United States v. Mississippi Valley Generating Company

PETITIONER: United States
RESPONDENT: Mississippi Valley Generating Company
LOCATION: Mapp's Residence

DECIDED BY: Warren Court (1958-1962)

CITATION: 364 US 520 (1961)
ARGUED: Oct 19, 1960
DECIDED: Jan 09, 1961

Facts of the case


Media for United States v. Mississippi Valley Generating Company

Audio Transcription for Oral Argument - October 19, 1960 in United States v. Mississippi Valley Generating Company

Earl Warren:

Number -- Number 26, United States, Petitioner, versus Mississippi Valley Generating Company.

Mr. Solicitor General.

J. Lee Rankin:

Mr. Chief Justice, may it please the Court.

This action involves the contract generally -- which it generally been called the Dixon-Yates contract.

It goes back to the year 1954.

The question is whether or not there was a conflict of interest involved which would be a ground for disaffirming or declaring the contract unenforceable.

In 1953, a question came up in this administration about whether the proposal of the TVA to build a new plant at Fulton, Tennessee steam plant, involving a large investment of government money should be approved.

It was included in the budget of President Truman.

And the problem that the Budget Director, Mr. Dodge had was a question of a debt of Lehman and whether or not this -- this proposal should be approved or some new or different should be made with regard to the handling of the power needs in that area.

The Atomic Energy Commission needed additional power for its plant at Paducah.

We've no question about that.

And it had been serviced by the TVA.

The demands of the Memphis area were such that they run the neighborhood of 400,000 kilowatts and therefore, some additional provision had to be made in order to take care of the additional requirements of the Atomic Energy Commission.

In considering this problem, Mr. Dodge talked to Mr. Woods, the Chairman of the Board of First Boston Corporation who was the employer of Mr. Wenzell who will be described in this controversy and was the person who was -- the Government claims is involved in the conflict of interest in this case.

Mr. Wenzell was a vice president, a director and his wife owned 200 shares of the stock of First Boston Corporation.

Mr. Woods, in May of 1953, suggested that the Budget Director hire Mr. Wenzell to make a study of the TVA in its cost and see what could be recommended to the Government.

This study was made and the only bearing that it has on the matter before the Court is that Mr. Wenzell obtained information and knowledge about TVA and its cost and so forth that its fair inference could have been used and probably was in connection with the subsequent contract with Dixon-Yates.

That he made the study and that he exhibited to Mr. Woods, Chairman of the Board in his corporation without the permission of the juror of Bureau of the Budget and they discovered it later.

Then, when the Government thought that provision should be made to try to obtain a contract for the furnishing of electricity by the private utility, Mr. Hughes suggested and called upon Mr. Wenzell to come and advise the Government in regard to that, particularly with regard to the cost of money.

And in January of 1954, Mr. Wenzell's action runs from January of 1954 through April 10th as employee of the Bureau of the Budget in regard to the Dixon-Yates contract.

John M. Harlan II:

Was Wenzell's connection with First Boston known to Dodge and Hughes when they saw everything?

J. Lee Rankin:

There's no question of what it was.

John M. Harlan II:

It was known.

J. Lee Rankin:

It was known, all the way through.

It was not -- it was known to AEC, to the Atomic Energy Commission too.

They did not know of his employment by Budget, that is the Atomic Energy Commission, that was the contract in agency, until considerably later period after April 10th that the Atomic Energy Commission did not, but the Bureau of the Budget did both Mr. Dodge and Mr. Hughes.

It's the position of the Government that they could not waive the statute and whatever they knew in regard to his action, they had no power to set aside the will of the Congress.

Now, I'll try to develop what all they knew and what happened with regard to the matter.

It's suggested that the question of the cost of money was not an important consideration in this contract.

The Government thinks it was primary and that the record shows that.