No. 12201 

IN THE SUPREME COURT OF TEE STATE OF MONTANA 

19 72 

UPPER MISSOURI G, &, T, ELECTKIC COOPERATIVE, 

INC., a corporation, 

Plaintiff and Respondent, 

McCONE ELECTRIC CO-OP, INC., a corporation, 

Defendants and Appellants, 

Appeal from: District Court of the Seventh Judicial District, 

Honorable Paul G, Hatfield, Judge presiding. 

Counsel of Record : 

For Appellants : 

Sandall, Moses and Cavan, Billings, Montana. 

Jerry Cate argued, Billings, Montana. 

For Respondent : 

V. G. Koch argued, Sidney, Montana. 

Filed : 

#pj s : 1972' 

Submitted: September 26, 1972 

Decided : #oV 3 1972 
Mr. Justice Wesley Castles delivered the Opinion of the Court. 

This is an appeal from a summary judgment for Upper Missouri 

G & T Electric Cooperative, Inc. (hereinafter referred to as 

Upper Missouri), 

This case has been before this Court previously in Upper 

MissouriG & T Electric Cooperative, Inc. v, McCone Electric 

Co-op, Inc., 157 Mont. 239, 484 P.2d 741. In that case we found 

summary judgment should not have been granted McCone Electric 

Co-op, Inc. (hereinafter referred to as McCone), and remanded 

the cause to the district court. 

Following remand, further discovery, and pretrial proceedings 

were had. Upper Missouri then filed a motion for summary judgment, which read: 

"COMES NOW the plaintiff and cross-defendant herein, 

and moves the Court, pursuant to Rule 56, Montana Rules 

of Civil Procedure, for Summary Judgment declaring the 

contract between plaintiff and defendant, and all thereof, a valid and subsisting contract, for the following 

reasons : 

"1, That there is no genuine issue as to any 

material fact and that plaintiff is entitled to 

Judgment as a matter of law; 

"2. That defendant's defenses and counter-claims 

are barred by the statute of limitations and laches; 

"3. That the defenses and counter-claims of 

defendant are insufficient, sham, frivolous and immaterial, and therefore, be stricken under Rule 12 (f) 

Montana Rules of Civil Procedure. 

"That the foregoing Motions are based upon the pleadings, 

exhibits, written interrogatories, pre-trial and general 

admissions, and depositions on file and of record in 

this cause, 1 I 

The court entered the following judgment: 

It The above entitled matter having come on regularly 

for hearing before the above entitled Court upon 

motion of plaintiff for Summary Judgment, and the 

Court having entered its Findings of Fact and Conclusions of Law: 

"IT IS ORDERED, ADJUDGED AND DECREED: 

"1, That the Motion for summary Judgment of plaintiff 

be and hereby is granted. 
2 That the wholesale power contract between 

the plaintiff and defendant is valid, binding 

and subsisting, 

"3. That the notice of withdrawal submitted to 

plaintiff by the defendant is of no legal effect, 

"4. That the counterclaims and defenses of defendant be and hereby are dismissed." 

On this appeal appellant McCone sets up a single issue-- 

the correctness of the summary judgment in that it contends 

there are still substantial material facts in dispute and 

summary judgment should not have been granted. Basically, 

the issue revolves around the validity of a long term wholesale 

power contract under which McCone agreed to purchase its power 

needs from respondent Upper Missouri for a period of 35 years. 

The contract was approved in 1959. 

McCone seems to assert that the articles and by-laws of 

Upper Missouri did not permit Upper Missouri to enter into a 

wholesale power contract with Basin Electric Power Cooperative, 

(hereinafter referred to as Basin), 

Nine electric distribution cooperatives, including McCone, 

banded together to form Upper Missouri cooperative and obtained 

a charter in April 1958. In May 1958, the trustees of Upper 

Missouri, including the trustee representative of McCone, 

adopted by-laws, The reason for the formation of Upper Missouri 

is best stated in the resolution of McCone passed in October 

1959, authorizing the assignment of certain United States Bureau 

of Reclamation (hereinafter referred to as Bureau) power to, 

and authorizing the execution of the contract with Upper Missouri. 

This resolution states in part: 

"WHEREAS, McCone Electric Co-op, Inc. may be 

faced with a severe electric power and energy 

shortage in the near future; and, * * * 

"WHEREAS, this Cooperative believes that it 

is the proper role for Upper Missouri to accept 

the f u l l u t i l i t y responsibility and furnish and 

provide the electric power and energy needed 

within its service area by this cooperative; 

and, * * * 
"WHEREAS, it appears now, that the Bureau of 

Reclamation will not fulfill the requirements 

of this Cooperative in the future, and 

"WHEREAS, it is desirable from a technical and 

economic standpoint that Upper Missouri arrange 

and negotiate for supplemental power for its 

members; and * * * 

"WHEREAS, it is deemed to be necessary and in 

the best interest of this Cooperative to have 

Upper Missouri supply all the present and future 

electric power and energy requirements of this 

Cooperative within the Upper Missouri service 

area Jc * ;'c. " 

The assignment of the Bureau contract was executed on 

October 16, 1959, by McCone and approved on November 24, 1959, 

by the Bureau. Also, on October 16, 1959, McCone executed 

the contract in question, and the approval of the Rural Electrification Administration was endorsed thereon dated November 30, 

1959. Under this contract, McCone agreed to purchase its power 

and energy requirements from Upper Missouri until December 31, 

1994, and to pay rates as established under paragraph 4(b) 

of the contract, which provides: 

"(b) The Board of Trustees of Upper Missouri at 

such intervals as it shall deem appropriate, but 

in any event not less frequently than once in each 

calendar year, shall review the rate for electric 

power and energy hereunder and under similar agreements with other member cooperatives and, if necessary shall revise such rate so that it shall produce 

revenues which shall be sufficient, but only sufficient, with the revenues of Upper Missouri from all 

other sources to pay all overhead and meet the cost 

of the operation and maintenance of the transmission 

system, generating plant and related facilities of 

Upper Missouri, the cost of transmission service, 

the cost of any power and energy purchased for resale hereunder by Upper Missouri, pay taxes, make payments on account of principal of and interest on all 

indebtedness of Upper Missouri, and to provide for 

the establishment and maintenance of reasonable reserves * * * The consumer agrees that the rate from time to 

time established by the Board of Trustees of Upper 

Missouri shall be deemed to be substituted for the 

rate herein provided and agrees to pay for electric 

power and energy furnished by Upper Missouri to it 

hereunder and after the effective date of any such 

revisions at such revised rates; provided, however, 

that no such revision shall be effective unless approved 

by the Administrator. I l 

From the pretrial order, McCone has admitted: 

"* * * that all rates were established by a majority 
of the board of plaintiff and were approved by 

the Rural Electrification Administration. Il 

Upper Missouri rented offices at Sidney, Montana, and hired 

management. Upper Missouri thereafter entered into long term 

contracts with the Bureau to purchase hydrogenerated power. 

When it determined that the Bureau could not supply the needs of 

its members, it entered into membership and a cooperative agreement to purchase thermo-generated power with Basin on a long 

term basis, and thereby participate in generation and direction 

as a member of this organization. On March 10, 1969, McCone 

advised Upper Missouri that it would terminate its membership 

effective on the meter reading date of the Bureau in June 1969, 

and proceeded with attempts to obtain direct delivery of power 

from Upper Missouri suppliers. This action was thereafter instituted. 

Referring back to the quoted parts of McCone's resolution, 

it is seen that there is nothing that even remotely suggests any 

limitation as urged by McCone. 

McCone urges that in 1959, at the time of the wholesale 

power contract with Upper Missouri, it was not contemplated that 

Upper Missouri would in the future contract to purchase power 

from Basin. Rather, McCone contends, it was contemplated that 

hydro-electric generating dams would be built on the upper 

Missouri river. Perhaps these contemplations were in the minds 

of some of the incorporators; but the resolution concerned power 

needs through a cooperative power supply entity from any source, 

We have examined the wholesale power contract and find that 

it is enforceable under its terms. The previous opinion of this 

Court sets out some of the pertinent and relevant provisions and 

will not be repeated here. In that opinion, appearing at 157 

Mont. pp. 249,250 and 484 P,2d pp. 746, 747, we said: 

 inal ally , the conclusions concerning public policy, 

restriction of trade, and fraud simply do not 

appear. The brief of * * * McCone states: 
"'The contracts in this case are against 

public policy and the public good and are in 

restraint of trade because they result in a 

significant portion of the population of eastern 

Montana having to pay additional costs for their 

electricity over the term of the contract and in 

that they prohibit McCone Electric in contracting 

with other andheaper sources of power developing 

coal reserves and power sources within the state 

of Montana * * *, ' 

"If every contract could be declared void because of 

a showing by an individual, a graup of individuals, 

or even a significant portion of individuals that 

they could save money by breaking it, chaos would 

result. Ten years after the contract, initiated 

and inspired, we are told, by defendant [McCone], 

defendant [McCone] now wants a better deal elsewhere. It is as simple as that, 11 

The foregoing statement of this Court is applicable here, 

There is no showing that the power contract is against public 

policy or in restraint of trade. There is nothing in the 

pleadings or the documents on file that would even remotely 

indicate that the by-laws were against public policy or the 

public good, but are ordinary by-laws, adopted with ~cCone's 

knowledge and consent, 

Upper Missouri did not perform acts detrimental to McCone 

which were outside the original contemplation of the parties. 

Upper Missouri became a member of Basin to obtain a power 

supply for its members, On cooperative principles Upper Missouri is a part owner of Basin's generation and transmission 

system which entitled Upper Missouri to a seat on the Basin board, 

Under the charter and by-laws, each of the nine cooperatives 

have a trustee upon the Upper Missouri board. Certainly one 

trustee cannot prevent the taking of action and entering into 

agreements, which the others believe will benefit the cooperative 

as a whole. 

The entire background, resolution a.nd contract indicate 

unequivocally that the purpose at the time was to obtain an 

adequate power supply to avoid a power shortage, and that Upper 

Missouri was to undertake the task to see that this did not 

happen, Upper Missouri fulfilled its part of the bargain; it 

has obtained and supplied that power, Now, many years after 
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. 

concur : 

~sskdiate Justice 

/ /chief Justice