McKinlay v. Javan Mines Co.

• Decision Date: 13 July 1926
• Citation: 42 Idaho 770,248 P. 473
• Parties: HARRY MCKINLAY, Respondent, v. JAVAN MINES COMPANY, a Corporation, Appellant
• Court: Idaho Supreme Court

248 P. 473

42 Idaho 770

HARRY MCKINLAY, Respondent, v. JAVAN MINES COMPANY, a Corporation, Appellant

Supreme Court of Idaho

July 13, 1926

BLUE SKY LAW-NONCOMPLIANCE-APPEAL AND ERROR-LICENSES.

1. On appeal from judgment for services in selling corporate stock specification in brief that evidence was insufficient to sustain verdict held to present question of plaintiff's failure to comply with blue sky law, in view of C. S., sec 6886.

2. In action for services in sale of corporate stock, failure to ask instruction as to plaintiff's compliance with blue sky law does not preclude review of evidence showing noncompliance.

3. Agent selling corporate stock has burden of proving his compliance with blue sky law.

4. Appeal on insufficiency of evidence to sustain verdict may be taken direct to supreme court without necessity of motion for new trial.

5. Under C. S., secs. 5306, 5309-5311 and 5317, recovery for services in sale of corporate stock cannot be had, in absence of showing of compliance with blue sky law.

APPEAL from the District Court of the Eleventh Judicial District for Twin Falls County. Hon. William A. Babcock, Judge.

Action to recover for services rendered. Judgment for plaintiff. Reversed and remanded.

Reversed and remanded with instructions. Costs awarded to appellant.

S. L. Hodgin, Stephan & North, for Appellant.

The evidence in this case is insufficient to sustain the verdict. (13 C. J. 421, 422, 713, and cases cited: C. S., secs. 5311, 5317; 6 R. C. L. 702 and cases cited; 17 R. C. L. 560; Zimmerman v. Brown, 30 Idaho 640, 166 P. 924; Goodyear v. Meaux, 143 Tenn. 287, 228 S.W. 57; Edward v. Ioor, 205 Mich. 617, 15 A. L. R. 256, 172 N.W. 620.)

The contract, if such existed between appellant and respondent, was void and recovery cannot be had by respondent for the reason that respondent did not comply with a penal statute prohibiting and making a crime the rendering of the services agreed to be performed by him, without compliance with such statute. (Zimmerman v. Brown, supra; note, 12 L. R. A., N. S., 586; Goodyear v. Meaux, supra; Edward v. Ioor, supra.)

E. V. Larson, for Respondent.

A person may recover for services rendered, or goods sold, even though he has failed to comply with the licensing statute. (Vermont Loan & Trust Co. v. Hoffman, 5 Idaho 376, 95 Am. St. 186, 49 P. 314, 37 L. R. A. 509; Mandelbaum v. Gregovich, 17 Nev. 87; 45 Am. Rep. 433, 28 P. 121; Rock Island Lumber Co. v. E. A. Wales Mill Co., 112 Kan. 623, 212 P. 97; Hughes v. Snell, 28 Okla. 828, Ann. Cas. 1912D, 374, 115 P. 1105, 34 L. R. A., N. S., 1133.)

The fact that respondent had not obtained a permit, did not make a sale of stock by him void, in as much as such sales are not prohibited, but the statute provides a penalty to be imposed upon a person or agent who fails to procure the necessary permit. (C. S., secs. 5311, 5317; Vermont Loan & Trust Co. v. Hoffman, supra.)

JOHNSON, Commissioner. William A. Lee, C. J., and Givens and Taylor, JJ., concur. WM. E. LEE, J., Mr. Justice Budge, Dissenting.

OPINION

JOHNSON, Commissioner

This is an action brought by respondent against the appellant company for the reasonable value of services performed in selling the capital stock of the appellant company. The company denied the employment, and as an affirmative defense alleged that the services performed were fully paid for by the delivery of stock in the appellant company, and also alleged that the respondent was not entitled to recover because he had failed to register with the department of commerce and industry as an agent for such company. The case was tried before a jury, and it returned a verdict in favor of the respondent. This appeal is from the judgment.

Appellant assigns but three errors: First, that the evidence is insufficient to sustain the verdict; second, that the court erred in the giving of one instruction; and, third, that the court erred in overruling appellant's motion for judgment non obstante veredicto. In view of the conclusions reached, it becomes unnecessary to discuss the second and third assignments.

It has been suggested, though not by respondent, that the specification of the insufficiency of the evidence in appellant's brief, is not sufficient to present the question of respondent's failure to comply with the "blue sky law." Appellant's brief specifies as error that--

"The court erred in rendering judgment on the verdict for the reason that the evidence is insufficient to sustain the verdict."

Under points and authorities, it recites:

"The evidence in this case is insufficient to sustain the verdict."

"The contract, if such existed between appellant and respondent, was void and recovery cannot be had by respondent for the reason that respondent did not comply with a penal statute prohibiting and making a crime the rendering of the services agreed to be performed by him, without compliance with such statute."

In support of these points, the appellant cites the sections of the "blue sky law" applicable and numerous authorities supporting the contention. In argument upon this point, appellant says:

"It will be observed from the pleadings and the evidence in this case that the contract sued upon by respondent was one for services rendered the appellant company in the sale of its corporate stock. . . .

"It is a general rule recognized by the courts that recovery cannot be had upon a contract to do an act prohibited by law and made by law a criminal act."

In numerous other instances the point is referred to, leaving no question as to the contention of appellant. In fact, appellant's brief is almost entirely given to this contention. The brief of respondent argues the point at length. The oral argument upon both sides was directed specifically to the point involved. Respondent has at no time, by brief or argument, contended or even hinted that this specification was insufficient to present for determination the question of the applicability of the "blue sky law" to respondent's right to recover.

It may be said that no instruction was asked or given upon this point, and thus the jury's attention was not called to it; but the giving or absence of instruction can have no bearing upon the sufficiency of the specification of error or the insufficiency of the evidence. An appeal upon grounds of the insufficiency of the evidence could be taken regardless of instructions. A verdict in the face of the evidence could not be held to be a finding that plaintiff had complied with the "blue sky law," no matter what the instructions.

To refuse to pass upon the error because of insufficiency of the specification would be not only to err in the face of the matters quoted from appellant's brief, but voluntarily to advance a reason for not considering the merits when no such reason has been advanced or hinted at by respondent, who, on the contrary, has argued the point at length as though properly here. By the same argument, respondent's brief is not only insufficient to raise the insufficiency of the specification of error, but wholly fails to raise it.

The proof establishes that plaintiff's transaction was within the "blue sky law," and it devolved upon him to prove his compliance therewith. (Eckert v. Collot, 46 Ill.App. 361; 9 C. J. 646.) Failure to make such proof constitutes an insufficiency of the evidence to sustain the verdict. The plaintiff's own testimony affirmatively establishes this failure. An appeal, based upon the insufficiency of the evidence to sustain the verdict, may be taken direct to this court without the necessity of a motion for a new trial. (Buster v. Fletcher, 22 Idaho 172, 125 P. 226.)

By C. S., sec. 6886, the reporter's transcript is "deemed adequate to present for review . . . . any question of insufficiency of evidence which may afterward be properly presented by specification of insufficiency in the brief on appeal."

The object of requiring particularity in the specifications of insufficiency of the evidence to sustain a verdict, is that the court's attention may be directed to specific instances in the record or specific lack of evidence, and it not be compelled to search the entire record. This requirement of particularity was never intended as a cloak for refusal to consider the specification, if by fair intendment it could be said to present the point. Nor is there any necessity, by rule or otherwise, that the particulars be phrased in any precise language, or be found upon any particular page of the brief. Surely, the specifications of particularity of the insufficiency quoted could not be held themselves insufficient, if they had been included under "Assignments of Error," instead of "Points and Authorities" and "Argument." In fact, the assignment of error is sufficient. The particularity follows quite properly under the latter two subdivisions. The brief of appellant has not failed to specify, not only the insufficiency, but of what it consisted.

C. S., sec. 5306, requires every investment company, before offering or attempting to sell its stock, to file in the office of the department of commerce and industry--

"A statement showing in full detail the plan upon which it proposes to transact business. A copy of all contracts, bonds, or other instruments which it proposes to make with or sell to its contributors. A statement which shall show the name and location of the investment company, and an itemized account of its actual financial condition, and the amount of its property and liabilities, and such other information, touching its affairs, as said department of commerce and industry may require."

C. S., sec. 5310, provides that--

"It shall not be lawful . . . . for any such investment company to transact business on any other plan...