[Copyrighted Material Omitted]
[Copyrighted Material Omitted]
The
plaintiff seeks to enjoin the enforcement of what is known as
the 'blue sky law' of the state of Arkansas, enacted
by the General Assembly of 1913, upon the ground of its
unconstitutionality. The defendants filed a motion to dismiss
for failure to state a cause of action, the plaintiff not
asking for a temporary injunction. In order that the issues
involved may be fully understood, a copy of the act, as
approved March 28, 1913, is here set forth:
'An
act to provide for the regulation and supervision of
investment companies and to provide a penalty for the
violation thereof.
'Be
it enacted by the general assembly of the state of Arkansas:
'Section
1. Every individual, corporation, co-partnership or
company, and every association (other than national banks
and corporations not organized for profit) now, or which
shall hereafter be organized in this state, whether
incorporated or unincorporated, which shall sell or
negotiate for the sale of any stock, contracts, bonds or
other securities of any kind or character other than bonds
of the United States, or of some municipality authorized to
issue bonds of the state of Arkansas, and notes secured by
mortgages on real estate located in the state of Arkansas
or sell building stock or loan investments, or building
investments to any person or persons in the state of
Arkansas, other than those specifically exempted herein,
shall be known for the purpose of this act as a domestic
investment company. Every such investment company organized
in any other state, territory or government, organized
under the laws of any other state, territory or government,
shall be known for the purpose of this act as a foreign
investment company.
'Section
2. Before offering or attempting to sell any stock,
contracts, bonds or other securities, building contracts,
loan investments or other securities of any kind or
character other than those specifically exempted in section
1 of this act to any person or persons, or transacting any
business whatever in this state, except that of preparing
the documents hereinafter required, every such investment
company, domestic or foreign, now or hereafter doing
business in this state shall file in the office of the
insurance commissioner of this state, together with a
filing fee of five dollars ($5.00), in addition to the fees
now required of all corporations, the following document to
wit:
'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 insurance
commissioner may require. If such
investment company shall be a copartnership or
unincorporated association it shall also file with the
insurance commissioner a copy of its articles of
copartnership or association, and all other papers
pertaining to its organization, and if it be a corporation
organized under the laws of Arkansas it shall also file
with the insurance commissioner a copy of its articles of
incorporation, constitution and by-laws, and all other
papers pertaining to its organization. If it shall be an
investment company organized under the laws of any other
state, territory or government, incorporated or
unincorporated, it shall also file with said insurance
commissioner a copy of the laws of such state, territory or
government under which it exists or is incorporated, and
also a copy of its charter, articles of incorporation,
constitution and by-laws and all amendments thereof which
have been made and all other papers pertaining to its
organization.
'Section
3. The duties devolving upon the insurance commissioner
under this act shall automatically pass to and become a
part of the duties of the bank commissioner whenever that
office shall be created in this state, and the fees
provided for herein for the services of the insurance
commissioner and his assistants shall also pass to the bank
commissioner and his assistants to pay them for the time
required in the performance of the duties set out in this
act. Provided in no event shall this act be construed so as
to increase the salary of the bank commissioner beyond that
fixed by the act creating his office, nor shall this act
increase the salary of the insurance commissioner, but in
order to carry out the provisions of the act an assistant
or deputy may be appointed at a salary of $1,800 a year, to
be paid monthly in accordance with section 15 of this act,
and said sum is hereby appropriated out of the fund
mentioned in section 15 for said salary.
'Section
4. All of the above described papers shall be verified by
oath, of a member of a copartnership or company, if it be a
copartnership or company, or by the oath of a duly
authorized officer, if it be an incorporated or
unincorporated association. All such papers however, as are
recorded or are on file in any public office shall be
further certified to by the officer of whose records or
archives they form a part, as being correct copies of such
records or archives. The verification described in this
section shall be made in the office of the insurance
commissioner or bank commissioner as the case may be, and
it will not be sufficient for the same to be made in the
state where the company is domiciled and then mailed to the
commissioner but where the individual, corporation,
copartnership or company or association is a nonresident of
this state, then the verification and filing must take
place as described in this proviso. Provided further, that
the verification and filing of papers as provided in this
act may be mailed or otherwise sent to the commissioner
where the individual, corporation, copartnership or company
or association is a resident of the state.
'Section
5. Every foreign investment company shall also file its
written consent, irrevocable that actions may be commenced
against it, in the proper court of any county in this state
in which a cause of action may arise, or in which the
plaintiff may reside, by the service of process on the
secretary of state, and stipulating and agreeing that such
service of process on the secretary of state shall be taken
and held, in all courts, to be as valid and binding as if
due service had been made on the company itself, according
to the laws of this state or any other state, and such
instrument shall be authenticated by the seal of said
foreign investment company and by the signature of a member
of the copartnership or company, if it be a copartnership
or company, or by the signatures of the president and
secretary of the incorporated or unincorporated
association, if it be an incorporated or unincorporated
association, and shall be accompanied by a duly certified
copy of the order or resolution of the board of directors,
trustees or managers of the corporation authorizing the
said secretary and president to execute the same. Whenever
service of process is served on the secretary of state, he
shall within twenty-four hours thereafter mail the same to
the home of the company against whom the process is
directed. The secretary of state is hereby commanded to
register said summons and if within a reasonable time he
does not receive a return card showing the same has been
delivered, he shall register another letter to said
company.
'Section
6. It shall be the duty of the insurance commissioner to
examine the statements and documents so filed, and if said
insurance commissioner shall deem it advisable he shall make
or have made a detailed examination of such investment
company's affairs, which examination shall be at the
expense of such investment company, as hereinafter provided
and if he find that such investment company is solvent, that
its articles of incorporation or association, its
constitution and by-laws, its proposed plan of business and
proposed contract contain and provide for a fair, just and
equitable plan for the transaction of business, and in his
judgment promises a fair return on the stocks, bonds and
other securities by it offered for sale, the insurance
commissioner shall issue to such investment company a
statement reciting that such company has complied with the
provisions of this act, that detailed information in regard
to the company and its securities is on file in the insurance
commissioner's office for public inspection and
information, that such investment company is permitted to do
business in this state, and such statement shall also recite
in bold type that the insurance commissioner in no wise
recommends the securities to be offered for sale by such
security company. But if said
insurance commissioner finds that such articles of
incorporation or association charter, constitution and
by-laws, plan of business or proposed contract contain any
provision that is unfair, unjust, inequitable or oppressive
to any class of contributors, or if he decides from his
examination of its affairs that said investment company is
not solvent and does not intend to do a fair and honest
business, and in his judgment does not promise a fair return
on the stocks, bonds, or other securities by it offered for
sale, then he shall notify such investment company in writing
of his findings, and it shall be unlawful for such company to
do any further business in this state until it shall so
change its constitution and by-laws, articles of...
