Case ID: ohio-st_62/html/0146-01.html
Source: Caselaw Access Project
Author: {"author": "By the Court :", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

The State of Ohio on Relation of the Interstate Savings Investment Company v. Matthews, Superintendent of Insurance, Etc.
    
      Deposit required of bond and investment companies — Act of April 25, 1898 — Does not apply to companies placing or selling securities, etc.
    
    The act of April 25, 1898 (93 O. L., 401), does not require that the sum of $25,000 to be deposited with the treasurer of state by a company doing in this state the business of placing or selling securities, etc., shall be derived wholly from its capital stock.
    (Decided February 20, 1900.)
    In Mandamus.
    The relator alleges that it is a corporation duly organized under the laws of West Virginia; its capital stock is $150,000 of which $50,000 is preferred and $100,000 common. Of the $50,000' preferred stock $2J,600 has been issued and the money realized thereon is in the possession of the company. Of the $100,-000 of common stock authorized but $20,000 has been issued and the proceeds thereof paid to the company. Of this amount $10,000 is retained by the company in obedience to the requirement of the laws of West Virginia. On the 28th of May, 1898, the relator deposited $25,000 in cash with the treasurer of the state of Ohio, and this amount, together with the $35,000 subsequently deposited, being ten per cent, of the gross receipts on the amount of business done by the relator in this state, was converted into municipal bonds of various municipalities in this state and deposited with the treasurer of state.
    The defendant refuses to issue a license to the defendant and its agents to further transact business in the state of Ohio according to the provisions of the act “to regulate certificate, bond and investment companies,” etc., passed April 25, 1898 (93 O. L., 401), because the deposit of $25,000 originally made by the relator was not wholly out of its paid-up capital stock, but was in part realized from the prosecution of its business. The question arises under the first section of the act, which is as follows:
    
      “Be it enacted by the General Assembly of the State of Ohio, That every corporation, partnership and association, other than a building and loan company, doing in this state the business of placing or selling certificates, bonds, debentures, or other investment securities of any kind or description, on the partial ■payment or installment plan, and every investment guaranty company doing business on the service dividend plan, shall, before doing business in Ohio, deposit with the state treasurer twenty-five thousand dollars either in cash or bonds of the United States or of the state of Ohio, or of any county or municipal corporation in the state of Ohio, for the protection of the investors in such certificates, debentures, or other investment securities. And in addition shall, on or before the tenth day of January of each year, deposit with the said treasurer, either in cash or bonds of the United States or of the state of Ohio, or of any county or municipal corporation in the state of Ohio, ten per cent, of the gross receipts on the amount of business done by it in the state of Ohio for the twelve months nest preceding the thirty-first day of December. The said deposit shall be made each year as aforesaid, until the total amount of such cash or bonds so deposited shall be worth one hundred thousand dollars.”
    It is admitted that the amount paid by the relator on account of its business transacted in. the state is in accordance with the requirement of the statute.
    
      Charles W. Baker, for the relator.
    
      J. M. Sheets, Attorney General, and J. E. Todd, Assistant Attorney General, for the state.
   By the Court :

In justification of the refusal of the defendant to grant the license it is said that in contemplation of the act the sum of $25,000, constituting the original deposit to be made by the company as a condition to its right to transact business in this state, must be derived wholly from its capital stock, to' the end that the security for investors thus created may be derived wholly from a source other than the means which they deposit with the company. That view might be entitled to legislative consideration, but it finds no warrant in the terms of the statute. They are fully satisfied with the deposit of the $25,000, as was done in this case, without regard to the source from which it is derived.

Peremptory writ allowed.