Bruner v. State

• Decision Date: 23 September 1970
• Docket Number: No. 42629,42629
• Citation: 463 S.W.2d 205
• Parties: Blue Sky L. Rep. P 70,904 R. E. BRUNER, Appellant, v. The STATE of Texas, Appellee.
• Court: Texas Court of Criminal Appeals

Page 205

463 S.W.2d 205

Blue Sky L. Rep. P 70,904

R. E. BRUNER, Appellant, v. The STATE of Texas, Appellee.

No. 42629.

Court of Criminal Appeals of Texas.

Sept. 23, 1970.

Emmett Colvin, Jr., Dallas, (on appeal only), for appellant.

Henry Wade, Dist. Atty., John B. Tolle, Camille Elliott, James P. Finstrom and John Stauffer, Asst. Dist. Attys., Dallas, and Jim D. Vollers, State's Atty., Austin, for the State.

OPINION

ONION, Judge.

The offense is a violation of the Securities Act (Article 581--29, Vernon's Ann.Tex.Civ.St.); the punishment, a $2500 fine.

Omitting the formal parts, the first count of the indictment reads as follows:

'* * * that one R. E. Bruner on or about the 23rd day of May, A.D. 1967, and anterior to the presentment of this indictment, in the County and State aforesaid, did then and there unlawfully engage in the business of a dealer in securities, and was then and there a dealer in securities by selling, offering for sale, soliciting subscriptions to and orders for securities, and did then and there sell and offer for sale to Dennis E. Owens and did then and there solicit of and from Dennis E. Owens a subscription to and order for a certain security, to wit:

'an investment contract and profitsharing agreement wherein the said R. E. Bruner represented and agreed on or about the 23rd day of May, A.D. 1967, with the said Dennis E. Owens that he, the said Dennis E. Owens, a purchaser of said security would be entitled to an interest in the profits of National Marketing Association, in that a certain amount of the Terrific Products Co. Cleaning Concentrate purchased for the said Dennis E. Owens at a 50% Discount of retail price in consideration for the payment by the said Dennis E. Owens of $1,350.00 to the said R. E. Bruner would be sold and caused to be sold by National Marketing Association for the benefit of the said Dennis E. Owens and the said Dennis E. Owens would receive a 50% Cash profit on said sale; and the said R. E. Bruner further promised, represented and agreed with the said Dennis E. Owens that he, the said Dennis E. Owens, as the purchaser of said security would be further entitled, in consideration for the payment of said $1,350.00 by the said Dennis E. Owens to the said R. E. Bruner to a portion of monies to be obtained by National Marketing Association and its agents through the sale of securities to other such persons thereafter who were to be invited by the said Dennis E. Owens to free dinners provided by National Marketing Association for solicitation of such investments by National Marketing Association and its agents, and to a portion of monies to be obtained by National Marketing Association and its agents through the sale of securities to each and every suceeding invitee of the said Dennis E. Owens invitees in like manner thereafter:

'and said security was issued after September 6, 1955, and was then and there not registered by notification by and with the Securities Commissioner of the State of Texas, and said security was then and there not registered by co-ordination by and with the Securities Commissioner of the State of Texas and then and there no permit for the sale of said security had been granted by the Securities Commissioner of the State of Texas, all as is provided by law in such cases and the said security was not then and there a duly registered security, duly registered as such by and with the Securities Commissioner of the State of Texas * * *.' ¹

The second count charged the appellant with selling and offering for sale a security without being a registered dealer.

Both counts were submitted to the jury and the appellant was found guilty under the first count of the indictment.

We are confronted at the outset with appellant's contention that the evidence is insufficient to sustain the conviction since the agreement or transaction involved is not a 'security' within the meaning of the Texas Securities Act. Our problem is compounded since the facts were not developed as well as they might have been, and much of the direct examination of the complaining witness was by use of leading questions which only served to confuse rather than clarify the transaction involved.

Dennis Owens, an oil and gas well tester, related that at the invitation of a friend (named Thompson) he attended several dinner parties at a fashionable Dallas restaurant given by the National Marketing Company where the guests were entertained by an after dinner speaker and merely asked to sign a card if they were interested in the investment program of the company.

On May 23, 1967, Owens testified he was contacted by a man whom he believed to be the appellant and that later on the same date the appellant and another employee of the National Marketing Company appeared at his office in Dallas and demonstrated to him and his secretary a soap product of the Terrific Products Company, Inc. for whom National Marketing Association was exclusive sales agent and discussed with him the 'investment contract' of the company. He related that appellant told him he could invest $300 or more, but that an investment of $1350 would place him in a 'higher bracket' as far as dividends and profits were concerned, at a level of 'fifty percent'; that in addition, while he would be obligated to endeavor to bring guests to dinner parties given by the company, he would share in 'profits and dividends' as a result of the investment made by any of such guests as well as the investments made by future invitees of his guests. Owens further related when he protested that he had a business and did not want to sell soap door-to-door he was assured he did not have to do so for the soap could be disposed of through the people he would bring to the company dinners. ²

It also appears Owens understood he was to also share generally in the 'profits and dividends' of the company, ³ and if he was not satisfied he could have his money refunded within a period of 90 days.

On the date in question Owens signed the following 'application and agreement':

Owens testified that subsequently on June 2, 1967, a John Brewer, an employee of the company, came to his office and picked up his check for $1,350 made payable to the National Marketing Company.

He admitted he made no investigation of the company, did not know whether it was a corporation, partnership, sole proprietorship, etc., and did not ask for a balance sheet.

In August of 1967 he received a warehouse receipt stating there was certain merchandise on deposit in his name at the location described.

Owens revealed he attempted to get his money refunded, and, while his friend Thompson was successful, he was rebuffed at the company's office with the statement that no one with the right to authorize the refund was present. Later he discovered the office closed and the phone disconnected and he never recovered any of his money.

He testified that he never bought any merchandise and that he had been assured he would not have to sell soap from door-to-door in order to realize any profit.

It was shown by the testimony of Hugh Wright, a senior examining attorney for the State Securities Board, that the appellant Bruner was not licensed as a dealer in securities nor was the National Marketing Company so licensed. Further, it was shown that the National Marketing Association had not registered any securities to be sold and that a permit had not been granted for the sale of any such securities. He testified, without objection, that in his personal opinion the transaction involved constituted a 'security.'

Testifying in his own behalf appellant related he had been hired in Oklahoma City as a salesman by the National Marketing Company, transferred to Dallas, then to Houston and back to Oklahoma City where he terminated his employment when he learned that a securities investigation of the company was being made. He testified he sold at wholesale prices the all-purpose cleaner or soap product of the company in quantities not less than $300 worth, which amount entitled the purchaser to quantity discount and the discount increased along with the amount of soap purchased; that purchasers would then sell at retail price to other individuals. He also related that a purchaser could dispose of the soap purchased through individuals he brought to the company dinners. He stated that the profit made by a purchaser was dependent upon the amount of the merchandise sold.

He acknowledged that he had gone to Owens' office and demonstrated the soap product but denied that he talked about dividends or told Owens anything that could be construed as leading him to believe he would generally share in the profits of the company or that he would receive anything from his guests' purchases of soap. He denied selling a 'security' or offering the same for sale.

He stated that when the 'application and agreement' was signed, Owens did not know what amount he wanted to buy and his status on the agreement as Area Director, Division Manager, District Supervisor, or local dealer was not checked. He indicated the status was dependent upon the amount of soap purchased and Owens did not give the company a check until some days later. The appellant related he personally informed Owens that his merchandise was available (in the event he wanted it in his possession) at 6115 Denton Drive, Love Field Warehouse. He stated that when individuals indicated they did not want to personally sell the soap, a 'warehouse receipt' was issued by the company (not the warehouse) to the purchaser though he had not personally handled Owens' receipt.

In rebuttal the State called William Marshall, General Manager of the Love Field Warehouse at 6115 Denton Drive, who testified he had nothing in storage there for Owens but that National Marketing Company had leased 120 feet of space and still had some cases there.

Article 581--4(A), V.A.T.S., defines a 'security' as follows:

'The term 'security' or 'securities' shall include...