William R. Compton Co. v. Allen

• Decision Date: 06 July 1914
• Docket Number: 13A.
• Citation: 216 F. 537
• Parties: WILLIAM R. COMPTON CO. et al. v. ALLEN et al. (NICKERSON et al., Interveners).
• Court: U.S. District Court — Southern District of Iowa

216 F. 537

WILLIAM R. COMPTON CO. et al. v. ALLEN et al. (NICKERSON et al., Interveners).

No. 13A.

United States District Court, S.D. Iowa, Central Division.

July 6, 1914

Caldwell Masslich & Reed, of New York City, Mayer, Meyer, Austrian &amp Platt, and Charles L. Powell, all of Chicago, Ill., and Clark, Byers & Hutchinson, of Des Moines, Iowa, for complainants and interveners.

George Cosson, Atty. Gen., of Des Moines, Iowa, for respondent.

Before SMITH, Circuit Judge, and McPHERSON and POLLOCK, District judges.

PER CURIAM.

This suit is brought by plaintiffs, corporate citizens respectively, of the states of Missouri, Indiana, and Maine against defendants, respectively, the Secretary of State and the Attorney General of the state of Iowa, to restrain the enforcement of an act of the General Assembly of that state approved April 19, 1913 (Acts 35th Gen. Assem. c. 137), commonly termed the 'Blue Sky Law,' of that state, which provides as follows:

'An act to provide for the regulation and supervision of investment companies, and providing penalties for the violation thereof. (Additional to chapter one (1) title nine (ix) of the Code relating to corporations for pecuniary profit.)

'Be it enacted by the General Assembly of the state of Iowa:

'Section 1. Sale of Certain Stocks and Bonds Prohibited-- Permits Granted by Secretary of State. That it shall be unlawful for any investment company or stockbroker or any representative thereof, either directly or indirectly, to sell or cause to be sold, offer for sale, take subscription for or negotiate for the sale in any manner whatsoever in this state, except as hereinafter provided, of any stocks, bonds or other securities of any kind or character, other than those expressly exempted from the provisions hereof, without a permit of

the Secretary of State as hereinafter provided. But nothing in this act shall be construed to prohibit the sale of bonds of the United States, or of the state of Iowa, or of municipal, county, school or drainage bonds, or of certificates issued by authority of the laws of the state of Iowa, or to prohibit banks from dealing in the various classes of securities now or hereafter authorized by law or to prohibit the sale of stocks, bonds or other securities at judicial sale or by administrators or executors, or bonds or notes secured by mortgage on real estate, provided that the amount of such lien and of all superior liens upon said real estate shall not exceed three-fourths of the actual cash value thereof.

'Sec. 2. Permits-- How Obtained-- Information-- Documents-- Fee. That before any investment company shall secure such permit, it shall be necessary for each and every such investment company to file in the office of Secretary of State, together with a filing fee of ten dollars ($10.), the following papers, documents, etc., together with such other information and documents as said Secretary of State shall deem necessary in each case to wit:

'1. A copy of its Constitution and by-laws, or articles of copartnership or association.

'2. An itemized statement of its actual financial condition and the amount of its properties and liabilities.

'3. A statement showing in full detail the plan upon which it proposes to transact business.

'4. A copy of all contracts, bonds or other securities which it proposes to make with or sell to its contributors.

'5. Sample copies of all literature or advertising matter used or to be used by such investment company.

'6. If it shall be a foreign investment company, it shall file a copy of its charter which copy shall bear the certificate of the Secretary of State, or other state officer having custody of such records, that it is a true, complete and correct copy.

'All the above described papers shall be verified by the oath of a duly authorized member of a copartnership or association, if it be a copartnership or association, and by the oath of the president and secretary, if it be incorporated, provided that the Secretary of State shall have the power to require such officers to make affidavit to such other reports or information as he may call for.

'Sec. 3. Foreign Corporation-- Service of Notice on Secretary of State. Every foreign investment company shall, before receiving a certificate as provided in section four (4) hereof, file in the office of the Secretary of State an agreement in writing (authenticated by the seal of said foreign investment company and by the signature of a member of a 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, 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, authorizing the said president and secretary to execute the same), that thereafter service of notice of any action or process of any kind against such foreign investment company, growing out of the transaction of any business of said company in this state, may be made on the Secretary of State, and when so made, such service of notice or process of any kind shall be valid, binding and effective for all purposes as if served upon the foreign investment company according to the laws of this or any other state, and waiving all claims or right of error by reason of such acknowledgment of service. Such notice or process with a copy thereof, may be mailed to the Secretary of State at Des Moines, Iowa, in a registered letter addressed to him by his official title, and he shall immediately upon its receipt acknowledge service thereof on behalf of the defendant foreign investment company by writing thereon, giving the date thereof, and shall immediately return such notice or process in a registered letter to the clerk of the court in which the suit is pending, addressed to him by his official title, and shall also forthwith mail such copy, with a copy of his acknowledgment of service written thereon, in a registered letter addressed to the person or corporation who shall be named or designated as such foreign investment company in such written instrument.

'The above provisions for the service of notice or process of any kind are merely additions to the general provisions of law relating to the service of notice or process, and are not to be construed to be exclusive.

'Sec. 4. Statement Filed-- Examination-- Permit. It shall be the duty of the Secretary of State to examine the statements and documents so filed and if he shall deem it advisable, he shall require such investment company to furnish him with further and more detailed information regarding the affairs of such investment company, and if he 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 contracts contain and provide for a fair, just and equitable plan for the transaction of business, he shall issue to such investment company a statement reciting that such company has complied with the provisions of this act and that such investment company is permitted to do business in this state. In no case shall the Secretary of State issue to such investment company or to its stockbrokers or agent thereof a permit to do business in this state unless, in his judgment, said investment company meets the requirements of this act.

'Sec. 5. Amendment of Charter, Articles of Incorporation, Constitution or By-laws Filed with Secretary of State. That no amendment of the charter, articles of incorporation, constitution or by-laws of any such investment company shall become operative until a copy of the same has been filed with the Secretary of State as provided in regard to the original filing of such papers, nor shall it be lawful for any such investment company to transact business on any other plan than that set forth in the statement required to be filed in section two (2) of this act, or to make any contract other than that shown in the copy of the proposed contract required to be filed by the provisions of said section, until a written statement showing in full detail the proposed new plan of transacting business and a copy of the proposed new contract shall have been filed with the Secretary of State in like manner as provided in regard to the original plan of business and proposed contract, and the consent of the Secretary of State obtained as to making such proposed new plan of transacting business and proposed new contract.

'Sec 6. Certified Financial Statement-- Fee-- Failure to Report-- Forfeit. That at the close of business of December 31st of each year, and at such other times as the Secretary of State may require, every investment company, domestic and foreign, shall file with the Secretary of State a statement properly verified by the officers of said company, which statement shall set forth its financial condition and the amount of its assets and liabilities and such other information concerning its financial affairs as the Secretary of State may require; said statement being for the information of the Secretary of State, and it shall not be open to public inspection, neither shall it be published, or used for private purposes. Each annual statement shall be accompanied by a filing fee of two dollars ($2.00). Any investment company failing to file said statement for the preceding year by the first day of February of each year, or failing to file any other or special report herein required within thirty (30) days after receipt of request therefor, shall forfeit to the state of Iowa the sum of five dollars ($5.00) per day until said statement is filed, or until its right to do business in this state is canceled; and unless said...