OFFICE   OF Ti-iE ATTORNEY    GENERAL   OF ‘TEXAS
                     AUSTIN
: .
      'icaorsble   C&o. Ii. QSm?parb, Psy, 2
                                               J
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                                                        16



:icnorableGoo. Es.3lleppax& Psg3 3




           %‘h% coEtcn l6 to be dellvemd to the Ass+.
     CiSEiQn u1thout anj ~rovzslon f3P its Pet;lm;
     the Asscclatlon  ln auth~rlwd to have fib cottca
     baadIed, pmwssed md stored; it is nut'korlzed
     to bomov nunsy oa, pool, sad aoil tba cotton;
     Ln other woti6, Lb Asaoelatlon 16 authorized to
     exerci,se all aota of onmrship cm%2th.6 cottcn
     after Its delivarg, subject only to tae Vii)thud
     pmsoribed COP d.eteraFTllag its pice.”
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                                                                   17   /



lkmorsblo (30. X. Sheppmd, Pajgb 4


A~~oolatlm    at the tlse   of the Cellrsr7 of hi3 p&aduce and
desp1.t~ the fcot that    the agreemeAt vlth t!! &3soo5.atlon la
ccuchsd in tswa of “salr end delivs;r*3,” the Supreme Co&
has held that contrsota of this klzx3 do not involve an “ab-
solute sale,” a%d *has said Lbt     the Asaooiatlon aots xcerol~
2.3 a selling. agent sor its ri?erdbeTa.Thus in f3X38 Certified
Cottonased areedors’ AJmoclatlcm V. Aldr1dge, 61 3. Y. (2d)
‘79, tb Court said at pp. 824333
           WI0 oon8t;ruotioA of this CoAtraot osy be
     based upon ore oardlnal rule; viz., What VW
     t?le Intentian of the partlea thereto vhexl oon-
     mw8d in cmneation vith the hiszorg 0r the
     class of legislation     and the puqmsea sou&xt
     to be nttsined?     that is the natme of the
     title by vhLch an J88OOihtiXl holds proprty’
     vhlch it la narkshlsl3 for its hmnbers? To
     Vhat CZ’tent do%8 it act in its OVX'Corporate
     r:zht aid to w&t extent Is a fZduc%aq cap
     city? 9x3 l.At?ultlon of the parties to J con-
     treat vlll oontml.        If necesaaq?, to g1ob ef-
     foot to the Intention of the ptwtier courhl
     will brush saida mere foam and e.xaMne the in-
     stmrment aa a vhols), in the 1-t       017the na-
     turs and csxoumst8nces of ths tPans~tloll, w1t.b
     a villv of ascertaining the true int8Atlnu of
     the paW.es esFcw%d in the instrumant. Co-
     O~eMtivs zlil&rbting a8soaletloAa and t.blr
     o_p9ration8 have brought th8l.r share of mzf
     groblwm , TPx9yhave taken thsFt* place IA the
     bua~~ess vorld, rrnd deslox-a, mmf?~~tu~bre,
     cr.0 busk~e88 m%nin @A@'-        XY wlp;r   tb%iP
     cca;rrsodditles. The low and t!z%contracts   sre-
     cutad tkemmnder authorize the oraociatian to
     rcnrk0kend se11 ‘co ayloultural       prcdmtr of
      1ta Denlb%r8. The asaoblatlozlIS zads the
     tigSAt Of 1:s WSFI~~I'St0 -S        th8fP >FO&IOtS;
      it is given the autioritj     to borrov nor?q on
      the prodzrots and to pledge 8am an aeourit-jy
      Sor ails of Ita obllgatlona,     It also haa thb
      rl$t   to diotrlbute    the noney so box-ored a8
      adva~css equitably among the b--cedersia ?co-
      portion tp tbelr delivery to the assool3tlon,
                      .
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:



    m.noraSle Gee. II. Seapazd,         page 5


         OS say us4 6iay prt      tbreof   in it3 busbmss
         oper6tioAa.    The   tlttt.4of the ccaimcdltlea In
         pl.acsd Sa the as8oalatlon to carry out thesfi
         yarpor4s.     The authority 0an5wred upon t&a
         as8ool8tlm Is A4c4saapg for it to operata
         erzd function auco4safully~       It ha8 no ss8sta
         axcepk the canmoditles dellvwred        to it by the
         msmbsss of the aaeooiatlcxa. It i8 8 AOA-
         stock ti    nonprofit ooncern, and ltmunt de-
         pccndSolirly for its existonce upon the con-
         tmiota tie      tith its ambern.     '30 acoa@.Lsh
         this ad, the I,qs$slotum        has announced that
         ftuusth8Adls        0Aly th4 psoduota of :tslR4m-
         bms, and will not couqttma~ce a dItied            a~erv-
         ice ‘by potitt*        it to h8Adlo th+ produoto
         or noAuleIabers.
                'The afd of the gwt    f"2n*nclsl instl-
         tl.ltions of tzIt3country in essential to the
         auccesa oi these nsaociations.      The sasoaia-
         tlonnust have fln6nof3l aasI.stanoe before
         It can fonotfon, Fmd the ageA must hsve
         paver to pool ?mdas11 tba ocasxx3lt~.w it
         osfosa SOS sale or plsdgs Sara4 a8 34cur4ty.
         30s “si4sa pusperer there 18 no 1lalt8t1cn
         65 to the suthosltq conferred upon th0 s3so-
         ciotian.    Thw Saxxiess 33 a gsoup Som th4
         a~soo?atfon, 6ucj sppolnt It to aot 8a thalr
         aelmlg qe+nt. TheJ tun OYDS t0 th0 8SSO-
         ~lntlon thefs coansoditl.es to be pooled zmd
         Sold sn the z#rket to tb beat      sdvantages.
         Sov(~ver, the 0PSicera 0P the ssaoolation
         have the oontsolllxq deci~1or.aas to when
         a?&hov the asle Shall be EL%%. %-I.28p4l~
         nits t.343assooL3tlcm to glace the oomaodl-
         if%8 in iia hands for SSl4 Vhan the cOndf-
         tlms ore Ssvorable, and arevents a dzq-
         kg on the market of commoditisl for vhLch
         them la no demand.
              'by t% tams OS the oontmat the grov-
         er hss surm~oxwd control over the o&e of
         hi3 grxhct, .Szd t&F&y to this 4Xt4At ha3
pw 6

¶.laportant
        .._ element
                ..m of
                                                                                           20




     lnten!Aox.iof themmben         tocreateat2weco-
     operative markatZ.ii assooiation, under tlio
     potters tuuaueralxxlby inu and by tSe cootnatrr,
     t-2 perfarm certain aervicsa exolusllrelg for
     its members, and to hold l-3 tao rsos or t
     Isltentlon that tha delivery of the need co t?ze
     aosooFation was an absoluco       aa30 would aestroo
     It as A co-oporatin       Ixum!Cet~ aasoufation.
     The menbe~~ hsvs oonrerrttd on this cusoolatlcll,
     es ttrsitr eelU3lg a@&,       such title  to the cotton-
     3eed vzth ~lwlary povem to handls and bie,pore
     of aamo, but the sssoal3t’%on barrdIes tlas,pro-
     coeds theroof for the ‘behsflt of itseU axl its
     mt3a ~r a l   see sohlBon Y. staple cotton cw-op.
     Asa%, 142 ‘mar. 312, 107 so. 2; T~bCbCCO        Grim-
     ers* Cc-o& Ararn ww Sow%, ~18533. C. 255, Xl7
     5. 23. 174 , 33 A. L. R. 231; ~Darpartnne V.
     ihttsr Ii111 Z'mit iPnr9m'       Asr‘n, 122 8%. 138,
     119 A. ll61 Phar: Co. v. Ss1e.mF-t         Won,   Icl3
     or. 514, 201 P. 222, 205 P. 970, 25 h. L. 33.
      10900; c~hdga~.uv     .SBV~~W r0r abma;?3r, 1923,
     p* 91.# (Xi@aals added)
           Sootion 19 of Arc;Zola            VIII    of our ConsWtuutlnn pro..
vlder 3
           “arm produots in tha t?andaOf the prs
    ,ducer, snd fl3ullly aupplled for hgpe &LJIdiparn
     use, a.ro exempC from all taxatiaz.8 3zM.l othe.r-
     vlss direated by a two-thirda vote of all tie
     iaf#d%WB @?b?diOd tQ          both   hOUB%B    Of    the L.CQiSbb-
      turs."

Fl-z?a
     L.egislaturo   ha8 never by e tuc-th%rda vote of all srerPbers
OP bid21 hou~fi~ 3.mpo~eds   tax on rim  imnhcts in the handr 0r
the producer,

            In   vit!in of   t5a    owst~otlm            giV#Zt   by   OUT   CoUrta   to
arranomento of the tgpe mds~ ~onsldaration,    ve feel that t%e
p?easlts tivolv9d irt Lao hstsnt qumJtim a.re still       *ran% pm-
ducts in the hsnde of the producsr~ withIn the me-            of the
&wre-quoted prorisiorr snd a3 such my not be tcwed. The ob-
vious purf;we   0i seeti0n 19 WBB t0 gmv=t  th   ii320dtion      0r
Honorable ~0.    H. &sppwd~     ~a~3 8


3 tax on ,40x-uproducta vhen swh tax vould beti dlmmUy
upon the producer of such products.  This purpose cannot
be accompl3.shedif ttuea are levted upon goods held aa ars
the peanut-s i.n the instantaituation,    for   the burdenof
such taxes vould inll dirmtly qnm the ~raducem of such
goodal. Coneaquently, notuithrt~        th3 faut thst lags1
.tltla to the peanuto Is vsstsd  in the corporation  mther
than .tn t&3 pPDdu~~)rs, you are xwspectfully advised that
tha mwmto are r,ot subject to taxation axid your westion
ia ivlsversd In the nega?civa.

           Wua)tU   that tha furegokqx sntisfactor%lp          ansY3rs
pour i.lquFrJ, v9 -Peaah



                                         YOUM very truly
