Court Opinion

ID: 7845015
Source: CourtListenerOpinion
Date Created: 2022-09-08 17:08:51.393695+00
Date Added: 2024-06-11T16:21:10.736638
License: Public Domain

BERDON, J.,
dissenting in part and concurring in part. The trial court found that the plaintiff, Connecticut National Bank, is barred from pursuing these actions against the defendants because it violated the provisions of the Connecticut Uniform Securities Act (CUSA), General Statutes (Rev. to 1993) § 36-470 et. seq.1 More specifically, the trial court found that the plaintiff was barred from bringing actions to collect on *75promissory notes made by the defendants in order to finance their purchases of units in the Great Rings Limited Partnership (Great Rings) because the plaintiff acted as an agent of the seller who perpetrated the fraud. The majority reverses the trial court on this theory of agency because it claims that under CUSA, the plaintiff, a corporate entity, cannot be an agent. In my view, the court’s interpretation that only a natural person can be an agent under CUSA for a violation under General Statutes (Rev. to 1993) § 36-498 (c) is contrary to the plain language of CUSA, the intent of its drafters, and the beneficent purposes of CUSA.
I agree that the definitional section of CUSA, General Statutes (Rev. to 1993) § 36-471 (2), defines “agent” as “any individual . . . .” Nevertheless, the majority ignores the prefatory language of § 36-471 that those definitions will control “unless the context otherwise requires.” (Emphasis added.) The context of § 36-498 (c) requires that the term “agent” as used therein includes a corporation for three reasons.
First, a common sense reading of § 36-498 (c) requires the construction that a corporation can be an agent. This becomes readily obvious when, in accordance with the statutory definition of “person” in § 36-471 (10),2 “corporation” is substituted for person when reading § 36-498 (c), as follows: “Every [corporation] who directly or indirectly controls a [corporation] hable under subsections (a) and (b) of this section, every partner, officer, or director of such a [corporation], every [corporation] occupying a similar status or performing similar functions, every employee of such a [corporation] who materially aids in the act or transaction constituting the violation and every broker-dealer *76or agent who materially aids in the act or transaction constituting the violation are also hable jointly and severally with and to the same extent as such [coiporation], unless the [coiporation] who is so hable sustains the burden of proof that [it] did not know, and in exercise of reasonable care could not have known, of the existence of the facts by reason of which the liability is alleged to exist. . . .” The majority would have us believe that a corporation could be hable under CUSA when it aids the wrongdoer in the fraud, as clearly set forth in § 36-498 (c), but that a corporation would not be liable if it participated in the fraud as an agent of the wrongdoer. I cannot accept such a construction of § 36-498 (c). Further, the fact that § 36-498 (c) gives relief to the “agent,” if “the [corporation] who is so liable sustains the burden of proof that [it] did not know, and in exercise of reasonable care could not have known, of the existence of the facts by reason of which the liability is alleged to exist,” clearly indicates the legislature intended to include a corporation as an agent. Moreover, the last sentence of § 36-498 (c), providing for contribution among the “several [corporations] so liable,” has obvious reference to an agent who is also subject to contribution. Accordingly, the term agent in the context of § 36-498 (c) must include a corporation because it is a “person” subject to contribution.
Second, the legislature could not have intended to limit agency liability under § 36-498 (c) to natural persons. “It is an accepted rule of statutory construction that the promulgators of statutes or rules do not intend to proclaim . . . ineffective rules or legislation. . . . It is also a rule of statutory construction that those who promulgate statutes or rules do not intend to promulgate statutes or rules that lead to absurd consequences or bizarre results.” (Citations omitted.) State v. Siano, 216 Conn. 273, 278, 579 A.2d 79 (1990). Corporations *77cannot act. They act through natural persons — their individual employees and officers. Reading “corporation” out of the definition of an agent in § 36-498 (c) can only lead, as in this case, to bizarre and ineffective results. In this case, the majority, through its narrow interpretation of CUSA, allows the plaintiff to profit through the wrongdoings of its officers, when those officers were acting on behalf of the plaintiff. Such an intent cannot be attributed to the legislature.
The absurd consequences of the majority’s interpretation in this case is illustrated by the trial court’s finding that “the evidence plainly shows that [the plaintiff], through its regional manager James Truelove and his secretary ‘Freddie,’ both effected and attempted to effect purchases or sales of . . . securities. . . . [Truelove] allowed [Kenneth] Zak and [Francis] Donnarumma [the principal promoters of Great Rings] to provide Great Rings investors with [the plaintiffs] financial statement forms. He was fully aware that . . . Zak and Donnarumma were touting the availability of . . . financing [from the plaintiff]. He plainly indicated to potential investors that [the plaintiff] was behind the investment. [Truelove] told Richard Carta that Great Rings was a good location and nice land and that Carta should be all right. His secretary ‘Freddie’ told Carta, Joseph Santoro, and John DePastino in their five minute meeting that he, Truelove, was aware of all that was going on. He gave Robert Rosa a note to sign, when he had never [previously] met Rosa, and uttered no denial when Rosa said that he was confident in the investment because the [plaintiff] had fully endorsed it. He told Robert Giacomi that he was very familiar with Great Rings, that the land in question was one of the most beautiful pieces of land in Connecticut, that he was thinking of purchasing one of the lots, and that Great Rings could not miss and was a ‘homerun.’ He told Jack Giacomi that Kenneth Zak was a ‘pro’ and that ‘[t]his *78is a pretty good project, and everyone should make some money.’ ”
Finally, the beneficent purposes of CUSA require the construction that a corporation can be an agent. The comprehensive statutory scheme of CUSA, commonly known as the “blue sky law,” “was adopted for the protection of investors in this state . . . [and they] should be broadly and liberally construed so as to effectuate the purpose of protecting the investing public from fraud.” (Emphasis added.) Shulansky v. Cambridge-Newport Financial Services Corp., 42 Conn. Sup. 439, 440-41, 623 A.2d 1078 (1991). Under the majority’s approach, that public policy could be frustrated by corporations when they violate CUSA as agents through their officers.
In sum, the plain language of § 36-498 (c), the intent of the legislature, and the beneficent purposes of CUSA require us to conclude that the term “agent” includes corporations, such as the plaintiff, that materially assist in the sale of unregistered and unexempted securities to the public. In light of the convincing evidence of Truelove’s material assistance in the Great Rings’ scheme, it is no wonder that the plaintiff never raised this argument that a corporation cannot be an agent at trial, but raises it on appeal for the very first time.
I agree with the results reached in the majority opinion with respect to the defendants Robert Giacomi, Jack Giacomi, Joseph and Hope Santoro, Robert Rosa, and Valerie DePastino. Because I am of the opinion that the plaintiff is an agent under § 36-498 (c), and because I agree with the trial court’s finding that the plaintiff as an agent “materially aidfed] in the act or transaction constituting the violation,” I disagree with the results with respect to the defendants John DePastino and Joseph Santopietro.

 As indicated in footnote 1 of the majority opinion, the provisions of CUSA were transferred and renumbered in 1995, and are currently codified at § 36b-2 et seq. References herein to the relevant provisions of CUSA are to their designations in effect during the period of time at issue in this case.

 General Statutes (Rev. to 1993) § 36-471 (10) provides in relevant part: " ‘Person’ means an individual, a corporation, a partnership, an association, a joint-stock company . . . .” (Emphasis added.)