People v. Syde, Cr. 5220

• Decision Date: 28 September 1951
• Docket Number: Cr. 5220
• Citation: 37 Cal.2d 765,235 P.2d 601
• Court: California Supreme Court
• Parties: , Blue Sky L. Rep. P 70,168 PEOPLE v. SYDE et al.

Page 601

235 P.2d 601

37 Cal.2d 765, Blue Sky L. Rep. P 70,168

PEOPLE v. SYDE et al.

Cr. 5220.

Supreme Court of California, in Bank.

Sept. 28, 1951.

Fred N. Howser and Edmund G. Brown, Attys. Gen., Frank Richards, Deputy Atty. Gen., William E. Simpson and S. Ernest Roll, Dist. Attys., and H. L. Arterberry, Deputy Dist. Atty., Los Angeles, for appellant.

Garner, Lillie & Bryant and George M. Bryant, Los Angeles, for respondent.

SHENK, Justice.

On March 8, 1950, the district attorney of Los Angeles county filed an information against the Defendants Milton and Harry Syde charging them in one count with conspiracy to violate the Corporate Securities Law, section 25000 et seq., Corporations Code, and in fifteen other counts with violations of the law by alleged sales of securities without first having obtained a permit from the Commissioner of Corporations. After a preliminary hearing in the Municipal court the defendants were held to answer on each count. On their arraignment in the Superior Court they moved pursuant to section 995 of the Penal Code to set aside the information as to all counts on the ground that the commitment was without reasonable or probable cause. The motion was granted as to all counts except count 1 ¹. The People appealed from the order granting the motion.

The facts are not disputed. Milton Syde Films, Inc., was incorporated in July 1949 for the purpose of engaging in the business of making, producing, buying, selling and dealing in dramatic exhibitions for radio, stage, motion pictures or television and related activities. Milton was president and Harry secretary-treasurer. The corporation thereupon published a certificate of the conduct of a theatrical arts training school and production business on Santa Monica Boulevard in Hollywood under the name of Rossmore Productions.

Some of the complainants received postcards from the 'casting dept.' of Rossmore Studios addressed to a child in the family whose photograph it is indicated had been seen in a portrait studio or elsewhere. The postcard informed the child that he or she would be considered for a motion picture film and requested a definite appointment. The parent took the child to the studio, where the child was accepted under a contract signed by the parent and one of the defendants. In one type of contract the artist (child) agreed to devote his efforts in the production of a film to be directed by Rossmore with pre-training of a selected cast not in excess of twenty-five members for a minimum of sixteen rehearsals. The contract called for a down payment of $15 by the parent and payment of the balance at the rate of $5 per rehearsal until a total of $98 was paid. Rossmore had the option of rejecting any cast member and refunding the money if the artist did not qualify. It was also provided that upon the sale or other disposition of the film sixty per cent of the gross receipts would be distributed equally among the cast members. Rossmore was to pay all costs and expenses of the production. Another type of contract provided for participation by the artist in a minimum of one television sound film and called for payment of a total of $198, with a down payment of $100 and $7 for each rehearsal. From the receipts of sale of the television film there was to be deducted the expense of sale. The balance was to be deposited in a 'reimbursement fund' from which sixty per cent was to be distributed to the members of the cast but not in excess ot any one member of the contract payment of $198.

Down payments and installment payments at each rehearsal attened were made as required. The parents accompanied the children to the rehearsals but were not permitted in the rehearsal studio. The record does not show whether films were actually made.

The question is whether the contracts constituted securities within the meaning of the Corporate Securities Law.

Section 25008 of the Corporations Code defines 'security' in part as 'any certificate of interest in a profit-sharing agreement' and 'any transferable share, investment contract, or bneficial interest in title to property, profits, or earnings.' Section 26104 makes the act of selling securities without compliance with the statutory requirements a punishable offense. Noncompliance by the defendants it not disputed.

If the contracts entered into with the various 'artists' are not securities within the foregoing definition, there was not probable cause for holding the defendants to answer and the granting of the motion pursuant to said section 995 was proper. The plaintiff contends that the contracts are securities because they constitute an interest in a profit-sharing agreement, or in profits or earnings.

The Corporate Securities Law does not contain an all-inclusive formula by which to test the facts in every case. And the courts have refrained from...