303) 

organized under the Markets and Warehouse 

Corporation Act, Chapter 3, Articles 5578 

through 5611, Tex. Civ. Stat. (Vernon, lg48), 

or under the Cooperative Marketing Act, Chapter 8, Articles 57 

Stat. (Vernon, 194 8 

through 5764, Tex. Clv. 

, has the power to 

execute oil and gas leases covering lands 

which such association own8 In fee, subject 

to the limitation8 placed upon corporate 

ownership of land under the general aorporation lawa of the State of Texas. 

Yours very truly, 

WILL WILSON 

Attorney General of Texas 

BiiT:pf:zt 

APPROVED: 

OPINION COMMITTEE 

Geo. P. Blackburn, Chairman 

L. P. Lollar 

Arthur Sandlin 

Richard Stone 

REVIEWED FOR THE: ATTORNEY GENERAL 

BY: James N. Ludlum 

y 

B. H. Timmins, Jr. P