State ex rel. Winterfield v. Hardin County Rural Elec. Co-Op.
| Decision Date | 04 April 1939 |
| Docket Number | 44537. |
| Citation | 285 N.W. 219,226 Iowa 896 |
| Parties | STATE ex rel. WINTERFIELD v. HARDIN COUNTY RURAL ELECTRIC COOPERATIVE et al. |
| Court | Iowa Supreme Court |
Appeal from District Court, Hardin County; H. E. Fry, Judge.
Quo warranto action under Chapter 531, section 12417 et seq., of the Code of Iowa to test the right of the five first named defendants to incorporate the last named defendant to conduct the business stated in its articles of incorporation. The relator having elected to stand upon his petition and to not plead further, upon the ruling of the court sustaining defendants' demurrer to the petition, final judgment was entered against the plaintiff dismissing the petition and for costs. On plaintiff's appeal the judgment is affirmed.
D. M Kelleher, of Fort Dodge, for appellant.
Stephens & Wisdom, of Des Moines, James E. Coonley, of Hampton, F. J. Lund, of Webster City, and H. A. Willoughby of Grundy Center, for appellees.
The relator is a citizen of Iowa, residing in Hardin County, and owning eighty acres of land in Franklin County. On September 30, 1936, he paid the membership fee of five dollars, and became a member of the defendant, Franklin Rural Electric Cooperative. Each of the defending County Rural Electric Cooperatives is a cooperative association organized pursuant to the provisions of Chapter 94 of the Acts of the 46th General Assembly, now appearing as Chapter 390-G1, section 8512-g1 et seq., of the 1935 Code of Iowa. On February 9, 1937, said defendants, through their respective presidents and secretaries, executed the " Articles of Incorporation of Federated Cooperative Power Association," purporting to organize, as an association, under said Chapter, the defendant, " Federated Cooperative Power Association."
The relator, feeling aggrieved at such action, demanded of the County Attorney of Hardin County that he institute proceedings, under Chapter 531, section 12417 et seq., of the Code of Iowa, requiring said Cooperatives to show by what authority they had taken such steps to organize and act under said Power Association. Upon the refusal of the County Attorney to so act, the relator, on August 11, 1937, procured from Judge Sherwood Clock an order permitting the relator to institute such action as the County Attorney had refused to take. Thereupon the relator, in the name of the State of Iowa, but upon his own relation, and through his own attorney, filed his petition, containing, among others, allegations stating the matters above set out, and also the following matters, in substance: that the County Cooperatives had been organized to engage in the construction and operation of rural electric transmission lines in their respective counties to supply electricity to their members; that the Cooperatives had no capital or funds and could purchase the necessary equipment only by borrowing money on the security of the equipment purchased, to be repaid on an amortization plan in twenty years; that the only source of payment was from the profits made in the sale of electricity purchased as cheaply as possible in a competitive market, and not by the operation of generating plants, and feeder lines; that memberships had been solicited on such basis only, to the end that the current might be obtained at moderate prices and under conditions which would insure uninterrupted service; that any plan to obligate the associations to buy current from a single source with no safeguard that the cost would be reasonable would be fatal to the plan of the Cooperative Associations; that the Federated Cooperative Power Association is but a name under which the County Cooperatives purport to act as a cooperative association, under pretense of having organized such association under the provisions of said Chapter 94, but actually adopting the form of a cooperative association to accomplish objects not authorized by law, while not in fact organized under or for the objects authorized under said chapter, or being such a cooperative association; that the five county cooperatives are usurping powers under the name of said Power Association, not for the objects enumerated in said Chapter, but in fact having as its sole object the generating and distributing to the five county cooperatives electric current generated at unknown and speculative monopoly rates from a single source, making uninterrupted service impossible, and burdening the members of the cooperatives with a debt as will result in a complete failure of the original enterprises; that it is a part of the plan of the five county cooperatives to borrow more than $400,000 to purchase generating and distributing equipment, and that thereby the members and consumers will be charged extravagant and preposterous rates and will be discouraged from retaining their membership and forced to abandon and sacrifice their investments. The last two paragraphs of the petition and the prayer are as follows:
" 13. Plaintiff avers that said five defendant county or local cooperative associations are not authorized or empowered by law to organize as a corporation said ‘ Federated Cooperative Power Association’ for the objects in this petition described, or for any object other than some one object expressly enumerated in Section 6 of said Chapter 94 of the Acts of the 46th General Assembly. That the said five defendant county cooperative associations seek by means of the pretended organization of said ‘ Federated Cooperative Power Association’ and by the acts in this petition described, to usurp corporate powers for objects not within the scope of the objects provided for in said Chapter 94 of the Acts of the 46th General Assembly. That said Federated Cooperative Power Association for the reasons in this petition set forth, is not organized for the purposes provided by said statutes and does not have as its sole object any one object enumerated in said statutes, and said defendants by and through said Federated Cooperative Power Association are exercising and attempting to exercise powers not conferred by law.
14. That said five defendant county cooperative associations are by reason of the facts in this petition set forth, acting as a corporation without being authorized by law. That said pretended incorporation of Federated Cooperative Power Association is for the reasons in this petition set forth wholly unauthorized and void.
Wherefore, plaintiff prays that the defendants, Hardin County Rural Electric Cooperative, Franklin Rural Electric Cooperative, Wright County Rural Electric Cooperative, Butler County Rural Electric Cooperative and Grundy County Rural Electric Cooperative be required to show by what warrant or authority they are acting under the name of Federated Cooperative Power Association as a pretended incorporated cooperative association; and by what warrant and authority said defendants are proceeding to create a debt of more than $400,000, for acquisition of an electric generating plant, building to house the same and feeder lines, and seeking by the plan and acts pursuant thereto described in plaintiff's petition, to impose upon the said five named county cooperative associations and their members respectively the burden of paying such price for electric current as will, over a period of twenty years, pay operating costs and the interest and principal of said debt of over $400,000; and by what warrant or authority they, the said five named county cooperative associations, in the manner and by the means set forth in the foregoing petition, intend to deprive the members of the said five county cooperative associations of the right of purchasing electric current at competitive market price. And plaintiff further prays that the acts of the said five county cooperative associations purporting to be done through their presidents and secretaries in signing and filing the Articles of Incorporation, a copy of which is attached to this petition, attempting to create or incorporate a pretended entity under the name of Federated Cooperative Power Association for the purposes in the foregoing petition described, may be adjudged and decreed to be unauthorized and void, and that said five defendant county cooperative associations in all their acts described in plaintiff's petition be adjudged to have attempted to exercise corporate powers not conferred by law; and plaintiff prays judgment for costs."
Briefly stated, the grievance of the relator, as alleged, appears to be that the five county cooperatives are not authorized under said Chapter 94 to organize the Federated Cooperative Power Association for the purpose of generating electric current alone, or in combination with transmission lines for its distribution, but only for the purpose of constructing and operating transmission lines, and that unless the purpose is restricted to the latter, the plan will be economically unsound and unworkable.
To his petition the relator has attached, as an exhibit, the articles of incorporation of the Power Association. These articles, which appear to be in regular form, were filed in the office of the Secretary of State, duly recorded therein and certificate issued by him. The objections raised by the appellant are confined to Article IV. This article is necessary to an understanding of the matters involved, and is as follows:
" The purpose or purposes for which the Association is formed are:
1. To generate, manufacture, purchase, acquire and accumulate electric energy and to transmit, distribute, furnish, sell and dispose of such electric energy; and to construct, erect purchase, lease as lessee, and in any manner acquire, own, hold, maintain, operate, sell, dispose of, lease as lessor, exchange and mortgage plants, buildings, works, machinery, supplies, apparatus, equipment...
To continue reading
Request your trial