Geiger-Jones Co. v. Turner

Decision Date10 February 1916
Docket Number51-53.
Citation230 F. 233
PartiesGEIGER-JONES CO. v. TURNER, Atty. Gen. of State of Ohio, et al. COULTRAP v. SAME. ROSE et al. v. HALL, Superintendent of Banks and Banking of State of Ohio, et al.
CourtU.S. District Court — Southern District of Ohio

[Copyrighted Material Omitted]

E. N Huggins, Timothy Hogan, and J. A. Shauck, all of Columbus Ohio, M. B. & H. H. Johnson and Francis R. Marvin, all of Cleveland, Ohio, and A. M. McCarty, of Canton, Ohio, for plaintiffs.

Edward C. Turner, Atty. Gen., and Henry S. Ballard, First Asst. Atty. Gen., of Columbus, Ohio, for defendants.

Before WARRINGTON, Circuit Judge, and SATER and HOLLISTER, District judges.

SATER District Judge.

The constitutionality of the so-called 'blue-sky' law of Ohio (sections 6373-1 to 6373-24, General Code, as amended by 103 Ohio L.pp. 743-753, 104 Ohio L.pp. 110-119, 105-106 Ohio L.pp. 363-364) is assailed in each of the above-mentioned cases, which, for convenience, are considered together. Statutes of a kindred character have in learned opinions been declared invalid by federal courts sitting in Michigan (Alabama & N. O. Transp. Co. v. Doyle (D.C.) 210 F. 173, Halsey & Co. v. Merrick, 228 F. 805), Iowa (Compton v. Allen (D.C.) 216 F. 537), West Virginia (Bracey v. Darst (D.C.) 218 F. 482), and South Dakota (Sioux Falls Stockyards Co. v. Caldwell). The last-named case, which is unreported, was decided by Sanborn, Circuit Judge, and Munger and Elliott, District Judges. [1] Although a consideration of the act will involve a reiteration of principles already ably and convincingly stated, it is thought advisable to review it in part, at least-- a task rendered difficult on account of the numerous exceptions to its general provisions, and, in some instances, of exceptions to such exceptions

The Geiger-Jones Company, an Ohio corporation, is engaged in buying and selling in Ohio and other states stocks and bonds principally of industrial corporations, domestic and foreign. It seeks to prevent the revocation of the license heretofore granted it to transact such business and the threatened enforcement of the law against its continued prosecution of the same. Coultrap, a citizen of the state of Pennsylvania and an agent of the Geiger-Jones Company, is also the owner and holder of and a dealer in stocks of certain Ohio corporations, and conducts his business in part by mail and in part by personal visits to the state. He charges that the revocation of the license of his employer will operate as a cancellation of his authority, and that the contemplated enforcement of the statute will interrupt and destroy his business.

Rose was heretofore arrested, indicted, and convicted in one of the state courts for violating the act by selling the stocks and bonds of industrial concerns, and, particularly, the stock of his coplaintiff, a West Virginia corporation, and is now awaiting sentence. Both he and the RiChard Auto Manufacturing Company allege that the enforcement of the statute by the defendants named in their bill will prevent Rose from prosecuting his business of selling securities and his coplaintiff from completing its organization and capitalization for the manufacture of automobiles.

Briefly stated, the validity of the act is assailed on the grounds that (1) it is violative of the commerce clause of the federal Constitution; (2) it is constitutionally obnoxious, in that it deprives plaintiffs of property without due process of law and denies them the equal protection of the laws; (3) it delegates legislative and judicial power to an executive officer, in violation of the state Constitution; and (4) it is a law of a general nature, but does not operate uniformly throughout the state, as required by section 26, article 2, of the state Constitution. If the act be unconstitutional, each of the plaintiffs is, as he must be, within the class whose constitutional rights are invaded. Standard Stock Food Co. v. Wright, 224 U.S. 540, 550, 32 Sup.Ct. 784, 56 L.Ed. 1197. The prayer of each bill is for general as well as specific relief.

The act, which is entitled 'An act to regulate the sale of bonds, stocks, and other securities, and of real estate not located in Ohio, and to prevent fraud in such sales,' prohibits, under severe penalties, the disposition of all securities subject to its provisions, without discrimination as to and regardless of their value, unless authority so to do is first obtained from the superintendent of banks (termed the commissioner). The term 'dispose of' is broadly construed to mean 'sell, barter, pledge, or assign for a valuable consideration or obtain subscriptions for. ' The first section, 6373-1, in comprehensive language declares that, except as otherwise provided in the act, no dealer may within the state dispose of or offer to dispose of any stocks, stock certificates, bonds, debentures, collateral trust certificates or other similar instruments (all termed 'securities') evidencing title to or interest in property issued or executed by any private or quasi public corporation, copartnership or association (except corporations not for profit), or by any taxing subdivision of any other state, territory, province or foreign government, without being first licensed so to do. Promissory notes are not within the terms of the act, as was the case in the original Michigan statute. A limited number of other securities are also excluded from its provisions. The inclusive character of the act extends, not only to 'securities' coming within its provisions, but also to the persons subject to its exactions, prohibitions and penalties, as is evidenced by its definition of the terms 'dealer' and 'company,' the former embracing 'any person or company' and the latter 'any corporation, copartnership or association, incorporated or unincorporated, whenever and wherever organized.' The term 'dealer' does not, however, include national banks or any company engaged in the marketing or flotation of it own securities or any stock-promoting scheme, although such company and scheme are required to obtain the certificate of the commissioner mentioned, and must abide by all the provisions contained in sections 6373-14 and 6373-16. A restricted number of other person, natural and artificial, having occasion to dispose of securities, are also excluded from the classification of dealers. An 'issuer' is defined to be an original issuer.

The act must be sustained unless it can be clearly shown to be in conflict with some constitutional provision. The question as to its wisdom was for the determination of the Legislature; with that the court is not concerned. If the power under the federal Constitution to enact it is absent, it is unimportant how wise, necessary or beneficent it may be, for it is then necessarily void because in conflict with the organic law of the land. Rail & River Coal Co. v. Yaple (D.C.) 214 F. 273, 279, 280; Alabama & N. O. Transp. Co. v. Doyle (D.C.) 210 F. 176; Bracey v. Darst (D.C.) 218 F. 491, 492; Board of Health v. Greenville, 86 Ohio St. 1, 20, 98 N.E. 1019, Ann. Cas. 1913D, 52; State v. Toledo, 48 Ohio St. 112, 132, 133, 26 N.E. 1061, 11 L.R.A. 729.

If there are separate and independent unconstitutional provisions in the statute, which may be rejected, and the rest of the act be permitted to stand and have effect according to the legislative intent, the valid portions must be upheld. But if an unconstitutional element pervades the entire statute as an inherent and essential part, it must fail as an entirety. In such a case it does not avail that the officer charged with the execution of the law may not enforce it according to its terms, but only as he may deem wise and expedient. Assent cannot be given, under such circumstances, to the proposition that, although a statute may authorize the accomplishing of an unconstitutional purpose, it must, nevertheless, be presumed that it will, in fact, only be used to accomplish what can be done in accordance with the Constitution. Taylor v. Commissioners, 23 Ohio St. 22, 33, 34; Alabama & N. O. Transp. Co. v. Doyle (D.C.) 210 F. 181; Bracey v. Darst (D.C.) 218 F. 491, 492; People v. Warden, 144 N.Y. 529, 539, 39 N.E. 686, 27 L.R.A. 718.

Because a certificate of stock is only evidence of the ownership of shares, the interest represented by them being held by the company for the benefit of the true owner (Citizens' Sav. & Tr. Co. v. Ill. Cent. R.R., 205 U.S. 46, 57, 27 Sup.Ct. 425, 51 L.Ed. 703; Ball v. Mfg. Co., 37 Ohio St. 306, 314, 65 N.E. 1015, 93 Am.St.Rep. 682), it does not follow, as defendants' counsel contend, that such certificate is of less value than an unprinted sheet of paper of corresponding size and quality, and that it cannot therefore be a subject of interstate commerce. If it be but written evidence of an interest in corporate property, the same may be said of notes and bills, which are mere evidence of indebtedness on the part of individuals or corporations that issue them. In Merritt v. American Steel-Barge Co., 79 F. 228, 235, 24 C.C.A. 530 (C.C.A. 8), in speaking of stock certificates, it was said that:

'In the business world such obligations or securities are treated as something more than mere muniments of title. They are daily bought and sold like ordinary chattels, they may be hypothecated or pledged, they have an inherent market value, and, while differing in some respects from chattels, they are generally classified as personal property.'

In Ohio a stock certificate is so far property that it may be seized by an officer making an attachment or levy. Section 8673-13, G.C. (See Page & A. Gen. Code.)

A state law, which, in its essentials, is a legitimate exercise of the police power, is not rendered invalid by reason of the fact that...

To continue reading

Request your trial
8 cases
  • Mississippi Power Co. v. May
    • United States
    • Mississippi Supreme Court
    • June 3, 1935
    ... ... 36; ... Biddle v. Smith, 256 S.W. 453; Otis v ... Parker, 187 U.S. 606, 47 L.Ed. 323; Hall v ... Geiger-Jones Co., 242 U.S. 539, 61 L.Ed. 480; ... Merrick v. Halsey & Co., 242 U.S. 568, 61 L.Ed. 498; ... Caldwell v. Sioux Falls Stock Yards Co., 242 U.S ... ...
  • Miss. Power Co. v. May
    • United States
    • Mississippi Supreme Court
    • April 29, 1935
    ... ... Mortgage Co., 209 P. 36; Biddle v. Smith, 256 S.W. 453; Otis ... v. Parker, 187 U.S. 606, 47 L.Ed. 323; Hall v. Geiger-Jones ... Co., 242 U.S. 539, 61 L.Ed. 480; Merrick v. Halsey & Co., 242 ... U.S. 568, 61 L.Ed. 498; Caldwell v. Sioux Falls Stock Yards ... Co., 242 ... ...
  • Lorenzetti v. American Trust Co.
    • United States
    • U.S. District Court — Northern District of California
    • May 19, 1942
    ...the courts on some of the activities of the banks. They had interstate transactions in stocks and bonds. In reversing Geiger-Jones Co. v. Turner, D.C., 230 F. 233, 239, which held that a state statute regulating dealings in stocks and bonds burdened interstate commerce, the Supreme Court in......
  • Town of St. Martinville v. Dugas
    • United States
    • Louisiana Supreme Court
    • March 2, 1925
    ...Hatch, 125 U.S. 1, 8 S.Ct. 811, 31 L.Ed. 629; Robbins v. Shelby County Taxing Dist., 120 U.S. 489, 7 S.Ct. 592, 30 L.Ed. 694; Geiger-Jones Co. v. Turner, 230 F. 233; Lanston Monotype Mach. Co. v. Curtis, 224 F. 140 C. C. A. 89; Stoll v. Pacific Coast S. S. Co., 205 F. 169; Logan v. Postal T......
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT