§421-18  Contracts between association and
members.  (a)  Period, withdrawal.  The bylaws may require members to
execute contracts with the association in which the members agree to patronize
the facilities created by the association, and to sell all or a specified part
of their products to or through it, 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 contract to sell to 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.  The title shall pass to the association upon delivery of the
product, or at any other time specified in the contract.  If the period of the
contract exceeds ten years, the bylaws and the contracts executed thereunder
shall specify a reasonable period, not less than twenty days, in each year,
after the tenth year, during which the member, by giving to the association
such reasonable notice as the association may prescribe, may withdraw from the
association.  In the absence of a withdrawal provision, a member may withdraw
at any time after ten years; provided that if a member is expelled from the
association before the end of the ten-year period, the contract shall be void.



(b)  Damages for breach; effect upon membership
status of association members.



(1)  The contract may fix, as liquidated damages,
which shall not be regarded as penalties, specified sums to be paid by the
members to the association upon the breach of any provision of the contract,
regarding the use of any facilities of the association or the sale, delivery, handling,
or withholding of products; and may further provide that the member who breaks
the member's contract shall pay all costs including premiums for bonds, and
reasonable attorney's fees, to be fixed by the court, in case the association
prevails in any action upon the contract.



(2)  Any member who breaches any provision of the
contract with the association shall be subject to removal from the association
including the forfeiture of all rights and privileges pertinent to membership
in the association as may be provided for in the bylaws of the association.  In
the absence of any provision in the association's bylaws relating to the
removal of members, removal may occur by majority vote of the board of
directors.  Any member so removed shall be entitled to reapply for membership
including the reinstatement of all such rights and privileges as may have been
previously forfeited subject either to (A) any provision in the association's
bylaws relating to readmission, or (B) in the absence of such provision, by
majority vote of the board of directors at the time readmission is sought.



(c)  Equitable relief.  A court of competent
jurisdiction may grant an injunction to prevent the breach of the contract by a
member and may decree specific performance thereof.  Pending the adjudication
of the action and upon filing a verified complaint showing the breach or
threatened breach, and a bond in such form and amount as may be approved by the
court, the court may grant a temporary restraining order or preliminary injunction
against the member.



(d)  Recording contracts.  The association may
file contracts to sell agricultural products to or through the association in
the office of the bureau of conveyances.  If the association has uniform
contracts with more than one member in any county, it may, in lieu of filing
the original contracts, file the affidavit of its president, vice president, or
secretary, containing or having attached thereto:



(1)  A true copy of the uniform contract entered into
with its members producing the product in the county;



(2)  The names of the members who have executed the
contract and a description of the land on which the produce is produced, if the
description is contained in the contract.



The association may file from time to time
thereafter affidavits containing revised or supplementary lists of the members
producing the product in the county without setting forth therein a copy of the
uniform contract but referring to the filed or recorded copy thereof.  All
affidavits filed under the section shall state in substance that they are filed
pursuant to this section.  The bureau of conveyances shall file the affidavits
and make endorsements thereon and record and make entries thereof in the same
manner as is required by law in the case of chattel mortgages, and shall
compile and make available for public inspection a convenient index containing
the names of all signers of the contracts, and collect for its services
hereunder the same fees as for chattel mortgages.  The filing of the contract, or
the affidavit, shall constitute constructive notice of the association's title
or right to the product embraced in the contract, to all subsequent purchasers,
encumbrancers, creditors, and to all persons dealing with the members with
reference to the product.  No title, right, or lien of any kind shall be
acquired to or on the product thereafter except through the association or with
its consent, or subject to its rights; and the association may recover the
possession of such property from any and all subsequent purchasers,
encumbrancers, and creditors, and those claiming under them, in whose
possession the same may be found, by any appropriate action for the recovery of
personal property, and it may have relief by injunction and for damages.



(e)  Effect of other statutes upon contracts. 
The provisions of this chapter are intended to encourage and to authorize
associations to effectively produce and market agricultural products, and to
derive the maximum benefits possible from such cooperative production and
marketing.  Accordingly, the contracts between an association and its members
shall be deemed to authorize the collective production and marketing of the
members' products, including but not limited to the combining, pooling and
blending of production quotas, marketing adjustments and distribution rights,
the provisions of any other law to the contrary notwithstanding.  This section
shall be liberally construed in favor of associations and their contracts with
their members. [L 1949, c 234, pt of §1; RL 1955, §176-19; HRS §421-18; am L
1969, c 200, §1; am L 1972, c 103, §5; am L 1978, c 183, §1; gen ch 1985]



 



Cross References



 



  Bureau of conveyances; recording, see chapter 502.



 



Rules of Court



 



  Injunctions, see HRCP rule 65.