                            .




                 THEATTORNEYGENERAL

                                 OF    TEXAS

GERALD C. MANN                  AUSTIN   11.TEXAS

*ITORNEYGENERAI.




   Honorable Charles T. Banister
   Criminal District Attorney
   Navarro County
   Corsicana, Texas
    Dear Sir:                         Opinion No. O-2874
                                      Re: Application of anti,-trustlaws to
                                           agreement among a group of dairg-
                                           men to fix the price of milk.
             We have your letter of October 30th wherein you request
    ouropinion on the following question:
             "Is it a violation for a group of dairymen
        to agree that a certain price for milk is a fair
        price and a fair return for labor expended, and if
        sold at a lesser price it would be at a loss, and,
        as if and when agreed, could they advertise the
        agreed price with each dairyman's name published in
        a local newspaper?"
             The statutes against trusts, monopolies, and restraints
    of trade are contained In Chapter 3 of Title 19 of the Penal Code
    of Texas and in Title 126 of the Revised Civil Statutes of Texas.
             The situation outlined by you above, Is clearly within
    the letter of Article 1632 of the Penal Code and Article 7426 of
    the Revised Civil Statutes. However, Article 1642 of the Penal
    Code, contained in Chapter 3, Title 1.9,expres8ly exempts agricul-
    tural products while in the hands of producers, from the operation
    of the criminal provisions of the antic-trustlaw in the following
    language:
             "No provision of this law shall apply to
        agricultural product8 or live stock while in the
        hands of the producer or raiser."
             In the recent case of Ex Parte Tigner, both the Court of
    Criminal Appeals of Texas (,l32S.W. (2d) 855) and the United States
    Supreme Court (84 Law Ed. 756) expressly approved the exemption
    of agricultural products in the hands of producers from the Texas
    criminal anti-trust law, and declared that the law was not uncon-
    stitutional by reason of such exemption. Under the authority of
    this case, and mindful of the rule that criminal statutes are
    strictly construed, it is our opinion that an agreement among a
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Honorable Charles T. Banister, page 2           o-2874



group of dairymen as to the price at which they will sell milk
produced by them does not constitute a violation of the criminal
provisions of the anti-trust laws.
         No such express exemption for agricultural product8 is
to be found in Title 126, of the civil statutes, relating to
trusts. The Cooperative Marketing Act of 1921, which appear8
as Chapter 8,'Title 93, Articles 5737 et seq., in the Revised
Civil Statutes, 1925, contains an express exemption for Coopera-
tive Marketing Associations from the anti-trust laws in Article
5762 which reads:

            "No association organized hereundershall be
       deemed to be a combination in restraint of trade or
       an illegal monopoly; or an attempt to lessen compe-
       tition or fix prices arbitrarily; nor shall the
       marketing contracts or agreements between the associ-
       ation and its member8 nor any agreements authorized
       in this chapter, be considered illegal or in restraint
       of,trade."
         In State v. Standard Oil Co., 130 Tex. 313 107 S.W.
~~",?e5,'~,b",ht;~~l~~~~c~oCcifeton
                                declared Article 5762, quoted
                            Fn deference to the holding of the
United States Supreme Court in Connolly v. Unlon'Sewer Pipe Co.,
184 U.S. 540, 22 S. Ct. 431, 46 L. Ed. 697. A majority of the
court; however, expressed the view that Article 5762 was not in-
valid, but that the exemption of Cooperative Marketing associa-
tions constituted a reasonable classification of subject matter.
In this view the United States Supreme Court concurred in Ex
Parte Tigner, supra; and since that case expressly overruled the
early Connolly case, there can now be no question but that the
Cooperative Marketing Act consitutues a valid exemption from the
anti-trust laws, both civil and criminal. Contracts entered into
by Cooperative Marketing Associations have been consistently sus-
tained by Texas courts, although such contracts had for their mr-
pose the stabilization of prices of agricultural commodities, and
restricted trade therein by members of such associations. See:
Texas Farm Bureau Cotton Ass'n. v. Stovall, 113 Tex. 273, 253
S.W. 1101; Lennox v. Texas Cotton Co-op Ass'n. (Tex. Corn.App.)
55 S.W. (2d) 543; Hollingsworth v. Texas Hay Ass'n. 246 S.W. 1068;
Central Texas Dairymen's Ass'n. v. Jones, 67 S.W. [2d) 896. In
each of these cases one of the parties to the contract or agree-
ment before the court was a corporation duly organized under the
Cooperative Marketing Act.
         In Fisher v. El Paso Egg Producers' Ass'n.   278 S.W.
262, the El Paso Court of Civil Appeals held a markeiing agreement
among a group of producers invalid under the anti-trust laws by
reason of the fact that the producer8 had failed to incorporate
under the Cooperative Marketing Act and consequently had failed
                      -     -




Honorable Charles T. Banister, page 3           O-2874


to qualify under that act so as to receive immunity from the civil
anti-trust laws. We quote from the opinion of the court in that
case:
          "Is the marketing agreement of appellee in vio-
    lation of the above provisions of our statute? (Sec-
    tion 1 of Article 7796, R.C.S., 1911, which is Article
    7426, R.C.S., 1925) If it is, and not being an incor-
    porated body and exempt from the above as a co-opera-
    tive marketing association under the provisions of our
    statute above referred to (Coop. Marketing Act), it is
    a 'trust' and its marketing agreement cannot be en-
    forced."
         We conclude that the agreement among the dairymen to fix'
the price of milk to be sold by them as described in your letter,
constitutes tiviolation of Article 7426, Revised Civil Statutes
of Texas, 1925, unless such dairymen'have organized a.Coopertive
Marketing Association, duly incorporated under the provisions of
Article 5737 et seq., R.C.S., and the agreement described by you
is in fact the marketing agreement between such association and
its constituent members.
                                  Yours very truly
                                Attorney General Of Texas
                                  By s/ Walter R. Koch
                                        Walter R. Koch
                                        Assistant

WRK:BRB:wc

APPROVED NOV 20, 1940
s/Gerald C. Mann
ATTORNEY GENERAL OF TEXAS
Approved Opinion Committee By s/BWS Chairman
