Court Opinion

ID: 9858529
Source: CourtListenerOpinion
Date Created: 2023-09-24 16:26:31.878704+00
Date Added: 2024-06-11T09:54:42.113428
License: Public Domain

ON PETITION FOR REHEARING
VANDE WALLE, Justice.
Goetz has filed a petition for rehearing in which he argues vigorously that our decision will create economic chaos in North Dakota. He urges that we distinguish between a promissory note which is an “investment” and a promissory note which is a “commercial note,” the former to be considered a security governed by the securities laws and the latter to be considered a loan exempted from the requirements of the securities statutes. If this distinction is made the question of whether a note is an investment or a loan then becomes a question of fact for the jury and an instruction that a note is a security would be erroneous.
Goetz cites several cases construing the Federal Securities Act as well as certain cases construing statutes in States which have adopted the wording of the Federal Securities Act. We agree those cases recognize the distinction urged by Goetz. However, as we noted in our previous opinion, the language added to the definition of “security” by our Legislature was not intended to reach that result. More important, however, the cases cited involve statutes which contain an exemption in the definition of “sale” which dictates such result. Thus in People v. Breckenridge, 81 Mich.App. 6, 263 N.W.2d 922 (1978), the Michigan Court of Appeals reversed a conviction of the violation of that State’s securities Act because the notes in that instance constituted a loan which by definition was exempt from the Act. The basis for that conclusion was the definition of “sales” contained in the Act. That definition excluded from the term “sale” “any bona fide pledge or loan.” M.C.L.A. § 451.801(jX6)(A); M.S.A. § 19.776(401)(j)(6)(A). An examination of the definition of “sale” as used in our Securities Act, Section 10-04-02(7), N.D.C.C., contains no such exemption. If, indeed, the consequences of our opinion are as dire as Goetz contends, it is a matter which should be presented to the Legislature for its consideration.
The petition for rehearing is denied.
ERICKSTAD, C. J., and PEDERSON, PAULSON and SAND, JJ., concur.