Court Opinion

ID: 9463163
Source: CourtListenerOpinion
Date Created: 2023-08-04 22:59:39.343081+00
Date Added: 2024-06-11T17:37:57.487801
License: Public Domain

CUMMINGS, Circuit Judge
(concurring).
One should look at both sides of the coin. If the seller of an ongoing business was anticipating that the repayment of the purchaser’s note would depend upon its conduct of the business, this could be conceptualized as an investment. Similarly, if the purchaser gave its note in reliance upon how well the seller had established the ongoing business, the transaction could also be said to have an investment flavor. These defendants were evidently not depending upon the future conduct of the business sold because Emisco had guaranteed Grossman’s note, and at the oral argument plaintiffs eschewed any contention that they were investors. While the giving of a note for an ongoing business might sometimes need “regulation to prevent fraud and to protect the interest of investors” where the issuers of the note were attracted “by financial returns on their investments” (United Housing Foundation, Inc. v. Forman, 421 U.S. 837, 849, 853*, 95 S.Ct. 2051, 44 L.Ed.2d 525), the present setting persuades me to concur.

 See also Movielab, Inc. v. Berkey Photo, Inc., 452 F.2d 662, 663-664 (2d Cir. 1971); Eason v. General Motors Acceptance Corp., 490 F.2d 654 (7th Cir. 1973), certiorari denied, 416 U.S. 960, 94 S.Ct. 1979, 40 L.Ed.2d 312; Alberto Culver v. Scherck, 484 F.2d 611, 615 (7th Cir. 1974), reversed on other grounds, 417 U.S. 506, 94 S.Ct. 2449, 41 L.Ed.2d 270; Occidental Life Insurance Co. v. Pat Ryan & Associates, 496 F.2d 1255, 1262-1263 (4th Cir. 1974), certiorari denied, 419 U.S. 1023, 95 S.Ct. 499, 42 L.Ed.2d 297; Lipton & Katz, “Notes" Are (Are Not?) Always Securities, 29 Business Lawyer 861, 866 (1974). C.N.S. Enterprises, Inc. v. G & G Enterprises, Inc., 508 F.2d 1354 (7th Cir. 1975), is not contra, for it involved a purely commercial transaction, namely, the giving of promissory notes in return for a bank loan.