Commonwealth v. Freed
| Decision Date | 10 October 1932 |
| Parties | COMMONWEALTH v. FREED. |
| Court | Pennsylvania Superior Court |
COMMONWEALTH
v.
FREED.
Superior Court of Pennsylvania.
Oct. 10, 1932.
Appeal from Court of Quarter Sessions, Clearfield County; A. R. Chase, President Judge.
Harry M. Freed was convicted of violating the Securities Act, and he appeals. Affirmed.
Argued before TREXLER, P. J., and KELLER, GAWTHROP, CUNNINGHAM, BALDRIGE, STADTFELD, and PARKER, JJ.
Edw. J. Thompson, of Philipsburg, for appellant.
F. Cortez Bell, Dist. Atty, of Clearfield, for the Commonwealth.
STADTFELD, J.
These were three indictments against Harry M. Freed for alleged violations of the securities act of 1927 (70 PS § 1 et seq.). The first indictment alleges that the defendant on March 3, 1931, being a salesman of securities, did unlawfully sell and offer for sale, contrary to said act of assembly, to one Matilda Kemp certain convertible debenture gold bonds of the Roxian Amusement Company, he, the said defendant, and it, the said Roxian Amusement Company, not being at the time registered with the securities commission of the commonwealth as an agent, salesman, and dealer authorized to sell securities of said company. The second count in the indictment alleges the unlawful solicitation of subscriptions to, and orders for, said securities from the said Matilda Kemp. The second indictment alleges the violation by said defendant of the securities act, in that on March 3, 1931, he did solicit subscriptions to and orders from one Victor Johnson for similar securities under similar circumstances. The third indictment alleges that the said defendant violated the securities act in having on April 1, 1931, as salesman of securities, sold and offered to sell similar securities to one Henrietta Kephart. The second count in the indictment alleges that on that date, the defendant, as salesman of securities, solicited subscriptions to, and orders for, these securities from the said Henrietta Kephart.
The three indictments came to trial on September 14, 1931, before Chase, J., and resulted in a verdict of guilty. From the judgment entered and the sentence pronounced thereon against defendant, he has appealed to this court, alleging that the trial judge erred in overruling his motion to direct an acquittal, in refusing to withdraw a juror, in his charge to the jury, in refusing motion for new trial, in the admission of certain evidence and the answers to certain points.
At the same time as were tried the indictments against Freed, the defendant, there were also tried with them, three indictments against Charles Foltz, charging similar offenses arising out of, and in connection with, the transactions charged against Freed.
The securities act (Act April 13, 1927, P. L. 273) is entitled: "An Act For the registration and regulation of certain individuals and entities selling, offering for sale or delivery, soliciting subscriptions to, or orders for, or undertaking to dispose of, inviting offers for, or inquiries about, or dealing in any manner in, securities defined herein, including securities issued by them;" etc.
By clause (c) of section 2 of the act (70 PS § 2 (c) it is provided that "the term 'dealer' shall include every person or entity, other than a salesman who engages in this State, either for all or part of his or its time, directly or through an agent, in selling, offering for sale or delivery, or soliciting subscriptions to, or orders for, or undertaking to dispose of, or to invite offers for, or inquiries about, or dealing In, any manner in any security or securities within this State, including securities issued by such entity."
It excepts, inter alia, from this definition, companies disposing of their own securities for their sole accounts in the following language, section 2 (c) (8) of the act, 70 PS § 2 (c) (8): "Wherein the issuer, a company organized under the laws of this State, or a company organized under other laws which has at least one half of its paid in capital Invested, employed or used in this State, disposes of its own securities,
in good faith and not for the purpose of avoiding the provisions of this act, for the sole account of the issuer, without any commission or fee, and at a total expense of not more than three per centum of the proceeds realized thereon, and where no part of the issue is used directly or indirectly in payment for patents, services, good will, or for property located outside of this State." By clause (d) of section 2 (70 PS § 2 (d) it defines "salesman" as follows: "The term 'salesman' shall, except as provided in section four [which section has no application to the facts in this case], include every person or company employed or appointed or authorized by a dealer to sell, offer for sale or delivery, or solicit subscriptions to or orders for, or dispose of inquiries about, or deal in any manner in, securities within this State, whether by direct act or through subagents."
By clause (f) of section 2 (70 PS § 2 (f) it defines "fraud"; "fraudulent"; "fraudulent practice": "The terms 'fraud' 'fraudulent' 'fraudulent practice' shall include any misrepresentation, in any manner, of a relevant fact not made honestly and in good faith; any promise or representation or predication as to the future not made honestly and in good faith, or an intentional failure to disclose a material fact, the gaining, directly or indirectly through the sale of any security, of an underwriting or promotion fee or profit, selling or managing commission or profit so gross and exorbitant as to be unconscionable and fraudulent; and any scheme, device or other artifice to obtain such a profit, fee, or commission: Provided, however, That nothing herein shall limit or diminish the full meaning of the terms 'fraud' and 'fraudulent' as applied or accepted in courts of law or equity."
By section 3 of the act (70 PS § 3), under which the indictments were drawn, it is provided, inter alia, that "no salesman or agent shall, in behalf of any dealer, sell, offer for sale, tender for sale or delivery, or solicit subscriptions to or orders for, or dispose or undertake to dispose of, or invite offers for or inquiries about, any securities within this State, unless registered as a salesman or agent of a dealer under the provisions of this act,"...
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