Published once a week in Palmer, Alaska, for
the Matanuska Valley Farmers' Co-operating
Association, for the purpose of giving news
of the Association's work, problems and ac
complishments .
WHEN THE CHICKENS COME HOME TO ROOST
Last week we did not have much Information about the reasons that the
District Court of Appeals used for reversing the Judgment of the Third
District Court in Anchorage in tho 19^5 dairy suit. We now have the
pertinent reasons for this action and will print thorn for your inform
ation.
The Court stated: "Tho circumstances of the Operation of tho Co-op
demonstrates that the parties agreed to a modification of the written
contract, substituting hcroforc another method of payment. The dairymen
have in the past, acquiosccd in, and substantially benefitted from, tho—»
payment methods to which they now object."
This was a fact indeed. The majority of tho Directors of the Co-op
wero dairymen and had full authority to make the rules for payment
within the limits of the marketing contract and the by-laws of the As
sociation. They could make a flat payment every week, or set up a pool.
There is no information in the minutes of the Director's meetings to
show that a pool was ever formed; so, it was up to the Directors to do
cidc whether any further payments were to be made at the end of the
year. They were not bound to make any further payments if they wero so
inclined. The important fact is, that the Board never declared them
selves,, on the matter in 1945» evidently because the Association as a
whole showed a very small margin of profit that year, and any further
payment would have been so small that it would have been useless. It
is also noteworthy that some of the dairymen had received considerable
benefits from other departments that were not profitable to tho Associ
ation that year. This was brought out in the trial, but was disregard- .
cd. The Court of Appeals noticed this, and made it an Important reason
for their decision. Territorial Law says that dividends can not be
from capital, but must bo from profits.
The Court further stated! "Apparently one of the principal factors
in converting tho dairy department from a losing entorpriso into a prof
itablo one was the construction of the dairy-crcamcry plant at Anchor
age , This construction v/as financed by the entiro Co-operative. The
cost apparently was not allocated to the dairy department as disting
uished from the other departments. This method of bookkooping tends to
exaggerate the amount of profits attributable to the dairy products."
As a matter of fact, the dairy department previous to the building of
the dairy in Anchorage was a losing matter. Dairymen were trying to
produce butterfat for the manufacturing of butter, and the dairy lost
several thousand dollars every year until the Co-op v/as able to sell
liquid milk in Anchorage. However, the dairy in Anchorage was not
built v/ith funds supplied by the dairy department, but, with funds de
rived from the successful operations of other departments and borrowed
funds, for v/hich the Association as a v/holo v/as obligated to pay.
There were other profitable sidelines carried on by the creamery, such
as the manufacturing of ice cream, popsiclcs, cultured buttermilk and
cottage cheese, in which little if any milk was used from milk sales to
the Association. Then there was about 12,1+00 a year from rentals of
apartments in the Anchorage Dairy building. All of this was demanded
by the dairymen. The District Court allowed the profit from these act
ivities to be paid to the Dairymen except for the rentals. In some
manner the records of the sales from the ice cream and other manufact
ured products, disappeared from the records of .the Association just be
fore the trial, in a manner suggesting sabotage.
Then tho Court said: "Having benefitted from this segregation each
year in the past, the dairymen would not now be permitted to repudiate
the basic principles governing the operation of the Co-operative." Also
"The appeal should not be permitted to modify the contract v/hen it is
to his benefit to do so, and then refuto it and insist upon strict per
formance when that would benefit him most. We think that is what he
is trying to do here."
In other words, tho Court thinks as we do, that a member of the Co-op
should learn to take the good along with the bad. That the good of tho
Association as a whole should always be considered, as well as the in
dividuals who mako up tho organization. The strange part of this ease
continued on page 4