The Topeka state journal. [volume] (Topeka, Kansas) 1892-1980, 1913-08-08
The BLUE SKY LAW
Its COnstitutiOnality Up to
Shawnee Court.
Two District Judges Hear Long,
Heavy Arguments.
THE 1918 LEGISLATURE
1t Tackled on Amendment That
Hurt.
Echo of MOunDay Suit Is This
Lawsuit.

Judges Dana and Whitcomb will dag
nose an amendment which the law
| contracted in it's association with
| the 1913 legislature and determine
| whether the act is constitutional. In
| support of their contentious that the
| law is or is not constitutional, the law
| yers in the MounDay case have celled
the courts attention to several hum
| dred safe, sane and sound court rul-
1ngS and point proudly to a wheelbar-
row load of legal reports which were
this morning dragged into the court
room.
For three hours this morning the
lawyers called the district courts at
tentions to decisions by the Kansas
supreme court and the supreme court
OF 40 other states, all of which SEEM
ingly established beyond question or
doubt the fact that the blue sky law
is both constitutional and unconstitu-
tional. And from this flood of legal
instruction from the learned judges of
the land the two Sweltering district
court judges will be expected to walk
right to given mark and hand down
a decision in the case which will bar
inspection and approval in all the ap
pellate courts of the country.
Caused by 1913 Amendment.
If the 1913 legislature hadn't tamper-
ed with the blue sky law, the act would
probably today be in good standing
with the public and the men who want
to sell questionable assets to Kansas
investors. But the 1913 law makers put
a provision in the 1911 law which said
that the sale of real estate in other
states should be regulated and the in
VeStmentS approved by the state bank
ing department just as that department
now regulates the sales of stocks and
bonds and securities to Kansas men
and women WHO are unable to accur-
determine hpr 7Saly vIof he,
the investments are good or bad.
This amendment to the law aroused
the wrath of Don A. MounDay who had
fearlessly sold New Mexican land con-
tracts to KansanS without interference
by the banking department. But with
the new law in operation, his business
was threatened and he filed suit to en-
join the bank commissioner and the
attorney general from enforcing the
law against his enterprise which had
threatened to pay dividends. MounDay
wanted the pet Kansas law declared
unconstitutional.
Suit Starts Much Trouble.
The MounDay suit precipitated a
world of trouble. ]. N. DoIley came to
the rescue of the law and MounDay
promptly sued the former bank COM
missioner for libel. Then the govern
ment began to investigate MounDay's
operations and himself and wife were
arrested on charge of fraudulent use
of the mails. The state also took "A |
hand in the fight and the courts were
asked to out MounDay and his sugar
point receiver for the alleged in-
solvent corporations to protect the IL
terests of innocent purchasers
Attorney General Dawson today
moved for the dismissal of the Noun
Day suit when he presented a de-
pleadings. Dawson opened the fight re- |
garding the constitutionality of the law
and urged that the Kansas enactment !
be upheld
As Dawson Sees the Case.
'"The blue sky law is a novel but
courageous effort on the part of the
state in the exercise of it's police pow :
ers to protest its citizens from being
swindled by the sale of muchrtootsd /
but worthless stocks, bonds, lands, lots, |
diamond contracts, mines and kindred |,
fakes which are no more valuable as
tangible property than so much blue
sky said Dawson. 1.-THE court will |
take judicial knowledge that for many |
years past in common with the rest of |
the country, Kansas was overrun with |
fakirs imposing upon the gullible with |
all sorts of get-rich-quick schemes.
ITO curb, if possible to suppress this |
sort of traffic, this wholesale and un-
blushing spOliatiOn of the innocent |
and trustful, the blue sky law was en-
acted. 1t was born of necessity. In
the olden time it was sufficient to
rely on the criminal law for punish
ment of swindlers who obtained other
peoples money by false pretenses, be-
cause before the days of commercial
the amount of fraudulent
mischief which one criminal had the
opportunity to perpetrate was limited.
But with the perfection of modern
systems of business, the range of any
one swindler's activities is almost un
limited.
There are not enough days in the
year to prosecute and convict the
numberless separate frauds which it
is possible for one INSCRIPTIONS man
to perpetrate on the public. Nor are
there enough days in the year for the
vast multitude Of defrauded persons
to try to Etigate and recover their
damages for all the various individual
and frauds which may be per-
petrated upon them by one fakir
consequently and out of necessity
to avoid the pitiful confession that a
sovereign state could not furnish
remedies for such innurn erab bic
of the states governmental and police
powers became necessary ard states
men and lawyers concede that in such
a predicament it is the duty of the
state to prevent and suppress such
boundless spawn of crime and fraud"
To back up his theory Dawson called /
to the courts attention legal citations
Common Law of England to the more
recent and familiar Kansas decision in
the Shocky-Dolley case from Abilene.
Law Is Too Broad, Says Quinton.
When Dawson had concluded his argu- |
ment, A B. Quinton took up the fight for