Untitled Texas Attorney General Opinion ( 1957 )

WILL WII%ON
Ax=rORNmcY GSNFXZAX. November 22, 1957
Honorable John C. White Opinion No. UW-303
Commlaaioner, Texas
Department of Agriculture Rer Interpretation of the
Austin, Texas Cooperative Marketing
Act, Chapter 8, Articles
5737 through 5764, Texas
Civil Statutes, relating
to non-farmers living in
a rural agrarian communi-
ty being charter members
of cooperative associa-
tions 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 Depart-
ment 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 pur-
pose 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 ,memberthereof, duly authorized In
writing. (c) Any association as defined in
Article 5738(c) may become a member or stock-
holder of any other association or associa-
tions 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 asso-
ciation, including lessees and tenants of land used for pro-
ducing 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 agricul-
tural 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 de-
termined 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
q
produce
or In the harvesting, preserving, drying,
processing, canning, storing, handling,
shipping or utll.lzatlonthereof, or the
manufacturing, or marketing of the by-
products 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 activ-
ities 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 connec-
tion with the production, cultivation and care
of citrus groves and the marketing, selling,
harvesting, preserving, drying, processing,
canning, packing, storing, handling or utill-
zatlon of any agricultural products produced
OP delivered,to it by its members, or the pro-
duction, manufacturing or marketing of the by-
products 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 char-
ter, 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;sis an Sfotlvlty
which Is "necessary, suitable and proper to the production,
cultivation and care of citrus groves', provided such asso-
ciation 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 asso-
ciation 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 agricul-
tural 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 be-
lieve 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 in-
cidents 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, chase or lease,
and op&& warehouses, bul g, e3Ievator6,
gins, storage tanks, silos, and euoh other
places.of storage and securlty,ar may be neo-
eaeary 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 facil-
ities 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 cor-
porate 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 asso-
ciation 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 pro-
duction and cultivation of citrus groves;
however, no such association may be
organized to supply water to those en-
gaged In the production of other agrlcul-
tural 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, Chap-
ter 8, Articles 57 through 5764, Tex. Clv.
Stat. (Vernon, 1948 , 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 aor-
poration lawa of the State of Texas.
Yours very truly,
WILL WILSON
Attorney General of Texas
BiiT:pf:zt
y
B. H. Timmins, Jr. P
APPROVED:
OPINION COMMITTEE
Geo. P. Blackburn, Chairman
L. P. Lollar
Arthur Sandlin
Richard Stone
REVIEWED FOR THE:ATTORNEY GENERAL
BY: James N. Ludlum