Court Opinion

ID: 9679663
Source: CourtListenerOpinion
Date Created: 2023-08-24 07:02:03.965633+00
Date Added: 2024-06-11T18:17:17.868753
License: Public Domain

WELLIVER, Judge,
dissenting.
I respectfully dissent.
Counts I and II are not based on a suit for rescission in the usual sense of the word, but rather are counts for money damages after tender back of the security pursuant to § 409.402 and § 409.411, RSMo 1986. These two counts are pleaded in almost the exact words of the securities law. Count III pleads common law fraudulent misrepresentations and does seek common law rescission.
Both Counts I and II state causes of action under the security law, because the three-fourths fractional interest in the oil and gas lease is a “security” under the Missouri Securities Act.
In Carney v. Hanson Oil Co., Inc., 690 S.W.2d 404 (Mo. banc 1985), this Court held:
Section 409.301, RSMo 1978, of the Missouri Securities Act requires that securities be registered to be offered or sold in this state unless they are exempted under § 409.402. Oil and gas interests are securities within the meaning of the Missouri Act. § 409.401(1), RSMo 1978. Section 409.402(b) exempts certain specified transactions from the registration requirements with the following exception: “no transaction in a certificate of interest or participation, including a limited partnership interest, in an oil, gas or mining title or lease, or in payments out of production or under such a title or lease shall be so exempted.”
The particular issue before us is whether § 409.402(b) meets the rational basis test in excluding oil and gas interests from the exemptions provided therein, while retaining them in the larger class of those required to register under § 409.301. The nature of oil, gas and mining interests has been recognized to present particular possibilities for fraud or participation by unsophisticated investors. See generally Watson, Federal and State Regulation of Oil and Gas Interests, 28th Inst, on Oil & Gas 245 (1977). This has been true since the period between the Civil War and the enactment of the first blue sky law in Kansas in 1911, “when securities promoters and salesmen peddled mining and oil stocks of many worthless companies to unsophisticated purchasers.” J. Mofsky, Blue Sky Restrictions on New Business Promotions 9-10 (1971). The Commissioner of Securities, in his amicus curiae brief, stated that his office has more enforcement actions concerning oil and gas interests and more criminal prosecutions of promoters of those interests than in any other single area in his jurisdiction. It is apparent that the high risk involved in oil and gas securities creates a special need for registration to inform *166and thereby protect the investing public. Cf. Florida Realty, Inc. v. Kirkpatrick, 509 S.W.2d 114, 119 (Mo.1974) (upholding deferred payment sales, but not cash sales, of land as securities against equal protection challenge). Foreign securities are treated no differently from domestic ones with respect to registration. Other states, including Oklahoma, California and Kansas, also single out oil, gas and mining interests for explicit and different exemption requirements. Okla.Stat.Ann. tit. 71, § 401(15) (West Supp.1984); Cal. Corp. Code § 25102(j) (West Supp.1984); Kan.Stat.Ann. § 17-1262(a) (Supp.1983). The classification meets the rational basis test.
Carney v. Hanson Oil Co., Inc., 690 S.W.2d 404, 407-08 (Mo. banc 1985) (emphasis added).
The question then is the applicable statute of limitations. Section 409.411, RSMo 1986, provides
(e) No person may sue under this section more than two years after the contract of sale ...
(h) The rights and remedies provided by this act are in addition to any other rights or remedies that may exist at law or in equity, ...
Section 409.411(e)(h), RSMo 1986.
Sohn v. Show Petroleum Inc., 581 F.Supp. 23 (E.D.Mo.1984) in construing this section stated:
Section 409.411(e), however, contains the language “[n]o person may sue under this section more than two years after the contract of sale.” The date of the contract of sale is the date when the seller becomes obligated to convey the securities. Frizzell v. Stewart Lumber Co., 329 Mo. 376, 44 S.W.2d 615, 617 (1931).
Sohn v. Show Petroleum Inc., 581 F.Supp. 23, 25 (E.D.Mo.1984).
The principal opinion would treat the trial court’s finding that the contract was orally consummated February 27-28, 1981 by telephone as a factual finding of the effective date of the contract while I believe that statement to be a finding or conclusion of law which has no binding effect on this Court. Appellant obtained financing March 24, 1981 and thereafter forwarded his check to respondents. Prior to this there was no writing of any kind reflecting the agreement to assign the oil lease. I do not think it can be argued that between February 27-28 and March 24 respondents had an enforceable right to recover the purchase price from appellant or that appellant could have had specific performance of an agreement to assign the lease prior to appellant obtaining and notifying respondents that he had obtained his financing commitment. This suit was instituted March 23, 1983.
The real estate law of this state has long been well settled. It is common in real estate contracts to make the salé contingent upon a buyer obtaining the appropriate financing. “It is held in Missouri that a provision in a real estate sales contract making the contract contingent upon the buyer’s obtaining financing creates a condition subsequent. Upon the nonoccurrence of the condition (i.e. the buyer’s obtaining financing), the buyer is ipso facto excused from performance.” Koontz v. Lee, 737 S.W.2d 766, 768 (Mo.App.1987). See also Berger v. McBride & Son Builders, Inc., 447 S.W.2d 18, 19 (Mo.App.1969). “A financing contingency in a real estate contract is a condition subsequent, not a condition precedent, which may be raised, if not fulfilled, to void the contract.” Flores v. Baker, 678 S.W.2d 884, 886-87 (Mo.App.1984). In effect, the buyer and seller have no sale until the buyer obtains financing. As a matter of law appellant and respondents had no sale of the fractional oil lease until appellant obtained and notified respondents of his financing. The suit herein was filed and instituted one day short of the statutorily provided two year statute of limitations.
The cause should be remanded with directions to set aside the dismissal of Counts I and II and further proceedings consistent with this dissenting opinion. Plaintiff-appellant’s pleadings entitle him *167to his day in court. I find no reason to reach Count III on this appeal.