People v. Boles

California Court of Appeal Nov 14, 1939 No. Crim. 3261Published

Before: McCOMB

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Holding. The court held that the issuance of an option to purchase corporate stock without a permit from the corporation commissioner violates the Corporate Securities Act. It further held that such an option does not qualify for the statutory exception regarding the conversion or subscription of securities.

Issues

Whether there was substantial evidence to sustain the defendants' convictions for violating the Corporate Securities Act.
Whether the issuance of an option to purchase stock required a permit from the corporation commissioner.
Whether the option fell within the statutory exception for the conversion or subscription of securities.

Disposition. Affirmed; appeals from verdicts dismissed.

Quotations verified verbatim against the opinion

“it is clear that, since defendants without first obtaining a permit issued to John Marcin an option to purchase 4,000 shares of the Santa Fe Oil Company securities, they violated the Corporate Securities Act”

“the option given by defendants is clear on its face and does not provide for the exchange of one security of the corporation for another security of the same corporation.”

“An appeal does not lie from the verdict of a jury”

McCOMB, J. —

From judgments convicting them of violating the Corporate Securities Act after trial before a jury and from orders denying their motions for a new trial defendants appeal. There are also purported appeals from the verdicts of the jury.

Viewing the evidence most favorable to the prosecution (respondent) the essential facts are:

Defendant Boles was president and defendant Armstrong secretary of Santa Fe Royal O'il Company, a corporation. April 17, 1936, the company borrowed $4,000 from John Marcin and delivered to Mm a note signed 11 Santa Fe Royal Oil Company by M. L. Boles, president, F. J. Armstrong, secretary-treasurer,” dated April 17, 1936, in the sum of $4,000 payable four months after date. On the same day. they delivered to Mr. Marcin an option to purchase stock of the Santa Fe Royal Oil Compaq*-, reading thus:

“Santa Fe Royal Oil Company, 707 Title Guarantee Building, 411 West 5th Street, Los Angeles. Telephone Michigan 7918, April 17, 1936'.

‘ ‘ Option to Buy.

‘ ‘ To Whom It May Concern:

“This is to certify that the Santa Fe Royal Oil Company, a corporation, has this 17th day of April, 1936, given to John Marcin an option for four months to purchase four thousand (4000) shares of Santa Fe Oil Company securities, or any part thereof, at par value of $1.00 per share, lawful money

[463]

of the United ‘States. This option expires midnight, August 17, 1936. Santa Fe Royal Oil Company, by M. L. Boles, President. By F. J. Armstrong, Secretary-Treasurer.”

A permit was not obtained from the corporation commissioner for the issuance of the foregoing option to purchase stock.

Defendants rely for reversal of the judgments on these propositions:

First: There was no substantial evidence to sustain the verdicts of the jury.

Second: It was not necessary to obtain a permit from the corporation commissioner before issuing the option to purchase stock set forth above, becaicse the transaction fell within the exception set forth in paragraph 8, subdivision (a), section 2 of the Corporate Securities Act (Act 3814, vol. 2, Deering’s General Laws [1931], p. 1926).

People v. Boles

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