Irvine Co. v. McColgan , 26 Cal. 2d 160 ( 1945 )

SHENK, J.

I dissent. In order to arrive at their conclusion the majority have by-passed the authorities which distinctly hold that the cooperative is the agent of its members, not&bly such eases as California Bean Growers Assn. v. Rindge L. & N. Co., 199 Cal. 168, 181 [248 P. 658, 47 A.L.R. 904]; Poultry Producers v. Barlow, 189 Cal. 278, 279, 281 [208 P. 93]; Haarparinne v. Butter Hill Fruit Growers Assn., 122 Me. 138 [119 A. 116]; Johnson v. Staple Cotton Cooperative Assn., 142 Miss. 312, 331 [107 So. 2]; Brown v. Staple Cotton Cooperative Assn., 132 Miss. 859, 889 [96 So. 849]; Cole-McIntyre-Norfleet Co. v. DuBard, 135 Miss. 20, 32 [99 So. 474]; Spencer Co-op. Live Stock Shipping Assn. v. Schultz, 209 Wis. 344, 346 [245 N.W. 99]; Mountain States Beet Growers Marketing Assn. v. Monroe, 84 Colo. 300, 311 [269 P. 886]; Industrial Commission v. United Fruit Growers Assn., 106 Colo. 223 [103 P.2d 15]; Texas Certified Cottonseed Breeders’ Assn. v. Aldridge, 122 Tex. 464 [61 S.W. 2d 79, 82]; Kansas Wheat Growers Assn. v. Board of Com’rs of Sedgwick County, 119 Kan. 877 [241 P. 466]; Oregon Growers Cooperative Assn. v. Lentz, 107 Ore. 561 [212 P. 811], They have been at great pains to draw an analogy between a cooperative and an independent broker. Identity of the two does not exist either in economic function or in legal contemplation.

The broker is an independent contractor, who deals with all who consign products, and who after sale returns the proceeds to the consignor, making deduction for expenses and a profit for himself. The cooperative has no independence. Its services may be and are performed by its members, and for its members only. Its function is to receive, process, distribute and sell the products of its member growers, returning to its members the proceeds less expenses only. Since members are obligated to deliver their entire crop to the cooperative and operate on a mutual help basis exclusively for themselves it is immaterial whether the reciprocal obligation is written in terms of sale or agency. The same result obtains as to a cooperative distributing agency having a membership exclusively of cooperative producer organizations. They are likewise mutually dependent and exist only for their cooperative members, who in turn exist only for their member producers. Both are strictly nonprofit. Both belong to the producer who has a voice in and directs the affairs of the cooperative marketing association and through it the cooperative distributing agency. The fallacy in the majority’s conclusion that the plaintiff’s activity ceases when it delivers produce to the cooperative marketing association lies in the statement that the plaintiff does not determine the manner, place, or time of sale, nor the prices and quantities of produce sold. On the contrary, as a member of the cooperative marketing association, the plaintiff has a voice in the cooperative management through a properly constituted board elected by the members.

The state has recognized the economic desirability of cooperative marketing associations by setting up the machinery for their organization and operation. The majority have not demonstrated why the members of such associations are not entitled to the full benefits flowing from the legislative recognition. The problem is not solved by talk of tax evasion or creating opportunity for tax evasion. The problem, if there is one, is for the Legislature and not for the courts. The courts would be quick to detect evasion by the discovery of a mere legal cloak of cooperation which does not in fact exist. Since the Legislature and the courts have recognized the cooperating members as the cooperative organization when they are organized in accordance with law for cooperative purposes, it is not for the court to say that they shall be recognized as such for one purpose but not for another.

The trial court found on sufficient evidence that the plaintiff was, in part, doing business in the State of New York, and the formula of allocation under the statute has not been successfully questioned by the defendant. In my opinion the judgment should be affirmed.

Schauer, J., concurred.

Respondent’s petition for a rehearing was denied April 19, 1945. Shenk, J., and Schauer, J., voted for a rehearing.