Montana labor news., 1944-12-28
Truth About the Montana
Power Company Write Off


tee of five directors was developed TO
work out a plan. They came out with
the proposition that a new company
new legal entity, should be formed. That
is the present Montana Power company,
which was to absorb Butte Electric and
its subsidiaries and was to issue four
shares Of Sl6O par value common stock
for each share of Butte Electric common
stock. AS a result of the carrying out
of that plan and the issuance of four
for one, some S19,OOO,00O in round fig
ures, was placed in the plant account
of Montana Power company, which was
in excess of the components Of the plant
accounts Of the constituent companies
in the merger.
"Unless this Commission and the Mon
tana Commission are going to ignore the
traditional concept that it takes two sep
arate and distinct and independent par
ties to make a contract, only one con-
clusion can be reached with respect to
the sl9.OOO,OOO Of excess, and that is
that it is a write-up and nothing more.
obviously there were no independent
PARTIES in the deal. 1t was Butte Elec-
tric all over again dealing with Montana
Power company, which was in sum and
substance Butte Electric under a new
name"
He referred to letters written by G.
F. Kelley, Montana Power company S
principal witness in the present case,
to John D. Ryan, a moving spirit in the
mergers. Kelley, said Goldberg, told
RYAN a proposed plan would not do since
it showed too clearly that Butte Electric
in reality was dealing with itself. He
quoted Kelley as also calling Montana
Power company merely corporate de-
vice" to carry out the merger.
Goldberg asserted the minutes Of the
Montana Power company will be
searched in vain for any indication that
anyone considered the plan real pur-
chase and sale. They reveal beyond
doubt that everyone considered it as
nothing more than a reorganization and
the putting Of some temporary financing
and undesirable financing on more
permanent basis"
The question was raised in the ora
argument whether the state law is con-
trolling. The company has contendee
that the Federal Power Commission car
take no action which conflicts with any
action taken under state statutes. MI
Goldberg pointed out that the Suprem'
Court held in the Northwestern Electric
company case that the state law wa
not controlling.
Goldberg stated that company coun
sci is asking the Federal Power Com
mission and the Montana Commission
to ignore the real substance Of what wa
done in the power company transaction
and to look only at the form Of the deal
Turning to the 1918 transactions, MI
Goldberg said that in 1918 Montan
Power company received the second hal
of the stock OF the Great Falls waite
Power and Townsite company and all &
the stock of Thompson Falls Power com
pany from Montana Power company
own president and largest stockholdei
John D. Ryan.
In order to present a clearer pictur
of the 1918 transactions, Mr.. COLDER
said it is desirable to start with tn
year 1906. At that time there were thre
principal power companies in Montana
Great Falls Water Power and Townsit
company, Butte Electric and Power com
pany, and United Missouri River Powe
company. Great Falls company owne
the most important water power sites il
the state, all on the Missouri river, nea
Great Falls. In 1906 all were undevel
oped except Black Eagle Dam, fror
which power was sold to a milling com