Commonwealth v. Moore
| Decision Date | 09 March 1925 |
| Docket Number | 476 |
| Citation | 5 Pa. D. & C. 738 |
| Parties | Commonwealth v. Moore |
| Court | Pennsylvania Commonwealth Court |
Motion in arrest of judgment.
Edwin M. Abbott, for defendant and motion.
Lemuel B. Schofield, Assistant District Attorney for Commonwealth, contra.
BARNETT P. J., 41st judicial district, specially presiding
The defendant was found guilty of violating the 22nd section of the Securities Act, approved June 19, 1923, P. L. 779, by dealing in securities without having been registered as required thereby, and has filed a motion in arrest of judgment, alleging that the act is unconstitutional.
In the brief of argument for the defendant the following are stated as the questions involved:
1. There is no notice in the act relating to going-concerns of long standing and of considerable and valuable interests as to what they must do with their business during the pendency of an application for registration with the Commissioner of Banking.
2. That the said act is confiscatory, in that it deprives the defendant, or the corporation of which he was a member, of their property and business without due process of law, contrary to the 14th Amendment to the Constitution of the United States.
3. That the act is unconstitutional because the subject-matter of the act does not apply to all dealers in all securities, and thus becomes class legislation, contrary to article in, section 7, of the Constitution of Pennsylvania.
4. Because the classification is unnecessary.
5. Because the classification is unreasonable.
6. Because the classification is multifarious and unnecessarily extended.
7. Because the classification is based on arbitrary and not material or real distinction.
8. That the act impairs the obligation of contracts in violation of article section 10, of the Constitution of the United States.
9. That the evidence shows conclusively that there was no sale of securities or purchase of the same after the notice to discontinue its business was served upon the defendant corporation by the Commissioner of Banking.
The criticism of the act contained in the first question is not well founded. Section 3 of the act forbids the transaction of business until registration has been effected. The act apparently contemplates a prompt registration, involving no material interruption of the business of a going-concern " of good repute," and if, for any reason, final disposition of the application is delayed, the 7th section provides that " the commissioner may, for special cause shown, grant temporary permission... to transact business as a dealer under the act." The defendant made no application for such temporary permission to transact business, probably for the same reason that prevented his producing his books at the office of the Bureau of Securities at any time when so required.
The purpose of the Securities Act is to regulate the business of dealing in stocks, bonds and other securities defined therein for the protection of the public against fraud. It is a police regulation of the same general class with statutes regulating the practice of the professions, the business of insurance, peddling, ticket selling, etc., which have been from time to time sustained as valid exercises of the police power of the State. " The 14th Amendment to the Constitution of the United States does not interfere with the proper exercise of the police power of the several states. Accordingly, the provisions of this amendment prohibiting any state from depriving any person of life, liberty or property without due process of law do not operate as a limitation upon the police power of the state to pass and enforce such laws as, in its judgment, will inure to the health, morals and general welfare of the people; nor do they prevent legislation intended to regulate useful occupations which, because of their nature or location, may prove injurious or offensive to the public:" 6 Ruling Case Law, 197, 198. The provisions of the act are not unreasonable and afford the applicant for registration full opportunity for hearing before the Commissioner of Banking (sections 5, 7 and 8); the decisions of the commissioner must be in writing and must state the grounds on which they are made (section 18): and any applicant aggrieval thereby has the right of appeal to the courts (section 19). We find no merit in the complaint contained in the second question.
The third question suggests that the act is in violation of article III, section 7, of the State Constitution, and the fourth, fifth, sixth and seventh questions offer reasons for so holding. The contrary has been held by the...
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