South Bend news-times. (South Bend, Ind.) 1913-1938, 1921-07-16
CITES RESULT OF
FIRST COOPERATIVE
CONCERN TEST CASE
Commerce Body Hears of
Terrc Haute Fine Against
Society's Agent.

The first test case against the Co.
operative Society OF America has just
been completed in Terre Haute, &C
cording TO a communication received
by the South Bend Chamber Of
Commerce Friday morning. The re-
port comes from the better business
commission which has handled the
prosecution. The result Of the first
case is OF interest in South Bend
since similar cases may folio "
throughout the state and in this city.
Information gathered By the South
Bend Chamber Of Commerce was
turned over 10 the Terre Haute
prosecution in the fighting OF the
case. In South Bend the society has
been active and has secured a large
membership. The same information
has been placed in the hands of the
local prosecutor.
The communication from Terre
Haute follows:
a few weeks ago we found .
small ad Offering the stock OF the
Cooperative Society OF America for
sale at $50. We at once got in touch
with the person offering 1t and ask
ed if he had a permit 10 sell the
stock in the state. He very promptly
laid the cards on the table and said
that he had been offered the stock
through "A Chicago broker for $3.50
and that men were selling it TO rail-
road emIloyes for $3.50 and was
trying TO save some OF his railroad
friends some money if they were de-
termined to buy that kind OF stock
and also make a profit for himself.
He was not familiar with the blue
sky law and Immediately offered 20
run the thing down.
Through his assistance we very
readily located a number Of persons
who had made purchases and IN
duced one Of them to give us copy
of the contracts and printed mat
ter.
Law Held Valid.
I'VE had copies made and got in
touch with the attorney generals
office, which furnished US with the
necessary form of affidavit, and, as
soon as the leader, Z. V. Hamilton,
came back 10 the city, he was
promptly picked up by the police.
At the preliminary hearing which
was attended by d representative OF
the attorney generals office and Sen.
Rats author of the law, the consti-
tutionality Of the law was argued
before a special judge who had been
agreed upon by both sides. The
judges decision was given in one
week and the blue sky law was de-
clared constitutional.
THE attorneys for the defendant
demanded a jury trial and the jury
was selected on Monday. 1t was a
representative group of men, all
classes being represented. Only one
witness was used to show the sale
Of the security and Atty. Menden-
hall of the securities commission, to
explain the law 70 the jury as an
other witness.
THE case was argued vigorously,
both Mr.. Mendenhall and Sen.
Rats being here, and. fortunately,
our assistant prosecuting attorney,
Earl Mann, was a member Of the
legislature and familiar with the
laws and local aspects Of the case
were in his hands.
Fined 500 and Costs.
THE jury returned the verdict Of
guilty and the matter was promptly
appealed TO a higher court. The de-
PENDANT was fined 500 and costs.
This is the h-st test case of the
blue sky law"
The South Bend Chamber Of Com
merce has been cooperating with
the securities commission in the
matter of the sale Of debentures in
the Cooperative Society of America
and the local Pros. Floyd O. Jelli-
son has been furnished with a stand
ard form of affidavit by the secur:-
ties commission. The case in Terre
Haute may set a precedent for the
state.