This аppeal challenges a summary judgment which held that a joint venture interest in raw land, purchased by investors whose sole expectations of profit or appreciation rests upon market inflation and not upon the managerial or entrepreneurial efforts of others, was not a “security” under the Securities Act. We affirm.
Appellants, plaintiffs below, asserted a cause of action against the appellees under the Securities Act. Tex.Rev.Civ.Stat.Ann. art. 581-1, et seq. (Vernon 1964). An essential еlement to the cause of action was the sale of a “security” as contemplated under the Securities Act. After discovery, the appellees moved for summary judgment on the ground that the undisputed facts compelled the legal conсlusion that they did not offer, or sell, a “security” to the appellants. The appellants did not respond to the motion for summary judgment in the trial court, nor do they offer a factual challenge before this court. It is the appellants’ position that the uncontested facts support the conclusion that each of the appellants purchased a “security” from the appellees and may thus prosecute their claims under the Securities Act.
The record reflects that the appellants purchased joint venture interests in real property from Claude R. McClennahan, Inc. (the “company”). The interests purchased were in two joint ventures labeled the Carlton Company Joint Venture No. 1 and 2 (hereinafter referred to as “joint vеnture”). The appellants testified on deposition that the purpose of the joint venture was to hold the tracts of land comprising the joint venture for appreciation and resale. Appellants never contemplated that any “profit” was to be generated in the joint venture by virtue of development or operation of the property. The company was designated as manager of the joint venture but the managerial activities to be performed by the company for the joint venture were principally those for doing what was necessary to protect, preserve and maintain the property in a condition where it could be resold.
The Multiple Ownership Agreement (hereinafter referred to as “agreеment”) executed by the participants in the joint venture reflects that ownership of the joint venture property was to be in the purchasers of the joint venture with title to be held by a nominee title holder. The agreement also provides that 60% of thе owners may at any time change the nominee title holder to the entity of their choice. The agreement further provides that certain actions can only be taken with the unanimous consent of all owners of the joint venture and gives the owners оf sixty percent (60%) in interest of the joint venture the right to direct the operations of the joint venture.
Our Securities Act defines the term “security” as follows:
The term “security” or “securities” shall include any share, stock, treasury stock, stock certificate under a voting trust agreement, collateral trust certifiсate, equipment trust certificate, preor-ganization certificate or receipt, subscription or reorganization certificate, note, bond, debenture, mortgage certificate or other evidence of indebtedness, any form of commercial paper, certificate in or under a profit sharing or participation agreement, certificate or any instrument representing any interest in or under an oil, gas or mining lease, fee or title, or any certificate or instrumеnt representing or secured by an interest in any or all of the capital, property, assets, profits or earnings of any company, investment contract, or any other instrument commonly known as a security, whether similar- to those herein referred to or not. Provided, however, that this definition shall not apply to any insurance policy, endowment.policy, annuity contract, op *485 tional annuity contract, or any contract or agreement in relation to and in consequence of any suсh policy or contract, issued by an insurance company subject to the supervision or control of the Board of Insurance Commissioners when the form of such policy or contract has been duly filed with the Board as now or hereafter required by law.
Tex.Rev.Civ.Stat.Ann. art. 581-4. The parties are in substantial agreement that this definition does not specifically include or exclude the kind of interest here, and we must look to cases construing the statutory language. The parties are also in substantial agreement that the decisions of the federal system offer a reliable guide because an act of Congress, known as the Securities Act of 1933,15 U.S.C.A. § 77a, et seq. (1971), includes a definition of “security” in virtually the same wording. In
S.E.C. v. W. J. Howey,
The touchstone [of the test] is the presence of an investment in a common venture premised on a reasonable expectation of profits to be derived from the entrepreneurial or managerial efforts of others. By profits, the Court has meant either capital appreciation resulting from the development of the initial investment as in Jointer, supra (sale of oil leases conditioned on promoters’ agreement to drill exploratory well), or a participation in earnings resulting from the use of investors’ funds, as in Tcherepnin v. Knight, supra (dividends on the investment based on savings and loan association’s profits). [Emphasis added.]
Turning to the summary judgment record, we find that the property acquired by the joint venture is in a remote rural area where any immediate use was limited to farming and pasturage. The property was almost equidistant from McKinney, Texas, and Denton, Texas. South of the property lies the extensive upper reaches of the Garza-Little Elm reservoir. North of the property lies similar rural property until one arrives at the Red River boundary of Texas. Each of the appеllants was examined in his deposition as to exactly what might be the source of their expectations of profit or appreciation of their investment and each relied, substantially, that market value inflation constituted their only hope. Further, each appellant testified that the services to be rendered by the appellees, or the company, or the trustee holding title, or anyone else, was to keep the property ready to sell when the hoped-for inflation of thе market might occur.
Appellants urge that in Howey and United Housing, the investment was likewise in land and the interest purchased was held to be a “security.” Appellants overlook the fact appearing in each case that immediately after the purchase, the investor also made a long term lease for management and control of citrus groves. This long term management and control by others, plus the investors’ expectation of profits therefrom, was the rationale of each decision. In our case, we do not find long term manаgement because the investors are free *486 to change managers at any time. Neither do we have management efforts devoted to making a profit, or appreciation, but only serving as a caretaker of the property.
Appellants also urge that “solely” as used in
Howey
does not preclude some participation by the investor along with “others” as shown in pyramid selling schemes.
See S.E.C. v. Glenn W. Turner Enterprises, Inc.,
Appellants further urge that “essential managerial effort” supplied by “others” is sufficient to make the interest purchased a “security.” This test has been applied in
Searsy v. Commercial Trading Corp.,
Appellants recognize that
McConathy v. Dal Mac Commercial Real Estate, Inc.,
We conclude and hold that the investment of appellants, along with others, in a raw land joint venture whose expectation of profit or appreciation was market inflation was not the purchase of a “security” within the definition provided under the Securities Act, Tex.Rev.Civ.Stat.Ann. art. 581-1, et seq. (Vernon 1964). Affirmed.