| Show WIDE EFFECT 4 Other Cases Involved Failure of Mortgage Co Appeal The supreme court of Utah Thursday rendered Its decision In Inthe Inthe Inthe the case of the Guaranty Mortgage company against M E Wilcox of Ogden The Tho judgment entered by byl I Judge I 5 In the district t court of Weber county Is unanimously affirmed I According to local focal lawyers the case Is of ot Importance because It I Involve the tho first o of the Utah blue sky law passed In 1919 The rhe facts briefly are that In 1921 the Guaranty Mortgage company was selling on an extensive scale Its seven per cent preferred capital stock aggregating In InJune InJune InJune June 1921 Mr Wilcox purchased ot or such stock and gave his I note for tor that sum and secured the eam by depositing the stock Ho He paid 60 on his note and be- be because because be because HoI I cause ho he failed tailed to pay the Install install- installment Installment December ment of o tailing falling due Install Install-I In De- De December De- De De December cember 1921 the company brought suit In the tho district court against him seeking Judgment on the note of less leas the tho payment with Interest at seven per pcr cent and COO and costs 01 of suit sun I The defendant claimed In hIs answer that the mortgage company hal had failed to comply with the Utah I blue sky law and at the time In question did not have the permission permission sion slon of or license from the state I securities commission to sell Its preferred stock The defendant pro prayed ed that his note of be declared void and the same be cancelled and that he halo hae JUdgment for the sum paid on the note At the trial the mortgage corn com company com company pany claimed that the transaction was as not a purchase and sale of ot the they I Istock stock stack but that Mr Dir V had made a voluntary subscription to the stock company's capital hadI I The rhe case was as tried in September last before Judge Kimball who bo I found that the company did not have the tho license and that the tran tran- transaction tran- tran transaction transaction was a purchase and sale bf the stock His judgment declared the note nulland null and void and requIred that it and the shares of ot stock be surrendered and cancelled and gas gao e eMr Mr Wilcox judgment the mortgage company for 60 and costs coals Mortgage company appealed to the supreme court court where the case was argued and submitted on briefs at the March term Judge Frick who writes rites the opInIon opinion opinion ion of o the court holds that there Is no question upon the record but that the company was as subject to the blue sky law andas and was vias requIred to have bave a license to sell its stock and that at the tho time o ol of the transaction tran tran- transaction transaction with B Ith Mr VII Wilcox cox It did not have such license OPINION QUOTED The opinion then proceeds It seems very tery ery clear to our minds that the transaction between plaIntiff and ami defendant constituted a pur- pur purchase purchase pur purchase chase and sale of the preferred stock The Tho mere fact that It was called a 0 subscription agreement Is not controlling Nor can It alter the tho legal lega effect of the transaction There Is a clear distinction beta bet een eenan eenan an agreement to subscribe for tor stock In a prospective corporation to be organized and an agreement to pur- pur purchase purchase pur purchase chase unsold and stock o of otan an organized corporation which Is Isa Isa Isa a going concern and Is put put- putting putting put putting ting Its stock on the market to raise funds with which to enlarge Its business The courts have hate recognized recognized recognized that distinction The opInion here cites cases from the courts or of other states and discusses the law of the cae Judge Frick further sa says s In Inthe the case at bar the transaction In question was one entirely between th the plaintiff corporation and the defendant which In our judgment constituted a and nd a sale eats of 60 shares of plaintiffs plaintiff's stock To the mind of tho the writer It would be bo entirely useless to attempt at attempt tempt to make anything else out of the transaction save a purchase and sale of the preferred stock The he opinion further says In Inthis this connection we e desire to add here that we are not of counsels counsel's contention that In view of the very lei y drastic penalties that are Imposed by the law and of the tho that may be bo vIsited esen en upon Innocent persons In case I the provisions of the law are 10 vio violated the tho law should receive a a strIct construction The penaltieS are In- In Indeed Indeed in indeed I deed drastic an the consequences harsh but that standing alone does cloes not us to that are clearly within both the tho spirit and the leter of the law as well as within the tha mischIef the law was Intended to meet In conclusion the opinion states that the the- findings and conclusions of law made by J Judge Kimball are unassailable and must mut prevail The decision o of the supreme court COUI t will doubtless dispose of seY- seY several sev several eral similar cases now awaiting t trial al In the court |
