CORPORATIONS - NEW TYPES OF SECURITIES UNDER BLUE SKY LEGISLATION

Authors

Abstract

The plaintiff company, in order to secure capital to finance the purchase and construction of retail gasoline stations and bulk plants in Wisconsin, proposed to sell coupon books for the sum of $35 per book. Purchases made with these coupons entitled the holder of the book to certain credits which, upon accumulation, were to be redistributed to him in cash upon presentation of coupons in the amount of 25 cents or more. Along with each coupon book there was to be issued to each purchaser a so-called good-will contract which, after stating its purpose as being to secure the good will and trade of the community, stipulated as consideration therefor that a fund was to be accumulated from the revenue derived from the sale of gasoline by the plaintiff company in the state. From this fund commissions and expenses of construction were to be paid, and, after ten years, a new fund was to be derived from the same source which was to be distributed to the owners of the good will contracts according to their distributive interests in such fund. The plaintiff company filed with the railroad commission a declaration of intention to sell these coupon books. The latter body, upon advice of the attorney general, issued a restraining order prohibiting the sale of such books until a permit therefor had been issued by the commission under the authority vested in it to regulate the sale of "securities." The plaintiff brought this action to enjoin the threatened prosecution by the railroad commission in the event the contracts were issued without such permit. The lower court upheld the action of the commission and dismissed the plaintiff's complaint. On appeal it was held, that the contracts were indivisible, and that the unit comprised a "security" within the operation of the security laws of the state, and the judgment was affirmed. Brownie Oil Co. of Wis. v. Railroad Commission of Wis. (\Vis. 1932) 240 N. W. 827.

Recommended Citation

CORPORATIONS - NEW TYPES OF SECURITIES UNDER BLUE SKY LEGISLATION, 30 Mich. L. Rev. 1113 (1932).
Available at: https://repository.law.umich.edu/mlr/vol30/iss7/15