The Topeka state journal. [volume] (Topeka, Kansas) 1892-1980, 1920-01-03
MAY SELL STOCK
Permit Granted to Renker Hotel
Company by Court.
Judges Mcclure and Whitcomb
Reverse Charter Board.

Judge James a. Mcclure in the
first division of the district court
today granted the Renker Hotel COM
pany permission to sell stock In To-
peka for the erection of a hotel In
doing this. Judge Mcclure, with Judge
George H. Whitcomb concurring in
the opinion, set aside the findings of
the state charter board which denied
a permit for the following reasons;
That the promoters plan of business
was unfair and inequitable.
That the securities offered In pay
ment for the property were in excess
of the reasonable value.
That the enterprise was merely
scheme of the promoters to get rich
at the expense OF the purchasers of the
aforesaid securities.
The court" said Judge Mcclure,
lis of the opinion that the charter
board acted in perfect good faith in
ma liking its findings against the plain
tiff, and it is with great hesitation and
reluctance that the court sets aside
the findings of the board.
Not Covered BY Law.
However the creation of a law to
safeguard investors is a duty of the
legislature. The court in an interpre-
tive position is unable to make a rul-
ing on a proposition for which no law
exists"
Extending the powers. of the state
charter so 1t TAKE sCOn-
sideration the welfare of investors in
business propositions. technically cor
rect, but which, in the opinion of the
board. will end in certain loss for in
vestors is a proposition under discus
sion at this time.
The state charter board contended
that with stock already sold for one
hotel to permit stock to be sold in a
second hotel enterprise would result
in financial loss to the purchasers
thereof, and for that reason the pro-
posed plan to build the second hotel
was unfair and inequitable.
The Renker people. on the other
hand, contend that the purpose of the
blue sky law is to prevent fraud and
imposition. in the sale of securities.
and that each plan stands on its own
merit independent of other similar
enterprises.
"It is a serious question:" said Judge
Mcclure in his opinion. whether the
blue sky law was intended to protect
against financial loss rather than I'M
fairness in the scheme of organization
or fraud"
Dcplores Lack Flexibility.
Continuing, Judge Mcclure deplored
the lack of flexibility in the law which
in his opinion makes it impossible for
the state charter board to rule on the
effect issuance of a charter will have
on the small investors purse and
leave, in Judge McClure's opinion, the
board. with power to do nothing ex-
cepting to determine whether the plan.
regardless of its business feasibility,
is technically correct and free from
fraud.
Judge Mcclure stated that the Rem
ker people in his opinion had been
fair in their attempt to place a valua-
ton on the property and had agreed
to have the property valued by APP.
praisers to be appointed by the state
charter board.
The alleged unreasonableness of the
90 per cent commission asked by the
promoters was taken up. Judge Nc
Clure pointed out that like commits
sions are permitted to oil companies
and other projects and that evidence
had been produced showing that the
expense of maintaining offices. clerk
hire and other necessities in the sale
of the stock did not make the demand
unreasonable.