Silverman v. Chicago Ramada Inn, Inc.

Decision Date16 September 1965
Docket NumberGen. No. 50003
Citation211 N.E.2d 596,63 Ill.App.2d 96
Parties, Blue Sky L. Rep. P 70,695 Moses J. SILVERMAN and Roselyn Silverman, Plaintiffs-Appellants, v. CHICAGO RAMADA INN, INC., a corporation, Benjamin H. Newman, Ezra F. Ressman, Joe Jacobs, Max Sherman, Alfred B. Holtz, Seymour B. Orner, Executor of the Estate of Mortimer M. Levin, Deceased, Ramada Inn, Inc., a corporation, Michael Robinson, and Marion W. Isbell, Defendants-Appellees.
CourtUnited States Appellate Court of Illinois

Prince & Schoenberg, Perry M. Berke and David B. Schulman, Chicago, for appellants.

Ressman & Tishler, Chicago, for appellees.

DEMPSEY, Presiding Justice.

Moses and Roselyn Silverman brought this action to rescind the sale of securities made to them in violation of the Illinois Securities Law. Ill.Rev.Stat., 1961, chap. 121 1/2, paras. 137.1-137.19, inclusive. The defendants moved for summary judgment, their motion was granted and the plaintiffs have appealed.

The summary judgment was predicated upon a finding by the trial court that the plaintiffs did not commence their action within the period of limitation prescribed in section 137.13, subd. D of the Act. The statute provides that no action shall be brought after three years from the date of the sale, and the issues in this appeal concern the sale and the date it was made.

The plaintiffs purchased from the defendants a 3% interest in the Envoy Hotels, Inc., an Illinois corporation which later changed its name to Chicago Ramada Inn, Inc. The first payment on the $9,900.00 purchase price was made on March 6, 1959, the second on March 19th, the third on May 5th and the last on October 20, 1959, at which time the plaintiffs received the stock and debentures evidencing their interest in the defendant corporation. Sometime thereafter the plaintiffs learned that the securities had not been registered in accordance with the provisions of the Securities Law and, after tendering the stock and debentures to the defendants and demanding a refund, they brought this action in July 1962 to recover the payments made by them.

The Illinois Securities Law of 1953 provides that, with certain exemptions, securities sold within this State must first be registered with the Secretary of State, section 137.5. Violations of this provision may impose criminal liabilities upon the seller of the unregistered securities. In addition, a civil action is created in the buyer by section 137.13, subd. A which provides that any sale in violation of the Act is voidable at the option of the buyer. The buyer may elect to tender the securities to either the seller or to the court and sue to recover the purchase money paid by him together with interest, costs and reasonable attorney fees.

The parties agree that the securities sold to the Silvermans were not registered; they agree that, under the Act, all persons participating in the sale are liable to the purchasers for the full amount paid by them; they also agree that purchasers who desire to avail themselves of the protective features of the Act must bring their action within three years from the date of the sale of the unregistered securities. They disagree, however, as to the application of the limitation provision to the dates involved in the sale and delivery of the securities in question.

The defendants contend that the statute ran from the date of the agreement to buy the securities and the first payment in March 1959. The plaintiffs contend that the statutory period did not start running until the last payment was made and the securities delivered in October 1959.

The question thus presented is when does the limitation period begin to run against a plaintiff was seeks to rescind an illegal sale of securities where the sale is entwined in a series of transactions. The answer to this question calls for an examination of the purpose of the Act and the interpretation of two if its sections: 137.-13, subd. D and 137.2-5.

The legislative intent in enacting the Securities Law is clear. The Act has been called 'paternalistic'; by it the State endeavors to shield its citizens from unscrupulous stock promoters. Registration with and approval by the Secretary of State is the primary safeguard, and comprehensive action against all participants in an unauthorized sale is the primary remedy. The purpose of the 1953 Act is stated in Meihsner v. Runyon, 23 Ill.App.2d 446, 163 N.E.2d 236, and the purpose of its predecessor, the Act of 1919, is set out in Foreman v. Holsman, 10 Ill.2d 551, 141 N.E.2d 31, 61 A.L.R.2d 1303. In the Meihsner case the court said:

'The objective of the Illinois Securities Act is to protect innocent persons who may be induced to invest their money in speculative enterprises over which they have little or no control. The Act is paternalistic in character and should be liberally construed to better protect the public from deceit and prevent fraud in the sale of stock, bonds and other securities within the state.'

In Foreman v. Holsman the court said:

'The Illinois Securities Act of 1919 was enacted for the protection and benefit of the public as a whole--'to protect the public from the dishonesty, incompetence, ignorance, and irresponsibility of persons engaging in the business of disposing of securities of uncertain value whereby the inexperienced and confiding are likely to suffer loss.' Stewart v. Brady, 300 Ill. 425, 442, 133 N.E. 310, 317.'

Mindful of the intent of the Act and the liberal construction which should be given to its provisions we turn to the...

To continue reading

Request your trial
34 cases
  • Adams v. Cavanagh Communities Corp., 81 C 7332.
    • United States
    • U.S. District Court — Northern District of Illinois
    • 10 Marzo 1994
    ...extent that Ambling relied upon the definition of "sale" under the securities law of Illinois by citing Silverman v. Chicago Ramada Inn, Inc., 63 Ill.App.2d 96, 211 N.E.2d 596 (1965), the Court respectfully disagrees with its 13 In 1979, Congress comprehensively revised the ILSFDA, includin......
  • Disher v. Fulgoni, 85-3269
    • United States
    • United States Appellate Court of Illinois
    • 25 Agosto 1987
    ...Cablevision Programming Investments (1986), 114 Ill.2d 150, 161-62, 102 Ill.Dec. 296, 499 N.E.2d 1309; Silverman v. Chicago Ramada Inn, Inc. (1965), 63 Ill.App.2d 96, 101, 211 N.E.2d 596.) The instant transaction, the "disposition" of the IRI stock for the trust certificates, clearly was a ......
  • Aste v. Metropolitan Life Ins. Co.
    • United States
    • United States Appellate Court of Illinois
    • 28 Marzo 2000
    ...definition of sale, which included some of the language now found in the definition of offer.4 In Silverman v. Chicago Ramada Inn, Inc., 63 Ill.App.2d 96, 211 N.E.2d 596 (1965), the plaintiffs bought a 3% interest in the defendant corporation. They made four payments over several months and......
  • Davenport v. A.C. Davenport & Son Co.
    • United States
    • U.S. Court of Appeals — Seventh Circuit
    • 5 Junio 1990
    ...4, 35 Ill.Dec. 275, 398 N.E.2d 1225 (1979); Levine v. Unruh, 99 Ill.App.2d 94, 240 N.E.2d 521 (1968); Silverman v. Chicago Ramada Inn, Inc., 63 Ill.App.2d 96, 211 N.E.2d 596 (1965). In this case the "date of sale" which triggered the running of the three year statute of limitations occurred......
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT