Milford chronicle., 1936-02-21
SUPREME COURT
GIVES TVARIGHT
TO Sell ELECTRIC
fcouiinued from Firsi Pagel

rule on the validity of such aetivi-
ties of the IVA as land purchases,
resettlement pr encouragement OF
the wider use of electric power.
But it refused to grant "declar-
atory decree" sought by the stock
holders, to enjoin the government
from future activity in competition
with private power companies as
the result of dams now under con-
struction or to be built.
Decision Is Limited
In the majority opinion, Hughes
said:
1--WE limit our decision to the case
before us, as we have defined it.
"The argument is earnestly pre-
scented that. the government by vir-
tue of its ownership of the (WilsOn)
dam and power plant could not es-
tablish a steel mill and make and
sell steel products, or a factory to
manufacture clothing or shoes for
the public, and thus attempt to
make its ownership Of energy, gen.
Grated at its dam, a means of carry
ing on competitive commercial en-
terprises and thus drawing to the
Federal government the conduct and
management 3f business having no
relation to the purposes for which
the Federal government was estab-
lished.
Not Establishing Industry
"The picture is eloQuently drawn
but we deem il to be irrelevant to
the issue here. The government Is
not using the water power at the
Wilson Dam to establish any indus
try to manufacture commodities of
any sort for the public
"The government is disposing OF
the energy itself with simply is
the mechanical energy, incidental to
falling water at the dam, converted
into the electric energy which is
susceptible to transmission.
"The question here is simply as
TO the acquisition of the transmits
sion lines as a faculty for the dis
posal of that energy.
iAnd the government rightly con-
ceded at the bar, in substance, that
it was without constitutional au-
thority to acquire or dispose of such
energy except as il comes into being
in the operation of works construct
ed in the exercise of some power
delegated to the United States.
I'VE have said, these transmission
lines lead directly from the dam,
which has been lawfully construct
ed. and the question of the consti-
tutional right Of the government to
acquire and operate local or urban
distribution system is not involved.
ave exnress no opinion as to the
validity of such an effort. as to the
status of any other dam or mower ,
deyelopment IN the Tennessee Val (
lev. whether connected with or as
to the validity of the Tennessee
Valley Authority act or Of the claims
made in the pronOuncements ana
program of the authority apart from
the Wilson Dam, or as the questions
we have discussed in rotation to the
particular provisions of the con-
tract of January 4. 1884, affecting
the Alabama Power Company"
Decision Long Delayed
The five-to-four split on the juris-
dictional question indicated to some
observers a probable cause for the
long delay in rendering the opinion.
The case was argued 60 days ago.
The minority stockholders, in
bringing their suit, contended the
action of the Alabama Power Com
pany's board of directors in enter
ing into the iva contract was Gin
furious" to corporate interests"
The board had refused to rescind its {
action.
Justice Brandeis, in delivering the
coneurring opinion challenging the !
courts jurisdiction. said:
within recognized limits, stock !
holders may invoke the judicial |
remedy to enjOin acts of the man ;
agement which threaten their prom |
erty interest. BIT they cannot secure /
the aid of a court to correct what |
appears to them to be mistakes Of |
Judgment on the part of the officers. ,
Courts may not interfere with =
the management of corporation, I
unless there is bad faith, disregard
of the relative rights Of its members {
or other action seriously threaten {
ing their property rights. 8
Contract Called Injurious
On the point, the majority held:
plaintiffs did not simply chal- 0
lenge the contract of January 4, 1884 c
as improvidently made-as an un- |
wise exercise OF the discretion vest t
ed in the board Of directors. They G
the contract both as in I
furious to the interests of the cor g
1oration and as dn illegal transac- c
the fundamental law. !
'In seeking 70 prevent the car e
.ying out of the contract, the suit !
vas directed not only against the
lower company but against the I
'fTennessee Valley authority and
IS directors upon the ground that {
he latter, under color Of the stat I
lte, were acting beyond the powers 4
which the Congress could validly t
.onfer. b
I'm such a case it is not neces- Q
airy for stOckholders-when their
refuses to take suitable
measures for its protection - to q
how that the managing board OF a
rustees have acted with fraudulent a
ntent or under legal duress. d
..To entitle the eomplainants to S
ouitable relief, in the absence Of d
n adequate legal remedy, it is n
nough for them to show the breach
I trust or duty involved in the in q
arious and illegal action" n
Built Under Defense Act p
/