Tallahatchie Valley Electric Power Association v. Mississippi Propane Gas Association, Inc. ( 1999 )


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  •                            IN THE SUPREME COURT OF MISSISSIPPI
    
                                           NO. 2000-CA-00015-SCT
    
    TALLAHATCHIE VALLEY ELECTRIC POWER ASSOCIATION AND SERVICEPLUS
    ENERGY CORPORATION
    v.
    MISSISSIPPI PROPANE GAS ASSOCIATION, INC.
    
    
    
    DATE OF JUDGMENT:                                 7/2/1999
    TRIAL JUDGE:                                      HON. DENISE OWENS
    COURT FROM WHICH APPEALED:                        HINDS COUNTY CHANCERY COURT
    ATTORNEYS FOR APPELLANT:                          COLMON S. MITCHELL
    
                                                      LARRY D. MOFFETT
    
                                                      C. MICHAEL ELLINGBURG
    ATTORNEYS FOR APPELLEE:                           JOHN EDWARD MILNER
    
                                                      STEPHEN J. CARMODY
    NATURE OF THE CASE:                               CIVIL - OTHER
    DISPOSITION:                                      REVERSED AND RENDERED-01/10/2002
    MOTION FOR REHEARING FILED:                       1/28/2002; denied 4/11/2002
    MANDATE ISSUED:                                   4/18/2002
    
         EN BANC.
    
         SMITH, PRESIDING JUSTICE, 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. 1999) (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, 
    643 P.2d 723
    , 728 (Ariz. 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 construing statutes, all statutes in pari materia are taken into consideration,
    and a legislative intent deduced from a consideration as a whole." Roberts v. Mississippi Republican
    Party State Executive Comm., 
    465 So. 2d 1050
    , 1052 (Miss. 1985). MPGA asserts, however, that the
    in pari materia doctrine is invoked only when the language of the statute is ambiguous. Hubbard v. McKey,
    
    193 So. 2d 129
    , 131 (Miss.1966). Here, MPGA contends, the statute is not ambiguous; thus, there is no
    reason to invoke the doctrine.
    
    ¶17. Moreover, MPGA urges that the code sections of the Miss. Elec. Act, when read separately or
    together do not allow for TVEPA to own and operate a propane gas business through its wholly-owned
    subsidiary. If the in pari materia doctrine is invoked, MPGA stresses, it only follows that each section of the
    Code dealing with the same or similar subject matter must be read together, not in pari materia with the
    federal REAct. Mississippi Pub. Serv. Comm'n v. Municipal Energy Agency of Mississippi, 
    463 So. 2d 1056
    , 1058 (Miss. 1985).
    
    ¶18. TVEPA maintains that its investment in ServicePlus and ServicePlus' investment in DeSoto are actions
    authorized and contemplated by 7 U.S.C. § 940b. The fact that Congress amended REAct with 7 U.S.C.
    §930, TVEPA argues, declaring that "rural electric and telephone systems should be encouraged and
    assisted to develop their resources and ability to achieve the financial strength needed to enable them to
    satisfy their credit needs from their own financial organizations and other sources . . ." supports the action
    undertaken by TVEPA. TVEPA states that since its investment in ServicePlus and/or DeSoto is less than
    15 percent of its total utility plant, their action is authorized by federal law and, therefore, within the scope
    of TVEPA's authority.
    ¶19. TVEPA argues that by examining the corporate purpose of TVEPA under the Miss. Elec. Act and
    against the backdrop of the language, purposes and policies of both state and federal law it is clear that
    TVEPA is authorized and empowered to form and own the stock in ServicePlus. TVEPA argues that
    because Miss. Code Ann. § 77-5-205 requires TVEPA to provide electricity at the lowest cost possible
    means, it must make prudent business decisions for the benefit of the company. TVEPA further contends
    that the ability to make these business decisions is sanctioned by Miss. Code Ann. §§ 77-5-229 and 77-5-
    231, which when read in conjunction with each other and § 77-5-251, mandate that TVEPA has broad
    power to make business decisions. Thus, the express language embodied in the Miss. Elec. Act, TVEPA
    submits, allows the formation and ownership of ServicePlus in order to "lower the cost of electricity to
    TVEPA's members, improve TVEPA's financial strength, and thereby help TVEPA make electric energy
    available to its member owners at the lowest cost possible."
    
    ¶20. This Court refuses to adopt such a strained interpretation of the relevant statutes when our statutory
    scheme expressly and unambiguously provides otherwise. While TVEPA is correct in noting that REAct
    and the Miss. Elec. Act were created for similar purposes, the Miss. Elec. Act specifically governs the
    formation and operation of rural electric power associations in Mississippi. The United States Supreme
    Court has held that REAct is enabling legislation which affords substantial deference to state statutory and
    regulatory authority. See Arkansas Elec. Coop. Corp. v. Arkansas Pub. Serv. Comm'n, 
    461 U.S. 375
    ,
    
    103 S. Ct. 1905
    , 
    76 L. Ed. 2d 1
     (1983).(3)
    
    ¶21. The Miss. Elec. Act. provides that the article is to be liberally construed, and declares that the article is
    complete in itself and shall be controlling. Miss. Code Ann. §77-5-251. The Act contains a clear
    expression of legislative intent that member corporations be prohibited from acquiring an interest in business
    enterprises not associated with the delivery of electric power. Even a liberal interpretation of the applicable
    statutes results in the conclusion that TVEPA is limited to the acquisition of electric energy assets.
    
    ¶22. As its name implies, the Mississippi Electric Power Association Law was enacted to encourage "the
    fullest possible use of electric energy." Miss. Code Ann. § 77-5-205 (emphasis added). Both Miss. Code
    Ann. § 77-5-229, which articulates the general powers granted to electric associations, and Miss. Code
    Ann. § 77-5-23, which articulates the specific powers, provide that the powers granted therein are limited
    to acts necessary for the accomplishment of the corporate purpose. Section 77-5-229, which articulates the
    general powers granted states:
    
          Each corporation formed under this article is hereby vested with all power necessary or requisite
          for the accomplishment of its corporate purpose, and no enumeration of particular powers
          hereby granted in this article shall be construed to impair any general grant of power herein contained,
          or to limit any such grant to a power or powers of the same class or classes as those enumerated.
    
    (emphasis added). Section 77-5-231, which contains the grant of specific power provides, in pertinent part:
    
          A corporation created under the provisions of this article shall have power to do any and all acts or
          things necessary or convenient for carrying out the purposes for which it was formed,
          including, but not limited to:
    
          ***
    
          (c) To acquire, hold and dispose of property, real and personal, tangible and intangible, or interests
          therein and to pay therefor in cash or property or on credit, and to secure and procure payment of all
          or any part of the purchase price thereof on such terms and conditions as the board shall determine.
    
    (emphasis added).
    
    ¶23. TVEPA's corporate charter, consistent with the language of § 77-5-205, states that it was formed to
    "encourage the fullest possible use of electric energy in the State of Mississippi" and, consistent with the
    language of § 77-5-231, to perform actions necessary and convenient to accomplishing its purpose.
    TVEPA's corporate purpose is limited to and cannot exceed the powers granted by the statutory scheme
    pursuant to which it was created. Section § 77-5-205 provides in relevant part:
    
          Three or more natural persons may ... form a corporation not organized for pecuniary profit 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 corporations.
    
    (emphasis added). Miss. Code Ann. § 77-5-225 provides that "... the corporate purpose of each
    corporation formed under this article shall be to render service to its members only." (emphasis added).
    TVEPA is permitted to render service and to acquire, own, operate, maintain, and improve a system or
    systems. Miss. Code Ann. § 77-5-231(d) (emphasis added). "Service" is defined as "the sale or other
    disposition of energy... at the lowest cost consistent with sound economy, public advantage and the
    prudent conduct of the business of a corporation." Miss. Code Ann. § 77-5-203(1)(emphasis added).
    "System" is defined as 'plant, works, system, facilities or properties... useful in connection with the
    generation, production, transmission or distribution of energy. § 77-5-203(f) (emphasis added). "Energy" is
    defined as all electric energy no matter how or where generated or produced." § 77-5-203(d) (emphasis
    added).
    
    ¶24. The language of the above statutes is clear that TVEPA is empowered to provide electricity. Nothing
    in the statutory scheme authorizes TVEPA to distribute another form of energy. Though TVEPA is granted
    powers necessary and convenient for carrying out the purposes of its organization and is authorized to
    acquire property to carry out those purposes, it can hardly be argued that it is "necessary or convenient" for
    TVEPA to sell propane gas to accomplish its purposes. Though the language "necessary or convenient"
    arguably broadens the powers granted to TVEPA, it does not enable TVEPA to engage in businesses
    which exceed its statutory or corporate purpose solely for the aim of increasing its bottom line under the
    guise of "prudent business decisions." As the trial court stated in its opinion, under TVEPA's interpretation
    of these statutes, it may own, operate, or invest up to 15% of its total utility plant in a department store,
    restaurant, or any other non-electric business, as long as the investment provides economic development for
    rural communities and profits which can be used to lower electric rates. The authority for such an
    interpretation simply cannot be found in either the letter or the purpose of the statutory scheme.
    
    ¶25. The Georgia Supreme Court decided a case nearly identical to that at hand in Flint Elec.
    Membership Corp. v. Barrow, 
    523 S.E.2d 10
     (Ga. 1999). The issue before the Georgia Court was
    whether Flint Electric Membership Corporation ("Flint") should be allowed to sell propane gas to its
    customers. Flint was a rural electric association that set up a wholly owned subsidiary, Flint Electric, to own
    and operate a propane gas business and sell propane to its electric customers. Id. Flint's statutory purpose
    was "to engage in rural electrification." Id. at 11. In 1997, Flint amended its charter to allow it "to engage in
    any lawful act, business, or activity which in the discretion of the Board of the Directors would be beneficial
    to the members." Id. Flint then formed a subsidiary corporation with the intention of selling propane gas to
    its members. Id.
    
    ¶26. Georgia law provides that an electric membership corporation may serve any one or more of the
    following purposes:
    
         (1) To furnish electrical energy and service; (2) To assist its members in the efficient and economical
         use of energy; (3) To engage in research and to promote and develop energy conservation and
         sources and methods of conserving, producing, converting, and delivering energy; and (4) To engage
         in any lawful act or activity necessary or convenient to effect the foregoing purposes.
    
    O.C.G.A. § 46-3-200 (2000). Further, O.C.G.A. § 46-3-201(b)(5) (2000) provides that a rural electric
    association may "purchase; take; receive by gift, will, or otherwise; lease; or otherwise acquire, own, hold,
    improve, use, and otherwise deal in and with real or personal property or any interest therein, wherever
    situated." The Georgia Supreme Court held that the rural electric association could not operate a propane
    gas company through a subsidiary, stating:
    
         Even if it can be said that subsections (2), (3) and (4) of O.C.G.A. § 46-3-200 authorize an EMC
         [electric association] to assist its members in the use of another energy source, promote its
         development, or engage in lawful activities to effect such a purpose, nothing in the GEMCA
         [Georgia's rural electric association act] authorizes an EMC to furnish or sell another form of energy.
         In fact, O.C.G.A. § 46-3-201 makes it clear that, while an EMC is empowered to "assist its
         members . . . in the efficient and economical use of energy," O.C.G.A. § 46-3-201 (b) (8), it
         can only furnish or sell "electricity." O.C.G.A. § 46-3-201 (b) (7). And while O.C.G.A. § 46-
         3-201 (b) (26) gives an EMC "all powers necessary or convenient to effect any or all of the purposes
         for which the electric membership corporation is organized," it can hardly be said that it is
         "necessary or convenient" for Flint to sell propane gas to accomplish its purposes.
    
    523 S.E 2d at 637-78 (emphasis added). TVEPA argues that this Court's interpretation of the Miss. Elec.
    Act should be broader than that espoused by the Georgia Supreme Court in interpreting the Georgia Act.
    TVEPA apparently relies on the fact that the Georgia statute lacks the liberal construction language. See
    Miss. Code Ann. § 77-5-231. Even a liberal interpretation of our statutes requires the conclusion that
    TVEPA is limited to the acquisition of electric energy assets. This Court cannot, in the name of liberal
    interpretation, expand the clear and express language of these statutes to affect an alteration more
    appropriately sought through legislative means. The lower court did not err in its interpretation of these
    statutes.
    
         II. WHETHER THE FEDERAL RURAL ELECTRIFICATION ACT PREEMPTS
         MISSISSIPPI'S ELECTRIC POWER ASSOCIATION ACT.
    
    ¶27. TVEPA argues that Congress' promulgation of 7 U.S.C. § 930 and the legislative history of REAct
    indicate that TVEPA is authorized by federal law to invest in ServicePlus. TVEPA alleges that the Miss.
    Elec. Act serves to frustrate the purposes of the federal act, and that this Court should find that, to the
    extent its provisions conflict with the REAct, the Miss. Elec. Act is preempted.
    
    ¶28. The United States Supreme Court has held that REAct is enabling legislation which affords substantial
    deference to state statutory and regulatory authority. See Arkansas Elec. Coop. Corp. v. Arkansas Pub.
    Serv. Comm'n, 
    461 U.S. 375
    , 
    103 S. Ct. 1905
    , 
    76 L. Ed. 2d 1
     (1983). "Nothing in the [federal] Rural
    Electrification Act expressly preempts state rate regulation of power cooperatives financed by the REA." Id.
    at 385-86. In explaining that the REAct established a lending agency and not a regulatory body, the
    Supreme Court stated:
    
          the legislative history . . . makes abundantly clear . . . that, although the REA was expected to play a
          role in assisting the fledgling rural power cooperatives in setting their rate structures, it would do so
          within the constraints of existing state regulatory schemes.
    
    Id. at 386 (citing 80 Cong. Rec. 5316 (Rep. Lea); Hearing on S. 3483 before the House Committee on
    Interstate and Foreign Commerce, 74th Cong., 2d Sess., 30, 37, 51, 52 (1936)).
    
    ¶29. Neither does the REAct implicitly preempt the Miss. Elec. Act. The Fifth and Tenth Circuit Courts of
    Appeal have held that state regulatory acts are not preempted by conflicting federal regulations promulgated
    by the Secretary of Agriculture under the federal REAct. See In re Cajun Elec. Power Co-op, Inc., 
    109 F.3d 248
     (5th Cir. 1997) (holding that REAct nor its regulations expressly or impliedly preempt Louisiana
    regulations governing operation of electric cooperatives); City of Stilwell v. Ozarks Rural Elec. Co-op
    Corp., 
    79 F.3d 1038
     (10th Cir. 1996) (stating that "the RE Act ... does not purport to regulate the
    operation of rural electric cooperatives; it merely assists their operation by offering low interest financing.
    The [Oklahoma law regulating electric cooperatives] establishes the framework under which the RE act-
    spawned rural cooperatives can operate.... To argue that [the state law's limits on powers conferred to rural
    cooperatives] somehow frustrates the purpose of the RE Act is to contend that state regulations should
    empower rural cooperatives witnout limitations. Such a position is untenable.").
    
    ¶30. Furthermore, the language of 7 U.S.C. § 904, which authorizes the Secretary of Agriculture to provide
    loans under the REAct provides, in part:
    
          The Secretary is authorized and empowered ... to make loans for rural electrification to persons,
          corporations, States, Territories, and subdivisions and agencies thereof ... organized under the laws
          of any State or Territory of the United States, for the purpose of financing the construction and
          operation of generating plants, electric transmission and distribution lines or systems for the furnishing
          and improving of electric service to persons in rural areas.... Such loans shall be on such terms and
          conditions ... as the Secretary shall determine ... except that no loan ... shall be made unless the
          consent of the State authority having jurisdiction in the premises is first obtained.
    
    (emphasis added). This language acknowledges that the creation and organization of rural electric
    associations is left to the states and that the state must give its consent in order for loans to be received.
    Section 940b is permissive in nature, allowing a recipient of federal funds to invest 15% of its revenue in
    non-Act purposes. The Miss. Elec. Act does not authorize this action. Absent legislative amendment, the
    actions of TVEPA exceed its statutory authority.
    
          III. WHETHER THE MPGA HAS STANDING TO CHALLENGE TVEPA'S
          OWNERSHIP IN DESOTO GAS COMPANY.
    
    ¶31. TVEPA argues that the action at hand is essentially an ultra vires challenge, and that, MPGA,
    therefore, lacks standing to bring the action. See West Bros., Inc. v. Illinois Central R.R., 
    222 Miss. 335
    , 
    75 So. 2d 723
    , 726 (1954) (business competitors have no standing to challenge activities of corporate
    rivals as being ultra vires); Home Owners' Loan Corp. v. Moore, 184 Miss 283, 
    185 So. 253
    , 255
    (1939) (ultra vires act can be challenged only by the sovereign which created the corporation).
    
    ¶32. MPGA argues that it has not brought an ultra vires challenge, but, rather, that it has challenged
    TVEPA's actions as illegal. It argues that TVEPA's ownership in Desoto Gas violate Miss. Code Ann. §
    77-5-231 and § 77-5-203, which expressly limit electric association activities to the "distribution ... of
    electric energy." Additionally, MPGA argues that one of its members, Dowdle Butane Gas Co., is also a
    member-owner of TVEPA. MPGA asserts that it has standing to sue because Dowdle Butane has standing
    to challenge any ultra vires acts of TVEPA.
    
    ¶33. We begin by noting that Mississippi's standing requirements are quite liberal. Fordice v. Bryan, 
    651 So. 2d 998
    , 1003 (Miss. 1995); Van Slyke v. Bd. of Trustees of State Institutions of Higher
    Learning, 
    613 So. 2d 872
    , 875-76 (Miss. 1993). A party may bring a lawsuit if they assert a colorable
    interest in the subject matter of the litigation or experience an adverse effect from the conduct of the
    defendant. Dye v. State ex rel. Hale, 
    507 So. 2d 332
    , 338 (Miss. 1987); Frazier v. State, 
    504 So. 2d 675
    , 691-92 (Miss. 1987). In Belhaven Improvement Ass'n, Inc. v. City of Jackson, 
    507 So. 2d 41
    (Miss. 1987), this Court recognized that an association has standing to bring suit on behalf of its members
    when:
    
         a) its members would otherwise have standing to sue in their own right; (b) the interests it seeks are
         germane to the organization's purpose; and (c) neither the claim asserted nor the relief requested,
         requires the participation of individual members in the lawsuit.
    
    Id. at 46. The action may be brought either in the name of the association or in the name of one or more
    individual members. See White Cypress Lake Dev. Corp. v. Hertz, 
    541 So. 2d 1031
    , 1034 (Miss.
    1989) (citing Belhaven Improvement, 507 So. 2d at 45-47).
    
    ¶34. MPGA's claim is, in essence, a challenge to TVEPA's power to act pursuant to statutory authority and
    its corporate charter, and, therefore, an ultra vires challenge, as distinguished from an act "malum
    prohibitum" which is, in and of itself, illegal. See Pendleton v. Williams, 
    198 So. 2d 235
    , 239 (Miss.
    1967). Nevertheless, MPGA has standing in its representation of Dowdle Butane. Dowdle Butane is a
    member of MPGA and TVEPA, purchases electricity from TVEPA, and, as such, is one of the member
    owners of TVEPA. Miss. Code Ann. § 79-4-3.04(b) (1996) states that a corporations power to act may
    be challenged in an action by a shareholder to enjoin the act. Dowdle Butane, arguably, has standing to sue
    in its own right. MPGA asserts interests relevant to its purpose as Dowdle Butane has been adversely
    affected by TVEPA's venture into the propane gas business. And, finally, the action may have been brought
    either in the name of MPGA or in the name of Dowdle Butane. See White Cypress, 541 So. 2d at 1034;
    Belhaven Improvement, 507 So. 2d at 46-47.
    
         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.
    
    ¶35. TVEPA argues that the United States was a necessary party to this action, and that the failure to join
    the United States pursuant to Miss. R. Civ. P. 19 renders the Court's action void. Rule 19 provides, in
    pertinent part:
          (a) A person who is subject to the jurisdiction of the court shall be joined as a party in the action if:
    
          (1) in his absence complete relief cannot be accorded among those already parties, or
    
          (2) he claims an interest relating to the subject of the action and is so situated that the disposition of
          the action in his absence may (i) as a practical matter impair or impede his ability to protect that
          interest or (ii) leave any of the persons already parties subject to a substantial risk of incurring double,
          multiple, or otherwise inconsistent obligations by reason of his claimed interest....
    
    TVEPA's loans from the Rural Electrification Administration contain after-acquired property clauses which
    serve to encumber all of TVEPA's property as security for those loans. Accordingly, TVEPA's stock in
    ServicePlus and, indirectly, Desoto Gas are encumbered. However, it should also be noted that federal
    funds were not used to purchase Desoto Gas.
    
    ¶36. MPGA contends that TVEPA has waived its joinder argument by failing to timely raise the issue
    below. This argument is without merit. TVEPA raised the joinder issue as early as its answer and also at
    trial. This Court has recognized that the federal courts have, as a matter of equity, allowed defendants to
    raise the issue of non-joinder for the first time on appeal where the interests of absent persons are at stake.
    Shaw v. Shaw, 
    603 So. 2d 287
    , 293 (Miss. 1992).
    
    ¶37. TVEPA argues that the United States should have been made a party pursuant to Rule 19(a)(2). It
    should be noted that Rule 19(a)(2) requires more than that the allegedly necessary party claim an interest
    relating to the subject of the action claims. TVEPA argues that the court's injunction forced TVEPA to
    divest itself of its interest in Desoto Gas, thus impairing the security interest of the United States. TVEPA
    also asserts that divestiture could subject TVEPA to double litigation and inconsistent obligations. TVEPA
    relies on Franz v. East Columbia Basin Irrigation Dist., 
    383 F.2d 391
     (9th Cir. 1967) and City of
    Anadarko v. Caddo Elec. Corp., 
    258 F. Supp. 441
     (W.D. Okla. 1996). In Franz, the plaintiff owned
    land in the irrigation district and was attempting to withdraw land from the district. The court found that the
    United States was a necessary party because the United States had invested money in the project, and the
    financial solvency of the project was threatened by the plaintiff's withdrawal. Franz, 383 F.2d at 392. In
    City of Anadarko, the city attempted to purchase property, mortgaged to the United States, from the
    electric corporation through condemnation proceedings. City of Anadarko, 258 F. Supp. at 443. The
    court held that the United States was an indispensable party by virtue of its mortgage on the property,
    which would be adversely affected by a judgment of condemnation. Id.
    
    ¶38. These cases are distinguishable from the instant case. The Court's determination in Franz that the
    United States was an indispensable party was based upon the finding that if the plaintiff were allowed to
    withdraw his lands from the irrigation district, the financial solvency of the project will be threatened and the
    chances of repayment to the United States of money invested in the project will be damaged. Franz, 383
    F.2d at 392. In the case sub judice, the chancery court took notice of the fact that the loans between
    TVEPA and the REA are fully collateralized by the assets of TVEPA without regard to Desoto Gas. The
    federal law relied on by TVEPA, 7 U.S.C. § 904 states that "loans under this section shall not be made
    unless the Secretary finds and certifies that in his judgment the security therefor is reasonably adequate and
    such loans will be repaid within the agreed time." The last loan from the REA to TVEPA was made in
    1990, eight years prior to TVEPA's acquisition of DeSoto Gas. TVEPA offers no evidence that its ability to
    pay the United States will be detrimentally affected by the sale of its interest in DeSoto Gas.
    ¶39. In City of Anadarko, the property at issue was purchased with funds loaned from the REA. 258 F.
    Supp. at 443. The consent of the Administrator of the REA to the sale had not been obtained as required
    by 7 U.S.C. § 904. No such consent is required in the case at hand. Section 904 authorizes the REA to
    make loans "for the purpose of financing the construction and operation of generating plants, electric
    transmission and distribution lines or systems for the furnishing and improving of electric service to persons
    in rural areas." Section 940b, on which TVEPA relies as authority for the investment in Desoto Gas,
    provides that TVEPA may invest, without approval of the Secretary, its own funds. Section 907 states:
    
          No borrower of funds under sections 904 or 922 of this title shall, without the approval of the
          Secretary, sell or dispose of its property, rights, or franchises, acquired under the provisions of this
          chapter, until any loan obtained from the Rural Electrification Administration, including all interest and
          charges, shall have been repaid.
    
    Again, the funds used to purchase Desoto Gas were not federal funds loaned by the REA pursuant to §
    904. TVEPA is not required to notify the Secretary prior to disposition of the property. Furthermore, the
    relief granted by the chancery court charged TVEPA with the sale of the stock. The court did not order
    mandatory divestiture. Any interest of the United States in the stock by virtue of the after-acquired property
    clause remains intact, subject to TVEPA's disposition of the stock, which will, presumably, be carried out in
    accordance with any requirements of the REA.
    
          V. WHETHER THE JUDGMENT OF THE LOWER COURT IS CLEARLY
          ERRONEOUS AND UNSUPPORTED BY SUBSTANTIAL EVIDENCE.
    
    ¶40. TVEPA argues that the record wholly fails to support any finding of legal injury by MPGA's members
    upon which to base the award of a permanent injunction. The trial court found that "[t]he evidence shows
    that since the purchase of DeSoto Gas by TVEPA, through its subsidiary ServicePlus, members of MPGA
    have lost customers to DeSoto Gas in service areas of TVEPA that were not formerly served by DeSoto
    Gas." TVEPA contends that the loss of customers to Desoto Gas is not a legally cognizable harm and
    cannot serve as the basis for awarding injunctive relief against TVEPA.
    
    ¶41. The question of whether MPGA's members suffered legally cognizable injury is closely tied to the
    question of standing, addressed previously. It is important that we here again observe that the basis of
    MPGA's standing in this action is by way of its member, Dowdle Butane, which is also an owner of
    TVEPA. Detrimental to MPGA's claim of injury, however, is the fact that the injury allegedly suffered by
    Dowdle Butane (and all its members, for that matter) does not arise from Dowdle Butane's status of
    member-owner of TVEPA, but from its status of competitor to DeSoto Gas. The question of whether
    MPGA has suffered a legally cognizable injury is a question separate from the question of standing, as
    explained by the Supreme Court in Davis v. Passman, 
    442 U.S. 228
    , 
    99 S. Ct. 2264
    , 
    60 L. Ed. 2d 846
    (1979):
    
          The Court of Appeals appeared to confuse the question of whether petitioner had standing with the
          question of whether she asserted a proper cause of action.... The nature of petitioner's injury ... is
          relevant to the determination of whether she has "alleged such a personal stake in the outcome of the
          controversy ..." And under the criteria we have set out, petitioner clearly has standing to bring this
          suit.... Whether petitioner has asserted a cause of action, however, depends not on the quality or
          extent of her injury, but on whether the class of litigants of which petitioner is a member may use the
          courts to enforce the right at issue.
    Id. at 239-40 n.18, 99 S.Ct. at 2274 n.18 (citations omitted). Thus, while there exists a factual injury
    sufficient to give MPGA standing, we must determine whether the injury is of legal significance, so as to
    entitle MPGA to the relief requested.
    
    ¶42. MPGA asserts that the operation of DeSoto Gas has caused its members to lose customers to
    DeSoto Gas since its purchase by TVEPA. Implicit in MPGA's argument is the assertion that because
    TVEPA's ownership of DeSoto Gas is unlawful, so is the competition afforded by DeSoto Gas. TVEPA
    admits that competitive "damage" to member businesses has occurred, but contends that it is not the basis
    of a cause of action since it is damnum absque injuria-a damage not consequent upon the violation of any
    right recognized by law. We agree. Though their business may have suffered "damage" from the operation
    of DeSoto Gas, such "damage" is not legally cognizable injury which may serve as the basis for injunctive
    relief.
    
    ¶43. This principle was clearly recognized by the United States Supreme Court in Alabama Power Co. v.
    Ickes, 
    302 U.S. 464
    , 
    58 S. Ct. 300
    , 82 L. Ed 374 (1938), in which an electric company brought suit to
    enjoin the Federal Emergency Administrator of Public Works from making allegedly unauthorized loans to
    municipal corporations in Alabama. The injury alleged was the electric company's loss of business as a
    result of the lawful, albeit destructive, use of the loans by the municipalities in establishing competing plants.
    Id. at 475. In finding that the electric company had not asserted a legally cognizable injury, the Supreme
    Court stated as follows:
    
          Unless a different conclusion is required from the mere fact that petitioner will sustain financial loss by
          reason of the lawful competition which will result from the use by the municipalities of the proposed
          loans and grants, it is clear that petitioner has no such interest and will sustain no legal injury as
          enables it to maintain the present suits.... "An injury, legally speaking, consists of a wrong done to a
          person, or, in other words, a violation of his right. It is an ancient maxim, that damage to one, without
          an injury in this sense (damnum absque injuria), does not lay the foundation of an action; because, if
          the act complained of does not violate any of his legal rights, it is obvious, that he has no cause to
          complain... Want of right and want of remedy are justly said to be reciprocal...." Parker v. Griswold,
          
    17 Conn. 288
    , 302, 303, 42 Am.Dec. 739....
    
          The only pertinent inquiry, then, is What enforceable legal right of petitioner do the alleged wrongful
          agreements invade or threaten? ... Nor will the subsequent application by the municipalities of
          the moneys derived therefrom give rise to an actionable wrong, since such application, being
          lawful, will invade no legal right of petitioner. The claim that petitioner will be injured,
          perhaps ruined, by the competition of the municipalities brought about by the use of the
          moneys, therefore, presents a clear case of damnum absque injuria. Stated in other words,
          these municipalities have the right under state law to engage in the business in competition
          with petitioner, since it has been given no exclusive franchise. If business be curtailed or
          destroyed by the operations of the municipalities, it will be by lawful competition from which
          no legal wrong results.
    
          What petitioner anticipates, we emphasize, is damage to something it does not possess -
          namely, a right to be immune from lawful competition.
    
    302 U.S. at 478-80 (emphasis added). The Supreme Court refused to accept the assertion "that A, who
    will suffer damage from the lawful act of B, and who plainly will have no case against B, may nevertheless
    invoke judicial aid to restrain a third party, acting without authority, from furnishing means which will enable
    B to do what the law permits him to do." Id. at 481. The Court observed that "[i]t is not unlawful for any
    one to compete with the company, although the latter may not be authorized to engage in the same
    business." Id. at 482. The Court also explained that a company acting beyond the warrant of the law, in
    violation of its charter, does not injuriously affect the rights of its competitors. Id. at 483.
    
    ¶44. MPGA's assertion that it has sustained actionable injuries from TVEPA's investment in DeSoto Gas
    rests implicitly on the assumption that the activities of DeSoto Gas were themselves unlawful. To the
    contrary, as Alabama Power demonstrates, the fact that TVEPA's ownership of DeSoto Gas was
    unauthorized does not make the sale of gas by DeSoto Gas unlawful. A corporation is a legal entity
    separate and distinct from its shareholders. Skinner v. Skinner, 
    509 So. 2d 867
    , 870 (Miss. 1987).
    There was no proof offered at trial to support the trial court's refusal to treat these entities as separate, save
    some common management among the entities. But see Johnson & Higgins of Miss., Inc., 
    321 So. 2d 281
    , 285 (Miss. 1975) (common management insufficient to justify piercing the corporate veil); Murdock
    Acceptance Corp. v. Adcox, 245 Miss, 151, 
    138 So. 2d 890
    , 895 (1962).
    
    ¶45. MPGA relies on Payne v. Jackson City Lines, Inc., 
    220 Miss. 180
    , 
    70 So. 2d 520
     (1954), and
    Campbell Sixty-Six Exp., Inc. v. J.&G. Exp., Inc., 
    244 Miss. 427
    , 
    141 So. 2d 720
     (Miss. 1962), for
    its assertion that businesses have successfully been awarded injunctive relief in Mississippi courts against
    competitors. These cases are clearly distinguishable. Both cases involved franchised carriers which brought
    suit to enjoin the activities of other carriers operating without franchises. The franchised carriers in both
    cases possessed property rights arising out of their franchises. Payne, 220 Miss. at 191, Campbell, 141
    So. 2d at 723-24. Furthermore, the competition presented by the non-franchised carriers was clearly
    recognized the this Court to be illegal, in violation of a statutory prohibition. Payne, 220 Miss. at 190-91;
    Campbell, 141 So. 2d at 726. There is nothing in the record to indicate that plaintiffs are the owners of any
    franchise, lawfully granted, entitling them, and no others, to sell propane gas in the territory involved. There
    is here no statutory or contractual right to be free from competition, as there was in Payne and Campbell.
    The only injury allegedly suffered is the natural opposition to having territory invaded to which they have no
    exclusive right.
    
    ¶46. Additionally, there is no evidence in the record which causally connects the alleged injury of the
    business concerns of the MPGA members to TVEPA's investment in DeSoto Gas. The trial court based its
    finding of irreparable injury to the following: "The evidence shows that since the purchase of DeSoto Gas by
    TVEPA, through its subsidiary ServicePlus, members of MPGA have lost customers to DeSoto Gas in
    service areas of TVEPA that were not formerly served by DeSoto Gas."
    
    ¶47. Skip Graeber estimated that his company lost 20 to 25 customers to DeSoto Gas. He and that he did
    not know why the customers switched to DeSoto Gas. Graeber stated that his company competes with
    numerous other gas companies and that turnover of customers between the companies is not unusual.
    
    ¶48. John Dowdle testified that his company lost more than 20 customers, out of a customer base of 130,
    000, to DeSoto Gas. One of the counties within Dowdle's service area is Panola County, which is also
    within the area serviced with electricity by TVEPA. He stated that DeSoto Gas had never solicited business
    in Panola County prior to its purchase by TVEPA. However, he was not able to say whether DeSoto Gas
    had plans to enter Panola County prior to its purchase by TVEPA. Other testimony demonstrated that
    DeSoto Gas had, in fact, operated in Panola County prior to its purchase by TVEPA and had at least 2
    customers in that county. Within the year after the purchase by TVEPA its customer base in Panola County
    grew to 60 customers. There is no indication in the record how many of these customers in the increase
    switched from Graeber's or Dowdle's companies or even how many of them were previously serviced by a
    gas company. Dowdle also testified that TVEPA's ownership of DeSoto Gas resulted in "unfair"
    competition in the gas industry because TVEPA could obtain loans at a lower interest rate than the other
    gas companies. No showing was made, however, that TVEPA had actually obtained such a loan
    subsequent to its purchase of DeSoto Gas or that DeSoto Gas had benefitted from such a loan. Even
    assuming lawful competition on the part of DeSoto Gas is actionable harm, the trial court's finding of
    irreparable injury on these facts, or lack thereof, is clearly erroneous.
    
                                                   CONCLUSION
    
    ¶49. Though TVEPA's ownership of DeSoto Gas is unauthorized by statute, the members of MPGA have
    no legal right to be free of the lawful competition posed by DeSoto Gas. Because MPGA has asserted no
    legally cognizable injury upon which the relief sought may be granted, the judgment and permanent
    injunction entered by the trial court are reversed, and judgment is rendered here for TVEPA and
    ServicePlus.
    
    ¶50. REVERSED AND RENDERED.
    
          PITTMAN, C.J., WALLER, COBB, AND DIAZ, JJ., CONCUR. McRAE, P.J., AND
          GRAVES, J., DISSENT WITHOUT SEPARATE WRITTEN OPINION. EASLEY AND
          CARLSON, JJ., NOT PARTICIPATING.
    
    1. TVEPA will be used to represent both TVEPA and ServicePlus unless otherwise indicated.
    
    2. For example: The directors of TVEPA are: Jack Flautt (President of TVEPA and ServicePlus), Dan
    Ferguson (Vice-President of TVEPA and ServicePlus), Gene Standridge (Secretary/Treasurer of TVEPA,
    ServicePlus, and DeSoto) Danny Ingram (Dir. and Vice-President of DeSoto, Harry House (also director
    of DeSoto), Lamar Crockett (also director of DeSoto), Robert Chapman, Will Hayes, and Pat Brown.
    Tom Underwood (General Manager of TVEPA,, C.E.O. of ServicePlus, President of DeSoto and on its
    board). The only directors of DeSoto Gas who are not involved with TVEPA and ServicePlus are: Bowdre
    Emerson, Phil Emerson, Paul Emerson, and Charles Emerson.
    
    3. One jurisdiction has even held that REACT did not confer regulatory powers upon the Rural
    Electrification Administration and that REA is a lending agency rather than a classic public utility regulatory
    body. City of Stilwell v. Ozarks Rural Elec. Co-op Corp., 
    79 F.3d 1038
     (10th Cir. 1996).