Bracey v. Darst
Citation | 218 F. 482 |
Parties | BRACEY et al. v. DARST, State Auditor of West Virginia, et al. |
Decision Date | 05 December 1914 |
Court | United States Courts of Appeals. United States Court of Appeals (4th Circuit) |
John A. Howard and J. M. Ritz, both of Wheeling, W.Va. for plaintiffs.
A. A Lilly, Atty. Gen., Frank Lively, Asst. Atty. Gen., and C. B Johnson and C. M. Hanna, both of Charleston, W. Va., for defendants.
Before PRITCHARD and WOODS, Circuit Judges, and DAYTON, District Judge.
This hearing is had under the provisions of section 266 of the Judicial Code of the United States (Comp. St. 1913, Sec. 1243), upon application of the plaintiffs for a temporary injunction to restrain the state officers, named as defendants, from prosecuting criminal proceedings against the individual plaintiffs for alleged violations of an act of the Legislature approved February 11, 1913, commonly known as the 'Blue Sky Law.'
The act is charged to be unconstitutional, invalid, and void: (1) Because it deprives them of their rights to sell in the state of West Virginia valuable stocks, bonds, and securities, which is depriving them of their property without due process of law; (2) that it denies the plaintiffs and each of them of the equal protection of the laws as guaranteed to them under the fourteenth amendment to the federal Constitution; (3) that it imposes a burden and practically amounts to prohibition of interstate commerce, contrary to section 8 of article 1 of the Constitution of the United States; (4) because it attempts to vest in and delegates to the Auditor of the State legislative, executive, and judicial powers in violation of the Constitution of West Virginia, and especially section 1, art. 5, thereof.
The terms of the act so assailed are:
'Sec. 3. All of the above described papers shall be verified by the oath of a member of the copartnership or company, if it be a copartnership or company, or by the oath of a duly authorized officer, if it be an incorporated or unincorporated association. All such papers, however, as are recorded, or are on file, in any public office shall be further certified to by the officer of whose record or archives they form a part, as being correct copies of such record or archives.
'Sec. 4. Every foreign investment company shall also file with the auditor its written consent, irrevocable, that actions may be commenced against it in the proper court of any county in this state, in which a cause of action may arise, or in which the plaintiff in such suit may reside, by the service of process on the auditor of this state, and stipulating and agreeing that such service of process on such auditor shall be taken and held in all courts to be as valid and binding as if due service had been made upon the company itself, according to the laws of this or any other state, and further expressly authorizing such auditor to accept service of any process, order or notice against such company, issued from any court in this state and agreeing that such acceptance of service shall have like force and effect as is above provided for service thereof upon such auditor, and such instrument shall be authenticated by the seal of said foreign investment company and by the signature of a member of the copartnership or company, if it be a copartnership or company, or by the signatures of the president and secretary of the incorporated or unincorporated association, if it be an incorporated or unincorporated association, and shall be accompanied by a duly certified copy of the order or resolution of the board of directors, trustees or managers of the corporation or association authorizing the said president and secretary to execute the same.
'Sec 5. It shall be the duty of the auditor to examine the statement and documents so filed, and if said auditor shall deem it advisable he shall have made a detailed examination of such investment company's affairs, which examination shall be made under the supervision of said auditor, and such examination shall be at the expense of such investment company, as hereinafter provided. And if the said auditor, upon his investigation, finds that such investment company is solvent, that its articles of incorporation or association, its constitution and by-laws, its proposed plan of business and proposed contract or securities contain and provide for a fair, just and equitable plan for the transaction of business, and in his judgment promises a fair return on the stocks, bonds, debentures and other securities by it offered for sale, said auditor shall issue to such investment company a statement reciting that such company has complied with the provisions of this act; that detailed information in regard to the company and its securities is on file in the auditor's office for public inspection and information; that such investment company is permitted to do business in this state; and such statement shall also recite in bold type that such auditor in no wise recommends the securities to be offered for sale by such investment or security company. But if said auditor finds that such articles of incorporation, or association, charter, constitution and by-laws, plan of business, or proposed contract contain any provisions that are unfair, unjust, inequitable or oppressive to any class of contributors, or if he decides from his investigation of its affairs that such investment company is not solvent and does not intend to do a fair and honest business, and in his judgment does not promise a fair return on the stocks, bonds, debentures, or other securities by it offered for sale, then he shall notify such investment company in writing of his findings, and it shall be unlawful for such company to do any further business in this state until it shall so change its constitution and by-laws, articles of incorporation or association, its proposed plan of business and proposed contract, and its general financial condition, in such manner as to satisfy the auditor that it is solvent, and its articles of incorporation or association, its constitution and by-laws, its proposed plan of business, and proposed contract are bona fide, and provide for a fair, just and equitable plan for the transaction of business, and does in his...
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