168 N.E. 401 | Ill. | 1929
Gettelman Co., Inc., an Illinois corporation, and the Federal Surety Company, an Iowa corporation, as surety for Gettelman Co., filed with the Secretary of State on August 31, 1926, a bond in the sum of $15,000 in conformity with section 23 of the Illinois Securities law and conditioned as required by that section, in order to procure the registration, under the Securities law, of Gettelman Co. as broker and dealer in securities for the period ending June 30, 1927. Two suits were brought on this bond in the municipal court of Chicago, in each of which a judgment was rendered for the plaintiff, from which the surety company appealed to this court on the ground that the question of the constitutionality of section 23 of the Illinois Securities law was involved. The questions in both cases are the same and they were argued and submitted together.
In No. 19465, which was brought in the name of the People for the use of J.G. Klemmer, the defendant moved to strike the plaintiff's statement of claim. The court denied *474 the motion, and upon the defendant's electing to stand by the motion a judgment by default was rendered in accordance with the affidavit of claim. In No. 19466, which was brought in the name of the People for the use of George A. Critchett, the defendant's affidavit of merits was stricken, and the defendant electing to stand by its affidavit, judgment was entered against it. In each case the affidavit of claim stated that Gettelman Co. was required to execute and deliver to the Secretary of State, as a condition precedent to its registration, the bond which was set out at length; that the license of Gettelman Co. as dealer and broker in the sale of securities was revoked by the Secretary of State on January 4, 1927, and that after that date Gettelman Co. offered to sell, and did sell to the respective plaintiffs on January 29, 1927, and March 11, 1927, certain securities, in the sale of which it was at those dates illegal for it to act as dealer or broker; that the sale of such securities was illegal and voidable, and that Gettelman Co., though repeatedly requested, had failed and refused to return the money paid to it on such sales.
Section 23 of the Illinois Securities law, as amended in 1925, declares that no person, owner, dealer and broker, or solicitor or agent, shall offer for sale or sell securities within this State unless registered with the Secretary of State as owner, dealer and broker or as solicitor or agent, provided that registration shall not be required of anyone when engaged solely in making sales specified as exempt in section 5 of the act. Any person, firm or partnership or corporation of good repute, upon entering into bond in the penal sum of $2000, payable to the People of the State of Illinois for the use and benefit of all persons interested, with terms, conditions and in forms to be approved by the Secretary of State and with a surety company satisfactory to the Secretary of State as surety, and on the payment of a fee of $25, and on such other reasonable conditions as may be imposed by the Secretary of State, may become a registered *475 owner, dealer and broker, and when duly registered may offer for sale and sell securities in classes A, C and D as prescribed in the act, provided that the Secretary of State, in his discretion, may in any case require a like bond in larger amount, but not in excess of the sum of $50,000, and that the Secretary of State, in his discretion, may permit a single bond for $50,000, with suitable conditions, to be filed to cover the requirements of this section 23 and also paragraph (b) of section 7 of the act.
The constitutional objection which the appellant has made in these cases is, that section 23 of the Illinois Securities law is an attempted delegation of legislative power to the Secretary of State and it is therefore void. All the legislative power of the State is vested in the General Assembly, and it may not divest itself of its proper functions or delegate its general legislative authority to the discretion of administrative officers so as to give to them the power to determine whether the law shall or shall not be enforced with reference to individuals in the same situation, without fixed rules or limitation for the exercise of such discretion. The legislature cannot delegate arbitrary power to any executive officer to say that under the same circumstances one rule of law shall apply to one or some individuals and another rule to others. The question of the extent to which the legislature may authorize others to do that which it might properly do yet cannot understandingly or advantageously do itself, has been considered by this court in numerous cases. The rule stated in Sutherland on Statutory Construction, section 68, is as follows: "The true distinction is between a delegation of power to make the law, which involves a discretion as to what the law shall be, and conferring an authority or discretion as to its execution, to be exercised under and in pursuance of the law. The first cannot be done; to the latter no objection can be made." Examples of this distinction are found in the cases *476
of People v. Cregier,
The appellee contends that the appellant is estopped from setting up the unconstitutionality of section 23. A person may waive his own personal, individual right to question the constitutionality of a statute or may be estopped to assert such right. Such an estoppel is based upon the prevention of a fraudulent result if one were permitted to dispute the existence of a state of facts which he has induced another to believe in and act upon. Before it can be invoked to the aid of the litigant it must appear that the person against whom it is invoked has by his words or conduct caused the litigant to believe in the existence of a certain state of things and induced him to act upon that belief. (Sutter v. People's GasLight Co.
"It is well settled as a general proposition, subject to certain exceptions not necessary to be here noted, that where a party has availed himself, for his benefit, of an unconstitutional law, he cannot in a subsequent litigation with others not in that position aver its unconstitutionality as a defense, although such unconstitutionality may have been pronounced by a competent judicial tribunal in another suit. In such cases the principle of estoppel applies with full force and conclusive effect." (Daniels v. Tearney,
In United States v. Tingey, 5 Pet. 115, a suit was brought against the defendant as surety upon the bond of a purser in the United States navy. One plea of the defendant alleged that an act of Congress of May 13, 1812, required that pursers of the navy should be appointed by the President and confirmed by the senate, and after the first of the next May no person should act in the character of purser who should not have been first nominated and appointed, excepting persons on distant service, and every person before entering upon the duties of his office should give bond, with two or more sufficient sureties, in the sum of $10,000, conditioned faithfully to perform the duties of purser in the navy of the United States; that after the passing of this act, and before the day of the date of the execution of the bond, the navy department of the United States caused the bond to be prepared and transmitted to the principal in the bond, and required and demanded of him that it should be executed by him, with two sufficient sureties, before he should be permitted to remain in the office and receive the pay and emoluments attached to said office; and it was further alleged that the condition of the bond was wholly variant and different from the condition which by law ought to have been required and varied and enlarged the duties and responsibilities of the principal *479 and his sureties, and was under color and pretense of the act of Congress and under color of office required and extorted from the principal in the bond, and from the defendant as his surety. The Supreme Court held the plea to be good. Its substance was that the bond, with the condition variant from that prescribed by law, was under color of office extorted from the principal and his sureties, contrary to the statute, by the Secretary of the Navy as a condition of the principal remaining in the office of purser and receiving its emoluments. It was said there was no pretense to say that it was a bond voluntarily given, or that, though different from the form prescribed by the statute, it was received and executed without objection. It was demanded of the party upon the peril of losing his office. It was extorted under color of office, against the requisitions of the statute. It was plainly an illegal bond, for no officer of the government has a right, by color of his office, to require from any subordinate officer, as a condition of holding office, that he should execute a bond with a condition different from that prescribed by law. That would be not to execute but to supersede the requisitions of law.
It is stated as a general rule of law in City of Portland v.Portland Bituminous Paving Co.
The causes of action on the bond are based entirely on section 23 of the law. That section being void and the defendant being bound by no estoppel or waiver, the appellee has shown no liability of the defendant to it in these actions.
The judgments of the municipal court of Chicago are reversed.
Judgments reversed. *482