People v. Sears
| Decision Date | 30 January 1956 |
| Docket Number | Cr. 5372 |
| Citation | 292 P.2d 663,138 Cal.App.2d 773 |
| Court | California Court of Appeals Court of Appeals |
| Parties | , Blue Sky L. Rep. P 70,299 PEOPLE of The State of California, Plaintiff and Respondent, v. Louis A. SEARS and Albert Kiers, Defendants, Louis A. Sears, Defendant and Appellant. |
Forno & Umann, Harry M. Umann, Los Angeles, for appellant.
Edmund G. Brown, Atty. Gen., William E. James, Deputy Atty. Gen., for respondent.
In an information containing 19 counts, filed by the District Attorney of Los Angeles County, defendants Louis A. Sears and Albert Kiers were Accused in Count I of the crime of criminal conspiracy, Penal Code, section 182, subd. 1, to violate the corporate securities law, Corporations Code, secs. 25009 and 26104. Twenty overt acts were alleged. Counts II through XI, and Count XIII charged violations of the foregoing sections of the corporations code. In Count XII, and in Counts XIV through XIX, defendant Sears was accused of the crime of grand theft. Only Counts I and II are of concern on this appeal since all other counts were either dismissed on motion of the district attorney, or the respective defendants were found not guilty thereof.
Count I, charging conspiracy, alleged that continuously through the period of time from about the first of January, 1950 to the filing of the information (February 16, 1953), the named defendants conspired, combined, confederated and agreed together, and with each other, and with divers other persons to violate the Corporate Securities Law.
In Count II, which charged the substantive offense of violating sections 25009 and 26104 of the Corporations Code, it was alleged that on or about the 21st day of August, 1950, in the County of Los Angeles, California, they did wilfully, unlawfully, and feloniously and knowingly sell, issue and cause to be sold for value in the sum of Two Hundred Fifty Dollars ($250.00) to one Cornie Bouma, a security, to-wit: shares of stock in the Sierra Nevada Oil Company, a corporation, organized under the laws of the State of Nevada for profit, without first having applied for and secured from the Commissioner of Corporations of the State of California, a permit so to do. Defendants were duly arraigned, and each made a motion to dismiss under section 995 of the Penal Code, which motions were granted. The People appealed and the order of dismissal was reversed with directions to the court below to deny said motions. People v. Sears, 124 Cal.App.2d 839, 269 P.2d 683. Upon the going down of the Remittitur, defendants were rearraigned, pleaded not guilty as to all counts of the information, waived trial by jury, and the matter was submitted to the court upon a stipulated statement of facts, which also provided that all exhibits admitted at the preliminary examination were deemed admitted into evidence at the trial. Thereupon, the People rested and the defendants offered their evidence. After submission of the cause the court found defendants guilty on Counts I and II. Defendant Kiers was granted conditional probation and defendant Sears was sentenced to State Prison. From the judgment of conviction defendant Sears alone prosecutes this appeal.
As to the stipulated statement of facts upon which the People relied for a conviction we regard the following, prepared by the attorney general, as a fair epitome thereof insofar as it pertains to Counts I and II upon which defendant Sears was found guilty. It is as follows:
'Exhibit 1 disclosed that Western Research Laboratories, Inc., a corporation, was organized and its articles of incorporation filed with the Secretary of State of the State of California on May 25, 1943. On November 25, 1949 an application, signed by appellant Sears, was filed by Western Research Laboratories, Inc. for a permit to sell and issue its shares of stock. On December 19, 1949 an amended application for such a permit was filed. Exhibit 2 is a certified photostatic copy of the Application for Permit and Decision Abandoning Application. Exhibit 3 is a certified photostatic copy of the Amended Application.
'Appellant Sears, whose address was given as 2360 Midlothian Drive, Altadena, California, was listed in the application as one of the directors and he was named as an officer, i. e. Chairman of the Board. The principal place of business of the corporation was the address of Sears. The application (Exhibit 2) stated that the applicant was the owner of an oil and gas lease located north of the Cajon Pass in San Bernardino County, commonly known as Yucca No. 1; that his lease was a community lease on approximately 750 acres on a one-eighth royalty basis; that the lease was assigned by the lessee to Sears and that it would be assigned to the corporation (Western Research Laboratories, Inc.); that an oil well had been drilled under the lease to a depth of 2,541 feet; that shares were to be sold to the public for cash at $50 per share not to exceed 2,250 shares and as each share was sold and issued to the general public to issue not to exceed share for share to Sears. The application asked to sell only to residents of California.
The amended application listed the same officers and directors and in addition stated that the sum of $14,900 had been invested by the corporation as received from various persons and that $5,421.67 had been invested by Sears. It was requested in the amended application that there be issuance of shares at $50 per share to those investors who were agreeable to the cancellation of their indebtedness by such means.
'Asa F. Harshbarger, a Deputy Commissioner, in the office of the Corporations Commissioner of the State of California, whose duties included passing on applications for permits filed in the office of the Corporations Commissioner, met with the defendant Sears and his attorney late in 1949 or early in 1950. The application of Western Research Laboratories, Inc., after it was filed, was referred to Mr. Harshbarger and he discussd the terms of the application on more than one occasion with Sears and his attorney. The discussions were held in the office of the Corporations Commissioner after the date of the original filing of the application (November 25, 1949), and prior to the date of the abandonment of the application (April 26, 1950).
'Mr. Harshbarger prepared a proposed permit and made a memorandum of such proposal on or about March 2, 1950, and a written outline of the proposed permit was made. The proposed permit was to provide that all outstanding shares of the Western Research Laboratories, Inc. were to be returned to the treasury and cancelled. The second portion of the proposed permit was to permit persons who had contributed moneys to the amount of $13,600 to receive shares for these contributions and in cancellation of such indebtedness and provided allowance of issuance of shares to the defendant Sears in cancellation of his indebtedness in the amount of $5,400, and provided that after this was done to allow the sale of shares to the person who had contributed to the original deal and desired to stay in and put up more money to further drill on the property. Provision was also made for stockholders of a company known as Knoll Groves Estates to be allowed to purchase a certain number of shares for further drilling on the oil well, and to issue promotion shares to the promoters, among whom was Sears. The proposed permit was to be conditioned that all shares would be escrowed so they could not be resold to the public and the owners of the promotion shares were to waive their rights to participate in the distribution of any assets on dissolution or to receive dividends until the people who had put in the money under the cash provisions had received from their returns near to the amount of their investment. All leases were to be turned over to the company covering the San Bernardino property.
'Thereafter Mr. Harshbarger received a letter from the attorney for the applicant withdrawing the application. Harshbarger was not informed of the fomation of a Nevada corporation known as the Sierra Nevada Oil Company. This corporation was organized and existing under the laws of the State of Nevada. An exemplified copy of the articles of incorporation signed by Louis A. Sears was filed by him in the office of the Secretary of State of the State of Nevada of February 15, 1950 (Overt Act No. 1). This document is Exhibit 4. Exhibit 5 is an exemplified copy of the list of the officers of the Sierra Nevada Oil Company, which included Louis A. Sears, President, 2360 Midlothian Drive, Altadena, California.
'A desist and refrain order, dated March 23, 1951 (Exhibit 6), was prepared and issued by the Corporations Commissioner of the State of California and mailed to the defendants and to the Sierra Nevada Oil Company and directed the parties not to 'sell or offer for sale, negotiate for the sale of or deal in any of the shares or other securities of Sierra Nevada Oil Company, a Nevada corporation, in the State of California, for the reason that the said Sierra Nevada Oil Company, a Nevada corporation, has no permit and for the further reason that in the opinion of the Commissioner of Corporations of the State of California the sale thereof is and would be unfair, unjust and inequitable to the purchasers thereof.'
'Specifically concerning Count II contained in the Information, Cornie Bouma, a dealer in dairy cattle who resided in Norwalk, County of Los Angeles, met defendant Kiers. Kiers said he was selling oil stock for Sierra Nevada Oil Company and talked to Bouma about an oil well in Cajon Pass in San Bernardino County. He said there were other investors and that Bouma should invest some money also. He invited Bouma to go with him to be shown where the oil well was being drilled. Kiers took Bouma to the well site in Cajon Pass where the well was being drilled and there introduced Sears. Bouma...
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