Court Opinion

ID: 6863639
Source: CourtListenerOpinion
Date Created: 2022-07-23 20:51:49.687589+00
Date Added: 2024-06-11T16:05:16.458408
License: Public Domain

BUFFINGTON, Circuit Judge.
In the court below 'the plaintiff, a corporation of Delaware, filed a bill against the defendants, citizens of Pennsylvania, who constituted the Securities Commission of that state. The bill prayed an injunction to prevent the defendants from bringing criminal prosecutions against the plaintiff, its officers and agents, for not talcing out broker’s licenses while carrying into effect a certain financial readjustment of the Associated Gas & Electric Company, its affiliate. With a view to determining whether the plaintiff was bound to take out such broker’s licenses and register the same, and with the consent of all parties, the course was followed of plaintiff filing the present bill. On final hearing the court below held with the plaintiff and enjoined the defendant from entering criminal prosecution, whereupon the members of the Securities Commission took this appeal.
In the final analysis the case narrows to the question of whether the plaintiff’s plan falls under the exceptions provided by the Pennsylvania Securities Act of April 13, 1927, P. L. 273 § 2(c), 70 PS Pa. § 2(c) which act provides:
“None of the following transactions shall constitute the person or company engaging therein a ‘dealer’ within the meaning of this act, that is to say, a sale, offer for sale, solicitation, subscription, invitation, dealing in, or delivery. * * *
“(11) Stock dividends, etc.; reorganizations — The distribution by a corporation of capital stock, bonds, or other security, to its stockholders as stock dividend or other distribution out of earnings or sur*280plus, or the issue of securities to the security holders or other creditors of a corporation, in the process of a bona fide reorganization of such corporation, made in good faith, either in exchange for the securities of such security holders or claims of such creditors or the issue of increased capital stock of a corporation sold or distributed by it entirely among its own stockholders.”
The court found as a fact that the proposed plan was one wholly between the Associated Gas & Electric Company and its security holders, that none of its exchange securities was to be offered to the public for sale, and the purpose of the plan was, as found by the court, “to relieve itself of the burden of having to meet fixed interest charges at definite periods, by inviting the holders of fixed interest debentures (the senior obligation of the company) to exchange them for new obligations at a higher rate of interest, cumulative, but payable only as earned and coupled with a sinking fund provision.” (D. C.) 11 F. Supp. 391, 393. In its opinion and findings the court held the plan was a reorganization made in good faith and was excepted by the statute, and that the plaintiff was therefore not required to take out and register broker’s licenses.
All the questions involved were discussed in the thorough opinion of the court.' Finding ourselves in accord therewith, and feeling that an additional opinion by this court would simply be an effort to clothe in different language what has been already satisfactorily said in the judge’s opinion, we limit ourselves to affirming the case thereon. .