Court Opinion

ID: 6762979
Source: CourtListenerOpinion
Date Created: 2022-07-21 00:33:26.749875+00
Date Added: 2024-06-11T16:02:38.894937
License: Public Domain

H. Brown, J.,
dissenting. The decision by the majority to allow rescission of this sale of stock does not serve the purpose of R.C. 1707.44(C)(1). The majority, in its “analysis,” ignores the fact that, on the record before us, the plaintiff Callahan solicited and structured the transaction which he later sought to rescind on the ground of noncompliance with R.C. 1707.44(C)(1). Callahan even prepared the promissory note. Further, this was not a general sale of securities. This was the only stock of the company sold, and Callahan, who initiated and structured the sale, was the only purchaser. No argument can be supported, manufactured or inferred to make Callahan the victim of overreaching by the seller. What the majority has done is to put Callahan in the enviable position of being able to claim the benefits of his purchase if the deal proved profitable and to rescind if the deal turned out poorly. While bright-line rules are often desirable, I do not think we need interpret the securities laws to provide this sort of “heads I win, tails you lose” opportunity.2
The majority concedes that it has “expanded” the law as set forth in Pencheff v. Adams (1983), 5 Ohio St. 3d 153, 5 OBR 318, 449 N.E. 2d 1277, in order to reverse the decision below by the court of appeals. Further, the majority fails to analyze Bronaugh v. R. & E. Dredging Co. (1968), 16 Ohio St. 2d 35, 45 O.O. 2d 321, 242 N.E. 2d 572, wherein we held in paragraph one of the syllabus that a purchaser is not entitled to restitution of the purchase price where the violation of the Ohio Securities Act is of such a trivial nature as not to affect the protection contemplated by the violated provision. Where, as here, the purchaser instigates and structures the sale of securities to himself, and where this is an isolated transaction, I would not allow the purchaser to rescind the sale by claiming that the stock he purchased and the promissory note he gave in payment were not registered with the Ohio Division of Securities. I would affirm the decision of the court of appeals.

 The fact that a purchaser initiates a stock transaction should not (as the majority and the Department of Commerce as amicus note) excuse noncompliance with R.C. 1707.44(C)(1). The case before us, however, involves far more than initiation of purchase by the party seeking rescission.