Broadwater-Missouri Water Users' Ass'n v. Montana Power Co.

The Montana Power Company, incorporated in New Jersey, is engaged in the business of generating and distributing electric power in the state of Montana. It brought suit in the federal court for Montana against the State Water Conservation Board, the individual members thereof, and the Broadwater-Missouri Water Users’ Association (an organization of the settlers in the Broadwater-Missouri irrigation project).

In its complaint the Power Company asserted the right by prior appropriation to the use of all the waters of the Missouri River and its tributaries for the purpose of operating certain hydro-electric plants —seven in number — located on the upper reaches of that stream. It alleged that on June 28, 1938, the defendant State Water Conservation Board had filed a notice of appropriation of 400 second feet of the waters of the Missouri for the purpose of irrigating lands in Broadwater County and for other beneficial purposes; that the Board had completed plans for the construction of a dam and irrigation works to divert the amount of its appropriation at a point above the dams and hydroelectric plants of the plaintiff, and had let or was proceeding to let contracts for, and to…

(dissenting).

On the question of diversity of corporate citizenships, the majority opinion is in conflict with the decision of the Fifth Circuit in Louisiana Highway Commission v. Farnsworth, 74 F.2d 910, 912, 913 , 1 certiorari denied 294 U.S. 729 , 55 S.Ct. 638 , 79 L.Ed. 1259 , and with the Supreme Court decision of Port of Seattle v. Oregon & W. R. Co., 255 U.S. 56 , 41 S.Ct. 237 , 65 L.Ed. 500 .

These and other cases establish the law to be that where a state creates separate corporate entities as its agents to perform governmental functions and gives such corporate entities the right to sue and be sued and the state’s Supreme Court, construing the laws creating such corporations, determines that the Legislature has created the corporations to be such separate entities, they are citizens of the creating state subject to be sued in the federal courts by a citizen of another state. The Water Conservation Corporation is such a separate entity.

Appellants’ brief contends that a corporation cannot be a citizen. Before the extended analysis, infra, of the Political and Military Codes of Montana and cases construing their provisions, in disagreement with the equally extended…