208 Wis. 468 | Wis. | 1932
As stated in plaintiff’s brief, this action is based upon a surety bond filed with the Railroad Commis
“ ‘Sale’ or ‘sell’ includes every disposition, offer, negotiation, agreement or attempt to dispose of a security or in*470 terest in a security for value, and every solicitation of a subscription or order for the purchase and every exchange for property.” Sec. 189.02 (5).
Neither on October 5, 1927, nor at any time thereafter, were those bonds classified as Class “A” securities within the meaning of ch. 189. Likewise, at the time the broker solicited, procured, and accepted plaintiff’s order for those bonds on October 5, 1927, and when it received from plaintiff the other securities, the proceeds of which were to constitute plaintiff’s payment for those bonds, the broker had not filed with the Railroad Commission the notice or application authorized by sec. 189.08 for permission to sell the bonds as a Class “A” security before obtaining the permit required by sec. 189.07. In fact no such notice or application for the permit, authorized by sec. 189.08, was actually filed by the broker with the Railroad Commission until on October 11, 1927.
Upon filing the notice provided for by sec. 189.08, a broker, “after complying” with the conditions therein prescribed, was authorized by that section, in conjunction with sec. 189.07, “to sell any Class ‘A’ security before securing a permit” therefor. But until the Dahinden-Schmitz Company filed its notice on October 11, 1927, its transactions with plaintiff were prohibited by reason of the provision in sec. 189.07 (1) that—
“Except as provided in sections 189.08 and 189.09, no company, broker or other person, directly or through an agent, shall in this state sell or take subscriptions for any security for the sale of which a permit has not theretofore been issued, until a permit has been issued by the commission authorizing the sale of such security.”
And every sale so prohibited is declared to be illegal and voidable at the election of the purchaser by sec. 189.22 (1). Consequently the .sale of the bonds in question, by Dahinden-Schmitz Company to plaintiff was illegal because the broker
“(3) Notice of such election shall be given to the party from whom recovery will be sought within three months after the purchaser shall have knowledge that such security was sold without a permit or in violation of or non-compliance with the terms and conditions of the permit.
“(4) No action shall be brought for relief under this section after three years from the date of such sale or contract for sale.”
The bonds in question had not been executed for delivery to purchasers at the time plaintiff made his purchase, and mere interim certificates therefor were first delivered to him. He held those certificates until August 8, 1928, when he sent them by letter to Dahinden-Schmitz Company for exchange for the permanent bonds. In his letter he inquired whether the Railroad Commission had approved the issue. On August 9, 1928, the Dahinden-Schmitz Company wrote to plaintiff that the permit which the commission had issued was but a Class “B” permit. In a letter which plaintiff wrote to the Dahinden-Schmitz Company on December 2, 1930, . he stated that he was “now informed that at the time of this sale this security had not qualified for sale in Wisconsin, but that some time later a Class ‘B’ certificate was issued.” That statement discloses that by December 2, 1930, at the latest, he had knowledge that the security was sold without
No action for relief was commenced by plaintiff until he brought this action on March 28, 1931. Meanwhile, by reason of sec. 189.22 (4), Stats., his cause of action to recover the purchase price paid by him on the sale, which was prohibited because the security had not been qualified for sale in this state, had become barred on October 6, 1930, upon the expiration of three years from the date of the sale, i. e. October 5, 1927.
“That three-year limitation in those provisions applies to every action brought for the recovery of the purchase price, when the underlying ground for the purchaser’s recovery is the want or absence, in the first instance, of the permit or authority to sell the security. . . . The right to maintain an action to realize on such a cause of action, when it does arise, is dependent upon, and the relief is recoverable only under and by virtue of, sec. 183.34, Stats. 1923 (sec. 189.22, Stats. 1925 et seq.). That statute creates a new right to relief, and specifies the conditions precedent and the remedy for its vindication. If any right of action, because of the failure in the first instance to secure a permit to sell the security, exists at all, it is by virtue of that statute. To recover as thereby authorized, the purchaser must comply with the conditions as to notice of election, and the time for the commencement of the action which that statute prescribes; and the remedy which is thereby provided for the vindication of the new right, which is thereby created, is exclusive of all others.” Waisbren v. Blink, 207 Wis. 619, 242 N. W. 169.
By the Court. — Judgment reversed, with directions to enter judgment dismissing the complaint.