| Wis. | Feb 5, 1929
The trial court held that the Columbia Casualty Company was in no manner liable to the plaintiffs and entered judgment dismissing the action as to said Columbia Casualty Company. It is apparent from the statement of facts that this conclusion of the court was based upon its finding, first: “That at no time was there a determination by the railroad commission of the state of Wisconsin that the securities so offered were not Class A securities;” and second, on the further finding that, except as to the letter of September 25th, set forth in the statement of facts, “no demand was ever made prior to the institution of this action upon said Columbia Casualty Company for any payment under the bond executed by said Columbia Casualty Company as surety.” We are to inquire whether these findings
Sec. 183.26 (2) (a), Stats. 1923 (which statutes govern the rights of the parties hereto), classifies as Class A securities “Notes, bonds, or other evidences of indebtedness issued by a person or company, secured by first mortgage lien upon real estate or leaseholds and buildings to be erected thereon, where it is established to the satisfaction of the commission,” etc. It was under this provision of the statutes that the Guaranteed Bond Company sought to qualify the Carnegie Hall Apartment bonds as Class A securities.
By sec. 183.26 (2) (a) 3 it is provided that the railroad commission may “refuse to classify such securities as Class A securities and classify them in Class B or deny a permit for the sale thereof.”
By sec. 183.27 (1) the sale of such securities prior to the issuance of a permit is prohibited, except as provided in sub. (4) and (5) of said section. By sub. (4) it is provided that any broker desiring to sell Class A securities before making application for a permit or securing such permit may do so upon compliance with the following conditions : (a) such broker shall at or before the time of offering any specific security for sale notify the commission in writing of the name or description of such security and shall, within thirty days or within such further time as the commission may fix, apply for a permit for the sale thereof as Class A security; (b) file with the commission a bond executed by a surety or guaranty company authorized to do business in this state, in the sum of $20,000, conditioned to repay to any purchaser of such securities on demand any money received of him therefor if said application shall not be made as above provided or the commission shall determine that the securities so offered are not Class A securities, and to pay to the commission the fees required by-sec. 183.38.
The legislative scheme thus provided is quite obvious.
It must be remembered that this was a statutory bond given to accomplish a statutory purpose, that the terms of the statute are to be read into the bond, and that the bond is to be construed conformably to the statute. Baumann v. West Allis, 187 Wis. 506" court="Wis." date_filed="1925-08-05" href="https://app.midpage.ai/document/baumann-v-city-of-west-allis-8194787?utm_source=webapp" opinion_id="8194787">187 Wis. 506, 204 N. W. 907. The construction which the trial court gave to this bond was all too nar
It is next argued that there was no demand made upon the Columbia Casualty Company for a repayment of the moneys prior to the .commencement of the action. Although the terms of the bond recite that the “Guaranteed Bond Company, as principal, and Columbia Casualty Company, as surety, do hereby undertake in the sum of $20,000 to repay to any purchaser of ’the securities offered for sale by said Guaranteed Bond Company ... .on demand any money received from such purchaser by the said Guaranteed Bond Company,” — as heretofore stated, the bond must be construed agreeably with the statute. The statute clearly imposes the primary liability upon the broker. The bond is given merely as a guaranty that the broker will meet this liability. The statute does not contemplate a bond imposing primary liability upon the surety. The statute requires the broker to repay. He is the only one that can repay, because he is the only one that received payment. There is nothing for the Columbia Casualty Company to repay, as it has received nothing. It simply guarantees the discharge of this obligation on the part of the broker. While according to the conditions of the bond a demand upon the Casualty Company might be a condition precedent to the maintenance of the action, we find no such provision in the statute, and the bond can impose no condition to recovery not authorized by the statute. We therefore hold that there is no ground for saying that any demand upon the Casualty Company was necessary for the maintenance of these actions. But if there was, we should have no hesitation in determining that the letter of September 25th constituted a sufficient demand.
It is contended by the appellants that the sales here under consideration were in violation of law because the securities sold were not in fact Class A securities, that sec. 183.27 authorizes the sale only of such securities as are in fact Class A securities upon the giving of the bond, and that the remedies provided by secs. 183.27 and 183.34 are cumulative and not inconsistent. Respondents contend that sec. 183.34 affords a remedy where the sales are in violation of law, that sec. 183.27 affords a remedy where the sales are in compliance with law, and that the remedy provided by sec. 183.34 is inconsistent with the remedy provided by sec. 183.27. We have little doubt that the sales under consideration were authorized by the statute and that they were not sales made in violation of law. It seems to be the purpose of the statute to permit the sale of securities deemed to be Class A securities in advance of a permit where the bond required is filed
By the Court. — Judgments reversed, and causes remanded with directions to render judgments in favor of the plaintiffs and against the defendant Columbia Casualty Company.