## Facts

- Fishermen’s Dock Cooperative, Inc. was a fishermen’s cooperative association organized under New Jersey law and operated to market members’ fish and distribute patronage-based benefits.
- In 1957, William M. Lambert became a member-stockholder by buying two shares for $125.
- At the time of Lambert’s purchase, a bylaw provided that upon termination of membership a stockholder would receive the “fair book value” of the shares.
- In 1962, the cooperative amended its bylaws (by majority vote, as permitted by the bylaws) to provide that a retiring member would receive only the price originally paid for the stock.
- In July 1965, the board terminated Lambert’s membership because he was no longer engaged in the fishing industry and did no business with the cooperative; Lambert did not contest the propriety of the termination.
- Lambert sued for the value of his stock interest and for patronage dividends; the patronage-dividend issue was withdrawn before Supreme Court review, leaving only valuation of the stock interest.
- The trial court valued Lambert’s stock interest at $15,092.10, but the Appellate Division reduced it to $125; Lambert sought review.

## Issues

1. Whether a cooperative may validly amend its bylaws, by the authorized voting procedure, to change a member’s redemption right from “fair book value” to return of the original purchase price.
2. Whether, upon termination of membership after such an amendment, a departing member is entitled to share in accumulated reserves and surplus through a “fair book value” redemption.

## Decision

- The Supreme Court of New Jersey affirmed the Appellate Division.
- Lambert was entitled only to $125, the original amount paid for his cooperative shares.
- The 1962 bylaw amendment limiting redemption to the original purchase price was enforceable against Lambert.
- The Court declined to address patronage-dividend claims because that issue had been withdrawn.

## Legal Principles

- Cooperative membership shares function primarily as incidents of membership in a patronage-based enterprise, not as investment stock intended to appreciate and be redeemed at a proportionate share of net worth.
- A member’s rights are defined by the cooperative’s governing documents, including bylaws that reserve a power of amendment by the prescribed vote; properly adopted amendments may alter economic incidents of membership.
- Accumulated reserves and retained patronage earnings are generally maintained for the cooperative’s continuity and operations and are not payable to departing members absent clear governing provisions requiring such distribution.
- Courts may construe cooperative documents in a manner consistent with the statutory cooperative model and with protecting the cooperative’s financial stability from depletion through withdrawals.

## Conclusion

The court held that a fishermen’s cooperative could enforce a duly adopted bylaw amendment limiting redemption of a departing member’s shares to the member’s original contribution, rejecting a claim to “fair book value” that would have included cooperative reserves and surplus.


Lambert v. Fishermen’s Dock Coop., Inc., 61 N.J. 596, 297 A.2d 566 (1972)