Court Opinion

ID: 3976427
Source: CourtListenerOpinion
Date Created: 2016-07-06 10:34:08.612496+00
Date Added: 2024-06-11T07:44:06.670424
License: Public Domain

Appellant has filed an exhaustive motion for a rehearing, and also there has been filed an interesting amicus curiae brief by attorneys, and these briefs have presented both novel and troublesome questions for our decision.
It is vigorously contended that an oil and gas lease is not a security, as the same is contemplated under the statute here being considered because of the peculiar wording thereof, in that the classification of securities seems to be wholly composed of matters that are entirely represented by certificates of value only, and they invoke the rule of ejusdem generis to substantiate their proposition as applied to the latter portion of the statute defining securities as follows:
Section 2(a), Vernon's Ann. Civ. St., Art. 600a, defining securities, among other things, says: "* * * certificate or any instrument representing any interest in or under an oil, gas or mining lease, fee or title, or any certificate * * * or any other instrument commonly known as a security, whether similar to those herein referred to or not."
We confess our inability to see why there should be any necessity for an invocation of the doctrine of ejusdem generis, or of like import, when the text is simple and plain, and defines *Page 555 
any instrument representing any interest in or under an oil, gas or mining lease, fee or title as a security. The rule of ejusdem generis is not applicable here on account of the fact that the very definition itself eliminates the application of such rule wherein it states: "or any other instrument commonly known as a security, whether similar to those herein referred to or not," thus abrogating the application of the doctrine of similarity, or like import. True it is that a statute must be based upon reasonable grounds, and can not go beyond the bounds thereof in defining and denouncing an offense. The denomination by the Legislature of an instrument conveying an interest in an oil, gas or mining lease as a security, is not deemed an unreasonable exercise of the police power; nor does the regulation of a dealer therein transcend the power of the State.
We also say that in our judgment the wording of the statute under consideration intended to and did include, under the characterization of securities, an instrument representing an interest in an oil or gas lease. That persons wishing to engage in the sale of such leases were required to obtain a permit to do so, and that a failure to obtain such a permit is punishable under the provisions of such statute.
That appellant was a person dealing in such securities is plain from the testimony. That he endeavored to bring himself under the exemption provided for in Section 3 (c) of the statute [Vernon's Ann. Civ. St., Article 600a, Section 3 (c)] is also plainly seen from the method which he adopted in his dealings with the persons who were the actual owners of the land represented by the leases that he was endeavoring to dispose of.
In our opinion, under the facts, appellant was not the owner of the lease disposed of, and we think the testimony clearly shows that appellant was not engaged in [Section 3 (c)] "Sales of securities made by, or in behalf of a vendor in the ordinary course of bona fide personal investment of his personal holdings, or change of such investment, if such vendor is not otherwise engaged either permanently or temporarily in selling securities. * * *." The leases in which he was dealing were not actually his own property, but he had adopted the policy of having the owner of the land execute a lease to him (appellant), and, in the event of the sale of such lease to another, he would accept and record such lease, and then transfer same to the purchaser, but in the event of no sale thereof, the lease would be returned to the land owner, or destroyed. In our judgment this was but a scheme or device practiced by appellant for the evasive purpose of claiming that the security was his own property. *Page 556 
Complaint is also made of the use of the word "temporarily" on account of its indefiniteness, and the uncertainty to be encountered in the construction thereof as opposed to permanent. We think an answer in the present instance finds itself in the fact that beyond question the testimony shows appellant to have been fully and permanently engaged in the sale of such securities, and as having made many sales as such, and the word "temporarily" is not applicable to the facts herein shown, and under the saving clause in this statute the word "temporarily" can be disregarded and you still find a violation of the law in the word "permanent."
Complaint is also made because of the fact that the security alleged to have been sold to Mrs. Secor is an imperfect instrument in that while it purported to transfer a certain portion of an oil lease, on account of a defective description therein it failed to convey any rights of any kind in and to said land so attempted to be leased. This is not a true position, but if true, then we can only say such a condition the more strongly illustrates the position herein taken in the original opinion.
In our opinion, the very thing that has here happened is the mark at which the Legislature was directing this law, and that is the sale of a security that is couched in such terms as to tempt the unwary to invest their funds therein, and then some flaw, defect or weakness be found rendering the same valueless to the loss of the investor and the unfair gain of the seller. The purpose of the law is salutary, and establishes a supervision and surveillance over matters oftentimes unknown to the investor but known to the seller who is forced thereunder to obtain a permit, and who presumptively has established his good faith before an officer of the State, after which the public should have the right to rely upon any representations made by such seller as a licensed purveyor of such securities.
There should be no alarm felt by honest dealers in such securities that their business will suffer interference, that they shall be called upon to obtain a special dispensation each time they desire to dispose of any security in their possession. Having once obtained their permit to sell such securities, the dealers' rights are fixed and determinable only by his own acts, until the time for a renewal thereof appears. As was said by Justice McKENNA in Hall v. Geiger-Jones Co.,242 U.S. 539: "Inconvenience may be caused and supervision and surveillance, but this must yield to the public welfare, and against counsel's alarm of consequences we set the judgment of the State," and, we might add, the safeguarding of the rights of its citizenship. *Page 557 
We think this cause has been properly disposed of in the carefully worked out original opinion herein, and the motion is therefore overruled.