People v. Woolsey

California Court of Appeal Apr 2, 1936 No. Crim. 2841Published

Before: Gould

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Holding. The court held that the Corporate Securities Act is a constitutional exercise of legislative power to regulate the business of purchasing and reselling securities, and that the trial court's erroneous instruction on larceny by trick and device was not prejudicial because the evidence supported a conviction for obtaining property by false pretenses.

Issues

Whether the Corporate Securities Act is unconstitutional as applied to an individual purchasing and reselling his own property.
Whether the Corporate Securities Act applies to building and loan certificates.
Whether the trial court committed reversible error by instructing the jury on larceny by trick and device when the evidence showed the owners intended to pass both title and possession.

Disposition. affirmed

Quotations verified verbatim against the opinion

“The power to regulate is undoubted, and is vested in the legislature.”

“We see no reason to exempt one such as appellant, engaged in the buying and selling of securities as a “business”, from the necessity of securing a broker’s license and submitting to the reasonable regulations of the act.”

“For an error not affecting the substantial rights of appellant the judgment of the trial court may not be disturbed, and unless the error complained of has resulted in a miscarriage of justice the judgment will not be set aside.”

GOULD, J.,

pro

tem.

Defendant, according to the testimony adduced in this case, owned and controlled two corporations, each admittedly an

alter ego

of defendant, by means of which he engaged in the business of purchasing building and loan certificates from the general public, commonly contacting the public through newspaper advertisements. For these certificates he paid ten per cent of their face value in cash and executed promissory notes for the balance, payable in eighteen months with interest at the rate of seven per cent per annum. Evidence disclosed that as soon as the certificates were acquired defendant sold them at prices far below their face value and that he used the money so realized to keep up interest payments on his notes for a time. It was also brought out by the evidence that in connection with the purchase of these certificates defendant made representations that he was engaged in the business of settling life estates, from which he derived sufficient income to meet the notes and other obligations. The testimony as a whole clearly established that he had no such business, that his companies made no profits and that the representations so made were false and untrue. It is admitted that he held no broker’s license from the commissioner of corporations.

For transactions involving the purchase of two certificates for $1,000 and $1573, respectively, defendant was charged upon four counts, two for grand theft and two for violation of the Corporate Securities Act. A jury found him guilty on all four counts, the court denied his motion for new trial and he appeals from the judgment and order.

Appellant contends that the Corporate Securities Act is unconstitutional in so far as it purports to regulate the purchase and sale by an individual of his own property. In this he relies chiefly upon the cases of

People

Pace,

73 Cal. App. 548 [238 Pac. 1089], and

People

Lesser,

123 Cal. App. 489 [11 Pac. (2d) 668]. The Corporate Securities Act as it now stands and as amended since the decision in

People v. Woolsey

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GOULD, J.,

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