Walton v. Semmler

• Citation: 6 Mich.App. 596,149 N.W.2d 885
• Decision Date: 25 April 1967
• Docket Number: No. 1,Docket No. 1959,1
• Parties: , Blue Sky L. Rep. P 70,738 H. E. WALTON d/b/a Walton Oil Company, Plaintiff-Appellant, v. R. W. SEMMLER, Defendant-Appellee
• Court: Court of Appeal of Michigan (US)

Page 885

149 N.W.2d 885

6 Mich.App. 596, Blue Sky L. Rep. P 70,738

H. E. WALTON d/b/a Walton Oil Company, Plaintiff-Appellant, v. R. W. SEMMLER, Defendant-Appellee.

Docket No. 1959.

Court of Appeals of Michigan, Division No. 1.

April 25, 1967.

Louis G. Basso, Jr., Wilson, Templin, Basso & Basso, Detroit, for appellant.

Arthur J. Hass, Detroit, for appellee.

Before LESINSKI, C.J., and BURNS and QUINN, JJ.

QUINN, Judge.

Plaintiff sued defendant in common pleas court of Detroit to collect amounts allegedly due from defendant to plaintiff under a written contract admittedly subject to the provisions of the blue sky law, C.L.1948, § 451.101 et seq. as amended (Stat.Ann.1964 Rev. § 19.741 et seq). ¹ Defendant pleaded the contract was void under the provisions of the blue sky law and his motion for judgment of no cause for action was granted at the close of plaintiff's case. Plaintiff appeals.

By written contract of June 4, 1959, plaintiff agreed to assign to defendant an undivided 1/32 of the leasehold working interest in a certain oil and gas lease and acknowledged receipt of $1,250 as defendant's proportionate share of the operating and drilling expense to date of contract. Defendant agreed to pay promptly his proportionate share of the cost of equipping the well for production and the operating expense thereof; defendant was to own his share of equipment. The other provisions of the contract are not pertinent to decision.

A well was completed in March 1960 and plaintiff assigned defendant his interest therein. Plaintiff billed defendant $869.73 for completion costs and defendant paid $750 on this billing, but he has never paid the balance of $119.73 or his share of operating costs through August of 1965 in the amount of $614.45. By this suit, plaintiff sought recovery of $734.18 plus interest of $68.81.

The pertinent provision of the statute is C.L.1948, § 451.120 (Stat.Ann.1964, Rev. § 19.760), which reads so far as applicable here as follows:

'Every sale or contract for sale of any security, not accepted for filing or otherwise exempt under this act or made contrary to any order of the commission, or made contrary to any provision of this act, shall be voidable at the election of the purchaser, and the person making such sale or contract for sale, * * * shall be * * * liable to such purchaser, upon tender to the seller or in court of the securities sold or of the contract made, for the full amount paid by such purchaser, together with all taxable court costs, in any action brought under this section: Provided, That no action shall be brought for the recovery of the purchase price after 2 years from the date of such sale or contract for sale.'

It is conceded the contract here involved comes within the foregoing provisions, and the question is what is the effect of those provisions on the situation presented here, namely: the purchaser makes no election to void the contract until sued thereon, and then only to avoid liability on the contract.

By the terms of the statute, this contract is voidable at the election of the purchaser; it is not void. Barth v. Klicpera (1929), 248 Mich. 460, 227 N.W. 757. The object of the blue sky law as stated in its title is 'to prevent fraud, deception and imposition in the issuance, trade, purchase, exchange, sale or...