WILL WII%ON

Ax=rORNmcY GSNFXZAX. November 22, 1957

Honorable John C. White Commlaaioner,Texas Department of Agriculture Austin, Texas 

### OpinionNo.UW-303

Rer Interpretationof the CooperativeMarketing Act, Chapter 

### 8, Articles 

### 5737through 

### 5764,Texas Civil Statutes, relating to non-farmers living in
a rural agrarian community being chartermembers of cooperativeassociations under the above chapterwith equal rights and privileges as the farmingmembers of the association, and other Dear CommissionerWhite: questions.

You have requested an Interpretation from this Department on the CooperativeMarketing 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 chartermembers of cooperativeassociationsunder this Chapter with equal rights and privileges as the farming members of the association?

"2. Is the supplyingof water to the members of an association organized for this purpose coveredby this Chapter, and is this type of association allowableunder this Chapter?



### "3

. Does a cooperativetype association
or corporation,organizedunder Chapter 3, Articles 

### 5578through 

### 561.1, or under Chapter 

### 8, Articles 

### 5737through 

### 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 agrioulturalproducts to be handled by or through the association, Including the lessees and tenants of landused for the production of suchproducts and any lessors and landlordswho receive as rent part of the crop raised on the leasedpremises. (b) If a member of a non-stock association be other than a natural person, suchmember may be presented by any Individual,associate officer or ,memberthereof, 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 organizedhereunder."

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 cooperativeassociation organizedunder this Act, unless such non-farmer is: (a) engaged In the production of agriculturalproducts to be handled by or through the association, including lesseesand tenants of land used for producing suchproducts; or Is (b)a lessor or landlordwho receives
as rent a part of the crop raised on the leasedpremises; or is (c) a corporationorganizedunder this Act or an association organizedunder the CooperativeMarketing 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 communitywould be eligible for membership of an association organizedunder 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 associationunder this Chapter, the purpose of which Is to supplywater to the members of such association. Art. 

### 5740, Tex. Civ. Stat. (Vernon, 1948), as amended,provides:. -

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

"AnAssociation may be organized to engage in any activity in conn&tlon with the production, cultivationand care of citrus groves or the marketing or selling of~agriculturalproducts and citrus fruits produce q or In the harvesting,preserving, drying, processing, canning, storing,handling, shippingor utll.lzatlon thereof, or the manufacturing, or marketing of the byproducts thereof; or in connectionwith 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 specifiedherein. Provided,however, any such activitiesmay extend to non-members and to the production, cultivationand care of lands owned or cultivatedby them and their products limitedby 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, cultivationand care of citrus groves and the marketing, selling, harvesting,preserving, drying,processing, canning,packing, storing,handling or utillzatlon of any agriculturalproducts 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 Interpretationof charterpowers Is that only suchpowers are given as are clearly embraced In the words of the Act or charter, or derived therefrom by necessary implication In view ofHonorable John C, White, page 4. (Ww-303)

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

In every grant of corporatepowers 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 supplywater to Itsmembel;sis an Sfotlvlty which Is "necessary, suitableand proper to the production, cultivationand care of citrus groves',provided such association is organized to supplywater to itsmembers for use In producing and cultivatingthe citrus trees. If, however, the water is to be supplied to the members of the association for some use other than the production, cultivationor care of the citrus trees, such association could not be properly formed and be consistentwith the purposes of any association under this Act. We can perceive of no instance In which the water could be used in the production, cultivationand 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 connectionwith the "marketingor selling of agriculturalproducts and citrus 'fruitsproduced 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 agriculturalproducts 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 supplywater for the production
or cultivationof the products bears any reasonable relation to the activity allowed by the statute, i.e.,marketing or selling of the products.

Regardingyour third question,Article 5742 (f),Tex. Civ.Stat. (Vernon,1948), empowers any association incorporated under the CooperativeMarketing 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 conductingand 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 "allprivileges of ownership" necessarily implies a power to do any act which Is consistentwith the usual incidents and privileges of ownership. This Includes the power to execute oil and gas leases covering landswhich such association owns in fee,Honorable John C, White, page 5 (W-303)

As to associations organizedunder the Marketing and Warehouse CorporationsAct, Chapter3, Articles 5578 through 5611, Tex. Clv. Stat. (Vernon,

### 1948),ArtioIe 5579, in stating the powers of such associations,provides In

### part:

” Theymay erect, and op&& warehouses, bul chase or lease, g, e3Ievator6, gins, storage tanks, silos, and euoh other places.of storageand securlty,armay 

### be neoeaeary for the storage,grading,weighing and classificationof cotton, and all farm products, and for the purpose of preparing suchproducts for the market. (Emphasisadded).
The power to purchase such facilities is, of course, the power to own them; likewise, the power to own the enumerated facilities of storagemust 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 normalprivileges of ownerahlp, including the power to execute 011 and gas leases coverlng such lande. Of course, this Is subject to the limitationsplaced upon corporate ownership of landunder the general corporation law8 of the State of Texas.

SUMMARY

Non-farmers living in a rural agrarian communitymay not be members of an association organizedunder the Cooperative Marketing Act, Chapter8, Articles 5737, through 5764, Tex, Civ. Stat. (Vernon, 

### 1948),unless suchnon-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 associationmay be organizedunder this Act to supply water to its members only for the production and cultivation of citrus groves; however, no such associationmay be organized to supplywater to those engaged In the production of other agrlcultural products. A cooperative associationHonorable John C.White, page 6. (WW-303)

organizedunder the Markets and Warehouse CorporationAct, Chapter 3, Articles 5578 through 5611, Tex. Civ. Stat. (Vernon, lg48),
or under the CooperativeMarketing 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 limitation8placed 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