Opinion ID: 1865218
Heading Depth: 1
Heading Rank: 18

Heading: Constitutionality of the Minnesota Securities Act.

Text: Having decided the Minnesota Securities Act applies to the sale of Dittmann, we now address appellant's constitutional challenge to the act based on federal equal protection grounds. U.S. Const. amend. XIV. Hagen argues that by applying the state securities act to the sale of business through a stock transfer he is subjected to a stricter standard of disclosure than is imposed on persons who sell a corporation through a sale of assets. He contends there is no reasonable basis for the differing treatment. [15] We disagree. Legislation is presumed valid and will be sustained if the classification drawn by the statute is rationally related to a legitimate state interest. City of Cleburne v. Cleburne Living Center, ___ U.S. ___, 105 S.Ct. 3249, 3254, 87 L.Ed.2d 313 (1985). Legislation is rational if the question is at least debatable. See Minnesota v. Clover Leaf Creamery Co., 449 U.S. 456, 464, 101 S.Ct. 715, 724, 66 L.Ed.2d 659 (1981). When a business is sold through the transfer of assets, the assets alone pass to the buyer. When a business is sold through a stock transfer, the buyer assumes not only the assets of the corporation, but also the liabilities. This greater risk justifies greater protection for the stock purchaser. The stricter disclosure requirement, therefore, has a rational basis. We hold the Minnesota Securities Act constitutional as applied to the sale of Dittmann.