Cooperative Dairymen's League v. Hansen

[495]

THE COURT.

An appeal by the plaintiff from a judgment entered in favor of the defendants.

Plaintiff (which will be hereinafter referred to as the league) is a nonprofit cooperative corporation composed of dairymen producing milk for sale in Alameda County, and the defendants are copartners engaged in the dairy business in that county. The league was incorporated in 1925, its purpose being to market the milk produced by its members, to the end that uniform prices might be obtained and the income proportionately distributed. Following its incorporation, by-laws were adopted and officers and directors were elected. Public meetings were held with the object of inducing dairymen to join the organization. In June, 1926, such a meeting was held in the town of Newark, at which the league’s general manager presided and the defendants were present. The defendants were at this time under contract to sell all their product to another dealer, and this contract, at the option of the latter, had several years to run. This fact was discussed; and there was evidence of an understanding that although these defendants would be unable to deliver their milk to the league during the term of the existing contract, they being the largest producers of milk in the locality, their identification with the league would have the effect of inducing others to join and thus strengthen the organization. Defendants’ existing contract provided that they should receive the current wholesale price for their milk; and it is admitted that the success of the league would tend to increase or maintain current prices. At the meeting mentioned defendants signed a membership contract; but it was testified that it was verbally agreed that this should not take effect until the expiration of the existing contract. It was agreed, however, that they should pay the regular dues as members of the league. The trial court so found; and although there was evidence of defendants’ participation in the management of the league’s affairs thereafter, which tended to show that they became members at the time, nevertheless the conclusion of the trial court is fairly sustained.

In this connection plaintiff contends in effect that defendants, by the provisions of their existing contract, were not obligated to deliver their product from year to year. But one paragraph of this contract was placed in evidence, the material portion of which reads as follows: “As a further