Court Opinion

ID: 4143173
Source: CourtListenerOpinion
Date Created: 2017-02-18 03:30:31.086075+00
Date Added: 2024-06-11T14:35:25.559449
License: Public Domain

OFFICE OFTHE   ATTORNEYGENERAL   OF~TEXAS
    -c.yInn                          AUSTIN
    --

          Secretary    bf State
          Austin,   'Pexaa

         Attention1     I&. Fi'ank
                                 D.
          Dear Mz’.Lwaon$

5

                    “*The aorporatlondoes not pmpose to
               qualify in your state an a forei,gnaoxqoration,
               nor do any tntraatatebualnees thers, but pro-
               poses, however, to aolialt offers for the pur-
               chase of royaltiesby resident nalesmn who
                                                                           888

            Honorable   Wll~lam   J. kuf~on.   Page 2

                 deduct comtrilerionra
                                   and remit the net oum with
                 said of+rs, for rooeptanaeor rejeatlon,by
                 the comDaJly+ln
                               Vyomlng.* ”
                      “The form or offer of puruhme to be used by
                 such cowany is enclosed herewith.
                      “This departmentvould appreciateyour opln-
                 ion a* to the follov~ queatlow under the state
                 of faate hereinoboro set out:
                      “(1) Is such aorpawtlon under such state
                 of facts engaged ln Interstatecoannerce?
                      "(2) If you have ansvered'Yes* to the
                 above question holding thereby that such corpora-
                 tton under mwh state of fa’actaend its agents ara
                 engaged in Laterstate commerue would such aorpora-
                 tion and it8 agent8 bo violating the pmvlrlona
                 a? the Texas SeaurftieaAut if they have xade no
                 atteraptto qualify under the iesuer’aprovisions
                 thoreof?
                      “(3)   If you have answered ‘Yes* to the first
                 question holding thereby that suah corporation
                 and its agent8 am engaged in interstateoozmmrue
                 vould,~uah oorpowtlon or ita agents be violating
                 the pmvialono of the Texas Becurlt~esAct ii they
                 foil to regieter under the provlelona 02 such Act
                 perta-      to the mglstratlon of dealers and
                 saletinwn?
                     The form or offer of purc2mee referred to by you 16
            as follows:
                                  “OFFER TO PURCRASR ROYALTY

                      'I, the undersigned,  do hereby offer to pur-
                 chase from Western Petroleum Corporetlon,a Uyom-
i       ’        lng corporation,a non-produciagover?idlng royalty
    .            interest of          thousandt?k(- ~i/10030th,)for
                 the sum of -                 Dollars. This offer
                                                                      889

    HonorableWllllam J. Lsvoon~ Page 3

           Is not binding upon ths aorporatlonuntil
           accepted by Its duly authorloodofficers in
           VyomIng, It bsIng understood that thIo I8 an

           produaing overridingmyalty    interests.
                "IA WITHESS UBEREOF, the undersignedhas
           laaunto oot his hand and oeal~thls-     aarr
                            I 194-.
           I
                         Saleomstt                  Rem%
            ‘Acceptedbyt
            Weoterm Petroleum   Corporation

                                                 Addreood
                 It is vell settled law that vhere the federal
    governmenthas assumed full jurisdictionof omttero vlthin the
    scope of Its power, Its regulationsare exclusivevithin the
    f.1el.d
          Involved (See the oese of Oregon-WashingtonR & H C. v.
    WashIngton {U.S.) 70 Lav Ed. 482).
                 It has llkeviss been settled by the Suproom Court
I   of the United Mates that otate rsgulatorylavo am valid unless
    oongreso has exaluolvelyoocupled the field'or unless the state
    law dlraotly buMan Interstatebommercw. (See authorltles
    collated In opinion Ho. O-2459 of this departnmnt,a copy of
    which In bnelooed herevlth for your lnforsratlan.)
                Seatton nr of Title 15, U.S.O.A.,  a portion of the
    Federal Beourltleoand Exchange Act, reads as follovot
                %othlno In thFo.sub-ohapterohkaffecti
           the jurisdlationof the SeeurltleoCon$o~
           7or any agency or office Performin lik       L
           tions) of any state or terrftory of the United
           States, or the District of Columbia, over ane
           security or any peraon." (i.hderscoring ours
    HonorableXIlllam 8. Lawson, Pago 4

                STudgpSt. Sum, of ths Northern District of Call-
    fornla, Southern Dlvlolon, In aonotrulngthe above quoted seu-
    tlon, said:
                nDeXendanizrelso call attention  to ha.
            18of the Act of 1933; whlah provides far 'state
           oontrol of securities'am Indicativeof the %n-
           tention of Congress to 1Qnlt Its legIol8tionto
           activitiesin interstate  oomneme.    Thor. IO no
           merit In tho oontentlen. The moot that ornc~be
           said fop the ooatlon is that It probably glum
           coneurroat jurlodlatlonto the Securitiesand
           Exohwga Caamloolonand the State authorities.
           Thers io.ao doubt that the Geouritles and Ex-
           change ComolooIonhao jurlsdletionof the matters
           here ooxplalnedof:' Becurltlesand Zx         0 com-
           mloolon v. Twetmst, Iaa., 28 Fed. Supp,    3 .
                                                   chan$
                 The oontentloahas been frequentlymade that 'Blue
    Sky Lava” or 'SeourltleoA&o*   impose burdens upon interstate
    commerce oad are, therefore,unaonstltutlonal. Suoh oeatentlono
    vere, hwever, rejected by the Supreme Court of the United States
    ia the case of Hall vs. Geiger-JonesCo-y,     242 U.S. 539.
    Also see annotationaIn 87 A.L.R. 46 et oeq:
                 ft vll1 be noted that the Texas 8eoamltleoAct makes
    it unlawful to offer for aale within the state oeouritleovlthout
    first ha lng        dthe     1 d lloense as well as to sell within
,
    the stat: vit~$%m      rsq~~d?.lcenoe. (80e Seotlon 12 of Artlale
     OOa, Vernon18 Annotated Texas Civil 8tatuteo.) The SeaurttieoAct
    of Wichlgan is nlmllar to ths Texas SecurltleoAat;   The Supreme
    Court of MiahIgan In the oaae of People v. Augustine, 204 8. W.
    747, held that for the offense of negotiating for sale unapproved
    seaurltlealn Mlahlgan the aotual sale aeed not be oonotmmatedin
    Xichlgon. In other words the negotiationswire had In luchlgan
    and the sale was eonsuounatedin #ev York. The MiohhigmiSu$reme
    Court held this to bo In vlolatlon of the Nlohlgan SeourltlesAat.
    Also ree the aaewof First Botlonal Bank of Pinevllle v. Wtlaon,
    55 S. Y. (26) 657, (Supmom Court of Kentucky).
HonorableWilliam J. LAWSON, Page 5

             We quite from the uase of Bartlett v. Doherty, 10
F. Supp. 469, mditled in home robsm&not m@terin3.hereto in
81 F. (2d) 920, re-hewing danled 8 3 F. (26) 920, certiorari
denied 83 Lav Ed. 1398, a8 follows~
            'In defendant'spre8ent brief the que8tlon
       Is revived, it being aqgued that these sale8 of
       stock were llewYork tramauti~nnsand valid under
       the laws of that atate, and that any aat ol'the
       Bev Hampshire Legfslaturewhich would Invalidate
       them is unaonstltutionalaa an undue burden 051
       lnter8tatecommerce. 'Itis argued that this
       vlev of the lav haa not been determinedby the
       United States Supreme Court.
              "It seems to me that derend&tla aontention
        is anavered by the Supreme Court In the aaae of
        Hall v. Oeiger-Jonesco., 242 u, 3. 539, 557, 37
        9. Ct. 217, 223, 61 L. Ed. 480, L. B. A. 19178,
        514, Ann. Cam. lgl?C; 693. It appears, that the,
        oontentlonof t-h8plaintiff now made did not es-
        cap8 the attention of the Supreme Court, for It
        saldc ITha next aantentlonof appellees 18 that
        the lav -8~   review Is a burden on interstate
        comme~ce,~andtherePore oontraveneathe commerce
        olause of the Conat.ituti.onof ths U&ted Ststas.
        t 4 e The provisions of the law, It will be ob-
        aerved,apglyto dlapositlonsof eeourltleswlthla
        the state. and vhlle lnformstl.on of those Issued
        lx-other statar~andf&&n      ooktrie8 is required
        to be filed, l l l they are,only af?euMd..bythe
        requirementof a llaenss of one who deals in them
        wlthln the etat8. Upon th i transportationinto
        the state there la no lmpe&&nt,--no r~egulatlon
        of them or lnterfersncr, with #em after they got
        there. There 1s thb exaatton onlg that hs'wh6
        dlaposea of them th8XW shall be licensed to do uo,
        and thlr only that they may not appear in false
        ahmacter and iwoae an armearance of a;ivalu8   vhlch
        they may not possess,--an h-this ct&tal.nl'~
                                                   is 6n.Q.
        an indirectburden upon them 88 objeat6 of lnter-
        state commerce, if'tneg may be PeRarded as such.
HonorableWill.iam3. Lawaon, Page G

            > *'It 16 a poll08 regulationmtrictly,not
        affeatlx$ them utatllthere lean attempt to make
        dlepoaitlonof them within the state, To give
        them more lmmnity than this is to give them more
        lnzaunlty than uore tangible artiales are given.
        they having no exempti& ~fromPagulatlon*he piar-
        pose of vhloh 1s to prevent fraud or deception.
        Suah regulation6affect interstate ao6mt8Faein
        them only inaide$tally.*
              I
                  . . .

             “me   next claim is that 'The aalea were made
        ln Hew York, the Rev Hnmpahire Bluo Bii Law has
        no extra territorialeffeot and thersfom oannot
        make th8ae sales void.' I oannot aaoept thi6
        statement of the law. Many of the states In ths
        Union have enaated~so-aalledBlue Sky laws. If
        def%ndant*66tate6mntvere true, all the d8f8nd6ut
        had to do vaa to eatabllshhis office in FJevYork
        City and flooiithe country vlth eeaurltie8,good
        or bad, and alaim immunity of 6.nybreaoh of lav
        of any state 60 long a6 rt retained at Its home
        offloe the right to conflirpor rejeot any male
                 ita OgentS elaevhere.,ff this 16 tITX8 the
                  Lsv of &v Rammhlre and that of moat other
               mnv as well be aar6pmd.    S   Both  11
        Buakbee-M8ar6Co., 275 II.3. 274, ;$ 8. C:: 12::
        72 L. Ed. 2771 Chatfianoo a l?atlonalBullding& Loan
        AssociationV, Dmmon, 189 U. 3. 408, 23 8. Ct. 630,
        47 L. Ed. 870." (Undereaorlng   ours)
             The above ease h8ld that the Hew Hmpshire Blue Sky
Lav, regulatingsaloa of eeouriti8avithin the state vithout pro-
hibiting interstateshipmentsvaa not unconetltutloaa2.  a8 an un-
due burden on interstatecommerce a!?.applied to sales of stock
tn which orders vece taken in Xew Rsmpahlre and confimations
vere made in dealer's N8v York Office.
             Whether or not the aorpoxmtion¶nvolVed herain      i6
engaged in inteP8tate commerce ia entirely ilIJImteri.al in Vi8V     Of
our further ansver vith respect to the local agents.
.

    HonorableHllll6m J. Lawlon, Page 7

                Rewiring the local agent6 to take out p44naitS
    1X4no Way burdenl,
                     the lrlterstate bUsin86s of the corporation;
    if it shouldbbeheld that 6Uoh business 16 interstatecom-
    m8rce.
                 While the local agent6 in any event would be re-
    quired to aomply vith the requirement8of our Texa6 Securltles
    Aot, yet, In view of the faat that the loaal a&mats in the
    present lnstanaeeontearglate aoliaitingonly with respect to
    the securitiesirsu6& by Thea particularcorporation,It uould
    not avail them to take out permite, seeing, that under the ex-
    press terms of our SeaurltleeAct, they would not thereby be
    authorized~to offer for sale eeourltierof a foreign corporation
    or solicit orders for a foreign corporatfonwhich itself had
    not taken out an 168~8~~6 permit.
                  h3tion   5   of our Texas ZeUUHtie8 Act d6dar661
                     dealer, agent or salesman shall 6ell or
                 .'%'a0
            offer for aalo eny seuuritlerIssued after the paae-
            age of thle Aot, exoapt those vhithlch
                                                come vithin the
            clasaea enUmer6ted In subdivisions(a) to (q) both
            inolueiv8 of Seotfon 3 of this Aat, or subdiviaionr
            (a) to (lj, both inolus~v8 of Section 23 of this
            Aot, Until th8 issuer of auoh seouritlesshall have
            been granted a permit by the Seoretary of State, and
            no such permit ehall be granted by the Seoretery of
            State until the lesue~ of such securitiesshall have
            filed with the Secretary OS State a worn statement
            verified under the oath of an executive officer of
            the Issuer and attested by the Secretary thereof,
            setting forth the following informationr6 l + "
                 In view OS the above quoted Section it 16 our opinion
    that the loaal agents, even with a permit,,vouldnot be authorized
    to offer for sale the sscuritieamentioned in your letter, unleso
    and until the aorporetion shell have b88n granted an issuer's per-~
    mit by the Beoretary of State.
                                                 Very truly yours