Court Opinion

ID: 9559229
Source: CourtListenerOpinion
Date Created: 2023-08-21 17:24:48.811954+00
Date Added: 2024-06-11T09:10:09.718969
License: Public Domain

*498O’CONNELL, J.,
dissenting.
I dissent. I do not believe that the legislature intended to incorporate all limited partnerships within the definition of "security” contained in ORS 59.015(13). The guiding principle in determining whether a particular transaction is of the type sought to be regulated under the Blue Sky Law should be whether it presents a danger requiring stricter rules of fraud then those afforded by the common law. As was noted by the Supreme Court in the first case requiring analysis of the word "security” under the Federal Securities laws:
"* * * However well these rules [of statutory construction] may serve at times to aid in deciphering legislative intent, they long have been subordinated to the doctrine that courts will construe the details of an act in conformity with its dominating general purpose, will read text in the light of context and will interpret the text so far as the meaning of the words fairly permits so as to carry out in particular cases the generally expressed legislative policy.” Securities & Exchange Com. v. Joiner Leasing Corp., 330 US 344, 350-51, 64 S Ct 129, 88 L Ed 88, 93 (1943).
More recently, the Supreme Court, in wrestling again with the definition of "security” within the Securities Acts, held:
"We reject at the outset any suggestion that the present transaction evidenced by the sale of shares called 'stock,’ must be considered a security transaction simply because the statutory definition of a security includes the words 'any * * * stock.’ * * *
"* * * Because securities transactions are economic in character Congress intended the application of these statutes to turn on the economic realities underlying a transaction, and not on the name appended thereto. Thus, in construing these Acts against the background of their purpose, we are guided by a traditional canon of statutory construction:
" '[A] thing may be within the letter of the statute and yet not within the statute, because not within its spirit, nor within the intentions of its makers.’ *499Church of the Holy Trinity v. United States, 143 US 457, 459, 26 L Ed 226, 12 S Ct 511 (1892).”
United Housing Foundation, Inc. v. Forman, 421 US 837, 848-49, 95 S Ct 2051, 44 L Ed2d 621, 630 (1975).
In holding that all limited partnerships, irrespective of their context, are "investment contracts” the majority ignores the spirit of the Oregon Securities Law.1 It must be remembered that the statute was enacted to provide special remedies in the limited class of cases involving the sale of securities. It was so limited because of the peculiar evils attending the marketing of securities. The dangers of deceptive practices assocated with the sale of securities to the public generally which inspired the passage of Blue Sky Laws are not present in one-to-one transactions which form no part of a general scheme. As Professor Loss points out, "The problem, in short, is to distinguish between the public offering of securities parading as 'limited partnership interests’ and 'an offering of a half interest in a hamburger stand.’ ”2 If the anti-fraud section of the statute is regarded as intended for the protection of purchasers where there is a public offering then of course, it would not apply in cases such as we have before us where two persons are drawn together by a mutual interest in creating a new enterprise. Plaintiff’s investment in the partnership was not as a result of an "indiscrimate offering to the public at large where the persons solicited are selected at random.”3 Because the policy of public protection *500underlying the Oregon Securities Law was not offended in this case, the interest should not be classified as a "security.”
It is to be noted that ORS 59.015(13), in defining the term "security”, specifically includes in the definition pension plan interests, preorganization subscriptions, collateral trust certificates, and voting trust certificates of participation in mineral leases. Each of these well established, readily identifiable interests was explicitly included within the definition of security. A limited partnership interest is likewise a well established and readily identifiable interest. It would seem, therefore, that if the legislature intended all limited partnership interests to be deemed "security” interests, such interests would have been explicitly included and not left to be part of a miscellaneous category of "investment contracts,” as the majority opinion treats them.4
This case, as well as Marshall v. Harris, decided this day, present difficult questions arising out of the ambiguity in the meaning of the term "security” as used in ORS 59.015. The statutes should be amended to clarify the meaning of the term "security.”
DENECKE, C. J. and HOWELL, J., join in this opinion.

The definitional section of the statute begins with the words, "As used in the Oregon Securities Law, unless the context otherwise requires * * This indicates a legislative recognition that to determine what a “security” is under the Act, a case-by-case analysis is needed. Cf. McClure v. First National Bank, 352 F Supp 454, 456-57 (N.D. Tex 1973), aff’d., 497 F2d 490 (5th Cir 1974), cert. denied, 420 US 930 (1975).

L. Loss, Securities Regulation 505 (2d ed 1961).

Dahlquist, Regulation and Civil Liability Under the California Corporate Securities Act, 33 Calif L Rev 343, 360 (1945). Dahlquist argues that where the right of mutual selection exists in limited partnerships, such membership does not constitute a "security.” Several California cases have adopted the mutual selection test in examining limited partnerships *500as securities. See Farnsworth v. Nevada-Cal Management, Ltd., 188 Cal App2d 382, 10 Cal Rptr 531 (1961); Rivlin v. Levine, 195 Cal App2d 13, 15 Cal Rptr 587 (1961); and Solomont v. Polk Development Co., 245 Cal App2d 488, 54 Cal Rptr 22 (1966).

In the interpretation of ORS 59.015(13) some significance may be attached to the fact that persons forming a limited partnership are required to file a certificate with the Corporation Commission disclosing detailed information on the nature of the business (ORS 69.180) in some respects similar to the registration requirement for the sale of securities.