Members or shareholders of a Co-operative generally have limited liability meani
ID: 373177 • Letter: M
Question
Members or shareholders of a Co-operative generally have limited liability meaning they do not have liability for debts and obligations including unlawful acts of those acting on behalf of the cooperative here Crow Wing. Member's liability is limited to amounts invested in the cooperative if any and for their personal liability of wrongdoings if any.
E.g. Members cannot be convicted for negligence, however, if court decides to impose a fine on the Co-operative members might have to chip depending on the amount of investment they have in the Co-operative.
Explanation / Answer
Randall and Peggy Norman operated a dairy farm in Pine River, Minnesota. About ten years after the operation was begun, the cows started to experience health issues. Over the next eighteen years, the herd suffered many serious health problems. Eventually, stray electrical voltage—which can use cow hooves as an unintended pathway, causing health issues—was detected. By then, milk production in the Normans’ herd had declined from 27 percent above the state average to 20 percent below it. The Normans filed a suit in a Minnesota state court against Crow Wing Cooperative Power & Light Company, a member-owned electrical cooperative that provided electricity to the Normans’ farm. If Crow Wing is found to have acted negligently, can its members be held jointly liable for the cooperative’s acts? Explain.