Curtis v. State, 37698
| Decision Date | 25 June 1959 |
| Docket Number | No. 37698,No. 2,37698,2 |
| Citation | 99 Ga.App. 732,109 S.E.2d 868 |
| Parties | , Blue Sky L. Rep. P 70,437 Lee CURTIS, Jr. v. The STATE |
| Court | Georgia Court of Appeals |
Syllabus by the Court.
1. (a) The purpose of Code (Ann.) § 97-112 (Ga.L.1957, p. 159) making it unlawful in any transaction involving an offer to sell or buy securities to employ any scheme or device to defraud or engage in any act which would operate as a fraud upon a purchaser or seller is to prevent practices in connection with the purchase or sale of such securities which are carried on with intent to defraud. An indictment alleging such a scheme or transaction is not subject to general demurrer although it fails to allege that the victim was in fact defrauded, since the only criminal intent necessary to be proved is the intent to defraud in the commission of the act or acts denounced by the statute.
(b) The special demurrers dealt with in this section of the opinion are without merit.
(c) The Georgia Securities Act is not so vague, ambiguous or contradictory as to render the indictment in the present case void for any reason alleged.
(d) The Georgia Securities Act makes it a misdemeanor for the seller of securities to engage in connection with any sale or offer of sale thereof in any act, practice, transaction or course of business which operates as a fraud upon the purchaser, or which would operate as such fraud. It also penalizes any device, scheme or artifice to defraud. Under the latter section it is necessary only to prove the false statement and that it was made with an intent to defraud, whether fraud resulted or not. Under the former, where it is alleged that the act, practice or transaction did operate as a fraud, and the indictment sets out the facts on which the State relies to prove this allegation, it is necessary, as against appropriate special demurrer, that the facts alleged sustain the conclusion that the transaction did in fact operate as a fraud against the named purchaser of stock. The indictment here fails to show any loss or detriment to the purchaser as a result of the alleged false statements, and accordingly the allegation that the transaction did operate as a fraud against such purchaser is subject to the special demurrers interposed.
2. That part of the Georgia Securities Act which permits criminal proceedings to be initiated by the Attorney General is cumulative and permissive, rather than exclusive. That the indictment by the grand jury in this case was returned after an appearance of the solicitor-general before the grand jury, to which the defendants were bound over after warrants were sworn out against them by individual prosecutors, does not render this proceeding subject either to a plea in abatement or a plea in bar.
The plaintiff in error, Lee Curtis, Jr., was, with six others, jointly indicted in the Superior Court of Hall County for violations of the Georgia Securities Act (Ga.L.1957, p. 134 et seq.), the indictment being in forty counts. Twenty-five of the counts, varying only as to dates, amounts and the name of the prosecutor, alleged that 'at a time when the said accused was offering for sale and selling to _____ stock in the Greater Georgia Investment Corporation, did employ a device, scheme, and artifice to defraud, and did engage in acts, practices, transactions, and a course of business which operates and would operate as a fraud and deceit upon the purchaser by wilfully, and falsely representing * * *: That the Greater Georgia Investment Corporation was organized for school teachers and that it was primarily owned by the school teachers of Georgia; that the officers of said corporation had paid $50,000 for the original issue of stock in the corporation; that Dr. M. D. Collins, State School Superintendent and Claude Purcell, Assistant State School Superintendent [and others] had purchased stock in said corporation; that said [named persons] were advisors to the corporation and were actively endorsing the sale of stock; that the corporation was primarily a teachers' loan company specializing in loans to teachers; that 50% of the said corporation's funds would be utilized in loans to teachers and that 25% of the corporation's funds would be used in other short term investments similar to that which other short term small loan finance companies make; and that 25% of the funds of the corporation would be used to invest in 'blue chip' securities; each of said representations being wilfully made and being false, and a device, scheme artifice to defraud, act, practice, transaction and course of business which operates and did operate as a fraud and deceit as aforesaid' causing the prosecutor to purchase a stated number of shares in the corporation for a stated amount of money.
Fifteen of the counts allege that 'at a time when said accused was offering for sale and selling to _____ stock in the Greater Georgia Investment Corporation, the said _____ being a prospective purchaser and customer, did falsely represent that the filing of the registration of said stock of the Greater Georgia Investment Corporation with the Commissioner of Securities of the State of Georgia meant that the said Commissioner had passed on the merits of said stock and had recommended and given approval to such stock and transaction, and that the 5% interest offered by said corporation was guaranteed by the Commissioner of Securities of Georgia, Ben W. Fortson, Jr.,' etc.
The plaintiff in error filed general and special demurrers, a plea in abatement and plea in bar, all of which were overruled. The assignment of error is to these judgments.
Archibald A. Farrar, Summerville, Marvin O'Neal, Jr., Atlanta, for plaintiff in error.
Jeff C. Wayne, Sol. Gen., Sidney O. Smith, Jr., Gainesville, for defendant in error.
1. (a) Code, Ann. § 97-112 (Ga.L.1957, p. 159), a part of the Georgia Securities Act, provides: 'It shall be a fraudulent practice and it shall be unlawful: * * * (b) For any person, in connection with any transaction or transactions in this State which involve any offer to sell or to buy securities, or any sale or purchase of securities, including securities exempted under the provisions of section 97-106 and including any transactions exempted under the provisions of Section 97-107, either directly or indirectly: (1) to employ any device, scheme, or artifice to defraud, or (2) to engage in any act, practice, transaction or course of business which operates or would operate as a fraud or deceit upon the purchaser or seller.' Code, Ann. § 97-9901 provides that any person wilfully violating any provision of Chapter 97-1 shall be guilty of a misdemeanor. Comparison of the counts set out in the statement of facts with the statute are sufficient to demonstrate that the indictment does in fact 'state the offense in the terms and language of this Code, or so plainly that the nature of the offense charged may easily be understood by the jury' as required by Code, § 27-701. It is contended, however, that fraud is the gravamen of the offense, and that accordingly, as in the cheating and swindling offenses, it is necessary to allege and prove that the person alleged to have been defrauded and cheated shall have sustained some pecuniary loss, citing Busby v. State, 120 Ga. 858(1), 48 S.E. 314; Wilson v. State, 84 Ga.App. 703(6), 67 S.E.2d 164; Mobley v. State, 13 Ga.App. 728(2), 79 S.E. 906, and similar cases. As stated in the brief, 'Plaintiff in error takes the position in this matter that since the General Assembly in defining fraudulent practices used the term fraud and deceit in Code, § 97-112 that the legislative intent was that fraud and deceit meant the same thing under this Code section as under Code, § 26-7410, since fraud and deceit can only mean exactly what they say, i. e.: the act of taking something from a person by false representations wilfully, whereby he injures and damages the person from whom he took something.' Code, § 26-7410 provides that the use of any deceitful means or artful practice by which one is defrauded and cheated shall be punished as for a misdemeanor. The fraudulent practice involved in this section must by definition be one which resulted in success to the perpetrator, so that it becomes essential to show that the victim was in fact defrauded--that is, suffered a pecuniary loss. Code, § 97-112 on the other hand makes it unlawful, and by definition a fraudulent practice, to employ any scheme or device to defraud. The one is retrospective in nature, the other prospective. A scheme to defraud is such a scheme as is initiated by the perpetrator with an intent to defraud another and cause him to suffer a pecuniary loss, but the intent, not the...
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