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syndicate, and the salesman of the not therefore, strictly speaking, or shares therein, and the trustee cre- technically, a corporation, a comated and designated by the terms of pany, a copartnership, or an assosale of said shares in said syndicate ciation. It is also clearly apparent to the subscribers thereto, who by that these denials in the indictment said sale became the beneficiaries of were not intended to, and do not, the trust of which the said King, mean that it is not an investment acting in the name of Shareholders' company as defined above, or such Syndicate, is the trustee.

an association of persons as is neces“The grand jurors further say sary in the formation or creation that the only evidence of the con- of a trust estate, since immediately tract or agreement between the said following these negations it is altrustee and the shareholders in said leged to be a trust estate, and an syndicate and of the plan or basis association of persons. And as deof operation of said syndicate, and fendant confessed the truth of these the status thereof, is contained in latter allegations, he will not, after the certificate which was issued by judgment, be allowed to take advansaid trustee, the said defendant, to tage of the seeming but not real conthe shareholders in said syndicate, tradictions in the language emand which is in words and figures ployed in describing a trust estate, as follows, to wit:

so evidently intended to be de“ 'No. 54.

-1- Units.

scribed, despite the inartificial man“'Capitalization $100,000.

ner in which it is done, if we must “ 'Shareholders' Syndicate,

give to the denial that the Share“ 'Louisville, Ky.

holders' Syndicate is a company or -A Trust Estate.

organization of persons the effect of “ "This certifies that Mrs. Mary L.

annulling the allegations that it is

a trust estate and such association Gray is the holder of one - units

of persons as is required to create of interest, fully paid and non

such an organization, which is assessable, in the in the Shareholders'

neither a corporation nor a copartSyndicate, subject to all the terms

nership, nor yet an ordinary comof its declaration of trust, dated

pany or association, but which nevSeptember 1, 1921, and recorded in

ertheless has some of the attributes its trustee's office in Louisville,

of all these more common organizaKentucky, and transferable on the

tions for the co-operative employbooks of the organization in person

ment of the means of many people or by attorney upon surrender of

in a business venture. this certificate properly indorsed.

We may therefore dismiss with“ 'In witness whereof, the said

out further discussion the contenorganization has caused this certifi

tion that the Shareholders' Syndicate to be signed by its trustee, and

cate is not an investment company its seal to be hereunto affixed at

under the act because it is neither a Louisville, Kentucky, this the 22d

person nor a corporation, and is alday of December, 1921.

leged not to be a copartnership, a “Thos. M. King, Trustee. " "Shareholders' Syndicate.

company, or an association.

This brings us to a consideration 'A Trust Estate Units

of whether or not a common-law “'1921

$10.00 “ *[Seal.]

trust is "a person, corporation, coEach.

partnership, company, or associa"'Louisville, Ky.'

tion" within the contemplation of It is clearly apparent from the the legislature in enacting this act, form of the certificate, as well as for, unless so, such an organization from what it is alleged the Share- or thing is not required to have seholders' Syndicate is and is not, that curities it may sell previously apit is a common-law trust of the proved by the banking commisMassachusetts type, and that it is sioner.

(197 Ky. 128, 256 8. 11. 162.) We cannot refrain from saying at have been more general and allthe outset that, if the language em- inclusive, for it expressly includes ployed does not include a common

individuals and all-"his, them, law trust, it is in our confident judg- and it"-associations of individuals ment, in view of the evil the legis- organized or that may be organized, lature was trying to cure, or at least whether incorporated or not. Bemitigate, the result of inadvertence sides, the legislature has, in subserather than design, because unques- quent sections of the act, carefully tionably the general purpose of the enumerated every kind of investlegislature was to forbid the sale in ment contract or security that it this commonwealth of every kind of did not intend its issuer should have investment contract, whatever its approved before offering it for sale. name and however issued, that in Hence it seems to us too plain for the judgment of the banking com- argument that the definition of an missioner did not have a chance, at investment company literally and least, to produce income for the in- necessarily includes a common-law vestor, without which it could not trust, the distinguishing features of properly be called a "contract, stock, which are too well understood to bond, or other security," as these require explanation, even though in terms are constantly employed this state they have not been so frethroughout the act.

quently encountered as they would Conceding that, if this general be in the immediate future, if appurpose is not clearly expressed, pellant's contention should be upthere are both sound reason and held by this court in the face of the eminent authority to the effect that unanimous opinion of many courts we ought not to stretch the fair that have rejected it as unsound in meaning of the language of this, a construing almost identical lanpenal statute, to make it conform to

guage in similar statutes. See Peoour ideas of the general purpose the ple v. Clum, 213 Mich. 651, 15 legislature had in view, we are yet A.L.R. 253, 182 N. W. 136, and of the opinion such authority is not Home Lumber Co. v. Hopkins, 107 applicable here because of a convic- Kan. 153, 10 A.L.R. 879, 190 Pac. tion that the very language em- 601, directly in point; and the folployed in forming this section of lowing cases, more or less related :

the act, fairly conTrusts-how far

Re Girard, 186 Cal. 718, 200 Pac. within Blue Sky strued, includes a 593; State v. Gopher Tire & Rubber Law.

common-law trust, Co. 146 Minn. 52, 177 N. W. 937; and that the general legislative pur- McCamey V. Hollister Oil Co. pose may be considered in constru- Tex. Civ. App. - , 241 S. W. 689; ing the meaning of the language em- Schmidt v. Stortz, 208 Mo. App. ployed.

439, 236 S. W. 694. It will be noticed the definition 2. The argument in behalf of the is: “Every person, corporation, contention that the act so construed copartnership, company, or associa- abridges the right to own property tion, organized or which shall here- and freely contract with reference after be organized in this common- thereto, in contravention of rights wealth, whether incorporated or un- declared to be inincorporated, which shall either alienable and guar

Constitntional

law-forbidding himself, themselves, or itself, or by anteed to all per- sale of securities or through others, sell or negotiate sons by the state al of banking for the sale of any contract, stock, and Federal Con- commissionerbonds, or other securities issued by stitutions, is in our him, them, or it within the com- judgment wholly lacking in merit. monwealth of Kentucky, shall be This could not possibly be true known for the purposes of this act with regard to a common-law trust as a domestic investment company” without being true with reference

We do not see how language could to individuals and unincorporated associations; nor is the law more the police power, since like laws enrestrictive of inalienable rights than acted in most of the states have been are laws universally recognized as upheld, and the contention of dewithin the police power of the state, fendant denied, not only by the state requiring that individuals, for the courts without exception, but by the common weal, before practising the Supreme Court of the United States profession of law, or medicine, or as well. what not, shall prove their fitness We therefore deem it a sufficient to and procure a license from a answer to defendant's contention to designated tribunal.

cite without further elaboration the There is no claim that the state case of Hall v. Geiger-Jones Co. banking commissioner is vested with 242 U. S. 539, 61 L. ed. 480, L.R.A. arbitrary power, or that the act, if 1917F, 514, 37 Sup. Ct. Rep. 217, within the legislative power of the Ann. Cas. 1917C, 643; the many state, is unfair, arbitrary, or unrea- cases cited in the comprehensive sonable in its terms or the manner note following that case as reported or methods provided for enforcing in L.R.A.1917F, 514; Merrick v. it.

N. W. Halsey & Co. 242 U. S. 568, The whole contention is that the 61 L. ed. 498, 37 Sup. Ct. Rep. 227; state is without power to enact any Caldwell v. Sioux Falls Stockyards law regulating or restricting the Co. 242 U. S. 559, 61 L. ed. 493, 37 power to contract of an individual Sup. Ct. Rep. 224_with all of which or association of individuals who do we heartily agree in so far as they not, like corporations, receive the are involved here, and hold that a power to contract from the state, state, under its police powers, may upon the sole ground that to do so regulate the sale of investment sewould deprive such individuals of curities by individuals, or any kind their inalienable and constitutional of association of individuals, as does rights of life, liberty, and property our Blue Sky Law, without infringwithout due process of law, etc. ing upon any personal or property

There is nowhere among free right guaranteed by the state or people any doubt of or disposition Federal Constitution. to contest the right of the individual Judgment affirmed. to freely contract with reference to his property, or that this right is fully protected by the state and Fed

NOTE. eral Constitutions; but, as one individual's absolute right of freedom “Blue Sky Laws" are the subject of in all matters ends where another's annotation in 15 A.L.R. 262, and 24 begins, it is universally recognized A.L.R. 523, which are supplemented in that, in order to secure the right to the annotation following STATE all and for the common good, the EVANS, post, 1169. Specifically, as to sovereign state within its indefina- the applicability of those laws to ble police power may, and often Massachusetts trusts, see subd. III. of must, prescribe reasonable regula- the annotation in 24 A.L.R. 523, 528.

, tions for the exercise thereof.

The general subject of “MassaThere being, as before stated, no chusetts trusts" is treated in the anclaim that any administrative fea- notations in 7 A.L.R. 612, and 10 ture of the law is arbitary or un- A.L.R. 887, supplemented by the annoreasonable, we need not devote space tation following Betts v. Hackathorn, to prove it to be a valid exercise of - A.L.R.

V.

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- Minn. 191 N. W. 425.)

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(- Minn, 191 N. W. 425.)

. Definition - "investment contract."

1. An "investment contract," under the state "Blue Sky Law” (Gen. Stat. Supp. 1917, 88 3782–1 to 3782-19) is a contract providing for the investment of capital in a way intended to secure income or profit from its employment. The contract set out in the opinion is an investment contract within the rule.

[See note on this question beginning on page 1169.] Indictment sufficiency sale of in- title to a legislative act, as “An Act vestment contract.

to Prevent Fraud in the Sale and Dis2. An indictment charging the sale position of Stocks, Bonds, or Other of an investment contract to c. on Securities,” is broad enough to cover June 6, charging that said contract legislation affecting investment conhad been issued by an investment com- tracts. pany, setting out the contract, which [See 25 R. C. L. 843 et seq.; 4 R. C. bears date June 6, with C. as grantee, L. Supp. 1604; 25 R. C. L. 860; 3 R. C. charges a sale to C. of a contract is- L. Supp. 1431.] sued to him on its sale, and is not void Criminal law what necessary to as a charge of a sale to C. of a con- conviction. tract he already owned.

4. Before a man can be punished, Statute title — sufficiency.

his case must be plainly within the 3. Under the state Constitution, a statute which is invoked to make his statute may only include legislation act a crime. The term “investment which by fair intendment is germane contract” is not so vague as to be into the subject expressed in its title. sufficient to apprise citizens of what What is necessary is that the title acts it is their duty to avoid. shall apprise members of the legis- [See 8 R. C. L. 58; 2 R. C. L. Supp. lature of the contents of the act. A 530.] Headnotes by HALLAM, J.

(Dibell, J., dissents.)

CERTIFICATION by the District Court for Hennepin County (Waite, J.) for the opinion of the Supreme Court of questions arising upon the overruling of a demurrer to an indictment charging defendants with selling an investment contract without a license in violation of statute. Affirmative answer returned and order affirmed.

The facts are stated in the opinion of the court. Messrs. Powell, Carman, & Cain A.L.R. 253, 182 N. W. 136. and Burnquist & Jackman for defend- The contract set out in the indict. ants.

ment is an investment contract or Messrs. Clifford L. Hilton, Attorney other security within the meaning of General, Montreville J. Brown, Assist- chap. 429, Laws 1917, as amended. ant Attorney General, and Floyd B. State v. Gopher Tire & Rubber Co. Olson, for the State:

146 Minn. 52, 177 N. W. 937; Re InThe facts alleged in the indictment vestors Syndicate, 147 Minn. 217, 179 support the charge that defendants N. W. 1001. sold and delivered the contract as The title is such as to permit the dealers.

use of the term "investment contract's People v. Clum, 213 Mich. 651, 15 in the body of the act.

State v. Cassidy, 22 Minn. 312, 21 scope of the act the written instruAm. Rep. 765; Johnson v. Harrison, 47 ment set out in the indictment? Minn. 575, 28 Am. St. Rep. 382, 50 N.

The allegations of the indictment W. 923; Butler v. Chambers, 36 Minn.

are that the U. S. I. Realty Com69, 1 Am. St. Rep. 638, 30 N. W. 308; Lien v. Norman Cou 80 Minn. 58,

pany was a Minnesota corporation 82 N. W. 1094; Winters v. Duluth, 82

engaged in the business of selling Minn. 127, 84 N. W. 788; Ek v. St.

investment contracts issued by it, Paul Permanent Loan Co. 84 Minn.

and that on the 6th day of June, 245, 87 N. W. 844; State ex. rel. Olsen 1921, defendant, without such liv. Board of Control, 85 Minn. 165, 88 cense, sold to Homer L. Clary "an N. W. 533; State v. Leland, 91 Minn. investment contract, which said in321, 98 N. W. 92; State v. Pioneer vestment contract had been issued Press Co. 100 Minn. 173, 9 L.R.A.

by said U. S. I. Realty Company, (N.S.) 480, 117 Am. St. Rep. 684, 110

and which said investment contract N. W. 867, 10 Ann. Cas. 351; State ex rel. Hildebrandt v. Fitzgerald, 117

is and was in words and figures as Minn. 192, 134 N. W. 728; State v.

follows: The contract is then set Droppo, 126 Minn. 68, 147 N. W. 829. out in full. It is dated June 6, The contract in question is a se

1921. By its terms, the company, is curity within the meaning of the act, consideration of the payment of the and it is immaterial that it is referred contract fee of $25, and of "the to in the indictment as an investment

covenants and agreements herein contract.

contained," agreed to sell to Clary State v. Howard, 66 Minn. 309, 34

the "west one half (W. 2) of tract L.R.A. 178, 61 Am. St. Rep. 403, 68 N. W. 1096; State v. Summerland, 150

one (1), block nine (9) Live Bee Minn. 266, 185 N. W. 255.

Land Subdivision No. 2," in the

county of Live Oak, state of TexHallam, J., delivered the opinion

as, for $2,500, payable in monthly of the court:

instalments of $25 each. The quanDefendants were indicted for sell- tity of land is not stated. There ing an investment contract without

is no express obligation on the a license from the state securities

part of Clary to pay, nor to buy. commission, contrary to the provi

There are none of the usual prosions of the so-called “Blue Sky

visions for furnishing an abLaw.” Chapter 429, Laws 1917

stract of title or for examination (Gen. Stat. Supp. 1917, SS 3782-1 to

of title. So far, it is a short form 3782–19), as amended by chapter of option for the sale of land. The 105, Laws of 1919. Defendants de

contract provides that it is made murred to the indictment. The

“subject to the options, privileges, court overruled the demurrer and

terms, and conditions printed herecertified these questions to this

on and made a part hereof." These court:

are many times longer than the 1. Does the indictment in this

main contract itself. In substance case state facts sufficient to consti

the essential sections provide: tute a public offense?

1. If the purchaser shall make 2. Is the written instrument set

no payment for three consecutive out in the indictment to be con

months, the company may, by nostrued as an investment contract tice, terminate the interest of the within the meaning of chapter 429 of the General Laws of Minnesota scribed, but the purchaser shall

purchaser in the real estate de1917, as amended?

have the right to resume payment 3. Is the title of the said act con

and be reinstated in his interest in stituting chapter 429 of the General

the land, if not sold, or to select othLaws of Minnesota 1917, as amend

er land owned and for sale by the ed by chapter 105 of the General

company, at its regular list price. Laws of Minnesota 1919, sufficient- 3. At any time after six months, ly comprehensive to include and by mutual consent, the purchaser constitutionally to bring within the may surrender all interest in the

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