Affiliations

• Ashwander v. Tennessee Valley Authority

  District Court, N.D. Alabama · 1935-02-22 · cited 5×

  This case involved preferred stockholders of the Alabama Power Company challenging contracts between the company and the Tennessee Valley Authority (TVA), including the sale of transmission lines and related arrangements for power distribution, as well as loans from the Public Works Administration to municipalities for building distribution systems tied to TVA power. The court decided that TVA was illegally operating a utility business in Alabama by making and selling electric energy beyond any surplus legitimately created for constitutional purposes such as navigation or national defense. The core reasoning was that under the Constitution, the federal government can only conduct such proprietary business when attached to an express or implied grant of power, and here the TVA's activities constituted an unauthorized ultra vires operation, making the contracts and loans invalid and subject to injunction. The court did not rule on the constitutionality of the TVA Act itself but found the specific transactions exceeded authority.

  federal powerbusiness & regulatory

  Read the full opinion inline ▾ (2,015 words)

• Ashwander v. Tennessee Valley Authority

  District Court, N.D. Alabama · 1934-11-28 · cited 5×

  This case involved preferred stockholders of the Alabama Power Company challenging contracts between their company and the Tennessee Valley Authority (TVA) on grounds that the transactions were ultra vires or illegal. The court addressed a motion to dismiss, ruling that stockholders may sue derivatively to set aside an ultra vires corporate act if the company refuses to act, though not for mere errors in business judgment absent fraud or oppression. Finding no evidence of bad faith by the company's management, the court held that the suit could proceed solely on the ultra vires claim to seek rescission or cancellation of the unexecuted contracts. The core issue for further resolution is whether TVA possessed statutory or constitutional authority under the TVA Act to enter the agreements for power production and distribution unrelated to surplus power from navigation improvements.

  federal powerbusiness & regulatoryprocedure

  Read the full opinion inline ▾ (2,775 words)