The Detroit times. [volume] (Detroit, Mich.) 1903-1920, 1913-08-16
ATTEMPT MADE
TO ENJOIN The
BLUE SKY" LAW
New York and Chicago Finan-
cial Concerns Make Applica-
tion in Federal Court
CLAIM LAW INFRINGES
RIGHT OF FREE CONTRACT
Case Will BE Heard in Detroit
Before Judge Sessions
Next Tuesday

Bills for injunctions 10 restrain the
enforcement fthe new blue sky
Law which went into effect Friday
We're filed during ire morning IN the
federal court in Detroit by several
large companies OF New York and
Chicago acting In concert.
The application viii come before
Judge Sessions next Tuesday. Beau
mont, Smith & Harris are attorneys
Tor the petitioners.
The Alabama and New Orleans
transportation Co, with a capital OF
s. 100000 and first mortgage bonds
outstanding TO the amount OF Sl,2l0.0 900
is one OF the plaintiffs 70 the suit, and
viii test the right or the state TO reg
ulate a company in the issuance or its
own securities.
Otter plaintiffs who question the
validity OF the law in its application
10 dealers are Lee. Higgins & Co. OF
Boston and New York. " w. Halsey
4 Co. OF Chicago and New York and
the Continental Trust and Savings
Bank. Of Chicago
These bills maintain the right OF the
plaintiffs TO sell bonds in Michigan
without legal restrictions and declare
that the law is an infringement upon
the right OF free contract
IL is claimed that this statute can
not be an exception TO the general
law on grounds OF public welfare be-
cause the law itself has no relation
10 the public health that the law for
bids interstate commerce in these Sc
curities which is beyond the power of
the state; that the law provides no
way for hearing on the worth OF Sc
curities offered for sale; that there is
no appeal from the findings or the
commission, that is vested with arbi-
trary power. and although an admin
istrative body the law gives II both
judicial and legislative power and
that the penalties in the law are too
great. IL is claimed that the title OF
the act is not proper, and hat the act
itself attempts 10 regulate manutactur
Ing and mining and other companies
under the title Of Investment compan-
les. Numerous determinations un-
der the act are referred 10.
Ii Is charged that the commission
has issued blanks that require lnior-
nation that the dealers cannot supply
and information that the commission
itself cannot require and that is not
at all appropriate under the act.
| IL is claimed that the commission
has approved certain manuals which
contain information about securities
that these manuals list insolyent com
panies as well as solvent. and that
the information given in the manuals
is not the information that is re
CURED by the act
II is expected that an additional bin
will be filed in the state court. ques-
tioning 'directlythe power OF the state
to regulate a local Michigan dealer IN
securities The bills were signed IN
Chicago Thursday. brought back 70
Detroit and filed Friday. New York
counsel appears also TO have been re-
tanned and IL is evident that the suits
are so framed TO test all the provis-
ions OF the law and furnish final de-
cision OH its merits.
This is the first action on the part
of any investment companies to thor
oughly test an act or this ort although
a suit was recently brought in the cir
| cult court OF the state OF Kansas, al
lacking the Kansas law. IL is said
that action will be deferred In other
states until the outcome OF this sui,
can be determined II is understood
| that the investment banks selected
! Michigan as a proper state 10 try the
matter out because II Is one OF the
| largest states in the Union. and ,e
cause OF the sweeping character of the
| Michigan law and the recognized an
| thority OF its federal courts.
/ The injunctions are asked FOL
against Attorney. General Grant Eel
lows. State Treasurer Jacob Haarei
and Banking Commissioner Z. h
Doyle who compose the Michigan go
Icurities commission. which will have
Icharge OF the enforcement OF the law