Opinion ID: 1485429
Heading Depth: 1
Heading Rank: 1

Heading: The Constitutionality of the Act.

Text: The Trust contends that the Securities Act is unconstitutional for the reason that the transportation and sale of securities is not interstate commerce. In the Lottery Cases, 188 U.S. 321, 345, 23 S.Ct. 321, 322, 47 L.Ed. 492, the Supreme Court said: What is the import of the word `commerce' as used in the Constitution? It is not defined by that instrument. Undoubtedly, the carrying from one state to another by independent carriers of things or commodities that are ordinary subjects of traffic, and which have in themselves a recognized value in money, constitutes interstate commerce. While securities are mere evidences of obligations to pay money or of rights to participate in earnings and distribution of corporate, trust, and other property and are mere choses in action, nevertheless in modern commercial intercourse they are sold, purchased, delivered, and dealt with the same as tangible commodities and other ordinary articles of commerce. The mails and the facilities of interstate commerce are commonly used to effectuate their sale and transfer and we have no doubt that they should be regarded as subjects of interstate commerce and transportation. [2] In Electric Bond & Share Co. v. Securities & Exch. Commission, 303 U.S. 419, 442, 58 S.Ct. 678, 686, 82 L.Ed. 936, 115 A. L.R. 105, the court said: When Congress lays down a valid rule to govern those engaged in transactions in interstate commerce, Congress may deny to those who violate the rule the right to engage in such transactions. Champion v. Ames, 188 U.S. 321, 23 S.Ct. 321, 47 L.Ed. 492; United States v. Delaware & Hudson Co., 213 U.S. 366, 415, 29 S.Ct. 527, 53 L. Ed. 836; Brooks v. United States, 267 U. S. 432, 436, 437, 45 S.Ct. 345, 69 L.Ed. 699, 37 A.L.R. 1407; Gooch v. United States, 297 U.S. 124, 56 S.Ct. 395, 80 L.Ed. 522; Kentucky Whip & Collar Co. v. Illinois Central R. Co., 299 U.S. 334, 335, 346, 347, 57 S.Ct. 277, 279, 280, 81 L.Ed. 270. And while Congress may not exercise its control over the mails to enforce a requirement which lies outside its constitutional province, when Congress lays down a valid regulation pertinent to the use of the mails, it may withdraw the privilege of that use from those who disobey. Champion v. Ames, supra; Lewis Publishing Co. v. Morgan, 229 U.S. 288, 33 S.Ct. 867, 57 L.Ed. 1190. The Securities Act of 1933, as amended, 15 U.S.C.A. § 77a et seq., does not attempt to regulate or prohibit the sale of securities in intrastate commerce. It merely provides as a condition precedent to the use of the mails and the facilities of interstate commerce that the issuer file a registration statement containing a true and complete statement of the information required by Section 7 of the Act, 15 U.S. C.A. § 77g, in order to protect the public against imposition and fraud in the sale of securities through the use of the mails or the facilities of interstate commerce; and as a deterrent against the filing of a false or misleading statement, subjects the persons responsible for such a statement or who participate in the making thereof to civil liabilities in favor of any person acquiring the security without knowledge of the false or misleading character thereof. See Section 11 of the Act, 15 U.S.C.A. § 77k. It is well settled that Congress may enact reasonable regulations to prevent the mails and the facilities of interstate commerce from being used as instruments of fraud and imposition. We conclude that the Act is within the constitutional powers of Congress. [3]