Opinion ID: 2118590
Heading Depth: 1
Heading Rank: 5

Heading: as to participation

Text: 13. The Court having determined that in so far as L.C. Dixon, LeRoy Dixon and William Lawin are concerned, they did aid and participate in the sale of guaranty fund surplus certificates to plaintiff, and the Court having also determined as to all defendants that they did aid and participate in the sale of guaranty fund surplus certificates generally, the following question is submitted for answer by the jury: 13. Were the defendants, Arthur Lawin, Donald Hart, F.E. Houle and N.D. Underhill aware of the sale of guaranty fund certificates at, the time of, or prior to, or within a reasonable time thereafter to the plaintiff? Answer yes or no  Yes. Upon return of the jury verdict, the trial court ruled that the guaranty fund certificates were securities within the provisions of Minn. St. c. 80; that they were sold without being registered; that all of the defendants aided and participated in the sale of certificates to plaintiff; and that plaintiff was entitled to recover against all of the defendants. It ordered judgment entered accordingly. Appellants raise the following issues on appeal: (1) Did the court err in denying the motion for summary judgment of dismissal on the ground that the guaranty fund certificates were not securities within the statutes requiring the registration of securities? (2) Did the court err in finding that William Lawin aided and participated in the sale of the guaranty fund certificates to plaintiff? (3) Did the court err in finding that all of the appellants aided and participated in the sale of guaranty fund certificates generally? (4) Did the court err in submitting to the jury the question: Were the defendants, Arthur Lawin, Donald Hart, F.E. Houle and N.D. Underhill aware of the sale of guaranty fund certificates at the time of, or prior to, or within a reasonable time thereafter to the plaintiff? Essentially appellants contend that the guaranty fund certificates as a matter of law are not securities and that they are not liable because they did not participate in the sale to the plaintiff. Since there has been no motion for a new trial and the appeal is from the judgment, the only question before this court is whether the lower court's findings, some of which were based upon the special verdict, are sustained by the evidence. 1. Upon appeal from the judgment, since no motion was made for a new trial, we are concerned first with whether the evidence sustained the jury's special verdict and the trial court's findings. It was for the triers of fact to resolve the conflicts in the testimony, and it is for this court to determine whether the findings support the conclusions of law and the judgment. 2. It is well settled in this jurisdiction that the findings of fact by a trial court or jury will not be reversed on appeal unless manifestly and palpably contrary to the evidence and that this rule applies whether the appeal is from a judgment or from an order granting or denying a new trial. See, State v. McCoy, 228 Minn. 420, 38 N.W. (2d) 386; Holz v. Pearson, 229 Minn. 395, 39 N.W. (2d) 867; Boulevard Plaza Corp. v. Campbell, 254 Minn. 123, 137, 94 N.W. (2d) 273, 284; Loth v. Loth, 227 Minn. 387, 35 N.W. (2d) 542, 6 A.L.R. (2d) 176; 1 Dunnell, Dig. (3 ed.) § 415. This court will consider the testimony in the light most favorable to the prevailing party and if the evidence as a whole tends to support the findings they will not be disturbed. The findings of fact by the jury and trial court stand on an equal footing and are entitled to the same weight and will not be reversed on appeal unless they are manifestly and palpably contrary to the evidence. A search of the record in the instant case would support the conclusion that the appellants, as directors, either authorized or participated in the sale of guaranty fund certificates to the plaintiff. The trial court determined that L.C. Dixon, LeRoy Dixon, and William Lawin aided and participated in sales to plaintiff. Based upon the jury's finding that the other appellants also were aware of the sale to plaintiff before, at the time of, or within a reasonable time after its making, the court determined that each aided and participated in the sale. A reading of the record indicates support for the findings of fact, conclusions of law, and order for judgment. In Drees v. Minnesota Petroleum Co. 189 Minn. 608, 250 N.W. 563, this court held that an officer of a corporation aiding and participating in the illegal sale of stock or securities of his corporation is liable to the purchaser for the money paid therefor and that no rescission or tender back of the stock so purchased was necessary before bringing suit where the purchaser received only a void paper certificate of stock. This court held that the action was not one in quasi-contract for recovery of money had and received by the corporation on an implied promise to repay, but for recovery on the ground of tort; this court further held that the evidence conclusively showed that the stock of the defendant corporation was sold in this state in violation of the statute requiring that such stock be registered and sale thereof licensed or approved by the state securities commission, and also that it conclusively appeared that the treasurer and the president aided and participated in the sales of such stocks to plaintiffs. In the instant case the Midland Mutual Fire Insurance Company with its principal place of business at Minneapolis was incorporated in 1936 under Mason St. 1927, §§ 3535, 3536, to engage in the business of insuring its members on the mutual plan against loss by fire and lightning. In 1942 the principal place of business was changed to St. Paul. The name was changed to Consumers Mutual Insurance Company in 1946. The offices were moved to Long Prairie in 1953. The corporate articles vested management in a board of directors elected by the policyholders from among their number. A policyholder was a member, entitled to one vote for each policy pursuant to Minn. St. 66.01, and could be assessed for payment of losses and expenses if net assets were insufficient (§ 66.07). Section 66.09 provides that a mutual insurance company may issue nonassessable policies if it establishes and maintains, over and above its liabilities and the reserves required by law of a like stock insurance company, a guaranty fund available for the payment of losses and expenses at least equal to the capital stock and surplus, if any, required of a like stock insurance company. That section also provides that the guaranty fund may be created either by transferring funds from existing surplus into such fund or by the issuance of guaranty fund certificates as specified in section 66.12, the same to be issued upon the conditions and subject to the rights and obligations specified in section 66.12. Consumers Mutual had been writing only assessable policies, no guaranty fund having previously been provided for. The minutes of the company show that the first use of surplus certificates was to raise $7,500 in order to provide a surplus of $10,000 to permit insuring and that the sales of the certificates to plaintiff and other sales made in 1953 and 1954 were for the purpose of raising capital. At a meeting March 25, 1953, a motion that the capitalization of the company be increased to $200,000 was adopted. L.C. Dixon, who became president of the company a few months later, testified: Q. So that when you made the motion to increase to $200,000.00 the capitalization you meant to issue and sell guaranty funds certificates? A. Yes.