Document: 341 U.S. 246 71 S.Ct. 692 95 L.Ed. 912 MONTANA-DAKOTA UTILITIES CO.v.NORTHWESTERN PUBLIC SERVICE CO. No. 77. Argued Nov. 27, 1950. Decided May 7, 1951. Mr. William D. Mitchell, Washington, D.C., for petitioner. Jacob M. Lashly, St. Louis, Mo., respondent. Howard E. Wahrenbrock, Federal Power Commission, amicus curiae, by special leave of Court. Justice JACKSON delivered the opinion 1 Petitioner and respondent are public electric utilities companies engaged in interstate commerce. Petitioner's predecessor were under same management through interlocking directorships joint officers. During that relationship two interchanged energy, shared expenses, made a number intercompany contracts establishing rates charges, which filed with accepted Commissoin. These contract charges at root this controversy. during period 1935—1945, its paid unreasonably high prices what furnished it, it received low provided That advantage, is alleged, was fraudulent unlawful due to directorate, prevented protest Commission have reasonable established pursuant provisions Act.1 2 sued United States District Court asserted jurisdiction on ground case 'arises Constitution, or laws States'2 and, more particularly, 'law regulating commerce,'3 specifically Act. 3 successful Court, found void fraud therein unreasonable. The court also determined would been question gave judgment difference between conception actual amounting over three-quarters million dollars.4 4 reversed Appeals Eighth Circuit without jurisdiction.5 5 As frequently happens where depends subject matter, whether exists has confused complaint states cause action. Judicial Code, vesting Courts, does not create causes action, but only confers adjudicate those arising from other sources satisfy limiting provisions. action To determine claim well founded, must take jurisdiction, ultimate resolution be affirmative negative. If raises federal question, mere power decide no merit, as has. In words Holmes, '* * if plaintiff really makes substantial an act Congress there ultimately held good bad.' Fair v. Kohler Die & Specialty Co., 228 22, 25, 33 410, 412, 57 716. See Hurn Oursler, 289 238, 240, 53 586, 587, 77 1148. Even patently frivolous might sufficient confer make final decision nature, binding res judicata parties. 6 complaint, substance, alleges existence directorship, contends such used fraudulently deprive federally conferred right demands reparations. We think claims so grounded constitute maintainable so, sustained facts. direction dismiss want error should stand precedent. 7 However, clear reason underlying Appeals' established. correct, we sustain reversal, though grounds than stated. 8 petitioner's problem avoid Scylla being drawn into Charybdis. arises deceit, common-law diversity citizenship these But charged excess permitted Act, confronted exclusive powers be. Hence, necessary bring court, one enforce using allegations escape limitations remedies. I. 9 identifies source Act's requirement utility rates,6 which, contends, creates legal may deem reasonable, even different Commission. It admitted, however, could institute suit recover portion past simply out failure exhaust administrative remedies, for, any time past, applied secured review perhaps, reduction Commission.7 10 gives cast alleging abuse deprived independence resort remedy. 11 open courts been. petitioner, contending they empowered, undertaking exercise power, both regard reasonableness justiciable rather criterion application determining lawful rate. Statutory abstract quality represented area pinpoint. allows spread unreasonable because too high. reduce concept concrete expression dollars cents function disembodied 'reasonableness' standard when embodied rate accepts determines governs rights buyer seller. A level reasonable. prescription statute apply independently enforce. 12 cannot separate joined together. litigate judicial forum general rate, ignoring qualification shall specific Commission's judgment, some considerable element discretion. can fixed merely authorize commerce commodity terms. 13 hold files fixes, that, except orders, assume opinion, one. II. 14 petitioner here fraud. Those, evidence supports them, findings exceedingly general, entirely whether, addition constructive inferred intercorporate relationship, acts deceit found. Nor appear thought mattered. 15 grievance active gains nothing Such Act had enacted. Before statutory did defrauded paying excessive adds actionable wrong, therefore, find character diversity. 16 appears rested heavily perhaps presumed relationship. vests otherwise prohibited, 'upon showing neither nor private interests will adversely affected thereby.'8 concerned approval. effect approval exempt ban remove presumption arise existence. strange contradiction policies declared affect regarded enough Perhaps, absence approval, raise state law, do supervising authority expressly approved arrangement. 17 need empowered believes committed itself, taken rise affects III. 18 entire agreed rendered all agree issues tendered it. disagree consequences disability. majority believe complaint. minority urges direct refer 19 true cases directed lower stay their hands pending reference body subsidiary question. Smith Hoboken R. R., Warehouse S.S. Connecting 328 123, 66 947, 90 1123; Thompson Texas Mexican 134, 937, 1132; General American Tank Car Corp. El Dorado Terminal 308 422, 60 325, 84 361. below concededly stated cognizable referred issue subsidiary. instance retain single vital issues. Here clearly severable liability, amount unless charge. Injury essential remediable 'Deceit injury concur.' Adams Clark, 1925, 239 N.Y. 403, 146 N.E. 642, 644. Connelly Bartlett, 1924, 286 Mass. 311, 315, 190 799, 801. 20 presented within competence body, independent proceeding, decide, comity avoidance conflict considerations proper issue. know ordered itself proceeding purpose. fact withheld grant reparations9 require entertain proceedings themselves order indirectly obtain allow directly. There indication Congress' intent. 21 urged leaves remedy agree. respect, worse off after losing lawsuit customers wins. Unless company failed include buying costs selling rates, amounts suppliers collected consumers. Indeed, assumption brief curiae here.10 admitted recoups again already recouped public, machinery others who recover.11 22 Under circumstances, conclude since involves decline forthrightly improvisation. 23 affirmed upon ordered. 24 Judgment affirmed. 25 FRANKFURTER, BLACK, REED, DOUGLAS, dissenting. 26 plaintiff, Montana-Dakota Utilities Company, here, successor interest several distributed energy North South Dakota. defendant, Northwestern Public Service served region south Montana-Dakota's territory. Both corporations enactment 1935. 49 Stat. 847, U.S.C. § 824 et seq., U.S.C.A. seq. controversy relations enterprises prior 1945. facts briefly summarized. 27 After January 1, 1935, directors Northwestern, officers company. arrangements formal authorization required 305(b) 825d(b), 825d(b). At times 1935 1945 sale energy. All agreements 205(c), 824d(c), legality conditioned challenged, either interested party initiative, become rates. now claims, essence, decade virtue control, corporation enjoyed uner contemporaneously asserting them before filing dominus Montana-Dakota, less exacted arm's length dealing companies. Having freedom thereby assert rights, brought Dakota recoup losses thus imposed 28 defendant moved law. motion denied, 73 F.Supp. 149, went trial. unfair circumstances resulting unreasonableness sum $779,958.30, principal interest. 29 reversed. 'had tribunal first instance' bearing practiced securing permission subversion 'The can, doubt, correct own mistakes', specify remedies deemed available. concluded dismissed. 181 F.2d 19, 23. important administration stake. 340 806, 40. 30 Section 317 present form district 'exclusive violations rules, regulations, orders thereunder, suits equity actions law liability duty created by, enjoin violation of, rule, regulation, thereunder.' 862, 825p, 825p. fairly construed light determination issues, seeks recognizes, properly entertained jurisdictional reinforcing, do, governing courts. March 3, 1911, 24(1), (8), 36 1091, 1092, §§ 1331, 1337, 1337. 31 directs 'All made, demanded, connection transmission rules regulations affecting pertaining just charge hereby unlawful.' 205(a), 851, 824d(a), 824d(a). 32 face outset contention section award reparations past. railroad legislation Interstate Commerce Feb. 4, 1887, 9, 16, 382, 384—385, amended, 16(1), 16(1); cf. Aug. 15, 1921, 308, 42 165, 209, 209. given deliberately. S.Rep. 621, 74th Cong., 1st Sess. 20. Wholesale consumers apparently considered, adequately protected authorizing prospective relief certain refunding sums accumulated pendency proceedings. 205(e), 206(a), 852, 824d(e), 824e(a), 824e(a). Despite unqualified declaration unlawful, intend low. us showed, recovery damages civil appropriate remedy, very different. claimed introduced show all; months late; bona fide obtained negotiation appeared be, instead 'conceived put operation aforesaid purpose exacting large (Montana-Dakota) purpose, among things, offsetting electrical generated transmitted sold resale Dakota.' V Thus substance misled approving schedules complied obligations full fair disclosure While artistically allege domination complaining unreasonable, plain import 34 insofar sets forth based misuse controlled corporation. course preclude giving roots fall court. essence pay transactions Montana-Dakota; while appropriately are, unchallenged, alleged complete timely fide. Since coercively controlled, file truly behalf. 35 closed door damage flowing Of relief, least instance, adequate fundamental regulatory 'no entitled supposed threatened until prescribed exhausted.' Myers Bethlehem Shipbuilding Corp., 303 41, 50—51, 58 459, 463, 82 638. This principle particularly relevant regulation. Pac. Co. Abilene Cotton Oil 204 426, 350, 51 553; Mitchell Coal Coke Pennsylvania 230 247, 916, 1472; Armour Alton 312 195, 61 498, 85 771. Compare Great Northern Merchants Elevator 259 285, 477, 943. provides meet situation us. seen subjected likewise afford agencies statutes injured February 9; August 309(e), 166, 210(e), 210(e). true, give look violated. 307(a), 856, 825f(a), 825f(a). Atlantic Coast Line State Florida, 295 301, 312, 55 713, 717, 79 1451. inquiry basis victims violations. Again, may, Government suggests, omnibus 309 vacate 858, 825h, 825h. fix retrospectively. establish 'to thereafter observed force.' 37 retrospectively damages, Montana-Dakota. Vacating acquiescence directorate prevent agency against law; provide impose wrongdoer. bound thinking existed precluded granting relief. 38 inability requires similarly disabled. unlike agencies, organs historic antecedents well-defined powers. They explicit familiar obligations. N.O.R. Brotherhood Ry. S. Clerks, 281 548, 50 427, 74 1034; Virginian System Federation, 40, 300 515, 592, 81 789; Deckert Independence Shares 311 282, 229, 189. evaporate formulated sanction. When 'left matter determination', our language traditional modes compel performance Board Com'rs Jackson County States, 343, 351, 288, 313. effectuate purposes statute, denied authorized. Rigsby, 241 33, 482, 874; Steele Louisville N.R. 323 192, 65 226, 89 173; Tunstall Locomotive Firemen Enginemen, 210, 235, 187; De Lima Bidwell, 182 743, 45 1041. 39 attested alike force principles practical carrying legislative objectives. 40 'rate aim needlessly aborted 'definite prohibition conduct' covered explicitly supra, page 568, 433. persons compelled discriminatory common carriers oldest forms Western Union Tel. Call Publishing 92, 561, 765. collection us, recognize deeply-rooted deny inconsistent long-established practice. experience indicates positive duties commands, normal largely sanction.1 Want explicitness providing rare disobedience denial 41 diverse conflicting local national problem. recently shown marked reluctance questions involved First Iowa Hydro-Electric Cooperative 152, 906, 1143. What here—the frustration, command reasonable—has significance. likely intended kind tampering scheme afforded forty-eight States. attribute interfere contemplated alien responsibilities equipped fulfill. No consequence remotely utilizing age-old ordinarily promptly corrected initiative parties 306, 825e, 825e. procedure available wrong transacts business. remedial confines masters. 43 transfer responsibility deciding variety situations emphasized 'are collaborative instrumentalities justice'. Morgan, 313 409, 999, 1005, 1429; Id., 307 183, 59 795, 83 1211; Palmer Commonwealth Massachusetts, 79, 34, 93. end practice call aid competence. R.R., Alkali Export Ass'n 325 196, 1120, 1128, 1554. Works litigation guidance transportation practices contract. 433, 331, 361; 12, 843, 1053. authorized disable advising needed. supra; 717. see why sought here. 44 think, charging distributor wholesale (1) (2) comply procedural requirements (3) preventing resorting request matters demain rule not, view considered 'reasonable' falls 'only preliminary, interim step' towards reviewable 313(b) reviewed part entered Comm. Hope Natural Gas 320 591, 618, 619, 64 281, 295, 88 333. objections raised primarily Act.2 prevail. serve facade behind enabled accomplish Certain fact—the completeness disclosure, loyalties directors—are Action disposition fund. 336 577, 775, 93 895; Comm., Cir., 833. Recovery windfall Many changes reflected collect. Louis O'Fallon 279 461, 488, 505—509, 384, 388, 395, 396, 798 (Mr. Brandeis, dissenting). extent passed loss customers, well-established unjust enrichment. And awarding benefit certainly better funds Northwestern. outlined employed similar demand resourcefulness unusual situation. defeats enrichment accomplished effectuating 46 Because refusing asked peculiarly report finding remanded further opinion. course, intimate sufficiency support conclusion lawful. restrict use wish adduced 1063, 838, 62 275, 791a—825r, 791a—825r. 1331. Not reported. 19. 205(a) that: 305, S.Rep.No.621, Brief pp. 13—14. 14—17. Data supplied reductions proposed invariably effective filed. More half increases automatically Those suspended withdrawn, modified, informal conferences staff. adoption substantially set

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