Lewis v. Creasey Corporation

• Decision Date: 23 March 1923
• Citation: 248 S.W. 1046,198 Ky. 409
• Parties: LEWIS, BANKING COM'R, v. CREASEY CORPORATION.
• Court: Kentucky Court of Appeals

248 S.W. 1046

198 Ky. 409

LEWIS, BANKING COM'R, v. CREASEY CORPORATION.

Court of Appeals of Kentucky.

March 23, 1923

Appeal from Circuit Court, Franklin County.

Suit by the Creasey Corporation against James P. Lewis, Banking Commissioner. Judgment for plaintiff, and defendant appeals. Affirmed.

Chas I. Dawson, Atty. Gen., and Martin T. Kelly, Asst. Atty. Gen for appellant.

J. P Hobson, of Frankfort, and Woodward & Warfield, of Louisville, for appellee.

THOMAS J.

Appellee and plaintiff below, the Creasey Corporation, was organized under the laws of Delaware, with an authorized capital of $3,000,000, and its business is the operation of wholesale grocery houses in the different states of the Union wherein it does business. One of its methods of procuring customers is that of selling to retail dealers what it denominates as a "service contract," for which it charges $300, and in consideration therefor it obligates itself to the purchaser of the contract to furnish him groceries for his store for a period of 20 years at only 5 per cent. increase of the original costs to plaintiff, plus the actual necessary expense of conducting the business, subject, however, to certain enumerated discounts for the payment of cash within a limited time after the furnishing of the goods. It is also agreed in the contract that the customer may at all times during its life be entitled to a standing credit with the company for the $300 he paid. Provisions for transferring the contract are contained in it, and perhaps some other minor matters not pertinent to the question involved. Upon the enactment of chapter 125, Acts of 1920, page 582, commonly known as "The Kentucky Blue Sky Law," and which is now sections 883e1 to 883e26, both inclusive, of the present Kentucky Statutes, plaintiff, as it claims out of abundant caution, complied with the provisions of that act, and obtained permission from the State Banking Commissioner, whom the act appoints to enforce and administer its provisions, the right and privilege to sell such service contracts in this commonwealth. In October 1922, it received notice from the present Banking Commissioner, the appellant and defendant below, James P. Lewis, to appear before him in his office at Frankfort, to show cause why its right to sell such contracts should not be revoked. The matter pended for a while and in December following the right was suspended by defendant, and this suit was filed by plaintiff against him in the Franklin circuit court to enjoin him from prosecuting plaintiff for failure to comply with the act and from otherwise interfering with its right to continue to sell such contracts in Kentucky. Upon a hearing of the motion the circuit judge granted the injunction which Chief Justice Hurt, with three other members of this court, declined to dissolve on a motion made before him for that purpose. The case was then finally heard by the circuit court upon affidavits and exhibits filed therewith, pursuant to agreement between the parties, and the temporary injunction was perpetuated, and this appeal by the Commissioner challenges the correctness of that judgment.

The right of the Commissioner to interfere with the business of plaintiff in the respects mentioned or to prosecute it for a failure to comply with the terms of the act is denied upon the ground that its terms do not include or apply to the character of contract involved, which proposition is denied by defendant, and that is the sole question for determination.

Before taking up the concrete question, we deem it appropriate to say that it is the contention of the Commissioner, and which plaintiff denies, that the character of contract involved is a fraudulent one, or at least it possesses potentialities for the perpetration of fraud, and that a number of plaintiff's customers have been actually defrauded, and that the whole scheme is bottomed upon unsound financial business principles. With some of the affidavits filed as evidence on behalf of plaintiff upon that issue, 117 letters from the holders of such contracts in Kentucky were filed, and with defendants affidavit about 52 letters from other customers were also filed, but none of those letters was brought here with the record. If, therefore, that issue of fact, which is strongly asserted by defendant and with equal positiveness denied by plaintiff, were pertinent and material to the determination of the case, we would be compelled to affirm the judgment as to that issue under the well-known rule of practice that, in the absence of the evidence heard by the trial court, we will presume that it was sufficient to sustain its finding. But we do not consider that issue as involved in this case, since, as we view the record, the only question before us is the correct construction of the statute so as to determine whether a contract of the nature of the one involved comes within its purview.

The sources of our aid, therefore, are the rules for the construction of statutes, the primary one of which is to ascertain the intention of the Legislature from the words it employed in enacting the statute, and not what it may have intended, but did not express. Another one is that words actually employed by the Legislature may be given a contracted meaning, dependent upon the connection in which they are employed, and as viewed in the light of the general purpose or scheme which the Legislature had in mind when it passed the statute. Subsidiary to those rules is the further one that words will not be given their literal meaning, when to do so would evidently carry the operation of the statute far beyond the purposes which the Legislature had in view, and which would make its provisions apply to transactions never contemplated by the legislative body. With these preliminary observations, and keeping them in mind, we will now proceed to a determination of the case.

Section 2 of the act, which is now section 883e2 of the Kentucky Statutes, says:

"Every person, corporation, copartnership, company or association (except those whose securities are exempt under the provisions of this act), organized or which shall hereafter be organized in this commonwealth, whether incorporated or unincorporated, which shall either himself, themselves or itself, or by or through others, sell or negotiate for the sale of any contract, stock, bonds or other

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