21 P.2d 126 | Cal. Ct. App. | 1933
Defendants were jointly charged in count I of an information with the crime of grand theft, and in counts II and III thereof with a violation of the Corporate Securities Act. They severally moved to set aside each of said counts on the ground that they were not legally committed, in that the evidence introduced before the committing magistrate failed to show that the offenses charged were committed. The trial court granted the motion of defendant Seidlitz as to all counts and that of defendant Dean as to counts II and III. Plaintiff has appealed from such orders of dismissal.
The evidence taken before the committing magistrate except in so far as the exhibits are concerned, is not before us. The record in the superior court on the matter of the motions is, however, and it appears therefrom that the theory under which count I was framed was that there was a conspiracy to commit the act between the two defendants. The trial *230 court stated at the hearing that there was no evidence connecting the defendant Seidlitz with the transaction, and appellant concedes that the dismissal of such defendant as to count I was proper.
It was stipulated at the hearing in effect that there was no evidence introduced at the preliminary hearing showing that no permit was issued by the corporation commissioner permitting the securities in question to be sold.
Count I of the information charges the sale of a security to one Walter F. Sagar without permission of the corporation commissioner so to do, and count II alleges a similar sale to one A.R. Greenslit. Section 3 of the Corporate Securities Act (Stats. 1917, p. 673; Deering's Gen. Laws, 1931, vol. 2, pp. 1924, 1928) prohibits the sale of any security by the issuer thereof without a certificate having first been issued by the corporation commissioner permitting the same. Section 6 of the act prohibits anyone from acting as agent or broker without first having secured a certificate from such commissioner authorizing such action. Section 17 makes it unlawful for any company, which includes any corporation, etc., or individual, issuing securities, either directly or indirectly, without such a permit, or contrary to the conditions of a permit if one has been issued, to issue or sell any security; and section 18, so far as material here, provides that "Every officer, agent or employee of any company and every other person who knowingly authorizes, directs or aids in the issue or sale of or issues or executes or sells, or causes or assists in causing to be issued, executed or sold, any security . . . contrary to the provisions of this act . . . is guilty of a public offense" and shall be punished as provided therein. Appellant admits that respondents are not charged either as being issuers of securities involved or as acting as agents or brokers for the issuer, but of violating section 18 of the act in selling a security for which no permit was obtained authorizing the issuance thereof. [1] It is appellant's contention that having shown the sale of a security coming within the meaning of the act, the burden of negativing the issuance of such a permit was not required of the prosecution to support a commitment, but that the burden was upon defendants to prove the affirmative thereof as a matter of defense. *231
The general rule of evidence respecting the proof of negative averments is laid down in the case of Commonwealth v. Boyer,
7 Allen (89 Mass.), 306, at page 307, as follows: "When the defendant is in the first instance shown to have done an act which was unlawful unless he was distinctly authorized to do it, the proof of authority is thrown upon him." In the case ofPeople v. Boo Doo Hong,
The security involved in count II appears to have been issued by the "South Vulture Gold Mining Co., Ltd., Trustees of a Common Law Estate", and is for "5000 equities" of the "normal par value of $1.00 each". The signature on the security appears as follows: "South Vulture Gold Mining Co., Ltd., Trustees of a Trust Estate Harry J. Mumma, Vice President Wm. G. Dean Secretary". In the lower left-hand corner appears a gilt seal with the name of the company imprinted thereon, and in the center thereof the words "Trustee's Seal". Apparently preceding the issuance of this security Sagar signed three agreements in writing by which he subscribed the sum of $300, $100 and $100, respectively, payable to the "Treasurer of the Trustees, Harry J. Mumma, upon demand, for the purpose of assisting in completing a fund to furnish tools, supplies and machinery to enable said group of [unemployed] mining workers to make efficient recovery of the gold values in the ores obtained from above named properties", of which the South Vulture Gold Mining Co., Ltd., was purported by the agreements to have obtained control. Such agreements were accepted on behalf of the trustees "by Wm. G. Dean, Secretary of the Board of Trustees". The agreements also provided that Sagar was to receive one per cent of the net profits for each $100 subscribed "from the Net Bullion Returns from the Gold Bar Mine in the Peck Mining District, Yavapai County, Arizona, owned by Mrs. Ray Seidlitz of Los Angeles, which is the first property to be operated by the trustees". It would appear from the little evidence at hand that the subscriptions for the securities issued by the South Vulture Gold Mining Co., Ltd., were taken by such agreements and that when the amount subscribed was paid in full the security was issued and delivered. A similar subscription agreement was signed by A.R. Greenslit in the sum of $500 and accepted by Dean for the trustees.
It would appear from the record and evidence before us that the burden was upon the trustees of the South Vulture Gold Mining Company, Ltd., to secure a permit before the *233 securities issued or to be issued could be legally sold. Under that situation, was the fact whether they had done so peculiarly within the knowledge of respondents?
Respondents urge that if the permits were granted by the commissioner to them it might be in line with the cases cited involving the practice of medicine, dentistry and optometry, as well as those involving the sale of intoxicating liquors without a license, but it is urged that the rule does not apply where the securities were issued by someone else, who may have obtained the license, as in such case the fact is one "which may or may not be peculiarly within the knowledge of a given defendant", and that the plaintiff can as conveniently obtain such knowledge by going to the office of the corporation commissioner as can the defendant. Possibly so, but the purpose of the act is to put the burden upon one selling a security to see that it can be lawfully sold. It is to prevent imposition on the public, which has the same right to investigate before it buys that one selling a security has before he sells. [2] The law, however, puts the burden of such investigation on the party selling, and it is no excuse if he fails to ascertain if such security cannot in fact be legally sold. He is bound to make such investigation, if the security is not issued by him, before attempting to make a sale thereof, and we may well presume that he did so, as it would not seem reasonable to presume that, knowing the law as he must, he would go ahead with the sale without an independent investigation.
In the case of Anderson v. Board of Dental Examiners,
A great deal of argument is made as to the accessibility of the records of the corporation commissioner to the plaintiff when a case is tried in Los Angeles, where the commissioner maintains an office. To prove the negative alleged, regardless of the accessibility of the records, requires a search by the commissioner of his entire records in order to ascertain if as a matter of fact a permit was not issued, and then to prove the result of such search by himself or his deputies, all of which costs the state considerable money in loss of time and inconvenience to the office which it can ill afford to bear and which it would seem it should not be compelled to suffer where a defendant himself has or should have peculiar knowledge as to the fact. *235 [3] At the hearing on the motion to dismiss the district attorney stated that the theory under which the prosecution had proceeded as to defendant Seidlitz was that of conspiracy between the two defendants, and that "we felt that if the defendant Seidlitz was at all culpable under the second two [counts of the information] she was under the first one"; so it would seem that as to that defendant, under such admission, all three counts were properly dismissed, regardless of the decision on the point raised by such defendant.
The order granting the motion to dismiss as to respondent Seidlitz is affirmed. As to respondent Dean it is reversed as to counts II and III.
Works, P.J., and Stephens, J., concurred.