U.S. Supreme Court FROST v. CORPORATION COM'N OF STATE OF OKL., 278 U.S. 515 (1929)

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petition by the Durant Company would be illegal; and that to issue a license which authorized such competition would take Frost's property without due process of law and deny to him the equal protection of the law. The District Court denied both the injunction and the motion to dismiss; and it dissolved the restraining order. Upon direct appeal by Frost, this court affirmed the interlocutory decree per curiam in Frost v. Corporation Commission, 274 U.S. 719, 47 S. Ct. 589, on the authority of Chicago Great Western Ry. Co. v. Kendall, 266 U.S. 94, 100, 45 S. Ct. 55. Thereupon, the facts being stipulated, the case was submitted in the District Court on final hearing to the same judges; and a decree was entered dismissing the bill. 26 F.(2d) 508. This appeal presents the same questions which were argued on the appeal from the interlocutory decree.

Under the Oklahoma act of 1907 cotton gins were held subject to regulation by the Corporation Commission. [Footnote 2] In 1915, the Legislature declared them public utilities and restriction of competition was introduced by prohibiting operation of a gin without a license from the commission. That statute required that a license issue for proper gins already established, but directed that none should issue for a new gin in any community already adequately supplied, except upon 'the presentation of a petition signed by not less than fifty farmer petitioners of the immediate vicinity.' Session Laws 1915, c. 176 (Oklahoma Compiled Statutes 1921, 3712-3718). Chapter 191 of the Session Laws of 1923 struck out of section 3714 the provision referring to farmers. But in 1925 there was inserted in lieu thereof the proviso, 'that on the presentation of a petition for the establishment of a gin to be run co-operatively, signed by one hundred (100)

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violate the quality clause. Whether the license was issued to Frost upon a showing of necessity does not appear. The mere granting of a license to the Durant Company later on different, and perhaps easier, terms would not violate Frost's constitutional right to equality, since he has already secured his license under the statute as written. The fact that some one else similarly situated may hereafter be refused a license, and would be thereby discriminated against, is obviously not of legal significance here. Southern Railway Co. v. King, , 30 S. Ct. 594; Standard Stock Food Co. v. Wright, 225 U.S. 540, 32 S. Ct. 784; Jeffrey Mfg. Co. v. Blagg, 235 U.S. 571, 35 S. Ct. 167; Arkadelphia Co. v. St. Louis S. W. Ry. Co., 249 U.S. 134, 149, 39 S. Ct. 237; Liberty Warehouse Co. v. Tobacco Growers, , 48 S. Ct. 291.

Fourth. Frost claims on another ground that his constitutional rights have been violated. He says that what the statute and the Supreme Court of Oklahoma call a license is in law a franchise; that a franchise is a contract; that where a constitutional question is raised this court must determine for itself what the terms of a contract are; and that this franchise should be construed as conferring the right to the conditional immunity from competition which he claims. None of the cases cited lend support to the contention that the license here issued is a franchise. [Footnote 3] They hold merely that subordinate political

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bodies, as well as a Legislature, may grant franchises; and that violations of franchise rights are remediable, whoever the transgressor. Moreover, the limited immunity from competition claimed as an incident of the license was obviously terminable at any moment. Compare Louisville Bridge Co. v. United States, 242 U.S. 409, 37 S. Ct. 158. It was within the power of the Legislature, at any time after the granting of Frost's license, to abrogate the requirement of a certificate of necessity, thus opening the business to the competition of all comers. It is difficult to see how the lesser enlargement of the possibilities of competition by a license granted under the 1925 proviso could operate as a denial of constitutional rights.

It must also be borne in mind that a franchise to operate a public utility is not like the general right to engage in a lawful business, part of the liberty of the citizen; that it is a special privilege which does not belong to citizens generally; that the state may, in the exercise of its police power, make that a franchise or special privilege which at common law was a business open to all;4 that a special privilege is conferred by the state upon selected persons; that it is of the essence of a special privilege that the franchise may be granted or withheld at the pleasure of the state; that it may be granted to corporations only, thus excluding all individuals,5 and that the Federal Constitution imposes no limits upon the State's discretion in this respect. [Footnote 6] In New Orleans Gas Co. v. Louisiana Light Co., 115 U.S. 650, 6 S. Ct. 252, the plaintiff,

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tions. In the nonstock type the capital is obtained parly from membership fees, partly through dues or assessments and partly through loans from members or others. And for fixed capital it substitutes in part personal liability of members for the corporation's obligations. [Footnote 7] In the stock type there are eo nomine dividends on capital and patronage dividends. In the nonstock type the financial benefit is distributed by way of interest on loans and refunds of fees, dues and assessments. And all funds acquired through the co-operative's operations, which are in excess of the amount desirable for a 'working fund', are to be distributed as refunds of fees, dues, and assessments. Both acts allow business to be done for nonmembers; and though the nonstock association may, it is not required, to impose obligations on the nonmember for the liability of the association. Thus, for the purposes here relevant, there is no essential difference between the two types of co-operatives.

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of a single share shall constitute the holder a member of the association; that only 8 per cent. 'interest' shall be paid on the capital; that the balance of the profits shall go 'either to increase the capital or business of the association, or for any educational or provident purposes authorized by the association,' or be distributed as patronage dividends; and that the patronage dividends be distributed among customers, except that nonmembers should receive only one-half the proportion of members. [Footnote 8]

The need of laws framed specifically for incorporating farmers' co- operatives being recognized, Massachusetts enacted in 1866 the necessary legislation by a general law which differed materially from that under which commercial organizations were formed. The statute provided for co- operatives having capital stock. [Footnote 9] Before 1900, 10 other states had enacted laws of like character. [Footnote 10] After

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1900 many such statutes were passed. Now, only 2 states lack laws making specific provision for the incorporation of farmers' co-operatives. [Footnote 11] Thirty-three states, at least, have enacted laws providing for the formation of co-operative associations of the stock type. All of them permit a fixed dividend on capital stock, the doing of business for nonmembers, and the distribution of patronage dividends. [Footnote 12] Some of them, recognizing the need for elasticity, impose the single requirement that earnings be apportioned in part on a patronage basis, and leave all other provisions for organization and distribution of profits to the by-laws. [Footnote 13]

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in number. [Footnote 14] The earliest law of this character was the crude measure enacted in California in 1895.15 Statutes of that type have been passed in about 16 States;16 but 10 of these have also laws of the stock type. [Footnote 17] The enactment of state laws for the incorporation of nonstock co-operatives and their extensive use in the co-operative marketing of commodities, are due largely to the fact that, prior to 1922, the Clayton Act, October 15, 1914, c. 232, 6 (38 Stat. 731; 15 USCA 17), limited to nonstock co- operatives the right to make a class of agreements with members which prior thereto would have been void as in restraint of

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'And in any case to the following: 'Third. That the association shall not deal in the products of nonmembers to an amount greater in value than such as are handled by it for members.'

Congress recognized the identity of the two classes of co-operatives, and the distinction between agricultural stock co-operative corporations and ordinary business corporations, also, by providing in the Revenue Act of 1926, c. 27, pt. III, 231 (44 Stat. 39; 26 USCA 982), that exemption from the income tax was not to be denied 'any such (co-operative) association because it has capital stock, if the dividend rate of such stock is fixed at not to exceed the legal rate of interest in the state of incorporation or 8 per centum per annum, whichever is greater, ... and if substantially all such stock ... is owned by producers; ... nor shall exemption be denied any such association because there is accumulated and maintained by it a reserve. ... Such an association may market the products of nonmembers in an amount the value of which does not exceed the value of the products marketed for members.' This exemption was continued in the Revenue Act of 1928, c. 852, 103 (45 Stat. 812; 26 USCA 2103).

More than two-thirds of all farmers' co-operatives in the United States are organized under the stock type laws. In 1925 there were 10,147 reporting organizations. Of these 68.7 per cent. were stock associations. In leading states the percentage was larger. In Wisconsin the percentage was 80; in North Dakota 87; in Nebraska, 91.3; and in Kansas, 92. Of the farmers' co-operatives existing in Oklahoma in 1925, 87.6 per cent. were stock associations. [Footnote 20] The great co-operative systems of Eng-

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land, Scotland and Canada were developed and are now operated by organizations of the stock type. [Footnote 21] The nonstock type of co-operative is not adapted to enterprises, which like gins require large investment in plant, and hence considerable fixed capital. [Footnote 22] For this reason it was a common practice for marketing co-operatives, which had been organized as nonstock co-operatives in order to comply with the requirements of the Clayton Act above described, to form a subsidiary co-operative corporation with capital stock to carry on the incidental business of warehousing or processing which requires a large investment in plant. [Footnote 23] And the fact that even the marketing of some products may be better served by the stock type of co-operative organizations is so widely recognized that most of the marketing acts provide that associations formed thereunder may organize either with or without capital stock. [Footnote 24]

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Experience has demonstrated, also, that doing business for nonmembers is usually deemed essential to the success of a co-operative. [Footnote 25] More than five-sixths of all the farmers' co-operative associations in the United States do business for nonmembers. In 1925, 86.3 per cent. of the reporting organizations did so. In leading states the percentage was even larger. In Wisconsin the percentage was 89; in Missouri 93.2; in Minnesota 94.1; in Nebraska 95.8; in Kansas 96.5; in North Dakota 97. In Oklahoma 92 per cent. of all co-operatives did business for nonmembers. [Footnote 26] Of the cotton co-operatives in the United States 93.9 per cent. did business for nonmembers. In Texas, where co-operative ginning has received successful trial,27 all the cotton co-operatives perform service for non-

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members. In Oklahoma, also, all of the cotton co-operatives reporting do business for nonmembers. [Footnote 28]

That no one plan of organization is to be labeled as truly co- operative to the exclusion of others was recognized by Congress in connection with co-operative banks and building and loan associations. See United States v. Cambridge Loan & Building Company, 278 U.S. 55, 49 S. Ct. 39, 73 L. Ed. -. With the expansion of agricultural co-operation it has been recognized repeatedly. Congress gave its sanction to the stock type of co-operative by the Capper-Volstead Act and also by specifically exempting stock as well as nonstock co-operatives from income taxes. State Legislatures recognized the fundamental similarity of the two types of co- operation by unifying their laws so as to have a single statute under which either type of co-operative might organize. 29 And experts in the Department of Agriculture, charged with disseminating information to farmers and Legislatures, have warned against any crystallization of the co-operative plan, so as to exclude any type of co-operation. [Footnote 30]

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That in Oklahoma a law authorizing incorporation on the stock plan was essential to the development of co-operation among farmers has been demonstrated by the history of the movement in that state. Prior to 1917 there was no statute which specifically authorized the incorporation of co- operatives. In that year the nonstock law above referred to was enacted. [Footnote 31] Two years passed, and only 3 co-operatives availed themselves of the provisions of that act. Then persons familiar with the farmers' problems in Oklahoma secured the passage of the law of 1919, providing for the incorporation of co-operatives with capital stock. [Footnote 32] Within the next 5 years

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202 co-operatives were formed under it; and since then 139 more. In the 12 years since 1917 only 60 nonstock co-operatives have been organized; most of them since 1923, when through an amendatory statute, this type was made to offer special advantages for co-operative marketing. [Footnote 33] Thus over 82 per cent. of all co-operatives in Oklahoma are organized under the 1919 stock act. One husband and one Oklahoma co-operative cotton gins have been organized under the 1919 stock law; not a single one under the 1917 nonstock law. [Footnote 34] To deny the co-operative character of the 1919 act is to deny the co-operative character, not only of the gins in Oklahoma, which farmers have organized and operated for their mutual benefit, but also that of most other co-operatives within the state, which have been organized under its statutes in harmony with legislation of Congress and pursuant to instructions from the United States Department of Agriculture. A denial of co-operative character to the stock co-operatives is inconsistent also with the history of the movement in other states and countries. For the stock type of co-operative is not only the older form, but is the type more widely used among English-speaking peoples.

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has recently been recognized by this court. Crescent Oil Co. v. Mississippi, , 42 S. Ct. 42. The specific evils existing in Oklahoma which the statute here assailed was enacted to correct was the charging of extortionate prices to the farmer for inferior ginning service and the control secured of the cotton seed. [Footnote 35] These conditions are partly attributable to the fact that a large percentage of the ordinary commercial gins in Oklahoma are controlled by cotton seed oil mills, which make their service as ginners incidental to that as crushers of seed, and are thereby enabled to secure the seed at less than its value. 36 That

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Plymouth Coal Co. v. Pennsylvania, 232 U.S. 531, 544, 34 S. Ct. 359; Tyler v. Judges of Court of Registration, 179 U.S. 405, 410, 21 S. Ct. 206; Cusack Co. v. Chicago, 242 U.S. 526, 530, 37 S. Ct. 190, L. R. A. 1918A, 136, Ann. Cas. 1917C, 594; Standard Stock Food Co. v. Wright, 225 U.S. 540, 550, 32 S. Ct. 784; Mallinckrodt Chemical Works v. Missouri, 238 U.S. 41, 54, 35 S. Ct. 671; Darnell v. Indiana, 226 U.S. 390, 398, 36 S. Ct. 120.

It seems to me that a fallacy, productive of unfortunate consequences, lurks in the suggestion that one may maintain a suit to enjoin competition of a business solely because hereafter some one else might suffer from an unconstitutional discrimination and enjoin it. But, more than that, even if the license had been withheld from appellant because he could not support the burden placed upon him by the statute, I should have thought it doubtful whether he would have been entitled to have had appellee's permit canceled-the relief now granted. He certainly could not have asked more than the very privilege which he now enjoys.

Mr. Justice HOLMES and Mr. Justice BRANDEIS concur in this opinion. Footnotes

Footnote 1 The stipulation of facts states: 'That W. A. Frost is engaged in the cotton ginning business under the name of Mitchell Gin Company and owns and operates a cotton gin in the city of Durant, Oklahoma; that said gin is operated under and by virtue of license duly issued by the Corporation Commission of the state of Oklahoma under and by virtue of article 4, chapter 20, Compiled Oklahoma Statutes, 1921, as amended by chapter 191, Session Laws of Oklahoma of 1923 and by chapter 109 of the Session Laws of Oklahoma of 1925.'

Footnote 2 Session Laws 1907-08, p. 756 (Comp. Stat. 1921, 11032). See Oklahoma Gin Co. v. State, 63 Okl. 10, 158 P. 629; Mascho v. Chandler Cotton Oil Co., 7 Annual Corp. Comm. Report 370. Compare Harriss-Irby Cotton Co. v. State, 31 Okl. 603, 122 P. 163.

Footnote 3 Walla Walla v. Walla Walla Water Co., 172 U.S. 1, 9, 19 S. Ct. 77; California v. Pacific Railroad Co., 127 U.S. 1, 40, 41 S., 8 S. Ct. 1073; Monogahela Navigation Co. v. United States, 148 U.S. 312, 328, 329 S., 13 S. Ct. 622; Owensboro v. Cumberland Telephone Co., , 64-66, 33 S. Ct. 988; Boise Water Co. v. Boise City, 230 U.S. 84, 90, 91 S., 33 S. Ct. 997, 57 L. Ed 1400; McPhee & McGinnity Co. v. Union Pac. R. Co. (C. C. A.) 158 F. 5, 10, 11. California v. Pacific Railroad Co., 127 U.S. 1, 40, 41 S., 8 S. Ct. 1073, merely describes the types of enterprises which may be made the subject of a franchise. The enterprises mentioned are all of the type which require the use of public property so that the permission of the state is required to condone what would otherwise be a trespass. Further, it is not maintained that the state is restricted to the issuance of franchises for the carrying on of such callings.

Footnote 4 Noble State Bank v. Haskell, 219 U.S. 104, 112, 113 S., 31 S. Ct. 186, 32 L. R. A. (N. S.) 1062, Ann. Cas. 1912A, 487.

Footnote 5 Shallenberger v. First State Bank, , 31 S. Ct. 189; Dillingham v. McLaughlin, 264 U.S. 370, 44 S. Ct. 362. Compare Assaria State Bank v. Dolley, 219 U.S. 121, 31 S. Ct. 189; German Alliance Ins. Co. v. Kansas, 233 U.S. 389, 416, 34 S. Ct. 612, L. R. A. 1915C, 1189.

Footnote 6 Bank of August v. Earle, 13 Pet. 519, 595; People's Railroad v. Memphis Railroad, 10 Wall. 38, 51; California v. Pacific Railroad Co., 127 U.S. 1, 40, 41 S., 8 S. Ct. 1073; Denver v. New York Trust Co., 229 U.S. 123, 141, 142 S., 33 S. Ct. 657.

Footnote 7 Section 10 makes each member assume 'original liability, for his per capita share of all contracts, debts, and engagements of the association existing at the time he becomes a member and created during his membership,' and 'additional liability' for his pro rata share of the liability of any other member whose liability may become uncollectible.

Footnote 8 Nourse, The Legal Status of Agricultural Co-operation (1927), passim, particularly pages 11, 21, 35, 36.

Footnote 9 St. Mass. 1866, c. 290. The type was called Rochdale because it was this type of organization which the pioneers of the present co-operation among English speaking peoples used there. This law which served as a pattern for most of the co-operative incorporation laws passed by other states prior to 1900 contained fewer of the safeguards to assure preservation of co-operative principles than does the Oklahoma act of 1919. No limitation was placed on the quantum of stock per member or on the voting privileges, and no restriction was placed on the amount of dividends to be paid on stock, the distribution of profits being left entirely to the by-laws and to the directors, save for the requirement that a portion of the earnings go into a reserve fund.

Footnote 10 Pennsylvania, Public Laws 1868, Act 62; Minnesota, Laws 1870, c. 29; Michigan, Acts 1875, No. 75, amending Act 288 of 1865 so as to include agricultural co-operatives; Connecticut, Laws 1875, c. 62; California, Laws 1878, p. 883; New Jersey, Laws 1884, p. 63; Ohio, Laws 1884, p. 54; Kansas, Laws 1887, c. 116; Wisconsin, Laws 1887, c. 126; Montana, 1895, Code (1921), 6375-6385. Tennessee, Laws 1882, c. 8, fails to specify whether the co-operatives to be incorporated thereunder shall be organized with or without capital stock.

Footnote 11 Delaware and Vermont. Vermont, however, has a section in her general corporation law which makes provision for co-operative associations.

Footnote 12 Arkansas, Acts 1921, p. 702; California, Laws 1878, p. 883; Colorado, Laws 1913, p. 220; Connecticut, Laws 1875, c. 62; Florida, Acts 1917, c. 7384; Georgia, Acts 1920, p. 125; Illinois, Laws 1915, p. 325; Indiana, Laws 1913, c. 164; Iowa, Code (1924) c. 389, 8459-8485; Kansas, Laws 1913, c. 137; Kentucky, Laws 1918, c. 159; Maryland, Laws 1922, c. 197; Massachusetts, Laws 1920, c. 349; Michigan, Acts 1921, No. 84, c. 4; Minnesota, Mason's Stats. (1927) 7822-7847; Missouri, Laws, 1919, p. 116; Montana, Code (1921), 6375-6396; Nebraska, Comp. Stats. (1922) 642-648; New Jersey, Laws 1884, p. 63; New York, Laws 1913, c. 454; North Carolina, Laws 1915, c. 144; North Dakota, Laws 1921, c. 43; Oklahoma, Laws 1919, c. 147; Ohio, Laws 1884, p. 54; Oregon, Oregon Laws Supp. (1927 ), 6954-6976; Pennsylvania, Public Laws, 1887, p. 365; Rhode Island, Laws 1916, c. 1400; South Carolina Acts, 1915, No. 152; South Dakota, Laws 1913, c. 145; Tennessee, Laws 1917, c. 142; Virginia, Laws 1914, c. 329; Washington, Laws 1913, p. 50; Wisconsin, Laws 1911, c. 368.

Footnote 13 See, for example, Nebraska, Laws 1911, c. 32; Indiana, Laws 1913, c. 164; Colorado, Laws 1913, p. 220; North Dakota, Laws 1915, c. 92; Florida, Acts 1917, c. 7384.

Footnote 14 Nourse, The Legal Status of Agricultural Co-operation (1927), pp. 51-72.

Footnote 15 Laws 1895, c. 183. That this act did not provide satisfactorily for all types of co-operative endeavor is evidenced by the fact that prior to the passage of the Clayton Act (38 Stat. 730) (which offered substantial) advantages to nonstock corporations) several of California's largest co-operatives did not incorporate under this or the similar act of 1909 (chapter 26), but were organized on a capital stock basis, e. g., California Fruit Growers' Exchange, California raisin growers. See Nourse, The Legal Status of Agricultural Co-operation, p. 64, note.

Footnote 16 Nevada, Stat. 1901, c. 60; Michigan, Public Acts 1903, No. 171; Washington, Laws 1907, p. 255; Alabama, Acts 1909, No. 145, p. 168; California, Laws 1909, c. 26; Florida, Laws 1909, c. 5958; Oregon, Laws 1909, c. 190; Idaho, Laws 1913, c. 54; Colorado, Laws 1915, c. 57; New Mexico, Laws 1915, c. 64; Oklahoma, Laws 1917, c. 22; Texas, Laws 1917, c. 193; Louisiana, Acts 1918, No. 98; New York, Laws 1918, c. 655; Pennsylvania, Laws 1919, Act 238; Iowa, Laws 1921, c. 122. In only two of the States is the doing of business for nonmembers expressly prohibited. Iowa, Laws 1921, c. 122; Texas, Laws 1917, c. 193. The rest of the statutes, though some are perhaps ambiguous in their terminology, apparently do not impose any restraint in this regard. See Nourse, The Legal Status of Agricultural Co-operation, p. 62.

Footnote 17 Michigan; Washington; California; Florida; Oregon; Colorado; Oklahoma; Pennsylvania; Iowa; New York. For the citations of these stock type laws, see note 10.

Footnote 18 Nourse, the Legal Status of Agricultural Co-operation (1927) pp. 73-92.

Footnote 19 Colorado, Laws 1915, c. 57; New Mexico, Laws 1915, c. 64; Oklahoma, Laws 1917, c. 22; Texas, Laws 1917, c. 193; Louisiana, Acts 1918, No. 98; New York, Laws 1918, c. 655; Pennsylvania, Laws 1919, Act 238; Iowa, Laws 1921, c. 122.

Footnote 20 U. S. Dept. of Agriculture, Technical Bulletin No. 40 (1928), Agricultural, Co-operative Associations, p. 88. The figures for Oklahoma are obtained from the worksheets from which the table on page 88 was compiled.

Footnote 21 See Fay, Co-operation at Home and Abroad (3d Ed. 1925) pp. 279-284, 356, 362-363; Year-Book of Agricultural Co-operation in the British Empire ( 1927) pp. 131-204; First Annual Report on Co-operative Associations in Canada (1928) pp. 65-78.

Footnote 22 The average investment of a plant in Texas is about $40,000. Hathcock, Possible Services of Co-operative Cotton Gins (1928) p. 5.

Footnote 23 Nourse, The Legal Status of Agricultural Co-operation, p. 54, note 3.

Footnote 24 Alabama, Laws 1921, No. 31, 2; Arizona, Laws 1921, c. 156, 2; Arkansas, Acts 1921, No. 116, 3; California, Laws 1923, c. 103, 653cc; Colorado, Laws 1923, c. 142, 3; Florida, Acts 1923, c. 9300, 3; Georgia, Acts 1921, No. 279, 2; Idaho, Laws 1921, c. 124, 3; Illinois, Laws 1923, p. 286, 3; Indiana, Laws 1925, c. 20, 3; Kansas, Laws 1921, c. 148, 3; Louisiana, Acts 1922, No. 57, 3; Maine, Laws 1923, c. 88, 3; Minnesota, Laws 1923, c. 264, 3; Mississippi, Laws 1922, c. 179, 3; Montana, Laws 1921, c. 233, 3; New Hampshire, Laws 1925, c. 33, 2; New Jersey, Laws 1924, c. 12, 2; New Mexico, Laws 1925, c. 99, 3; New York, Laws 1924, c. 616, 3; North Carolina, Laws 1921, c. 87. 3; North Dakota, Laws 1921, c. 44, 3; Ohio, Laws 1923, p. 91, 2; South Carolina, Acts 1921, No. 203, 3; South Dakota, Laws 1923, c. 15, 2; Tennessee, Laws 1923, c. 100, 3; Texas, Laws 1921, c. 22, 3; Utah, Laws 1923, c. 6, 3; Viginia, Laws 1922, c. 48, 3; Washington, Laws 1921, c. 115, 2; West Virginia, Acts 1923, c. 53, 3; Wyoming, Laws 1923, c. 83, 3.

Footnote 25 It is to be noted that statutes like the Bingham Co-operative Marketing Act (Acts Ky. 1922, c. 1), which provide solely for the formation of marketing associations, restrict the service of the association (with the exception of storage) to the products of members. But such statutes do not purport to repeal earlier laws authorizing agricultural co-operation for other purposes which allow business for nonmembers. That the Legislatures recognize that the problems of co- operative marketing and of other types of agricultural co-operation require different treatment is demonstrated by the retention of general laws providing for agricultural co-operation after passage of the standard marketing act. In Oklahoma, for example, in the same year that the act of 1917 was amended so as to embody some of the features of the Bingham Act, the 1919 act was amended in unimportant particulars, thus receiving express legislative recognition of its continued usefulness. Laws Okl. 1923, cc. 167, 181.

Footnote 26 U. S. Dept. of Agriculture, Technical Bulletin No. 40 (1928) Agricultural Co-operative Associations, p. 88. The figures for Oklahoma are obtained from the worksheets from which the table on page 88 was compiled.

Footnote 27 Hathcock, Devolopment of Co-operative Gins in Northwest Texas, p. 4.

Footnote 28 U. S. Dept. of Agriculture, Technical Bulletin No. 40 (1928) Agricultural Co-operative Associations, p. 89. The figures for Oklahoma are obtained from the worksheets from which the table on page 89 was compiled.

Footnote 29 See, e. g., Maryland, Laws 1922, c. 197; New York, Laws 1926, c. 231; Oregon, Supp. 1927, 6954-6976. The New York Law is known as the Co- operatives Corporations Law, and consolidates all prior acts for the formation of co-operative associations. Thus, marketing co-operatives, with or without capital stock, and other agricultural co-operatives, with or without capital stock, and with or without restrictions as to business for nonmembers, are all organized under the same act.

Footnote 30 Chris L. Christensen, Chief of the Department of Agriculture's Division of Co-operative Marketing, in Department Circular No. 403 (1926), says (page 2); '... The various forms which co-operative organizations have taken demonstrate the adaptability and extensive usefulness of this form of business organization.' And at page 3: 'A discussion of organization types is of value only when the conditions that make certain types necessary or valuable are taken into consideration. Attempts to build co-operative associations according to any special plan have met with failure in the past, and it is possible that in the future we shall see more rather than fewer types of co-operative organizations.'

Footnote 31 That the draftsmen of this law were influenced by the restrictions of the Clayton Act is evidenced by the fact that some of the language of section 2 of the 1917 act is taken verbatim from section 6 of the Clayton Act (15 USCA 17).

Footnote 32 The Oklahoma state market commission, Carl Williams, editor of the Oklahoma Farmer-Stockman, and various farm organizations lent their assistance to the legislature in drafting this law. See Second Biennial Report of Oklahoma State Market Commission (1919-1920) p. 5; Carl Williams, Letter to Division of Co-operative Marketing, Department of Agriculture, dated January 21, 1929. The Oklahoma state market commission says of the 1919 Act (Marketing Bulletin, April 20, 1920, p. 5): 'In organizing these new corporations, the farmers had a real basis on which to organize. ... The law was written by men who understood the farmer's condition and had some practical knowledge of real co-operative marketing on a business basis. The laws of Minnesota, Nebraska, and other states were studied. Conditions under which co-operative associations had failed in the Northern states and those which had succeeded were taken into careful consideration. The best points from the laws of the several states, which would be suitable for Oklahoma conditions were incorporated and the features of these laws which were not suitable were eliminated.'

Footnote 33 Laws 1923, c. 181.

Footnote 34 All figures here given are obtained from the files of the Department of Agriculture, Division of Co-operative Marketing.

Footnote 35 Two of the leading farm newspapers in Oklahoma are the Oklahoma Cotton Grower and the Oklahoma Farmer-Stockman, the latter edited by Carl Williams. In an editorial on February 10, 1926, the Cotton Grower urges farmers to form co-operative gins as the only way to obtain economy in ginning service. On March 1, 1927, the Farmer-Stockman contains an editorial urging, as a partial solution of the ginning problem, the placing of members on the Corporation Commission who are interested in the farmer as well as in the commercial gin. On May 15, 1927, the same paper notes the great increase in co-operative ginning in the state, and says that it is due to the extortionate prices charged by private ginners. On August 15, 1927, the Farmer-Stockman speaks of the meeting of the Corporation Commission to fix rates for ginning as the 'annual farce.' It is stated that the meeting is called a farce because the rate is always set high enough, so as to allow grossly excessive returns to the ginners at the expense of the farmers. The editor states that the only solution for the farmer is co-operation in ginning. On September 15, 1927, the same paper states that some privately owned gins have averaged a profit of over 100 per cent. on invested capital over a period of three years. On October 15, 1927, the Farmer-Stockman notes that poor ginning can cost the farmer at least 4 cents on each pound of cotton.

Footnote 36 The District Court said (26 F.(2d) 508, 519, 520): 'The ordinary commercial ginner within the state of Oklahoma may gin either as an individual, a co-partnership, or a corporation; no statute, rule, or provision of law restricts him in any wise in the enjoyment of the full proceeds of the earnings under the rate fixed. He usually is engaged, not only in ginning cotton, but also in the purchase of seed cotton, cotton seed after he has ginned the cotton, and frequently in the purchase of cotton after it is ginned for profit. A ginner has a greater facility to purchase the seed than anyone else. As he gins the cotton, he catches the seed as they fall from the stand, and has the immediate means for storage and housing same. The patron, if he does not elect to sell to the ginner, must receive them and haul them away, when as a rule he has no place for storage for accumulating as much as a carload, so as to sell them to advantage. A great per cent. of the gins so operated are owned and controlled by cotton seed crushers, operating cotton seed oil mills within the state of Oklahoma; such operation of gins not being entirely for the purpose of rendering a public service, but also for collecting cotton seed at a central point. Their gin business as ginners is incidental to that as crushers of seed, to the end that they may be enabled to purchase the seed under favorable conditions. See Choctaw Cotton Oil Co. v. Corporation Commission, 121 Okl. 51, 247 P. 390; Planters' Cotton & Glanning Co. v. West, 82 Okl. 145, 198 P. 855.'