Tallahatchie Valley Electric Power Association v. MISS. PROPANE GAS …

• Decision Date: 10 January 2002
• Docket Number: No. 2000-CA-00015-SCT.,2000-CA-00015-SCT.
• Citation: 812 So.2d 912
• Parties: TALLAHATCHIE VALLEY ELECTRIC POWER ASSOCIATION and ServicePlus Energy Corporation v. MISSISSIPPI PROPANE GAS ASSOCIATION, INC.
• Court: Mississippi Supreme Court

812 So.2d 912

TALLAHATCHIE VALLEY ELECTRIC POWER ASSOCIATION and ServicePlus Energy Corporation v. MISSISSIPPI PROPANE GAS ASSOCIATION, INC.

No. 2000-CA-00015-SCT.

Supreme Court of Mississippi.

January 10, 2002.

Rehearing Denied April 11, 2002.

Colmon S. Mitchell, Hernando, Larry D. Moffett, C. Michael Ellingburg, Jackson, Attorneys for Appellant.

John Edward Milner, Stephen J. Carmody, Jackson, Attorneys for Appellee.

EN BANC.

SMITH, P.J., for the court.

¶ 1. This appeal arises from a Judgment and Permanent Injunction issued by the Chancery Court of Hinds County against Tallahatchie Valley Electric Power Association ("TVEPA"). We are asked to determine whether the statutory scheme by which rural electric power associations, such as TVEPA, are authorized, allows those associations to acquire a controlling or total interest in business enterprises which are not associated with the delivery of electric power. We find that the chancery court correctly determined that TVEPA exceeded its statutory authority in acquiring a controlling interest in such an enterprise. However, because plaintiff MPGA has no legal right to be free of the lawful competition posed by DeSoto Gas, it has asserted no legally cognizable injury upon which the injunction may be granted. Accordingly, the judgment and permanent injunction of the chancery court must be reversed and rendered.

FACTS

¶ 2. In August,1998, the Mississippi Propane Gas Association, Inc. ("MPGA"), a non-profit association representing companies engaged in the sale and distribution of propane gas, filed a Verified Compliant for Injunctive Relief and Declaratory Judgment against TVEPA and Serviceplus Energy Corporation ("ServicePlus").¹ TVEPA is a not-for profit association incorporated under Mississippi Electric Power Association Law, Miss.Code Ann. §§ 77-5-201, et seq. (2000) The defendant ServicePlus is a wholly-owned Subsidiary of TVEPA. ServicePlus owns all of the stock of DeSoto Gas Company ("DeSoto"), a Mississippi business corporation engaged in the distribution and sale of propane gas.

¶ 3. In July, 1999, after the filing of numerous pleadings, motions, and a trial, the lower court entered a Judgment and Permanent Injunction. In its Judgment, the court adopted and incorporated its May 12, 1999, Opinion and Order finding that TVEPA and ServicePlus "exceeded the scope of their statutory authority to conduct business and are hereby permanently enjoined from owning or operating DeSoto Gas Company or any other company with an interest in the business of propane gas distribution or supply."

¶ 4. In July, 1999, TVEPA filed a Motion for a New Trial, to Alter or Amend Judgment, or Alternatively, for Stay of Judgment During Pendency of Appeal. In December, 1999, the trial court denied TVEPA's post-trial motions. On January 3, 2000, TVEPA and ServicePlus perfected their appeal to this Court.

¶ 5. During the 1930's, the United States Congress passed laws allowing the formation of rural electric associations with the intent of provide rural citizens with affordable electric energy. 7 U.S.C.A. §§ 901 et seq. ("federal rural electrification laws"). In 1936, the State of Mississippi passed the "Electric Power Association Act," Miss.Code Ann. §§ 77-5-201 et seq. (2000) ("Miss.Elec.Act") so that rural citizens would be eligible to receive the benefits of the federal law and for the purpose of:

promoting and encouraging the fullest possible use of electric energy by making electric energy available at the lowest cost consistent with sound economy and prudent management of the business of such corporation.

Miss.Code Ann. § 77-5-205.

¶ 6. In 1937, TVEPA was formed pursuant to the Miss. Elec. Act. The purpose of TVEPA, as described by its charter, is consistent with the language of Miss.Code Ann. § 77-5-205. TVEPA is owned and controlled by its members. TVEPA's Board of Directors manages all of TVEPA'S affairs and is comprised of people who are already members of TVEPA.

¶ 7. TVEPA provides electricity to areas located in the counties of Panola, Tate, Tallahatchi, and Yalobusha, with additional service areas located in portions of the counties of Grenada, Quitman, Tunica, Lafayette, and Calhoun. The Mississippi Public Service Commission delineates the areas TVEPA may serve with certificates of public convenience and necessity.

¶ 8. In 1997, TVEPA's board determined that TVEPA should invest in a propane business in an effort to keep its rates down and encourage economic development. The board directed its general manager to negotiate with the owners of DeSoto Gas, a propane distributor located in Hernando, Mississippi. TVEPA's Board of Directors approved an option to purchase all of the stock or assets of DeSoto Gas from the Emerson family. The Board also decided to form a subsidiary to engage in for-profit activities including the purchase of DeSoto Gas. TVEPA authorized a multi-million dollar loan to the subsidiary for the purpose of acquiring all of the stock or assets of DeSoto Gas.

¶ 9. On February 26, 1998, TVEPA and/or its subsidiary entered into an option agreement to purchase 100% of the DeSoto Gas stock. The terms of the option included payment of $100,000 for the option, $2.25 million in cash at closing, and $1,672,296.42 in a five year promissory note. On May 1, 1998, the TVEPA board met again and formed a wholly-owned subsidiary named ServicePlus Energy Corporation.

¶ 10. ServicePlus entered into a Purchase Agreement with the owners of DeSoto, in which TVEPA guaranteed the promissory note for ServicePlus. On May 26, 1998, TVEPA borrowed money from the National Rural Utilities Finance Corporation. TVEPA loaned ServicePlus the money to purchase the stock and guaranteed the promissory note for the remaining balance due on the purchase of the stock from the DeSoto Gas stockholders. On May 29 and June 1, 1998, the agreement to purchase, the promissory note, the guaranty and other purchase documents were approved and executed by TVEPA. After the purchase, many of the officers and members of the board of directors of ServicePlus and DeSoto overlapped as officers and board members of TVEPA.²

¶ 11. Aggrieved by the judgment of the chancery court, TVEPA raises the following issues on appeal:

I. WHETHER TVEPA EXCEEDED ITS STATUTORY AUTHORITY BY ACQUIRING AN INTEREST IN DESOTO GAS COMPANY.

II. WHETHER THE FEDERAL RURAL ELECTRIFICATION ACT PREEMPTS MISSISSIPPI'S ELECTRIC POWER ASSOCIATION ACT.

III. WHETHER THE MPGA HAS STANDING TO CHALLENGE TVEPA'S OWNERSHIP IN DESOTO GAS COMPANY.

IV. WHETHER THE JUDGMENT OF THE LOWER COURT IS VOID BECAUSE OF THE FAILURE TO JOIN THE UNITED STATES AS AN INDISPENSABLE

PARTY PURSUANT TO RULE 19.

V. WHETHER THE JUDGMENT OF THE LOWER COURT IS CLEARLY ERRONEOUS AND UNSUPPORTED BY SUBSTANTIAL EVIDENCE.

STANDARD OF REVIEW

¶ 12. This Court has long held that findings of fact made by a chancellor will not be disturbed unless they are either manifestly wrong or clearly erroneous. See Smith v. Dorsey, 599 So.2d 529, 533 (Miss.1992)

. This Court has also determined that "[w]hen the [chancellor's] determination is one of law rather than fact, `the familiar manifest error/substantial evidence rule does not prevent this Court from conducting a de novo review of the chancellor's finding.'" Tisdale v. Clay, 728 So.2d 1084, 1085 (Miss.1998) (quoting Stevenson v. Stevenson, 579 So.2d 550, 552-53 (Miss.1991)).

DISCUSSION

I. WHETHER TVEPA EXCEEDED ITS STATUTORY AUTHORITY BY ACQUIRING AN INTEREST IN DESOTO GAS COMPANY.

¶ 13. In 1936, Congress created the Rural Electrification Act of 1936 ("REAct"), codified at 7 U.S.C. § 901 et seq., which empowered the REA, a federal agency, to provide rural America with low cost electricity and telephone service by lending funds and technical assistance to rural electric and telephone systems. In 1936, the Mississippi Legislature passed the Electric Power Association Act in order to enable the its rural citizens to benefit from the federal law. 1936 Miss. Laws ch. 184.

¶ 14. In 1970, after an attempt to terminate the REA loan program by President Nixon, Congress created a federal policy that "rural electric and telephone systems should be encouraged and assisted to develop their credit needs from their own financial organizations and other sources..." 7 U.S.C. § 930. At the same time, however, other REA regulations prohibited REA borrowers from investing more than 3 percent of their funds in "non-Act" purposes, which entailed purposes other than providing electricity. In 1987, responding to this limitation Congress amended the REAct adding 7 U.S.C. § 940b which allowed borrowers under the REA loan program to "invest its own funds or make loans or guarantees not in excess of 15 percent of its total utility plant for `non-Act' purposes."

¶ 15. TVEPA contends that the Miss. Elec. Act and the Federal REAct must be read in pari materia because both laws present a collaborative effort attempting to address the issue of low-cost electricity to rural areas. In support of this argument, TVEPA cites a litany of cases from different jurisdictions holding that the state laws should be interpreted in pari materia with the federal law. See, e.g., Morton v. Hammond, 604 P.2d 1, 4 (Alaska 1979)

(where state and federal statutes deal with same subject matter and state schemes relies on federal scheme, statutes are in pari materia); Arizona Civil Rights Div. v. Olson, 132 Ariz. 20, 643 P.2d 723, 728 (1982) (Arizona Civil Rights Act interpreted in pari materia with Title VII and federal Equal Pay Act of 1963); Industrial Comm'n of State of Colorado v. Board of County Comm'rs, 690 P.2d 839, 842 (Colo. 1984) (Colorado unemployment tax laws interpreted in pari materia with Federal Unemployment Tax Act). The fact that these laws were enacted at the same time, under the same circumstances, and for the same purpose, TVEPA claims, reinforces the argument that these laws should be construed together.

¶ 16. MPGA agrees that "in...