Fargo Partners v. Dain Corp., No. 76-1053
| Court | United States Courts of Appeals. United States Court of Appeals (8th Circuit) |
| Writing for the Court | Before ROSS, STEPHENSON and WEBSTER; ROSS |
| Citation | 540 F.2d 912 |
| Parties | Fed. Sec. L. Rep. P 95,682 FARGO PARTNERS, a North Dakota Partnership, Appellant, v. DAIN CORP., Appellee. |
| Decision Date | 04 August 1976 |
| Docket Number | No. 76-1053 |
Page 912
v.
DAIN CORP., Appellee.
Eighth Circuit.
Decided Aug. 4, 1976.
Page 913
Stephen W. Plambeck, Fargo, N. D., for appellant; Frank Magill, Nilles, Hansen, Selbo, Magill & Davies, Ltd., Fargo, N. D., on briefs.
Lawrence C. Brown, Minneapolis, Minn., for appellee; Gregory R. Howard, Minneapolis, Minn., and E. T. Conmy, Jr., Conmy, Feste & Bossart, Ltd., Fargo, N. D., on briefs.
Before ROSS, STEPHENSON and WEBSTER, Circuit Judges.
ROSS, Circuit Judge.
This action was brought by Fargo Partners alleging fraud and deceit in violation of the Federal Securities Act of 1933 and the Federal Securities Exchange Act of 1934. Pendent claims under state law were also alleged. After a Fed.R.Civ.P. 12(d) preliminary hearing, the district court 1 dismissed the complaint for want of jurisdiction, holding that the transaction did not involve a security as defined in the Acts, 15 U.S.C. §§ 77b(1), 78c(a)(10). Fargo Partners v. Dain Corp., 405 F.Supp. 739 (D.N.D.1975). We agree with this conclusion and affirm the judgment of dismissal.
Defendants below were Candletree, a Kansas partnership; its partners individually; Viking Investment Corporation; and Dain Corporation. Candletree's partners are also the officers of Viking Investment. All of the original defendants have been dismissed except Dain Corporation.
The transaction is described in the opinion of the district court:
Fargo Partners (hereinafter "Fargo") entered into an agreement with Candletree, whereby Fargo purchased an apartment development in Blue Springs, Missouri. Dain Corporation functioned in the role of broker. Specifically, Candletree conveyed by warranty deed and bill of sale the project to Fargo in return for a promissory note for $3,375,000.00, with interest. The note was secured by a trust deed and an assignment of rents, leases and profits. Pursuant to the agreement, Fargo has paid Candletree the sum of $265,650.00.
Viking Investment and the three individual partners of Candletree guaranteed Candletree's performance, and further agreed to indemnify Fargo and hold Fargo harmless from any costs, expenses or damages, including reasonable attorney fees caused by any default of Candletree.
As part of the transaction, Fargo signed a management agreement granting back to Candletree or its agents or representatives under its control, exclusive right to management of the property consisting of the apartment project with 248 dwelling units. This grantback, among other things, included Candletree's right to handle marketing for rent-up; to offer for rental not only the dwelling
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units but any other concessions, including preparation for initial rent-up; to set up tenant selection policy; to show the premises to prospective tenants; to process applications for rental; to prepare dwelling leases and execute same in its own name; to collect, deposit and disburse security deposits; to collect rent, charges and other accounts receivable to be deposited in an account in its own name; to secure full compliance by each tenant with the terms of the lease; to comply with local codes; to investigate service requests of tenants; to make arrangements for utilities; and from said funds collected and deposited, make disbursement for wages, taxes, assessments and payments on debt service on the financing with any remaining balance not required for working capital purposes to be paid monthly to Fargo.Id. at 740-41. The management agreement could be cancelled by Fargo upon 30 days notice, and Candletree had the right to delegate its management responsibilities upon...
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Matek v. Murat, Nos. 86-6292
...participation of the investors in the scheme, to determine whether an interest is an investment contract. In Fargo Partners v. Dain Corp., 540 F.2d 912 (8th Cir.1976), the plaintiff bought an apartment complex and granted back to the vendor the exclusive right to manage the property. The ag......
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Williamson v. Tucker, No. 79-1058
...enters into a contract of management with the vendor, yet retains ultimate control of the operation. In Fargo Partners v. Dain Corp., 540 F.2d 912 (8th Cir. 1976) (appeal from a dismissal for lack of subject matter jurisdiction), the plaintiff purchased a 248-unit apartment complex in a tra......
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U.S. v. Holtzclaw, Criminal Action No. 3:96-00022.
...Assocs., 731 F.2d 349, 357 (6th Cir. 1984); Kim v. Cochenour, 687 F.2d 210, 213 n. 7 (7th Cir.1982); Fargo Partners v. Dain Corp., 540 F.2d 912, 914-15 (8th Cir.1976); Glenn Turner, 474 F.2d at 482 (9th Cir.); Aldrich v. McCulloch Properties, Inc., 627 F.2d 1036, 1040 n. 3 (10th Cir.1980); ......
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Mathews v. Cassidy Turley Md., Inc., No. 51
...unit owners. The court held this investment to be a security. A useful comparison can also be made with Fargo Partners v. Dain Corp., 540 F.2d 912, 914–15 (8th Cir.1976) (investment found not to be a security where a manager exercised control but property was directly owned by one investor ......
-
Matek v. Murat, Nos. 86-6292
...participation of the investors in the scheme, to determine whether an interest is an investment contract. In Fargo Partners v. Dain Corp., 540 F.2d 912 (8th Cir.1976), the plaintiff bought an apartment complex and granted back to the vendor the exclusive right to manage the property. The ag......
-
Williamson v. Tucker, No. 79-1058
...enters into a contract of management with the vendor, yet retains ultimate control of the operation. In Fargo Partners v. Dain Corp., 540 F.2d 912 (8th Cir. 1976) (appeal from a dismissal for lack of subject matter jurisdiction), the plaintiff purchased a 248-unit apartment complex in a tra......
-
U.S. v. Holtzclaw, Criminal Action No. 3:96-00022.
...Assocs., 731 F.2d 349, 357 (6th Cir. 1984); Kim v. Cochenour, 687 F.2d 210, 213 n. 7 (7th Cir.1982); Fargo Partners v. Dain Corp., 540 F.2d 912, 914-15 (8th Cir.1976); Glenn Turner, 474 F.2d at 482 (9th Cir.); Aldrich v. McCulloch Properties, Inc., 627 F.2d 1036, 1040 n. 3 (10th Cir.1980); ......
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Mathews v. Cassidy Turley Md., Inc., No. 51
...unit owners. The court held this investment to be a security. A useful comparison can also be made with Fargo Partners v. Dain Corp., 540 F.2d 912, 914–15 (8th Cir.1976) (investment found not to be a security where a manager exercised control but property was directly owned by one investor ......