5 OFFICE OFTHE ATTORNEYGENERAL OF~TEXAS

-c.yInn AUSTIN

--

Secretary bf State Austin, 'Pexaa Attention1 

### I&. Fi'ank D.
Dear Mz’.

Lwaon$

“*The aorporatlon



### doesnot pmpose to qualify in your state an a forei,gn aoxqoration, nor do any tntraatate bualnees thers, but proposes, however, to aolialt offers 

### for the purchase of royalties by resident nalesmn who

### 888

**Honorable Wll~lam**  **J. kuf~on.**  Page 2

i ’

. deduct comtrilerionra and remit the net oum with **said** of+rs, for rooeptanaeor rejeatlon, by the comDaJly+ln

Vyomlng.* ” “The form or offer of puruhme to **be** used by such cowany is enclosedherewith. “This department

vould appreciateyour oplnion a* to the follov~ queatlow under the state of faate hereinoboroset out: “(1) Is such aorpawtlon under such state of facts engaged ln Interstatecoannerce? "(2) If you have 

### ansvered 'Yes* to the above questionholding thereby that such corporatton under mwh state of fa’acta **end** its agents **ara** engaged in **Laterstate commerue**  would such aorporation **and** it8 agent8 bo violatingthe pmvlrlona a? the Texas Seaurftiea Aut if they have xade no atterapt

to qualifyunder the iesuer’aprovisions thoreof?

“(3) If you have answered ‘Yes* to the first questionholding thereby that suah corporation and its agent8 am engaged in interstateoozmmrue vould, ~uah oorpowtlon or ita agents be violating the pmvialono of the Texas Becurlt~es Act ii they foil to **regieter** under the provlelona02 such Act perta- to the mglstratlon of dealers and saletinwn? The form or offer of purc2mee referred to by you 16 as follows:
**“OFFER TO**  **PURCRASR**ROYALTY

'I, the undersigned, do hereby **offer** to purchase from Western Petroleum Corporetlon, a Uyomlng corporation,

a non-produciag

over?idlngroyalty interestof the sum of - thousandt?k(- ~i/10030th,)for Dollars. This offer

### 889

HonorableWllllam J. Lsvoon~ Page 3

Is not binding upon ths aorporatlon until acceptedby Its duly authorloodofficers in VyomIng, It bsIng **understood** that thIo I8 an

produaingoverridingmyalty interests.
"IA WITHESS UBEREOF, the undersigned has laaunto oot his hand and oeal~thls - aarr I 194-. I Saleomstt Rem%

‘Accepted byt Weoterm Petroleum Corporation

Addreood
It is vell settled law that vhere the federal government

has assumed full jurisdiction of omttero vlthin the scope of Its power, Its regulations are exclusivevithin the f.1el.d Involved (See the oese of Oregon-Washington R & H C. v. WashIngton {U.S.) 70 Lav Ed. 482).

I It has llkevissbeen settledby the Suproom Court

of the United Mates that otate rsgulatorylavo am valid unless oongresohas exaluolvelyoocupled the field'orunless the state law dlraotlybuMan Interstatebommercw. (See authorltles collated In opinionHo. O-2459 of this departnmnt, a copy of which In bnelooedherevlth for 

### your lnforsratlan.)

Seattonnr of Title 15, **U.S.O.A.,** a portion of the Federal Beourltleoand ExchangeAct, reads as follovot

%othlno In thFo.sub-ohapter ohkaffecti the jurisdlation

of the SeeurltleoCon$o~ 7or any agency or office Performin lik L tions) of any state or terrftoryof the United States, or the District of Columbia,over ane securityor any peraon." ( i.hderscoring ours, Honorable XIlllam 8. Lawson, Pago 4

STudgp St. Sum, of ths NorthernDistrict of Callfornla, SouthernDlvlolon, In aonotrulngthe above quoted seutlon, said: nDeXendanizr elso call attention to ha. **18** of the Act of 1933; whlah provides far 'state oontrol of securities' am Indicativeof the %ntentionof Congress to 1Qnlt Its legIol8tionto activitiesin interstate oomneme. Thor. IO no merit In tho oontentlen. The moot that ornc~be said fop the ooatlon is that It probablyglum coneurroat jurlodlatlon to the Securitiesand Exohwga Caamloolonand the State authorities. Thers io.ao doubt that the Geouritles and Exchange ComolooIon

hao jurlsdletion

of the matters here ooxplalnedof:' Becurltlesand Zx 0 commloolon v. Twetmst, Iaa., **28** 

### Fed. Supp, **3** chan$

**.** Sky Lava” The oontentloa has been frequently made that 'Blue or 'Seourltleo

A&o* imposeburdens upon interstate commerceoad are, therefore, unaonstltutlonal. Suoh oeatentlono vere, hwever, rejectedby the Supreme Court of 

### the United States ia the case of Hall vs. Geiger-JonesCo-y, **242 U.**  **S. 539.**  Also see annotationaIn **87 A.L.R.**  **46** et oeq:

ft vll1 be noted that the Texas 8eoamltleo Act makes it unlawful to offer for aale within the state oeouritleo vlthout first ha lng dthe 1 d lloense as well as to sell within the stat:vit~$%m rsq~~d?.lcenoe. (80e Seotlon 12 of Artlale OOa, Vernon18Annotated**Texas** Civil 8tatuteo.) The Seaurttieo Act of Wichlgan is **nlmllar** to ths Texas Securltleo Aat; The Supreme Court of MiahIgan In the oaae of People v. Augustine,204 8. W. **747,** held that for the offense of negotiatingfor sale unapproved seaurltlealn Mlahlgan the aotual sale aeed not be oonotmmatedin Xichlgon. In other words the negotiations wire had In luchlgan and the sale was eonsuounated in #ev York. The Miohhigmi Su$reme Court held this to bo In vlolatlonof the Nlohlgan Seourltles Aat. Also ree the aaewof First BotlonalBank of Pinevlllev. Wtlaon, 55 S. Y. **(26)** 657, (Supmom Court of Kentucky).HonorableWilliam J. LAWSON, Page 5

We quite from the uase of Bartlettv. Doherty,10 F. Supp. 469,mditled in home robs m¬ m@terin3.

hereto in 81 F. (2d) 920, re-hewing danled **8** denied 83 Lav Ed. **1398,** a8 follows~ 3 **F. (26)**  **920, certiorari** 

'In defendant's **pre8ent** brief the que8tlon Is revived, it being aqgued that these sale8 of stock were llew

York tramauti~nns

and valid **under** the laws of **that** atate, and that any aat ol' the Bev HampshireLegfslature which would Invalidate them is unaonstltutional aa an undue burden 051 lnter8tatecommerce. 'It is argued that this vlev of the lav haa not been determined**by** the United States Supreme Court.
"It seems to me that derend&tla aontention is anaveredby the Supreme Court In the aaae of Hall v. Oeiger-Jonesco., 242 u, 3. **539,** 557, 37 9. Ct. 217, 223, 61 L. Ed. 480, L. B. **A.** 19178, 514, Ann. Cam. lgl?C; 693. It **appears,** that the, oontentlonof t-h8

plaintiffnow made did not escap8 the attentionof the SupremeCourt, for It saldc IThanext aantentlonof appellees18 that the lav -8~ review Is **a** burden on interstate comme~ce,~and

therePoreoontraveneathe commerce olause of the Conat.ituti.on of ths U&ted Ststas. t 4 e The provisionsof **the** law, It will be obaerved,apgly

to dlapositlonsof eeourltles wlthla the state. and vhlle lnformstl.on of those Issued lx-otherstatar~andf&&n ooktrie8 is required to be filed, l l l they are,only af?euMd..bythe requirementof a llaenss of one who deals in them wlthln the etat8. Upon th i transportation into the state there la no lmpe&&nt,--no r~egulatlon of them or lnterfersncr, with #em after they got there. There 1s thb exaattononlg that hs'wh6 dlaposea of them th8XW shall be licensed to do uo, and thlr only that they may not appear in false ahmacter and iwoae an armearanceof a;ivalu8 vhlch they may not possess,--an h-this ct&tal.nl'~

is 6n.Q. an indirectburden upon them 88 objeat6 of lnterstate commerce, if' tneg may be PeRardedas such.HonorableWill.iam 3. Lawaon, Page G

> *'It 16 a poll08 regulationmtrictly,not affeatlx$them utatll there lean attempt to make dlepoaitlonof them within the state, To give them more lmmnity than this is to give them more lnzaunlty

than uore tangibleartialesare given. they having no exempti& ~from Pagulatlon*he piarpose of vhloh 1s to prevent fraud or deception. Suah regulation6

affect interstateao6mt8Fae in them only inaide$tally.* I

. . .
**“me next**  claim is that 'The aalea were made ln Hew York, the Rev HnmpahireBluo Bii Law has no extra territorialeffeot and thersfom oannot make th8ae sales void.' I oannot aaoept thi6 statementof the law. Many of the states In ths Union have enaated~so-aalled Blue Sky laws. If def%ndant*66tate6mntvere true, all the d8f8nd6ut had to do vaa to eatabllshhis office in FJev York City and flooii

the countryvlth eeaurltie8, good or bad, and alaim immunityof 6.ny breaoh of lav of any state 60 long a6 rt retainedat Its home offloe the right to conflirp or rejeot any male ita OgentS elaevhere.,ff **this 16**  **tITX8** the Lsv of &v Rammhlre and that of moat other mnv as well be **aar6pmd. S**  **Both 11**  Buakbee-M8ar6

Co., 275 II.

3. 274, ;$ 8. C:: 12:: 72 L. **Ed.** 2771 Chatfianoo **a** l?atlonalBullding & Loan Association

V, Dmmon, 1 9 U. 3. 408, 23 8. Ct. 630,

8 47 L. Ed. 870." (Undereaorlng ours) The above ease h8ld that the Hew Hmpshire Blue Sky Lav, regulatingsaloa of eeouriti8a vithin the state vithout **pro** hibiting interstateshipments vaa not unconetltutloaa2. a8 an undue burden on interstatecommercea!?. applied to sales of stock tn which ordersvece taken in Xew Rsmpahlreand confimations vere made in dealer'sN8v York Office.

Whether or not the aorpoxmtion¶nvolVed**herain i6**  engaged **in** inteP8tate **commerce ia**  **entirely ilIJImteri.al**  **in Vi8V**  **Of** our furtheransver vith respect to the local agents..

HonorableHllll6m J. Lawlon, Page 7

Rewiring the local agent6 to take out p44naitS 1X4 no Way **burdenl,** the lrlterstatebUsin86s of the corporation; if it shouldbbe

held that 6Uoh business 16 interstatecomm8rce. While the local agent6 in any eventwould be required to aomplyvith the requirement8 of our Texa6 Securltles Aot, yet, In view of the faat that the loaal a&mats in the present lnstanaeeontearglate aoliaitingonly with respect to the securitiesirsu6& by Thea particularcorporation, It uould not avail them to take out permite, seeing, that under the express terms of our Seaurltlee Act, they would not thereby be authorized~

to offer for sale eeourltierof a foreign corporation or solicitorders for a foreign corporatfon which itselfhad not taken out an 168~8~~6 

### permit.

**h3tion 5**  of our Texas ZeUUHtie8 Act d6dar661 .'%'a0 dealer, 

### agent or salesman shall 6ell or offer for aalo eny seuuritlerIssued after the paaeage of thle Aot, exoapt those vhithlch come vithin the clasaea enUmer6tedIn subdivisions(a) to (q) both inolueiv8 of Seotfon **3** of this Aat, or subdiviaionr (a) to (lj, both inolus~v8of Section 23 of this Aot, Until th8 issuer of auoh seouritles shall have been granted a permit by the Seoretaryof State, and no such permit ehall be granted by the Seoreteryof State until the lesue~ of such securitiesshall have filed with the SecretaryOS State a worn statement verifiedunder the oath of an executiveofficer of the Issuer and attestedby the Secretarythereof, setting forth the following informationr 6 l + "
In view OS the above quoted Section it 16 our opinion that the loaal agents, even with a permit,,vould not be authorized to offer for sale the sscuritiea mentioned in your letter,unleso and until the aorporetion shell have b88n granted an issuer'sper-~ mit by the Beoretaryof State. Very truly yours