Corporation Law for Cooperative Agricultural Associations

Del. Code tit. 3, ch. 85

in effect

Del. Code tit. 3, § 8501 Definitions.

As used in this chapter, unless the context otherwise requires: (1) “Agricultural products” includes all agricultural, horticultural, vegetable, fruit and floricultural products of the soil, livestock and meats, wool, hides, poultry, eggs, dairy products, nuts, mushrooms and honey, but does not include timber products. (2) “Association” means a corporation formed under this chapter. (3) “Patron” means a person engaged in agriculture whose products are sold by or supplies purchased through the association, or who has executed a contract with the association to sell all or a part of the patron’s agricultural products to or through the association. (4) “Person engaged in agriculture” means a person engaged in agriculture, dairying, livestock raising, poultry raising, floriculture, mushroom growing, beekeeping, horticulture and other allied occupations.

Del. Code tit. 3, § 8502 Formation of associations; advertisement of intention to apply for charter.

(a) Cooperative agricultural associations, instituted for the purposes of mutual help, having capital stock, may be formed under the provisions of this chapter by any number of persons, not less than 5, engaged in agriculture. (b) Notice of an intention to apply for a charter or articles of association shall be inserted in 1 newspaper of general circulation, printed in the county where the principal place of business is situated, for 1 insertion, setting forth briefly the character and purpose of the corporation and the kind of service to be performed by it. The advertisement shall be published at least 3 days before the application is laid before the Secretary of State.

Del. Code tit. 3, § 8503 Articles of association; contents; acknowledgment.

(a) The articles of association of an intended association shall be subscribed by 5 or more persons, 3 of whom shall be citizens of this State, and shall set forth: (1) The name of the association, which shall include the word “cooperative”; (2) The class of services to be performed by the association, which services shall be 1 or more of those enumerated in § 8507 of this title; (3) The location of the registered office of the association, which shall be within this State; (4) The term for which it is to exist; (5) The amount of its capital stock, and the number and par value of shares into which it is divided, the names and post-office addresses of the subscribers, the number of shares subscribed by each, and the amount of capital actually paid into the treasury; (6) The number of its directors for the first year, not less than 5, the names and residences of those who are chosen for directors for the first year, and the name and residence of the treasurer; (7) Any other provisions, not inconsistent with law, which the association sees fit to adopt, governing the regulation and conduct of its affairs. (b) The articles of association shall be acknowledged by not less than 5 of the subscribers thereto, before any officer authorized to take acknowledgments and administer oaths and affirmations in this State. The subscribers making the acknowledgment shall also make and subscribe an oath or affirmation before the authorized officer that the statements contained therein are true.

Del. Code tit. 3, § 8504 Certificate of incorporation; issuance and recording.

(a) The articles of association, accompanied with proof of publication of the notice provided for in § 8502 of this title, shall be presented to the Secretary of State, who shall examine the same, and if the Secretary of State finds the articles in proper form and within the purpose mentioned in this chapter, the Secretary of State shall endorse his or her approval thereon, and direct a certificate of incorporation to issue in form similar to those issued to corporations organized under the general corporation law of this State. The certificate of incorporation shall incorporate the subscribers and their associates and successors into a body politic and corporate, in deed and in law, by the name chosen. The articles of association shall be filed in the office of the Secretary of State. (b) A certified copy of the articles of association, together with all endorsements, shall be recorded in the office of the recorder of deeds in and for the county where the principal place of business is situated. From thenceforth the subscribers thereto, their associates and successors shall be a body politic and corporate for the purposes and upon the terms named in the articles of association. (c) Certified copies of the records of articles of association shall be competent evidence for all purposes in the courts of this State.

Del. Code tit. 3, § 8505 Existing domestic corporations.

Corporations which exist under the laws of this State, and the purposes of which coincide with the purposes of associations incorporated under this chapter, shall, upon accepting this chapter, by a writing under the seal of the corporation, duly filed in the office of the Secretary of State, be entitled to all of the privileges, immunities, franchises and powers conferred by this chapter upon associations to be created under the chapter and, upon acceptance and approval thereof by the Secretary of State, he or she shall issue a certificate to the corporation reciting the same.

Del. Code tit. 3, § 8506 Reincorporation of foreign associations; procedure; effect.

(a) Cooperative agricultural associations or corporations created by or under the laws of any other state, doing business in this State, and in which 3 or more of the stockholders are citizens of this State, and which are organized and operating under laws similar to this chapter, may become corporations of this State under this chapter by preparing, having approved and recorded a certificate which shall state: (1) The name of the corporation, which shall include or be changed to include the word “cooperative”; (2) Its purpose, which shall include 1 or more of the class of services enumerated in § 8507 of this title; (3) The principal place where its business is to be transacted, which shall be within this State, and at which it keeps a record of the names and residences of the stockholders and the number of shares held by each; (4) The term for which it is to exist; (5) The number of stockholders and the total number of shares of stock outstanding; (6) The number of its directors, and the names and residences of those elected for the current year, and the name and residence of the treasurer; (7) The amount of its capital stock, and the number and par value of the shares into which it is divided; (8) The name of the state and the name and citation of the statute or legislation under which it was originally created; (9) Its financial condition at the date of the certificate, showing capital stock paid in, funded debt, floating debt, estimated value of property and cash assets, if any. (b) The certificate shall be accompanied by another certificate, under the seal of the corporation, showing the consent of a majority in interest of the corporation to the application for a charter and to a renunciation of its original charter and of all privileges not enjoyed by corporations under this chapter under the laws of this State. (c) Both certificates shall be acknowledged by at least 3 of the directors of the corporation before the recorder of deeds of the county in which the chief operations are to be carried on or in which the principal office is situated. The directors shall also make and subscribe an oath or affirmation before the recorder of deeds to be endorsed on the certificates that the statements contained therein are true. The certificates shall then be produced to the Secretary of State, who shall examine the same, and, if he or she finds the certificates to be in proper form and within the purposes named for associations under this chapter, he or she shall approve them, and endorse his or her approval thereon, and direct a certificate of incorporation to issue in the usual form incorporating the stockholders and their successors into a body politic and corporate, in deed and in law, by the name chosen. The certificate of incorporation shall be filed in the office of the Secretary of State, and a certified copy thereof, with all its endorsements, shall then be recorded in the office for the recording of deeds in and for the county where the chief operations are to be carried on. (d) From the date of the certificate of incorporation, the foreign association or corporation shall be, and exist as, a corporation of this State under the provisions of this chapter and of its charter. All rights, privileges, powers, immunities, lands, property and assets of whatever kind or character possessed and owned by the original corporation, shall vest in and be owned and enjoyed by the corporation so created as fully and with like effect as if its original charter had remained in force, save as by general law and by its certificate of incorporation is expressly stated otherwise. All suits, claims and demands by the corporation, in existence at the date of the new charter, shall and may be sued, prosecuted, and collected under the laws governing the corporation prior to its new charter. Claims and demands of every nature and character in existence at the date of the new charter may be collected from and of the newly chartered corporation as fully and with like effect as if no change had taken place.

Del. Code tit. 3, § 8507 General powers of associations.

An association incorporated under this chapter may engage in the buying and selling of agricultural products, taking title to such products or acting as agent for its stockholders, patrons, or any of them; may engage in or perform for its stockholders or patrons services connected with the production, harvesting, preservation, drying, grading, canning, storing, handling, utilization, marketing or sale of agricultural products produced by them; and may engage in or perform for its stockholders or patrons services connected with purchasing or leasing for use by them of supplies, including livestock, machinery, equipment, feed, fertilizer, electricity and seeds, and the hiring of labor, or any 1 or more of the kinds of service specified in this section, for the agricultural or other purposes of the stockholders.

Del. Code tit. 3, § 8508 Specific powers of associations.

Each association formed under this chapter, by virtue of its existence as such, may: (1) Have succession for the period limited in its articles of association, and, when no period is limited thereby, exist perpetually, subject to the power of the General Assembly under the Constitution of the State, and unless sooner dissolved by operation of law or under the provisions of this chapter; (2) Maintain and defend judicial proceedings by the name specified in the articles of association; (3) Adopt and use a common seal and alter the same at pleasure; (4) Hold, purchase, and transfer such real and personal property as the purposes of the corporation require; (5) Elect a board of directors, which may appoint a president, vice-president, secretary, treasurer and other officers, agents and employees as are deemed necessary; prescribe their duties; require bonds of them, and dismiss them and any of them in accordance with this chapter and with the bylaws of the association; (6) Make bylaws, not inconsistent with the law, for the management of its property, the regulation of its affairs and the conduct and management of the association; (7) Perform for stockholders and other patrons the services described in the articles of association and authorized by this chapter; (8) Make contracts necessary in the conduct of its operation and the transaction of its affairs; (9) Borrow money necessary to the conduct of its operations, and issue notes, bonds and other evidences of indebtedness therefor, and give security in the form of mortgage or otherwise for the payment thereof; (10) Cooperate with any other association or corporation, whether formed under this chapter or otherwise, for the purpose of promoting the objects for which it was incorporated, or the objects for which any other similar association was formed. Any association may, upon resolution adopted by its board of directors, enter into all necessary and proper stipulations, agreements, contracts, and arrangements with any other cooperative corporation, association or associations, formed under this chapter or otherwise, for the cooperative and more economical carrying on of its business, or any part or parts thereof; or any 2 or more cooperative associations, formed under this chapter or otherwise, may, upon resolutions adopted by their respective boards of directors, for the purpose of more economically carrying on their respective businesses, by agreement between them, unite in employing and using, or several such associations may separately employ and use, the same methods, means and agencies, which agencies may be another such association or associations for carrying on and conducting their respective businesses; (11) Foster membership in the association and solicit patrons by advertising or by educational or other lawful means; (12) Exercise such incidental powers as are necessary in the conduct of its operations; (13) Issue and sell its preferred and common stock, but no person shall become the owner of more than 5 percent of the outstanding common stock of the association; (14) Purchase and hold stock of corporations engaged in the buying or selling of agricultural products as defined in this chapter, when such purchase and holding is in keeping with the purposes for which the association was formed.

Del. Code tit. 3, § 8509 Adoption of bylaws.

Within 30 days after the recording of the articles of association in the office of the recorder of deeds, as prescribed in § 8504 of this chapter, a call, signed by not less than a majority of the directors, shall be issued for a meeting of the common stockholders. At such meeting, or any adjourned session or sessions thereof, bylaws regulating the conduct and management of the association shall be adopted.

Del. Code tit. 3, § 8510 Provisions of bylaws.

Bylaws shall, within the limits of this chapter, prescribe: (1) The time, place and manner of calling and holding meetings. Meetings of stockholders may be held (a) by a meeting at large at such place as may be designated by the bylaws or action of the board of directors, or (b) by a meeting of delegates elected to represent the stockholders by the respective local or district organizations in such manner as may be provided by the bylaws, or (c) by district or local meetings held in the several districts or locals into which the association has divided itself. Meetings in districts or locals shall be of stockholder members of such districts or locals and need not necessarily be held at the same time in each district or local. The bylaws may provide that the board of directors may take a vote of the stockholders on a specific case or resolution by mail signed or unsigned ballot; (2) The number of directors; the time and manner of their nomination, election and removal, their powers and duties; the number, not less than a majority, necessary to the exercise of their powers; and the method of fixing their compensation, if any. The board of directors may, by resolution adopted by a majority of the whole board, delegate 2 or more of its number to constitute an executive committee, which, to the extent provided in such resolution, shall have and exercise the authority of the board of directors in the management of the corporation. The bylaws may provide a system for the nomination of directors by a representative body or council, or otherwise, and for their election, either at large or by districts, by votes cast by stockholders in district or local organizations with the return of the votes to the central office for tabulation; (3) The officers, their terms of office, the time and manner of their appointment, their powers and duties, and the method of fixing their compensation, if any; (4) Regulations governing the sale, transfer and redemption of common stock; (5) Any other provisions deemed proper and necessary to carry out the purposes for which the association was formed, including provisions, if deemed advisable, for the creation of a representative body or council, which, among other powers, may be granted power to hear and determine charges against any member of the board of directors, and power to remove any director where such charges are sustained. The vacancy which may thus be created shall be filled as in other cases. A representative body or council, if created, shall have, in addition to the powers provided by this chapter, such other powers as are provided by the bylaws, which by the bylaws may be made advisory only; (6) The method or methods by which the bylaws may, from time to time, be adopted, altered, amended or repealed. The authority to make, alter, amend or repeal bylaws may be expressly vested by the bylaws in the board of directors or in a representative body or council, subject to the power of the representative body or council to change or repeal bylaws made by the board of directors, and subject to the power of the stockholders to change or repeal bylaws made by either the directors or the representative body or council. Notice of all amendments proposed by the stockholders, the representative body or council, or the directors shall be given either to the stockholders individually or by publication in such regularly published paper or periodical, if any, as shall be established by the association and distributed to stockholders.

Del. Code tit. 3, § 8511 Exclusive buy and sell requirements of bylaws; liquidated damages; enforcement.

The bylaws may require common stockholders to sell all or any part of their specifically enumerated agricultural or other similar products, and to buy all or any part of their specifically enumerated supplies, exclusively through the association, but, in such case, shall specify a reasonable period in each year during which such stockholders, by giving notice prescribed in the bylaws, may withdraw and be released from their obligation to employ the services of the association in respect to such products and supplies. The bylaws or contracts, or both, may fix, as liquidated damages, specific sums to be paid to the association to reimburse it for any damages which it, or the stockholders, sustain by the failure of any common stockholder or other patron to perform any obligation to the association under the articles of association, the bylaws, or any contract with the association, and such provision shall be valid and enforceable in the courts of this State. A court of equity may grant an injunction to prevent breach of the contract and may decree specific performance thereof.

Del. Code tit. 3, § 8512 Amendment of articles of association.

The articles of association may be amended pursuant to an affirmative vote of two-thirds of all the common stockholders or the members of a representative body or council in attendance at any regular meeting, or at a special meeting called for the purpose, due notice of the time, place and object of which regular or special meeting has been given as prescribed in the bylaws. A copy of such amendment, signed and acknowledged by not less than 3 of the directors, shall be presented to the Secretary of State, who shall examine the same, and, if he or she finds it in proper form, shall endorse approval thereon. The amendment shall then be filed in the office of the Secretary of State. A certified copy of the amendment, together with the endorsements thereon, shall then be recorded in the office of the recorder of deeds in the county where the principal place of business is situated.

Del. Code tit. 3, § 8513 Dissolution of associations.

Any association may cease to do business and be dissolved in the same manner as corporations are dissolved under the general corporation laws of the State.

Del. Code tit. 3, § 8514 Sale of assets.

Any association organized, existing or registered as a cooperative agricultural association under this chapter may sell, lease or exchange all its property and assets, including its goodwill and its corporate franchises, upon such terms and conditions and for such consideration as its board of directors deems expedient and for the best interests of the corporation, when authorized by written consent of the holders of a majority of the stock issued and outstanding having voting power or by vote of said stockholders at a meeting duly called for that purpose. No such authorization by vote or written consent is required where its board of directors determines that the fair value of its property and assets is less than the par value of its outstanding stock and its property and assets are sold to another association organized, existing or doing business as a cooperative agricultural association in this State and registered as provided under this chapter, in exchange for the obligation to purchase or redeem, at the par value, any of its stock offered for sale or redemption by its stockholders and the obligation to assume and pay all its debts.

Del. Code tit. 3, § 8515 Registered office in State; principal office or place of business in State.

(a) Every association created under this chapter shall have and maintain in this State a registered office which may, but need not be, the same as its place of business. (b) Whenever the term “principal place, where its business is to be transacted,” “principal place of business” or “principal office” is or has been used in the articles of association of a cooperative agricultural association, or in any other document, or in any statute, it shall be deemed to mean and refer to, unless the context indicates otherwise, the association’s registered office required under § 8503(a)(3) of this title; and it shall not be necessary for any association to amend its articles of association or any other documents to comply with this section.

Del. Code tit. 3, § 8521 Directors; duties; election; term; vacancies.

(a) The board of directors of each association shall consist of not less than 5 members. The board shall manage the affairs of the association and shall perform such other duties as are specifically imposed upon the board by this chapter. (b) The bylaws of the association shall provide a method by which directors shall be nominated and elected, and may provide that the territory in which the association has stockholders shall be divided into districts, and may apportion the directors to be elected to the respective districts on the basis either of the number of stockholders or the quantity of the commodities produced for sale through the association in the respective districts. Meetings for the nomination and election of directors may be held by the stockholders either at the principal office of the corporation, or at district or local meetings of the stockholders held at the usual meeting places of local groups of stockholders that are organized for administrative purposes in the several communities, or by delegates or representatives chosen for that purpose by the stockholders in meetings assembled in the several local communities, as the bylaws may direct. Directors shall hold office until their successors enter upon the discharge of their duties. Vacancies shall be filled for the unexpired terms by the board of directors at any regular meeting, or at any special meeting called for that purpose. (c) The board of directors shall be a continuing body, the term of one-third, or as near as may be, of whom shall expire each year, and the bylaws of the association shall so regulate the terms of directors, including the terms of additional directors that may be authorized from time to time, in order to make this principle effective.

Del. Code tit. 3, § 8522 Officers; appointment; terms; vacancies; bonds.

The officers of every association shall include a president, vice-president, secretary and treasurer, who shall be appointed annually by the board of directors. The president and vice-president shall be appointed from among the directors. The secretary and treasurer may be nonstockholders. The office of secretary and treasurer may be combined and one individual appointed thereto. Vacancies in offices shall be filled for the unexpired term by the board of directors in the manner provided for the original appointment of officers. Officers shall hold their offices until their successors are appointed and qualified and have entered upon the discharge of their duties. The board of directors shall require the treasurer, and may require such other officers, agents and employees charged by the association with responsibility for the custody of funds or property, to give bond, with sufficient surety, for the faithful performance of their duties as such. The premium on such bond shall be paid by the association.

Del. Code tit. 3, § 8523 Removal of directors and officers.

Any director of the association may, for cause, at any regular meeting, or any special meeting called for that purpose, be removed from office by the vote of not less than two-thirds of the stockholders present, or by the two-third vote of a representative body created and authorized by the bylaws to cause such removal. Any officer of the association may, for cause, at any regular meeting of the board of directors, or any special meeting of the board called for the purpose, be removed from office by the vote of not less than two-thirds of the directors present. Ten days written notice of the time and place and object of the meeting shall be given, in the manner prescribed in the bylaws, to the members of the body authorized to cause the removal, and to the directors or officers against whom charges are to be presented. Such directors or officers shall, at the same time, be informed of the nature of the charges to be preferred against them, and at such meeting shall have the opportunity to be heard in person or by counsel and by witnesses.

Del. Code tit. 3, § 8531 Issue, redemption and transfer of stock.

An association may transact or do business with or for patron stockholders or patrons not stockholders, and may issue and sell its preferred stock to patrons or nonpatrons of the associations, but common stock of the association shall be sold to patrons only. The certificate of common stock shall contain a provision that the association shall have an option to redeem the stock at par value plus declared and unpaid dividends when the owner thereof has for a period of 12 months done no business with the association, and shall contain a further provision that no sale or transfer of stock shall be valid without the written consent of the association, and, if the association withholds its consent to such sale or transfer, then the association shall redeem such stock at par value plus declared and unpaid dividends.

Del. Code tit. 3, § 8532 Dividends on stock.

Dividends on the common stock shall be paid only after dividends are paid on the preferred stock, and the required surplus fund set aside, and shall be not greater than 6 percent per annum, except as provided in this chapter. Dividends on preferred stock shall be not greater than 12 percent per annum and shall be cumulative.

Del. Code tit. 3, § 8533 Liability of stockholders and officers for debts of association.

The officers and stockholders of an association, organized under and accepting this chapter, shall not be individually liable for the debts of the association otherwise than as provided in this chapter. Each common stockholder of an association shall be liable in the common stockholder’s individual capacity to the amount of stock held by the common stockholder for all work and labor done to carry on the operations of the association. The terms “work” and “labor” as used in this section mean only such obligations incurred by the association for salary and wages for actual labor and services performed by individuals.

Del. Code tit. 3, § 8534 Voting rights of stockholders.

Every common stockholder shall be entitled to 1 vote only, and no vote by proxy shall be permitted. This restriction shall not affect any powers granted to the representative body or council, or the delegates thereto.

Del. Code tit. 3, § 8535 Patronage refunds.

After payment of the dividend on the preferred stock, and after making provision from its net earnings for the reserve fund, as provided in this chapter, the remainder of the net earnings of the association, not required for dividends on the common stock, may, in the discretion of the directors, be distributed as a patronage refund. Patron stockholders may be entitled to patronage refunds at double the rate of patronage refunds to which nonstockholder patrons shall be entitled. Patronage refunds may be credited to the accounts of nonstockholders in the purchase of capital stock of the association.

Del. Code tit. 3, § 8536 Reserve fund.

An association, after making provision for the payment of dividends on the preferred stock, and before payment of dividends on the common stock, or the distribution of any patronage refund or dividend shall set aside 10 percent of the total net earnings, annually, for a reserve fund, until the reserve fund equals at least 30 percent of the paid up capital stock. The reserve fund shall be available for such purposes as are designated and authorized by the vote of two-thirds of the members of the board of directors at a duly assembled meeting of the board, subject to the limitations and conditions provided for in the bylaws of the association.

Del. Code tit. 3, § 8537 Revolving reserve fund.

After payment of the dividend on preferred stock, and after making provision from its net earnings for the reserve fund, as provided in § 8536 of this title, the remainder of the net earnings of the association not required for dividends on the common stock and not distributable as a patronage refund may, at the discretion of the directors, be set up in a revolving reserve fund to be kept on the books of the association in the names of the patrons, according to the volume or value of their patronage. No stockholder or patron shall be entitled to payments from the revolving fund, except as provided by the board of directors, which shall have full and complete control of the expenditure and use of the funds therein, the provisions herein contained being merely authoritative and not mandatory.

Del. Code tit. 3, § 8538 Annual audit and report.

At the close of each fiscal year, a complete audit of the operations of the association shall be made by a qualified accountant employed by the board of directors. The written report of the accountant shall include statements of services rendered by the association, the balance sheet, the receipts and disbursements, and the assets and liabilities, the total number of stockholders, and other proper information, and shall be submitted to the members at the next regular meeting. Within 3 months after the expiration of the fiscal year for which made, the secretary of the association shall file one copy of the report of the audit with the Secretary of the Department of Agriculture of this State and one copy with the Dean of the School of Agriculture of the University of Delaware. No person shall, without consent of the association, except in obedience to judicial process, make or permit any disclosure whereby any information contained in the report may be identified as having been furnished by the association.

Del. Code tit. 3, § 8541 Purchases; sales; contracts with stockholders and patrons.

An association may engage in buying and selling agricultural products and supplies and take title thereto. An association may make and execute contracts with its stockholders and other patrons requiring them to sell all or any specified part of their agricultural products or specified commodities exclusively to or through the association or any facilities to be created by the association. An association shall be granted by any such contract the rights which its members individually have, arising out of the production, sale, handling or delivery of products or commodities covered by the contract. The contract shall specify a reasonable period in each year during which the association or any stockholder or patron so contracting with the association may terminate the contract. The association, as agent for a stockholder or other patron, may buy agricultural supplies for him or her and sell his or her agricultural or other kindred products.

Del. Code tit. 3, § 8542 Permissive provisions of marketing contracts.

Contracts with stockholders or other patrons may provide that the association may: (1) Blend proceeds of sales in one or more or all markets, and equalize returns among all stockholders and other patrons in such markets; (2) Establish pools and, in the case of milk, a base rating plan or any plan for production control; (3) Collect the proceeds of the sales of such products or commodities direct from the buyer thereof, and this authority shall be coupled with an interest in favor of the association and the other patrons which is irrevocable by the stockholder or patron as long as the contract is in effect; (4) Make, or permit the buyer to make, such deductions from the proceeds of the sales or products or commodities and the payment therefor to the association as are provided in the contract, and such authority shall be coupled with an interest in favor of the association and the other patrons which is irrevocable by the stockholder or patron as long as the contract is in effect.

Del. Code tit. 3, § 8543 Title to products sold by stockholders and patrons to association.

If stockholders and patrons contract a sale to an association, it shall be conclusively held that title to the products passes absolutely and unreservedly to the association at the time of delivery out of the possession of the stockholder or patron, or at any other time, expressly and definitely agreed in the contract. The contract may provide that the association may sell or resell the products delivered by its stockholders and other patrons, with or without taking title thereto, and pay over to its stockholders and patrons the resale price, after deducting all necessary overhead and other costs and expenses, interest, dividends on the preferred and common stock, and other proper reserves.

Del. Code tit. 3, § 8544 Suits by association against buyers; joinder of stockholder or patron.

(a) Where a contract provides that an association may collect the price of products or commodities sold through the association or facilities created by it, the association may maintain an action against any buyer of such products or commodities for the price, in its own name, without joining such stockholder or patron, with the same force and effect as if the association held title to the products or commodities and to the claim for the price thereof, and it shall not be a defense to any buyer to plead payment of the price to the stockholder or patron where the buyer has notice of the contract between the association and its stockholder or patron prior to the alleged payment. (b) Where a contract provides that an association may make, or have the buyer make, a deduction from the proceeds of the sale of products or commodities sold through the association or facilities created by it, to be paid to the association, the association may maintain an action for the deduction, in its own name, without joining its stockholder or patron, with the same force and effect as if the association held title to the products or commodities and to the claim for the full price thereof, and it shall not be a defense to any buyer to plead payment of the price to the stockholder or patron where the buyer has notice of the contract between the association and its stockholder or patron prior to the alleged payment. (c) Where a contract provides that an association may make, or have the buyer make, a deduction from the proceeds of the sale of products or commodities sold through the association or facilities created by it, to be paid to the association, the association shall have the right to maintain an action for the deduction in its own name without joining its stockholder or patron, with the same force and effect as if the association held title to the products or commodities or to the claim for the full price of the products or commodities, or to a claim in the amount of such deduction, and it shall not be a defense to a buyer to plead payment of all of the price of the products or commodities, including the deduction authorized to be made, to the stockholder or patron where such buyer has notice of the contract between the association and its stockholder or patron prior to the payment, or to plead that the effect of the provisions of this chapter constitute a partial assignment of the claim of the stockholder or patron.

Del. Code tit. 3, § 8545 Joinder of claims in suits by associations.

An association may join in a single suit any number of claims for the proceeds of products or commodities, or deductions therefrom, or any other claims arising from the sale, handling or delivery of such products or commodities, which its stockholders or patrons may have against any buyer, regardless of the fact that these claims may arise from the sale of products or commodities of different stockholders or patrons.

Del. Code tit. 3, § 8546 Monopoly and restraint of trade.

An association organized under this chapter shall not be deemed to be a combination in restraint of trade, nor an illegal monopoly, nor an attempt to lessen competition or fix prices arbitrarily, or to create a combination or pool in violation of any law of this State, nor shall the marketing contracts between the association and its members, or any agreement authorized by this chapter, be so considered, nor shall the association be deemed to be a party to a combination in restraint of trade, or illegal monopoly, by reason of any agreement made with buyers of products or commodities sold to or through the association or facilities created by it, in accordance with this chapter.

Del. Code tit. 3, § 8551 Prohibited acts.

(a) No person shall knowingly induce or attempt to induce any stockholder of an association organized under this chapter to breach such stockholder’s marketing contract with the association, or maliciously and knowingly spread false reports about the finances or management thereof. (b) Producers of agricultural products or commodities shall have the right to form or become stockholders or patrons in cooperative agricultural associations organized or registered under this chapter, and no person shall directly or indirectly interfere with, restrain or coerce such producers in the exercise of this right. (c) Buyers of agricultural products or commodities from producers or from such cooperative agricultural association, whose stockholders or patrons sell all or any part of their agricultural products or commodities to or through the association or facilities created by it shall not: (1) Distribute or circulate any blacklist of stockholders or patrons of the cooperative agricultural association, or advise any person of the membership of any producer in such cooperative agricultural association, for the purpose of preventing the purchase or sale of or payment for agricultural products or commodities produced, sold or offered for sale by the producer so blacklisted or so named; (2) Dominate or interfere with the formation, existence or administration of any cooperative agricultural association by any means, including but not limited to the following: a. Participating or assisting in, supervising, controlling or dominating the initiation or creation of any cooperative agricultural association or its business (as distinguished from social or educational activities), meetings or elections, and no certificate of incorporation under this chapter shall issue to any persons or corporation so dominated, nor shall any rights under § 8562 of this title accrue to a corporation so dominated; b. Making known to such producers the buyer’s approval or disapproval of any cooperative agricultural association for the purpose of encouraging or discouraging membership or shareholding therein, becoming a patron, contracting or cooperating therewith; (3) Encourage or discourage membership or shareholding in any cooperative agricultural association or becoming a patron, contracting or cooperating with the same. (d) Nothing in this chapter shall preclude a buyer from making an agreement with a cooperative agricultural association (not established, administered or assisted by any action of the buyer) requiring membership or shareholding therein, becoming a patron, contracting or cooperating therewith as a condition of the purchase of a producer’s agricultural products or commodities, if such cooperative agricultural association has as its stockholders or patrons a majority of the producers supplying such buyer with the agricultural commodity or products sold to such buyer. (e) The word “buyer” as used in this section shall not include a buyer which is a cooperative agricultural association of producers. (f) Nothing in this section shall prevent a cooperative agricultural association (not established, administered or assisted by any action of the buyer) or its officers or agents from bargaining with buyers or prospective buyers of their products with regard to prices therefor, and practices, terms, conditions, rules and regulations pertaining to the industry in which they are engaged.

Del. Code tit. 3, § 8552 Penalties; civil liabilities; injunctions.

Whoever violates this chapter shall be fined not more than $300, or imprisoned for not more than 6 months, or both, and shall be liable to the association aggrieved in a civil action in the penal sum of $100 for each such offense. The association shall be entitled to an injunction against such violator to prevent continuation of such conduct.

Del. Code tit. 3, § 8561 Exemption from state taxation.

No association organized under this chapter shall be liable for the payment of any state tax upon its right to do business in this State, upon its earnings or income, or any part thereof, upon its capital stock, or upon any scrip, bonds, certificates, or other evidences of indebtedness issued by such corporation, and all stocks, bonds, et cetera, issued by such associations shall be exempt from all state taxation. Associations organized under this chapter shall not be required to file reports relative to taxes required by law of corporations not exempt from the payment of such taxes.

Del. Code tit. 3, § 8562 Foreign associations or corporations.

Associations or corporations organized under the laws of any other state, the purposes of which coincide with the purposes of associations incorporated under this chapter, shall be allowed to carry on any proper activities, operations, and functions in this State, upon compliance with the legal requirements applicable to foreign corporations desiring to do business in this State, with power to make any and all contracts which can be made by any association incorporated under this chapter. Such contracts shall be legal and valid and enforceable in this State with the same force and effect as if the corporation were organized under this chapter. Such associations or corporations shall be entitled to all of the rights, exemptions, remedies and protection available for cooperative agricultural associations formed under the provisions set forth in this chapter, with the same force and effect as if such association or corporation were organized under this chapter. Any such association or corporation shall be treated as organized under this chapter with regard to the prohibition and penalty provisions set forth in this chapter.

Source: DE Code (Official Site)URL: https://delcode.delaware.gov/title3/c085/sc01/index.htmlFetched: 10/4/2026