State v. Summerland

• Decision Date: 10 November 1921
• Docket Number: No. 22406.,22406.
• Citation: 150 Minn. 266,185 N.W. 255
• Parties: STATE v. SUMMERLAND et al.
• Court: Minnesota Supreme Court

150 Minn. 266

185 N.W. 255

STATE

v.SUMMERLAND et al.

No. 22406.

Supreme Court of Minnesota.

Nov. 10, 1921.

Appeal from District Court, Douglas County; Carroll A. Nye, Judge.

P. A. Summerland and others were indicted for selling investment securities without a license, and interposed separate demurrers, which were overruled, and on request the district court certified to this court for decision the question of law so raised. Overruling of demurrer reversed, and cause remanded.

Hallam and Dibell, JJ., dissenting.

Syllabus by the Court

Where an indictment alleges but one sale of investment securities without a license as a violation of chapter 429 of the Laws of 1917 (Gen. St. Supp. 1917, §§ 3782-1 to 3782-19), as amended by chapter 105 of the Laws of 1919, it thereby brings the charge within the exception contained in the statute and is demurrable.

Where it appears from an indictment that defendants were not the issuers or owners of the securities alleged to have been sold, sufficient facts must be pleaded to show that they were dealers in such securities.

‘Units,’ as used and defined in the indictment, held to be within the term ‘investment securities,’ as used in the statute. State v. Gopher Tire Rubber Co., 146 Minn. 52, 177 N. W. 937. Gunderson & Leach and Ralph S. Thornton, all of Alexandria, for appellants.

R. G. Anderson, Co. Atty., of Alexandria, and M. J. Brown, Asst. Atty. Gen., for the State.

QUINN, J.

The grand jury of Douglas county returned an indictment against defendants jointly. When called to plead, Schaefer and Urness interposed separate demurrers, which were overruled, and upon request the district court certified to this court for decision the question of law so raised. The question is whether the indictment is sufficiently specific to charge a violation of the provisions of chapter 429 of the Laws of 1917 (Gen. St. Supp. 1917, §§ 3782-1 to 3782-19), as amended by chapter 105 of the Laws of 1919.

[1] It is urged in support of the demurrers: (1) That the indictment charges but one sale, and thereby brings the act complained of within the exception contained in the statute; (2) that sufficient facts are not set forth to show that defendants were dealers, nor that the units claimed to have been sold constitute either an investment contract, stock, bond, or other security, within the purview of the law. The charging part of the indictment is as follows:

‘The said P. A. Summerland, Henry A. Schaefer, and Andrew A. Urness on the 4th day of July, A. D. 1920, at the city of Alexanderia, in the county of Douglas, being then and there dealers, did wrongfully, willfully, and unlawfully offer for sale and sell to one Andrew Haugen certain securities issued by the Alexandria, Minnesota, Oil Syndicate, of Alexandria, Minnesota, an unincorporated association, known and designated by said association as units, to wit, three units, of the par value of the hundred dollars each, each of which said units entitles the owner thereof to an undivided beneficial interest in and to the property and assets of said association, and in and to the profits resulting from the operation thereof (such unit being registered in the books of said association in the name of the owner thereof), to participate in the management and control of the business and affairs of said association by casting one vote at any meeting of the unit holders of said association upon any question coming before such meeting; said offer and sale so made as aforesaid being then and there made in the course of continued and successive transactions of a similar nature; the said the Alexandria, Minnesota, Oil Syndicate then and there being an investment company, the said P. A. Summerland, said Henry A. Schaefer, said Andrew A. Urness, and the said the Alexandria, Minnesota, Oil Syndicate, or any one of them not being then and there licensed by the State Securities Commission of the state of Minnesota to sell said securities within the state of Minnesota as required by law, contrary to the form of the statute in such case made and provided,’ etc.

The here material parts of the statute are: (a) Section 2 and subdivision (j) thereof, which provides that the statute shall not apply to isolated or single transactions; (b) section 3, as amended, which, read in connection with section 4 in the first paragraph, prohibits an issuer of investment contracts from engaging in the business of selling or offering them for sale in the state unless licensed, and in the second paragraph prohibits any dealer from selling or offering for sale such securities, or professing the business of so selling or offering, within the state, unless the sale of such securities by the company or the dealer be licensed; (c) the closing paragraph of section 17 as amended.

In the second paragraph of section 3 of the original act (section 4 of the amendatory act) a dealer is defined to be any person, firm, copartnership, company, corporation, or association, not the issuer, who shall within the state sell or offer for sale any of the stocks, bonds, investment contracts, or other securities, issued by an investment company, or who shall, by advertisement or otherwise, profess to engage in the business of selling or offering for sale such securities within the state. Then follows this language:

‘The term ‘dealer’ shall not include an owner, not issuer, of such securities so owned by him when such sale is not made in the course of continued and successive transactions of a similar nature, nor one who in a trust capacity created by law lawfully sells any securities embraced within such trust.'

[2] The closing paragraph of the original act (section 10 of the amendatory act) provides that, in prosecutions under the act, any of the exceptions specified in sections 2, 3, and 6 shall constitute a matter of defense, and that it shall not be incumbent upon the state to...