Court Opinion

ID: 5161917
Source: CourtListenerOpinion
Date Created: 2022-01-02 02:55:12.513076+00
Date Added: 2024-06-11T08:25:10.630267
License: Public Domain

I dissent. The majority opinion misinterprets the rights of the Dairy Association and seriously confuses its annual right not to renew the producer's agreement with its right to expel a member at any time for cause. The net effect of the majority opinion is that the Dairy Association is locked into a producer's agreement to purchase milk from the producer for twenty years unless the Association can find good cause to expel him. On the other hand, the member/producer has the unconditional right each year to opt out of the agreement.
The Association was organized under Utah Code Ann. § 3-1-17
(1982). That section deals with contracts between the Association and its members and provides in part:
 (I) The bylaws may require members to execute contracts with the association *Page 544 
in which the members agree to patronize the facilities created by the association, and to sell all or a specified part of their products to or through it. . . . If the period of the contract exceeds three years, the bylaws and the contracts executed thereunder shall specify a reasonable period, not less than ten days in each year, after the third year, during which the member, by giving to the association such reasonable notice as the association may prescribe, may withdraw from the association; provided, that if the bylaws or contracts executed hereunder so specify a member may not withdraw from the association while indebted thereto. In the absence of such a withdrawal provision, a member may withdraw at any time after three years.
In conformity with the above statutory mandate, the Dairy Association adopted its by-law No. 8, entitled "Withdrawal":
 WITHDRAWAL: There shall be designated in the Marketing Contract a period of ten days in each year during which the member may withdraw, by serving upon the Association written notice of intention to withdraw.
This statutory right of withdrawal afforded to each member is also inserted into the "Membership Application and Agreement" signed by each member when he applies for membership. It there provides:
 It is also understood and agreed that this agreement shall remain in force and effect for one year from date and shall be terminated then only by either party giving the other party notice in writing that it intends to abandon this contract between the first and tenth day, inclusive, of the month of June.
(Emphasis added.) It is to be noted that the above provision extends the annual right of withdrawal to the Association as well as to the member. Likewise, in the producer's agreement with the Association, the same annual right of withdrawal is afforded to each party. Paragraph XIII provides:
 This contract shall remain in force for a period of ten (10) years from date, unless cancelled in writing by either party between the first and tenth day, inclusive, of the month of June of any year, written notice of such cancellation to be served upon the opposite party, provided, that a member may not cancel this contract and withdraw from the Association while indebted thereto. This contract shall be automatically renewed for an additional period of ten years unless sooner cancelled in the manner set forth in this paragraph.
(Emphasis added.)
In summary, while section 3-1-17 and by-law 8 guarantee the member his basic right to withdrawal annually, should he choose to do so, the membership application and agreement and the producer's agreement also extend that right to the Association. There being no restriction in the statutes or in the articles of incorporation or by-laws against the Association's enjoying that right, the Association and the member/producer were free to include it in their contract. Section 3-1-17 and by-law No. 8 are part of the members' "Bill of Rights" and do not purport to deal with or preclude the Association from enjoying the annual right of withdrawal, if contractually conferred. In essence, membership in the Association and the term of the producer's agreement are for a one-year period, but they are automatically renewed annually unless the member or the Association affirmatively acts to terminate them. Unless either the member or the Association opts out, membership and the contract could remain in force for as long as twenty years.
The majority opinion recognizes the annual right of the member to withdraw, but denies this same right to the Association although the rights of both parties spring from the same language in the membership application and agreement and in paragraph XIII of the producer's agreement. Nothing could be clearer than that both parties have that right unconditionally. The majority has confused this annual right to opt out with the unrelated right of the Association under article IV of its articles of incorporation to terminate a membership *Page 545 
and the producer's agreement for cause:
Article IV
. . . .
Termination
 The Board of Directors by a three-fourths (3/4) vote may for cause determine that it is for the best interests of the Association that any membership contract may be terminated. Termination of any producer's marketing contract shall thereby terminate such person's membership in the Association.
By-law No. 7 similarly affords the Board the right to terminate a membership at any time when good cause is found:
TERMINATION OF MEMBERSHIP:
 The association shall have the right to terminate and cancel memberships whenever it appears to the Board that the holder thereof is ineligible to hold the same, or that he has violated the Articles of Incorporation, the By-laws, the Marketing Contract, or other regulations of the Association.
It is to be noted that since the expulsion must be for cause, it can occur at any time and is not limited to or related in any way to the unqualified privilege during the first ten days of June to opt out and decline to renew the contract and membership for another year. Significantly, article IV and by-law No. 7 are entitled "Termination," whereas by-law No. 8 is entitled "Withdrawal."
The majority seriously errs in merging the two separate and distinct rights and in then concluding that the annual right of the Association not to renew a producer's agreement must be for cause, but the producer may elect not to renew for any reason or no reason at all. The net result of the majority opinion is that the Association is locked into a twenty-year contract with the member/producer unless the Association can find good cause to expel him. This would be a highly incongruous result and one which it appears the parties did not intend. It is abundantly clear that by-law No. 7, dealing with expulsion from membership for cause, and paragraph XIII of the producer's agreement and the membership application and agreement, conferring the annual right of each party not to renew the contract for another year, do not deal with the same subject and should not be merged in their application.
Inasmuch as the Dairy Association gave written notice to plaintiff during the first ten days of June in 1982 (and again in 1983) that it elected not to renew the annual agreement, pursuant to section XIII, the legal relationship of plaintiff and defendant ended. It is true that in 1982 the notice came on the heels of the May 26, 1982, resolution by the Association's Board of Directors, but the notice did not refer to or depend upon the resolution. The notice of nonrenewal by its very terms was pursuant to paragraph XIII and did not spring from any violation by plaintiff of the May 26 resolution, although plaintiff's refusal to pay the assessment may well have motivated the Association to exercise its right to opt out of the producer's agreement.
I would affirm the judgment of the trial court upholding the right of the Association not to renew its contract with plaintiff and would award the Association attorney fees (under paragraph VI) which it incurred in enforcing its right to opt out of the producer's agreement.
Under the view that I take of this case, it is unnecessary for us to decide the validity of the May 26 resolution. However, as an aside, it does not work the discrimination contended for by the majority opinion. On the contrary, my view of the resolution is that it imposes upon Utah members of the Association the same obligation as is imposed upon Idaho members to pay a 1 percent fee for the promotion of the sale of dairy products. Idaho producers are required by Idaho law to pay the fee, and they have no statutory right of refund. Since Utah members have the right of refund and some members were exercising that right, the May 26 resolution endeavored to bring equality by requiring the Utah producers who received a refund from the Utah Dairy Commission to pay that amount to the Association to promote sales. I therefore view the resolution as promoting equality rather than creating *Page 546 
inequality as does the majority opinion. I find no support in the record for the assertion of the majority that the effect of the resolution is that Idaho members pay 2 percent and Utah members pay only 1 percent. Even plaintiff does not make that claim. His complaint is that the May 26, 1982, resolution was made effective retroactively by the Association so as to require him to pay to the Association his statutory refund for 1981, which he had already received. Since the Association did not rely on his disobedience of the resolution for its termination of the agreement with him, plaintiff's contention need not be answered. It should be observed, however, that plaintiff is a Utah producer and the resolution could not discriminate against him even under the majority's interpretation of it.
DURHAM, J., concurs in the dissenting opinion of HOWE, J.