People v. Whelpton

California Court of Appeal Oct 16, 1950 No. Crim. 4457Published

Before: McCOMB

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Holding. The court held that the evidence was sufficient to sustain convictions for violating the Corporate Securities Act, finding that the defendants' solicitation of loans with the promise of future stock options constituted an illegal sale of securities. The court further held that a conspiracy need not be formally charged in an information if the evidence establishes its existence.

Issues

Whether the evidence was sufficient to sustain convictions for violating the Corporate Securities Act.
Whether transactions labeled as loans that included options to purchase stock constitute a 'sale' of a 'security' under the Act.
Whether a conspiracy must be specifically pleaded in an information to support a conviction based on conspiratorial conduct.

Disposition. affirmed

Quotations verified verbatim against the opinion

“Such receipts, it is apparent when considered in connection with the other evidence received, were mere subterfuges for the purpose of avoiding the other provisions of the act.”

“A conspiracy need not be pleaded in an information if the evidence actually shows the existence of one.”

McCOMB, J.

After trial before the court without a jury, defendants Whelpton and Wilkins were found guilty on six counts of violating the Corporate Securities Act. From the

[830]

judgments and orders denying their motions for a new trial, they appeal.

Defendants contend the evidence is insufficient to sustain their conviction.

This proposition is untenable. The evidence discloses that the Chino Hills Oil Company, a California corporation, was organized April 23, 1943. Defendant Whelpton, one of the organizers, was issued a permit on September 16, 1943, to sell and issue 1,765 shares of stock to certain named persons. The stock was placed in escrow and never removed therefrom. The final expiration date of such permit was February 15, 1944. After such date and about September 20, 1947, Mrs. Hostettler loaned to the corporation two separate sums, one of $200, the other of $500; received a receipt therefor signed by defendant Whelpton as vice president-treasurer. At the time she made the loan she was told by defendant Whelpton that if they got oil production they would refund the money to her or she could turn the receipt in and get shares of stock for it. Defendant Wilkins made similar statements to her. Such evidence is sufficient to sustain the conviction on count 8 of the information.

On August 7, 1948, and again on August 18, 1948, defendant Wilkins told Mr. Kirseherman that the Chino Hills Oil Company was drilling for oil and that if he would loan the company money, when the well got into production the Corporation Commissioner would be asked for a permit to issue more stock and he would immediately be given his money back with which he could buy stock. Relying on this statement he gave her a check for $1,500 dated August 7, 1948, another for $1,500 dated August 18, 1948, and received a receipt signed by defendant Whelpton as vice president-treasurer. Such evidence sustains the convictions under counts 10 and 11 of the information.

Defendant Wilkins on or about August 7, 1948, told Mr. Mettler that the Chino Hills Oil Company needed some money to buy casing; that the well was finished, and that after production had been obtained, he could get shares of stock in the corporation for $10 per share. On August 20, 1948, and September 7, 1948, defendant Wilkins repeated the same statements' to Mr. Mettler; on August 7, 1948, he gave her

People v. Whelpton

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