Range v. Tennessee Burley Tobacco Growers Ass'n

On Petition to Rehear.

McAMIS, P. J.

By their respective petitions to rehear both parties complain of our holding that the relationship between producers and the Association is that of debtor and creditor.

Complainants insist that the equities due producers are held in trust by the Association and, for that reason, we erred in not sustaining the suit as a class action. The Association insists that the equities constitute savings *687•which, under cooperative practice, are subject to be withheld and used as revolving capital. Upon further reflection, we are constrained to adhere to our original conclusion that such equities constitute nothing more than an indebtedness of the Association:

The contracts of the Association with Commodity Credit Corporation created the relationship of principal and agent between them — not between the Association and producers. Under these contracts the Association became obligated to perform certain duties in furtherance of the purpose of Commodity Credit Corporation and the intent of the Act to aid producers. Incident to the performance of its contractual duties, and without any contract or agreement with individual producers, the benefits of the Act, to the extent of the equities here involved, found their way into the hands of the Association. The producers, as the prime beneficiaries of the contracts between Commodity Credit Corporation and the Association, are, therefore, mere creditors of the Association. The fact that the Association was acting as an agent of Commodity Credit Corporation does not impress the funds in its hand with a trust in favor of growers.

But, if we are mistaken in this view and the relation is that of trustee and cestui que trust it would seem that if, as we have held, complainants are not in the true sense representative of other thousands of growers entitled to equities, the same reasons would exist for declining to entertain the suit as a class action.

We said in our original opinion that warehousemen having at least possible conflicting interests were active in the conduct of the suit and obligated to pay fees of *688complainants’ counsel. In part, the basis of our statement that this was “admitted” was the testimony of Mr. W. G% Yann, a warehouseman. (Copied in an unpublished portion of this opinion.)

There is other evidence of activity by the warehouse-men, too long and involved to set out, tending to the same conclusion.

It may be true as insisted that warehousemen helped in the creation of the Association and that its continued existence is not altogether contrary to their interests. A conflict lies, however, in the fact that the Association favors cooperative warehouses and redrying plants and it must be remembered that a primary purpose of the bill was to enjoin the use of funds in such enterprises. We are, therefore, of opinion a court of equity should decline to entertain the suit as a class action especially when to do so would force the Association to operate under the cloud of a possible judgment so large as to seriously jeopardize its credit. Aside from this, we think producers who wish to withdraw their equities can do so with greater facility and at less expense by making demand upon the Association than by coming into court to formally claim the benefits of this suit.

We are content with the taxation of the cost of making up the transcript as directed in our former opinion. Complainants’ petition to rehear is, accordingly, denied.

The Association’s petition to rehear erroneously assumes that under our former opinion a cooperative cannot place savings due its members in a revolving fund and devote such savings to the operation and advancement of the cooperative enterprise. That question was not *689presented once we concluded that, in acting under its contracts with Commodity Credit Corporation, the Association was not acting in the role of a cooperative but as an agent of Commodity Credit Corporation. For the reasons above set forth we hold that such equities are debts of the Association and, therefore, cannot be classed as “savings.” For the same reason marketing laws and agreements are inapplicable.

The Association’s petition mistakenly assumes that we held that the Chancellor was correct in raising an estop-pel against it. Having held that the equities constitute indebtedness of the Association rather than savings due members it was unnecessary to determine the correctness of the Chancellor’s holding that the Association had represented to prospective members that their equities would be distributed in cash.

The foregoing determines in principle other questions raised by the Association’s petition to rehear. It must, therefore, be denied.

Hale and Howard, JJ., concur.