UPPER MO G T CO-OP v MCCONE EL
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No. 12201 I N THE SUPREME C U T O TEE STATE O MONTANA OR F F 1972 UPPER MISSOURI G , &, T, ELECTKIC COOPERATIVE, INC., a corporation, P l a i n t i f f and Respondent, McCONE ELECTRIC CO-OP, I N C . , a corporation, Defendants and A p p e l l a n t s , Appeal from: D i s t r i c t Court of t h e Seventh J u d i c i a l D i s t r i c t , Honorable Paul G, H a t f i e l d , Judge p r e s i d i n g . Counsel of Record : For Appellants : S a n d a l l , Moses and Cavan, B i l l i n g s , Montana. J e r r y Cate argued, B i l l i n g s , Montana. For Respondent : V. G. Koch argued, Sidney, Montana. Submitted: Decided : Filed : #pjs : 1972' September 26, 1972 #oV 3 1972 M r . J u s t i c e Wesley C a s t l e s d e l i v e r e d the Opinion of t h e Court. This i s an appeal from a summary judgment f o r Upper Missouri G & T E l e c t r i c Cooperative, Inc. (hereinafter referred t o a s Upper Missouri), This case has been before t h i s Court previously i n Upper MissouriG & T E l e c t r i c Cooperative, Inc. v , McCone E l e c t r i c Co-op, Inc., 157 Mont. 239, 484 P.2d 741. I n t h a t c a s e we found summary judgment should not have been granted McCone E l e c t r i c Co-op, Inc. ( h e r e i n a f t e r r e f e r r e d t o a s McCone), and remanded the cause t o t h e d i s t r i c t c o u r t . Following remand, f u r t h e r discovery, and p r e t r i a l proceedings were had. Upper Missouri then f i l e d a motion f o r summary judg- ment, which read: " O E NOW t h e p l a i n t i f f and cross-defendant h e r e i n , C MS and moves t h e Court, pursuant t o Rule 56, Montana Rules of C i v i l Procedure, f o r Summary Judgment d e c l a r i n g t h e c o n t r a c t between p l a i n t i f f and defendant, and a l l t h e r e o f , a v a l i d and s u b s i s t i n g c o n t r a c t , f o r t h e following reasons : "1, That t h e r e i s no genuine i s s u e a s t o any m a t e r i a l f a c t and t h a t p l a i n t i f f i s e n t i t l e d t o Judgment a s a matter of law; "2. That defendant's defenses and counter-claims a r e b a r r e d by t h e s t a t u t e of l i m i t a t i o n s and l a c h e s ; "3. That t h e defenses and counter-claims of defendant a r e i n s u f f i c i e n t , sham, f r i v o l o u s and i m m a t e r i a l , and t h e r e f o r e , be s t r i c k e n under Rule 12 ( f ) Montana Rules of C i v i l Procedure. "That t h e foregoing Motions a r e based upon t h e pleadings, e x h i b i t s , w r i t t e n i n t e r r o g a t o r i e s , p r e - t r i a l and general admissions, and depositions on f i l e and of record i n t h i s cause, 1I The c o u r t entered t h e following judgment: It The above e n t i t l e d matter having come on r e g u l a r l y f o r hearing before t h e above e n t i t l e d Court upon motion of p l a i n t i f f f o r Summary Judgment, and t h e Court having entered i t s Findings of Fact and Conclus i o n s of Law: "IT I S ORDERED, ADJUDGED AND DECREED: "1, That t h e Motion f o r summary Judgment of p l a i n t i f f be and hereby i s granted. 2 That t h e wholesale power c o n t r a c t between t h e p l a i n t i f f and defendant i s v a l i d , b i n d i n g and s u b s i s t i n g , "3. That t h e n o t i c e of withdrawal submitted t o p l a i n t i f f by t h e defendant i s of no l e g a l e f f e c t , "4. That t h e counterclaims and d e f e n s e s of defendant be and hereby a r e dismissed." O t h i s a p p e a l a p p e l l a n t McCone sets up a s i n g l e i s s u e - n t h e c o r r e c t n e s s of t h e summary judgment i n t h a t i t contends t h e r e a r e s t i l l s u b s t a n t i a l m a t e r i a l f a c t s i n d i s p u t e and summary judgment should n o t have been g r a n t e d . Basically, t h e i s s u e r e v o l v e s around t h e v a l i d i t y of a long term wholesale power c o n t r a c t under which McCone agreed t o purchase i t s power needs from respondent Upper Missouri f o r a p e r i o d of 35 y e a r s . The c o n t r a c t was approved i n 1959. McCone seems t o a s s e r t t h a t t h e a r t i c l e s and by-laws of Upper Missouri d i d n o t permit Upper Missouri t o e n t e r i n t o a wholesale power c o n t r a c t w i t h Basin E l e c t r i c Power Cooperative, (hereinafter referred t o a s Basin), Nine e l e c t r i c d i s t r i b u t i o n c o o p e r a t i v e s , i n c l u d i n g McCone, banded t o g e t h e r t o form Upper Missouri c o o p e r a t i v e and obtained a c h a r t e r i n A p r i l 1958. I n May 1958, t h e t r u s t e e s of Upper Missouri, i n c l u d i n g t h e t r u s t e e r e p r e s e n t a t i v e of McCone, adopted by-laws, The r e a s o n f o r t h e formation of Upper Missouri i s b e s t s t a t e d i n t h e r e s o l u t i o n of McCone passed i n October 1959, a u t h o r i z i n g t h e assignment of c e r t a i n United S t a t e s Bureau of Reclamation ( h e r e i n a f t e r r e f e r r e d t o a s Bureau) power t o , and a u t h o r i z i n g t h e execution of t h e c o n t r a c t w i t h Upper Missouri. This r e s o l u t i o n s t a t e s i n p a r t : "WHEREAS, McCone E l e c t r i c Co-op, I n c . may be faced w i t h a s e v e r e e l e c t r i c power and energy s h o r t a g e i n t h e n e a r f u t u r e ; and, *** "WHEREAS, t h i s Cooperative b e l i e v e s t h a t i t i s t h e proper r o l e f o r Upper Missouri t o a c c e p t t h e f u l l u t i l i t y r e s p o n s i b i l i t y and f u r n i s h and provide t h e e l e c t r i c power and energy needed w i t h i n i t s s e r v i c e a r e a by t h i s c o o p e r a t i v e ; and, * * * "WHEREAS, i t appears now, t h a t t h e Bureau of Reclamation w i l l n o t f u l f i l l t h e requirements of t h i s Cooperative i n t h e f u t u r e , and "WHEREAS, i t i s d e s i r a b l e from a t e c h n i c a l and economic s t a n d p o i n t t h a t Upper Missouri a r r a n g e and n e g o t i a t e f o r supplemental power f o r i t s members; and *** "WHEREAS, i t i s deemed t o be n e c e s s a r y and i n t h e b e s t i n t e r e s t o f t h i s Cooperative t o have Upper Missouri supply a l l t h e p r e s e n t and f u t u r e e l e c t r i c power and energy requirements of t h i s Cooperative w i t h i n t h e Upper Missouri s e r v i c e a r e a Jc ;'c. " * The assignment of t h e Bureau c o n t r a c t was executed on October 1 6 , 1959, by McCone and approved on November 24, 1959, by t h e Bureau. A l s o , on October 1 6 , 1959, McCone executed t h e c o n t r a c t i n q u e s t i o n , and t h e approval of the Rural E l e c t r i f i c a t i o n Administration was endorsed t h e r e o n dated November 30, 1959. Under t h i s c o n t r a c t , McCone agreed t o purchase i t s power and energy requirements from Upper Missouri u n t i l December 31, 1994, and t o pay r a t e s a s e s t a b l i s h e d under paragraph 4 ( b ) of t h e c o n t r a c t , which provides: "(b) The Board of T r u s t e e s of Upper Missouri a t such i n t e r v a l s a s i t s h a l l deem a p p r o p r i a t e , b u t i n any e v e n t n o t l e s s f r e q u e n t l y t h a n once i n each c a l e n d a r y e a r , s h a l l review t h e r a t e f o r e l e c t r i c power and energy hereunder and under s i m i l a r agreements with o t h e r member c o o p e r a t i v e s and, i f necess a r y s h a l l r e v i s e such r a t e s o t h a t i t s h a l l produce revenues which s h a l l be s u f f i c i e n t , b u t only s u f f i c i e n t , w i t h t h e revenues of Upper Missouri from a l l o t h e r sources t o pay a l l overhead and meet t h e c o s t of t h e o p e r a t i o n and maintenance of t h e t r a n s m i s s i o n system, g e n e r a t i n g p l a n t and r e l a t e d f a c i l i t i e s of Upper Missouri, t h e c o s t o f t r a n s m i s s i o n s e r v i c e , t h e c o s t of any power and energy purchased f o r res a l e hereunder by Upper Missouri, pay t a x e s , make payments on account of p r i n c i p a l of and i n t e r e s t on a l l indebtedness o f Upper Missouri, and t o provide f o r t h e e s t a b l i s h m e n t and maintenance of r e a s o n a b l e r e s e r v e s * The consumer a g r e e s t h a t t h e r a t e from time t o time e s t a b l i s h e d by t h e Board of T r u s t e e s of Upper Missouri s h a l l be deemed t o be s u b s t i t u t e d f o r t h e r a t e h e r e i n provided and a g r e e s t o pay f o r e l e c t r i c power and energy f u r n i s h e d by Upper Missouri t o i t hereunder and a f t e r t h e e f f e c t i v e d a t e of any such r e v i s i o n s a t such r e v i s e d r a t e s ; provided, however, t h a t no such r e v i s i o n s h a l l be e f f e c t i v e u n l e s s approved by t h e Administrator. I l ** From t h e p r e t r i a l o r d e r , McCone h a s admitted: "* * * t h a t a l l r a t e s were e s t a b l i s h e d by a m a j o r i t y of t h e board of p l a i n t i f f and were approved by t h e Rural E l e c t r i f i c a t i o n Administration. Il Upper Missouri rented o f f i c e s a t Sidney, Montana, and h i r e d management. Upper Missouri t h e r e a f t e r entered i n t o long term c o n t r a c t s with t h e Bureau t o purchase hydrogenerated power. When i t determined t h a t t h e Bureau could n o t supply t h e needs of i t s members, i t entered i n t o membership and a cooperative agreement t o purchase thermo-generated power with Basin on a long t e r m b a s i s , and thereby p a r t i c i p a t e i n generation and d i r e c t i o n a s a member of t h i s organization. On March 10, 1969, McCone advised Upper Missouri t h a t i t would terminate i t s membership e f f e c t i v e on t h e meter reading d a t e of t h e Bureau i n June 1969, and proceeded with attempts t o o b t a i n d i r e c t d e l i v e r y of power from Upper Missouri s u p p l i e r s . This a c t i o n was t h e r e a f t e r i n - stituted. Referring back t o t h e quoted p a r t s of McCone's r e s o l u t i o n , i t i s seen t h a t t h e r e i s nothing t h a t even remotely suggests any l i m i t a t i o n a s urged by McCone. McCone urges t h a t i n 1959, a t t h e time of t h e wholesale power c o n t r a c t with Upper Missouri, i t was n o t contemplated t h a t Upper Missouri would i n t h e f u t u r e c o n t r a c t t o purchase power from Basin. Rather, McCone contends, i t was contemplated t h a t h y d r o - e l e c t r i c generating dams would be b u i l t on t h e upper Missouri r i v e r . Perhaps t h e s e contemplations were i n t h e minds of some of t h e i n c o r p o r a t o r s ; b u t t h e r e s o l u t i o n concerned power needs through a cooperative power supply e n t i t y from any source, W have examined t h e wholesale power c o n t r a c t and f i n d t h a t e i t i s enforceable under i t s terms. The previous opinion of t h i s Court s e t s out some of t h e p e r t i n e n t and r e l e v a n t p r o v i s i o n s and w i l l n o t be repeated here. I n t h a t opinion, appearing a t 157 Mont. pp. 249,250 and 484 P,2d pp. 746, 747, we s a i d : inal ally , the conclusions concerning public p o l i c y , r e s t r i c t i o n of t r a d e , and fraud simply do n o t appear. The b r i e f of McCone s t a t e s : *** "'The c o n t r a c t s i n t h i s case a r e a g a i n s t p u b l i c policy and t h e public good and a r e i n r e s t r a i n t of t r a d e because they r e s u l t i n a s i g n i f i c a n t p o r t i o n of t h e population of e a s t e r n Montana having t o pay a d d i t i o n a l c o s t s f o r t h e i r e l e c t r i c i t y over t h e term of t h e c o n t r a c t and i n t h a t they p r o h i b i t McCone E l e c t r i c i n c o n t r a c t i n g with o t h e r a n d h e a p e r sources of power developing c o a l r e s e r v e s and power sources w i t h i n t h e s t a t e of Montana ' * * *, "If every c o n t r a c t could be declared void because of a showing by an i n d i v i d u a l , a graup of i n d i v i d u a l s , o r even a s i g n i f i c a n t portion of i n d i v i d u a l s t h a t they could save money by breaking i t , chaos would r e s u l t . Ten years a f t e r t h e c o n t r a c t , i n i t i a t e d and i n s p i r e d , we a r e t o l d , by defendant [McCone], defendant [McCone] now wants a b e t t e r d e a l e l s e where. I t i s a s simple a s t h a t , 11 The foregoing statement of t h i s Court i s a p p l i c a b l e h e r e , There i s no showing t h a t t h e power c o n t r a c t i s a g a i n s t p u b l i c p o l i c y o r i n r e s t r a i n t of t r a d e . There i s nothing i n t h e pleadings o r t h e documents on f i l e t h a t would even remotely i n d i c a t e t h a t t h e by-laws were a g a i n s t p u b l i c p o l i c y o r t h e public good, b u t a r e ordinary by-laws, adopted with ~ c C o n e ' s knowledge and consent, Upper Missouri d i d n o t perform a c t s d e t r i m e n t a l t o McCone which were o u t s i d e t h e o r i g i n a l contemplation of t h e p a r t i e s . Upper Missouri became a member of Basin t o o b t a i n a power supply f o r i t s members, On cooperative p r i n c i p l e s Upper M i s - s o u r i i s a p a r t owner of Basin's generation and transmission system which e n t i t l e d Upper Missouri t o a s e a t on t h e Basin board, Under t h e c h a r t e r and by-laws, each of t h e n i n e cooperatives have a t r u s t e e upon t h e Upper Missouri board. C e r t a i n l y one t r u s t e e cannot prevent t h e taking of a c t i o n and e n t e r i n g i n t o agreements, which t h e o t h e r s b e l i e v e w i l l b e n e f i t t h e cooperative a s a whole. The e n t i r e background, r e s o l u t i o n a.nd c o n t r a c t i n d i c a t e unequivocally t h a t t h e purpose a t t h e time was t o o b t a i n an adequate power supply t o avoid a power shortage, and t h a t Upper Missouri was t o undertake t h e t a s k t o s e e t h a t t h i s d i d not happen, Upper Missouri f u l f i l l e d i t s p a r t of t h e bargain; i t has obtained and supplied t h a t power, Now, many years a f t e r the fact, McCone is attempting to vary by par01 evidence the unimpeachable intent of the parties, as evidenced by the resolution and the contract. That a signatory to the Articles of Incorporation, by-laws and other documents should, ten years later, accuse Upper Missouri of undue influence and fraud is unrealistic. The circumstances and purpose of the contract before the Court differ considerably from the restraint of trade cases cited by McCone. McCone, with eight other cooperatives, banded together to form an electric power supply cooperative to supply power, each having a member trustee on the board and each becoming an owner of Upper Missouri; the contract was entered into not to create a monopoly, fix prices nor limit competition, but to avoid a shortage of power which was foreseen to be certain to occur if an additional source of power was not found. McCone has taken power and operated under the contract and rates for ten years and should now be estopped to deny what has been established by contract and performance. The findings of fact and conclusions of law support the judgment, and there are no material facts in issue. The ruling of the district court was correct, and the judgment is affirmed. ~sskdiate Justice concur : / /chief Justice
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