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U.S. Supreme Court

Montana-Dakota Utilities Co. v. Pub. Serv. Co., 341 U.S. 246 (1951)

Montana-Dakota Utilities Co. v. Northwestern Public Service Co.

No. 77

Argued November 27, 1950

Decided May 7, 1951

341 U.S. 246


Petitioner and respondent are public utility electric companies engaged in interstate commerce and subject to the Federal Power Act. For ten years, while under the same management through interlocking directorates and joint officers with the approval of the Federal Power Commission, petitioner's predecessor and respondent interchanged electric energy, shared expenses, and made a number of intercompany contracts establishing rates and charges which were filed with and accepted by the Commission. After separation of their management, petitioner sued in a federal district court to recoup losses alleged to have resulted from its predecessor's paying respondent unreasonably high charges for what respondent furnished it and receiving unreasonably low rates for what it furnished respondent. It alleged that these rates and charges were fraudulent and unlawful, and were due to the interlocking directorates, which prevented protest to the Commission to have reasonable rates and charges established pursuant to the provisions of the Federal Power Act. There was no diversity of citizenship of the parties, and federal jurisdiction was asserted solely on the ground that the case arose under the Federal Power Act.


1. Since the complaint asserted a cause of action under the Federal Power Act, the District Court had jurisdiction to determine whether it stated a cause of action maintainable in a federal court and, if so, whether it was sustained on the facts. P. 341 U. S. 249.

2. The complaint stated no cause of action maintainable in a federal court. Pp. 341 U. S. 249-255.

(a) Under the Federal Power Act, the right to a reasonable rate is the right to the rate which the Commission files or fixes, and, except for review of the Commission's orders, a court can assume no right to a different rate on the ground that, in the opinion of the court, such different rate is the only reasonable rate or a more reasonable rate. Pp. 341 U. S. 250-252.

(b) In the absence of diversity of citizenship, the allegation of fraud resulting from the interlocking relationship did not state a cause of action maintainable in a federal court. Pp. 341 U. S. 252-253.

Page 341 U. S. 247

(c) Since the Federal Power Act does not authorize the Commission to grant reparations for unreasonable rates collected in the past, the District Court could not properly refer the case to the Commission for determination of the reasonableness of the rates here involved. Pp. 341 U. S. 253-254.

3. Since the case involves only issues which a federal court cannot decide, and can only refer to a body which also would have no independent jurisdiction to decide them, the complaint must be dismissed. P. 341 U. S. 255.

181 F.2d 19 affirmed on a different ground.

In a suit alleged to be founded on the Federal Power Act, the District Court awarded petitioner a judgment for losses sustained on past rates and charges which the District Court found to be unreasonable and based on fraud. The Court of Appeals reversed on the ground that the District Court was without jurisdiction. 181 F.2d 19. This Court granted certiorari. 340 U.S. 806. Affirmed on a different ground, p. 341 U. S. 255.

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