Somers v. Commercial Finance Corp.

• Court: Supreme Judicial Court of Massachusetts
• Writing for the Court: BRALEY
• Citation: Somers v. Commercial Finance Corp., 245 Mass. 286, 139 N.E. 837 (Mass. 1923)
• Decision Date: 25 May 1923
• Parties: SOMERS v. COMMERCIAL FINANCE CORPORATION.

245 Mass. 286

139 N.E. 837

SOMERS

v.COMMERCIAL FINANCE CORPORATION.

Supreme Judicial Court of Massachusetts, Suffolk.

May 25, 1923.

Appeal from Municipal Court of Boston, Appellate Division.

Action of contract by Paul Somers against the Commercial Finance Corporation to recover the amount paid on the purchase price of stock in the defendant corporation as money had and received to the plaintiff's use. Judgment ordered for defendant by the appellate division of the municipal court of the city of Boston on report, on agreed facts by the sitting justice, and plaintiff appeals. Order of appellate division affirmed.Jos. G. Bryer, of Boston, for plaintiff.

Sherburne, Powers & Needham of Boston, for defendant.

BRALEY, J.

The defendant, a Massachusetts corporation, entered into a contract with Henry V. Greene under which in consideration of the issuance to him of 20,000 shares of the common stock of its new issue, he agreed to sell 40,000 shares of the new issue of tis preferred stock ‘at a price to net the defendant $51.25 for each and every share thereof,’ giving the ‘common stock as a bonus to the buyers of the preferred * * * in the ratio of one share to two.’ Greene assigned the contract to the H. V. Greene Company, a corporation organized under the laws of this commonwealth, which the parties agree ‘had power to * * * sell, and negotiatethe stock * * * as an investment in the state of Connecticut.’ Acting under the authority given to Greene, ‘the Greene Company at Hartford, Conn., sold to the plaintiff for $850 12 shares of the preferred stock with 6 shares of the common stock as a bonus, and delivered the certificates,’ for which the plaintiff gave in payment a collateral note for ‘$660,’ payable to the defendant's order ‘185 Devonshire street, Boston, Mass.,’ in 22 equal payment of $30 without interest, the first payment to be made 30 days from the date of sale, and pledged therewith as ‘general collateral’ the 12 shares of preferred stock. It does not appear whether the selling agent received any money, but the agreed facts state that the plaintiff has paid to the defendant the full purchase price. The plaintiff subsequently demanded the ‘return of all moneys paid, and tendered to the defendant the certificates endorsed in blank, with all dividends received.’ The tender having been refused, the present action is brought to recover the amount paid as money had and received to the plaintiff's use.

[2] The contract of sale was made and executed in Connecticut, and its validity is to be determined by the law of that state. Old Dominion Copper Mining & Smelting Co. v. Bigelow, 203 Mass. 150, 174, 89 N. E. 193,40 L. R. A. (N. S.) 314;American Malting Co. v. Souther Brewing Co., 194 Mass. 89, 95, 80 N. E. 526;National Security Co. v. Nazzaro, 239 Mass. 341, 346, 132 N. E. 49. It is contended that, as neither the defendant nor its agents had been licensed by the bank commissioner as required by sections 3460, 3462, and 4023, of the General Statutes of Connecticut, Revision of 1918, which were then in force, to transact business therein of the character described, the sale was a violation of the statute, for which a penalty is imposed by section 3468. It is settled that where a statute declares that certain kinds of contracts shall not be made unless governmental sanction therefor had previously been obtained, and a penalty is provided for its violation, an agreement of the character prohibited cannot be enforced. Allen v. Hawks, 13 Pick. 79, 82;Downs v. Lewis, 11 Cush. 76, 78;Miller v. Post, 1 Allen, 434;Bank of United States v. Owens, 2 Pet. 527, 7 L. Ed. 508. Compare Enterprise Brewing Co. v. Grime, 173 Mass. 252, 53 N. E. 855.

It was stipulated, after the case had been reported to the appellate division, that ‘the whole of chapter 188 of the Connecticut General Statutes, Revision of 1918,’ containing certain classifications in connection with the sections just referred to, ‘may be considered as a fact in evidence for the consideration of the case.’ But we cannot consider evidence which was not introduced before the trial judge whose rulings are to be affirmed or reversed on the evidence reported. G. L. c. 231, §§ 108, 109, 110; Smith v. Tennyson, 219 Mass. 508, 107 N. E. 423, Ann. Cas. 1916B, 121;Burbank v. Farnham, 220 Mass. 514, 107 N. E. 351,108 N. E. 492;Real Property Co., Incorporated, v. Pitt, 230 Mass. 526, 120 N. E. 141;Brown v. Learmouth, 228 Mass. 417, 117 N. E. 829;Freed v. Rosenthal, 231 Mass. 357, 121 N. E. 72;Saunders v. Smith Granite Co., 232 Mass. 1, 121 N. E. 431. The statute, being penal, is to be construed strictly. It is not to be extended by implication. Hosmer v. Sargent, 8 Allen, 97, 99, 85 Am. Dec. 683;Commonwealth v. Worcester & Nashua Railroad, 124 Mass. 561, 563;Chase v. Curtis, 113 U. S. 452, 5 Sup. Ct. 554, 28 L. Ed. 1038;Bolles v. Outing Co., 175 U. S. 262, 20 Sup. Ct. 94, 44 L. Ed. 156. While section 3462 declares that ‘no investment company as defined by section 3460 shall do business in this state until it has been licensed by the bank commissioner in the manner prescribed by section 4023, and violations of this provision shall be subject to the penalty provided by section 3468,’ yet ...