State v. Noorlun

• Citation: 2005 ND 189,705 N.W.2d 819
• Decision Date: 09 November 2005
• Docket Number: No. 20040329.,20040329.
• Parties: STATE of North Dakota, Plaintiff and Appellee v. Lyle J. NOORLUN, Defendant and Appellant.
• Court: United States State Supreme Court of North Dakota

705 N.W.2d 819

2005 ND 189

STATE of North Dakota, Plaintiff and Appellee v. Lyle J. NOORLUN, Defendant and Appellant.

No. 20040329.

Supreme Court of North Dakota.

November 9, 2005.

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Birch Peterson Burdick, State's Attorney, Fargo, ND, for plaintiff and appellee.

Chad Rory McCabe, Bismarck, ND, for defendant and appellant.

VANDE WALLE, Chief Justice.

[¶ 1] Lyle J. Noorlun appealed from a judgment entered upon a jury verdict finding him guilty of nine counts of violating North Dakota securities law. We hold the trial court did not err in denying Noorlun's request to include additional language in a jury instruction, the court did not abuse its discretion in admitting five letters into evidence, there was sufficient evidence to sustain the convictions, and the statute of limitations did not bar Noorlun's prosecution. We affirm.

I

[¶ 2] Before her death in May 2002, Norma Jordee invested $250,000 with Noorlun in three promissory notes that were renewed at various times. There was evidence Jordee lived in Fargo, North Dakota, and issued a $170,000 check for a June 26, 1997 promissory note that was renewed on December 18, 1998; a $50,000 check for a November 6, 1997 promissory note that was renewed on May 5, 1999; and a $30,000 check for a September 14, 1998 promissory note that was renewed on March 13, 1999.

[¶ 3] The State claimed the renewals of the three promissory notes constituted the sale or offer to sell unregistered and non-exempt securities under N.D.C.C. ch. 10-04. By information dated December 17, 2003, the State charged Noorlun with three counts of selling or offering to sell unregistered or non-exempt securities to Jordee in Cass County on December 18, 1998, on March 13, 1999, and on May 5, 1999; three counts of acting as a security salesman or agent for those transactions without registering in North Dakota; and three counts of violating a cease and desist order issued by the North Dakota Securities Commissioner in January 1998.

[¶ 4] After a preliminary hearing on March 25, 2004, Noorlun moved to dismiss the prosecution. He claimed he did not sell or offer to sell unregistered or non-exempt securities to Jordee on the dates alleged in the information, and he merely renewed pre-existing promissory notes on those dates. He essentially claimed prosecution on the original notes was barred by the five-year statute of limitations in N.D.C.C. § 10-04-18, and the renewals of the original notes were not new transactions. The trial court denied Noorlun's motion to dismiss.

[¶ 5] At trial, there was evidence that Noorlun and Jordee had initially entered into a $170,000 promissory note on June 26, 1997, a $50,000 promissory note on November 6, 1997, and a $30,000 promissory note on September 14, 1998. The State introduced evidence of typewritten letters purportedly signed by Noorlun and sent by him from Henderson, Nevada, to Jordee in Fargo, which indicated those promissory notes had been renewed on the dates alleged in the information. The State introduced evidence that neither the promissory notes nor the renewals were registered in North Dakota; neither Noorlun nor his company, Management Services, was a registered security agent in North Dakota; and the North Dakota Securities Commissioner had issued a cease and desist order against Noorlun and Management Services in January 1998. A jury found Noorlun guilty of all nine charges.

II

[¶ 6] Noorlun contends the trial court erred in denying his request to include language in a jury instruction regarding renewals of promissory notes. Relying on Liberty Nat'l Bank & Trust Co. v. Dvorak, 199 N.W.2d 414 (N.D.1972), Noorlun argues the court's instruction on "notes" was incomplete because it did not explain the difference between a note and a renewal of a previous note. He claims any prosecution on the three original promissory notes was barred by the five-year statute of limitations in N.D.C.C. § 10-04-18(4). He essentially asserts the renewals of the previous notes were not new transactions, and any prosecution on those notes was also barred by that five-year statute of limitations.

[¶ 7] On appeal, we review jury instructions as a whole and consider whether they correctly and adequately advise the jury of the applicable law and do not mislead or confuse the jury. State v. Jaster, 2004 ND 223, ¶ 17, 690 N.W.2d 213. If jury instructions, when considered in their entirety, correctly advise the jury of the applicable law, there is no error even though a trial court refuses to submit a requested instruction that is a correct statement of the law, or even if part of the instructions, standing alone, may be insufficient or erroneous. Id. We will reverse a conviction only if the instructions, as a whole, are erroneous, relate to an essential subject in the case, and affect a substantial right of the accused. Id.

[¶ 8] Under N.D.C.C. § 10-04-18(1), any person who willfully violates certain provisions of N.D.C.C. ch. 10-04, or an order by the securities commissioner under that chapter, or who engages in any act, practice, or transaction declared to be unlawful under that chapter is guilty of a class B felony. Section 10-04-10, N.D.C.C., prohibits a person from selling or offering to sell securities in this state unless registered as a dealer or salesman, and N.D.C.C. § 10-04-04 prohibits a person from selling, or offering to sell any unregistered or non-exempt securities in this state. Noorlun has not argued the promissory notes or renewals in this case were exempt securities under N.D.C.C. §§ 10-04-05 or 10-04-06. Section 10-04-02, N.D.C.C., defines "security" as "any note;. . . evidence of indebtedness; . . . or, in general, any interest or instrument commonly known as a `security.'" Under N.D.C.C. § 10-04-02, "sale" or "sell" means "every sale or other disposition of a security or interest in a security for value, and every contract to make any such sale or disposition." An "offer for sale" or "offer to sell" means "every attempt or offer to dispose of, or solicitation of an order or offer to buy, a security or interest in a security for value." N.D.C.C. § 10-04-02. Under those definitions, we have consistently construed promissory notes to be securities. See State v. Goetz, 312 N.W.2d 1, 4-5 (N.D.1981); State v. Weisser, 161 N.W.2d 360, 365-66 (N.D.1968); State v. Davis, 131 N.W.2d 730, 732-33 (N.D.1964).

[¶ 9] Here, the trial court instructed the jury in language following N.D.C.C § 10-04-02 on the definitions of security, sale or sell, and offer for sale or offer to sell. The court instructed the jury that it was unlawful to willfully sell or offer to sell securities in North Dakota unless the securities were registered or exempt and that persons who sell or offer to sell securities must register as a salesman or agent with the securities commissioner. The court instructed the jury on three counts of selling or offering to sell securities on the dates alleged in the information, three counts of acting as a security salesman or agent without registering as an agent in North Dakota, and three counts of violating a cease and desist order.

[¶ 10] In language from Dvorak, 199 N.W.2d at 416-17, the trial court also instructed the jury:

The purpose of a renewal note is to extend the time the debtor has within which to pay his obligation. Whether the renewal note is actually a renewal or a new note depends upon the intention of the parties. A renewal signifies a substitution of the obligation on the same terms and conditions. In other words, the only change is an extension of time in which to pay the note.

If the obligation changes, for instance the principal amount of the note is increased, the transaction is not a renewal. The transaction is a new obligation, a new note. We have stated a note is a security. The new note is subject to the North Dakota Securities Act, just as the original note was subject to the Act.

Noorlun claims the court erred in not including language in that instruction from Dvorak, at 416-17, to the effect that "a note is renewed when a new note evidencing the same obligation is executed and delivered by the maker to the holder of the old note."

[¶ 11] In Dvorak, 199 N.W.2d at 416-17, the issue was whether a guarantor's obligation under an initial promissory note was exonerated under N.D.C.C. § 22-01-15 when the debtor executed a second note without a guarantee by the guarantor. The second note was secured in part by the same collateral, and it substantially increased the principal debt and extended payments over a longer period of time. Dvorak, at 417. We held the second note altered the first note within the meaning of N.D.C.C. § 22-01-15, and exonerated the guarantor from any further liability on the first note. Dvorak, at 417. In reaching that conclusion, we decided the second note was not a renewal of the first note. Id. at 416-17. We quoted Douglas County State Bank v. Sutherland, 52 N.D. 617, 204 N.W. 683, Syll. ¶ 4 (1925), to define "renewed" to mean a "`note' is `renewed', within the meaning of that term as used in ch. 91, S.L. 1921, when a new note evidencing the same obligation is executed and delivered by the maker to the holder of the old note." Dvorak, at 416-17. In deciding the second note was not a renewal of the first note, we said the purpose of a renewal note was to extend the length of time the debtor has to pay the obligation:

Whether a new note is a renewal of another note depends upon the intention of the parties. A renewal signifies the substitution in place of one engagement of a new obligation on the same terms and conditions; that is, the re-establishment of a particular contract for another period of time. An obligation is renewed when the same obligation is carried forward by the new paper or undertaking, whatever it may be. There may be a change of parties. There may be an increase of security, but there is no renewal unless the obligation is...