Securities and Exchange Commission v. WJ Howey Co.

Citation60 F. Supp. 440
Decision Date17 April 1945
Docket NumberCivil Action No. 220.
PartiesSECURITIES AND EXCHANGE COMMISSION v. W. J. HOWEY CO. et al.
CourtUnited States District Courts. 11th Circuit. United States District Courts. 11th Circuit. Southern District of Florida

Wm. A. McClain, of Atlanta, Ga., for plaintiff.

C. E. Duncan, of Tavares, Fla., and George C. Bedell, of Jacksonville, Fla., for defendants.

DE VANE, District Judge.

There is no controversy with respect to the facts in this case. The parties, by written stipulation filed May 20, 1944, have agreed upon the principal facts. In addition, the parties offered oral and documentary evidence at a hearing subsequently held at the direction of the Court for the purpose of supplying certain additional information desired by the Court.

The record shows that the W. J. Howey Company, hereafter referred to as the Howey Company, is a corporation, organized under the laws of the State of Florida in 1922, with its principal place of business at Howey-in-the-Hills, Florida. Howey-in-the-Hills Service, Inc., hereafter referred to as the Service Company, is a corporation organized under the laws of the State of Florida in 1932, with its principal place of business at Howey-in-the-Hills, Florida. G. W. Griffin is president and Dodge Taylor is vice president of both companies. The Howey Company and the Service Company share the same offices and utilize the same personnel and both companies are under direct common control.

The Howey Company is the owner of large tracts of land in Lake County, Florida, which it is now and for more than twenty years has been planting to citrus trees and selling at various stages of development, after the trees have reached one year old or older. The prices charged vary according to the number of years the land has been planted to citrus trees. The price generally received for land where the trees are one year old is $675 per acre; for two year old trees, $750 per acre; and bearing trees, five years or older, approximately $1,000 per acre.

The Service Company is now and since its organization has been engaged in the business of cultivating and caring for citrus groves sold by the Howey Company to others where its services were desired by the purchaser. It has, since 1935, used a standard form of service contract. In occasional instances modification of this contract is made to suit the requirements of a particular owner. By such service contract the Service Company undertakes to properly maintain, fertilize, spray, cultivate, and otherwise care for the citrus groves, for a specified service charge of $40 per acre per year for trees under five years old, and $30 per acre, per year, for bearing groves more than five years old.

In addition to the service charge the owner of the land agrees to pay for pruning, dusting and dusting material, spraying and spray material, special treatment, seed for cover crop, sowing of same, fertilizer, replacement of any trees which may die, and watering of trees when necessary. The Service Company acts as the agent of the owner of the property for the purpose of marketing the fruit, if that service is desired.

During the three year period ended May 31, 1943—being the period involved in this case—the Howey Company sold fifty-one (51) parcels of land comprising 195.26 acres of grove property. Of the fifty-one purchasers forty-two entered into the service contract with the Service Company for the care of their properties. The contracts covered 166.54 acres, or 85% of the acreage sold by the Howey Company during that period.

The Service Company is also engaged in the general business of servicing citrus groves and services many grove properties. It maintains 75 tractors, spray wagons, fertilizer trucks and other machinery used in the cultivation of citrus trees; a machine shop with mechanics and a force of about one man to each 100 acres of grove property. The record does not disclose the total acreage being cared for by the Service Company on May 31, 1943, but it does disclose that in ...

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3 cases
  • U.S. v. Johnson
    • United States
    • U.S. Court of Appeals — Fifth Circuit
    • 25 Octubre 1983
    ...in the district court was whether the shares were securities, and that court had made the determination as a matter of law. 60 F.Supp. 440 (S.D.Fla.1945). 8 This Court, however, has at least once upheld a district court's submission of this issue to a jury. Nor-Tex Agencies, Inc. v. Jones, ......
  • U.S. v. Johnson
    • United States
    • U.S. Court of Appeals — Fifth Circuit
    • 25 Febrero 1983
    ...in the district court was whether the shares were securities and that court had made the determination as a matter of law. 60 F.Supp. 440 (S.D.Fla.1945). 7 This Circuit, however, has at least once upheld a district court's grant of this power to a jury. Nor-Tex Agencies, Inc. v. Jones, 482 ......
  • Securities and Exchange Commission v. Howey Co
    • United States
    • U.S. Supreme Court
    • 27 Mayo 1946
    ...unregistered and nonexempt securities in violation of § 5(a) of the Act, 15 U.S.C.A. § 77e(a). The District Court denied the injunction, 60 F.Supp. 440, and the Fifth Circuit Court of Appeals affirmed the judgment, 151 F.2d 714. We granted certiorari, 327 U.S. 773, 66 S.Ct. 821, on a petiti......

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