A. Members may be required to execute contracts as a condition of admission to the association, whereby the members agree to patronize the facilities created by the associations, to sell all or a specified part of their products to or through, or to buy all or a specified part of their supplies from or through, the association or any facilities created by it. If the members in the association contract a sale to or through the association the fact that for certain purposes the relation between the association and its members may be one of agency shall not prevent the passage from the member to the association of absolute and exclusive title to the products which are the subject matter of the contract. Such title shall pass to the association upon delivery of the product or at any other specified time which may be expressly and distinctly agreed upon in the contract subject to previously existing liens. In the case of contracts with members who are natural persons, if the period of the contract exceeds three years, the contracts executed thereunder shall specify a reasonable period in each year during which the member by giving to the association such reasonable notice as may be prescribed in the contract may withdraw and be released from his obligations, subject to liability already incurred by him as a member of the association. In the absence of a provision for notice of withdrawal in the contract a member who is a natural person may withdraw at any time after three years subject to liabilities already incurred.

B. The contract may fix, as liquidated damages, which shall not be regarded as penalties, specific sums to be paid by the member to the association upon the breach of any provision of the contract regarding the use of any facilities of the association or the sale or delivery or withholding of products and may further provide that the member who breaks his contract shall pay all costs, premiums for bonds, expenses and fees, in case any action is brought upon the contract by the association.

C. In the event of any breach or threatened breach of such a contract by a member, the association shall be entitled to an injunction to prevent the breach of the contract and to a decree of specific performance thereof. Pending the adjudication of such an action and upon filing a verified complaint showing the breach or threatened breach, the association shall be entitled to a temporary restraining order and preliminary injunction against the member.

D. The association may cause the original of a contract or an authenticated copy thereof to be filed in the office of the county clerk of the county in which the products described in the contract, or any part thereof, are or will at some future time be situated. Such contracts shall describe the property or services affected, the manner in which they are affected and the time for which they are affected and shall state the names and residences of the parties to the contract.

The filing of a contract in conformity to the provisions of this section shall operate as notice thereof to all subsequent purchasers and incumbrancers of so much of said property as is at the time mentioned in the contract located in the county or counties wherein such contract or authenticated copy thereof is filed; provided that when property subject to such a contract is moved into this state, or from one county to another, any previous filing of the contract shall not operate as notice as against subsequent creditors, purchasers, mortgagees or encumbrancers for a longer period than one hundred twenty days after such removal, but such contract must be refiled in the county to which the chattel is removed and in which it is permanently located. The fees for filing such contracts shall be twenty-five cents (25 ) for each contract.

E. Whenever such contract shall have terminated, the association shall on demand give to the member a certificate to that effect, which may be filed with the county clerk. The county clerk shall be entitled to the same filing fees under this subsection as in the case of chattel mortgages.

History: Laws 1937, ch. 152, § 16; 1941 Comp., § 48-1316; 1953 Comp., § 45-14-16.

Cross references. — For injunctions, see Rule 1-066 NMRA.

Compiler's notes. — For similar provisions in earlier act, see Laws 1925, ch. 99, §§ 13, 20 and 21.

Contract enforceable. — Cooperative marketing association without capital stock and operated for mutually beneficial purpose could enforce performance of grower's contract to sell alfalfa to it exclusively, in suit for specific performance or for injunction against contract breach; rule that contract for delivery of ordinary article of commerce would not be compelled by specific performance was not applicable, as action for damages would not afford adequate remedy. Elephant Butte Alfalfa Ass'n v. Rouault, 1926-NMSC-009, 33 N.M. 136, 262 P. 185.

Right of cooperative marketing association to compel specific performance of member's contract to sell alfalfa to it exclusively would not be denied on grounds that it would require constant court supervision for long period of time and possibly involve pursuit of member from place to place; such rule was one of decision, and not limitation on jurisdiction of court of equity. Elephant Butte Alfalfa Ass'n v. Rouault, 1926-NMSC-009, 33 N.M. 136, 262 P. 185.

Association not liable for losses. — Agreement between members and nonprofit agricultural cooperative marketing association, making association sole marketing agency for members' onions and requiring association to gather, harvest and haul same at expense of individual members, created relationship of principal and agent; association was bargaining agent, not independent enterprise, did not take title to onion crop and was not liable for losses due to delay in making sales absent unreasonable exercise of discretion. Santo Tomas Produce Ass'n v. Smith, 1961-NMSC-080, 68 N.M. 436, 362 P.2d 977.

Am. Jur. 2d, A.L.R. and C.J.S. references. — 18 Am. Jur. 2d Cooperative Associations § 14.

Validity and construction of provision for liquidated damages in contract with cooperative marketing association, 12 A.L.R.2d 130.

3 C.J.S. Agriculture § 145.