Court Opinion

ID: 9535684
Source: CourtListenerOpinion
Date Created: 2023-08-07 04:51:54.597753+00
Date Added: 2024-06-11T13:33:18.396503
License: Public Domain

MR. JUSTICE DALY,
concuring in part and dissenting in part:
I concur in the majority decision on Issue Nos. 1, 3, 4, 5, and 6.1 further concur in the adoption of the broadened flexible definition of “investment contract” as that term is used in the Securities Act of Montana.
It is to the majority’s application to defendant of his newly broadened definition, not before adopted in Montana, that I respectfully dissent.
It is true, as the majority states, that security regulation acts as remedial measures to protect the public have been liberally construed. However, although the majority cites two cases in which a *397broadened definition of security had been newly developed and applied in a criminal case, it is undisputable that the vast majority of cases in which such a liberal construction has been adopted have been civil, not criminal, in nature including the two primary United States Supreme Court decisions, Howey and Forman. See also, S. E. C. v. Koscott Interplanetary, Inc. (5th Cir. 1974), 497 F.2d 473; S. E. C. v. Glenn W. Turner Interprises, Inc. (9th Cir. 1973), 474 F.2d 476; State Commissioner of Securities v. Hawaii Market Center Inc. (1971), 52 Haw. 642, 485 P.2d 105; State ex rel. Healy v. Consumer Business System, Inc. (1971), 5 Or.App. 19, 482 P.2d 549; Silver Hills Country Club v. Sobieski (1961), 55 Cal.2d 811, 13 Cal.Rptr. 186, 361 P.2d 906.
In giving effect to the remedial goals of the Securities Act, however, we must not sacrifice basic concepts of constitutional criminal justice.
The most basic principle of criminal law at stake here is that persons must have notice from the State of those acts which the State will prosecute as crimes. H. Earl Clack Co. v. Public Service Comm’n (1933), 94 Mont. 488, 502, 22 P.2d 1056, 1059. Criminal statutes that are too vague or ambigious will be struck down as unconstitutional for failure to give persons of ordinary intelligence fair notice that their contemplated conduct is forbidden. Papachristou v. City of Jacksonville (1972), 405 U.S. 156, 162, 92 S.Ct. 839, 843, 31 L.Ed.2d 110, 115-16. Although the Supreme Court in Papachristou noted that “[i]n the field of regulatory statutes governing business activities, where the acts limited are in a narrow category, greater leeway is allowed,” these statutes too must provide notice of forbidden conduct.
The evidence here indicates that the requisite fair notice to defendant that his sealer contract were securities and should have been registered cannot be found in the statutory definition of “security”. Section 15-2004(11), R.C.M.1947. That the statute fails to give adequate notice that this definition is broad enough to cover defendant’s scheme is further indicated by the reaction of Thomas Olsen, then Gallatin County Attorney, when defendant presented *398his plans to him. At trial Olson frankly admitted that it did not occur to him that defendant’s sealer contracts needed to be registered as securities. In fact defendant advertised these contracts over the radio and in the newspapers for several months and sold 82 of the contracts in the Bozeman area before securities investigators from Helena became involved in the matter. If the county attorney charged with enforcing the statute did not think the contracts wee securities, I fail to see how a nonattorney unfamiliar with the statute could be deemed to have sufficient notice that he may be engaged in a criminal activity.
I emphasize “may”because until this opinion, it was entirely unclear as to whether defendant’s plan did in fact violate the Securities Act. “There can be no doubt that a deprivation of the right of fair warning can result not only from vague statutory language but also from an unforseeable and retroactive judicial expansion of narrow and precise statutory definition of “security”. Bouie v. City of Columbia (1964), 378 U.S. 347, 352, 84 S.Ct. 1697, 1702, 12 L.Ed.2d 894, 899. Indeed, an unforeseeable judicial enlargement of a criminal statute operates precisely like an ex post facto law forbidden by both our federal and state constitutions. Bouie, U.S.Const. Art, I, § 10; Mont. Const. Art. II, § 31.
This is not to say that the Montana Securities Act or the statutory definition of “security” are unconstitutional per se. I would only hold that applying this broadened definition of “security” retroactively to defendant’s activities is improper and violates his due process right of fair warning. The definition should be prospective in application only.
The Michigan Supreme Court addressed the same question presented here in People v. Dempster (1976), 396 Mich. 700, 242 N.W.2d 381 and concluded:
“Without a prior ‘clarifying gloss’ or a clear definition of the special kind of negotiable promissory note intended to be exempted under the statute, or perhaps some form of prior actual notice that the instruments are not of the type exempted from registration [e. g., cease and desist order or injunction], a conviction could not *399stand for failure to register such a negotiable note.” 242 N.W.2d at 389. (Footnote summarized in brackets.)
See also State v. George (1975), 50 Ohio App.2d 297, 362 N.E.2d 1223.
I would reverse defendant’s conviction on this count.