Creasy Corp. v. Enz Bros.

Vinje, C. J. Sec. 1753 — 57, Stats. 1919, provides that “The sale of every security issued by any company without a permit of the commission authorizing the same then in effect, shall be void,” and sub. (c), sec. 1753 — 48, Stats. 1919, defines security or securities as follows: “ ‘Security’ or ‘securities’ means and includes any bonds, stocks, notes or other obligations or evidences of indebtedness or of title which constitutes evidence of, or is secured by, title to, interest in or lien upon any or all of the property or profits of such company.” It is the claim of the defendant that the contract in question comes under the term “or other obligations” mentioned [52] in the statute. It will be noted that the statute does not speak merely of “other obligations,” but of “other obligations or evidences of indebtedness,” We think the true reading of the language is as though it read “other obligations of indebtedness” or “other evidences of indebtedness.” But if this be not so, the same result would follow if the word “obligations” stood alone and divorced from the words “of indebtedness,” for it stands with words such as “securities, bonds, stocks, notes, or other evidences of indebtedness.” These words all connote financial obligations to pay money or are securities therefor. The doctrine of noscitur a sociis would apply to the words “or other obligations” if they are read as standing alone, and they would be construed to mean money obligations and not other contractual obligations. To enlarge them to include the latter would practically prevent, except with permission of the commission, the entering into contracts of any kind in this state by “companies” defined in sub. (b), sec. 1753 — 48. Such was not the purpose of the statute. Its purpose was to protect the residents from the purchase of worthless obligations for the payment of money in whatever form such obligations took. In the contract in question there is no obligation to pay money on the part of the plaintiff. Its obligation is to render a certain'service to the defendant for a period of twenty years, which service it has fully rendered up to the date of the suit. The service consisted in selling its goods tO' the member for cost plus a very small per cent, of profit. The member acquired no rights either in the capital or profits of the company. The contract would be fully discharged by plaintiff rendering the specified service for the required length of time. It is clear that our railroad commission correctly held, as the evidence shows, that the contract in question does not come within the purview of the statute. Much reliance is placed by the defendant upon the case of People v. Clum, 213 Mich. 651, 182 N. W. 136. In that [53] case the defendant sold shares of the par value of $10 each in an association organized under the common law. The court very properly held that such “shares” were “stock” within the meaning of its Blue Sky Law. A security was sold that purported to give the holder a pro rata share or per cent, in both the capital and profits of the association. We have no such case before us. It may be argued that in one sense every contract is a security because it guarantees to the parties thereto something of value. But as before stated, the Blue Sky Law was enacted for the purpose of protecting against the sale of worthless money obligations and not against entering into other contracts where service is to be rendered, as here, or other obligations are incurred • that do not partake of the sale of securities or of a sharing in either the capital or profits of a company. By the Court. — Judgment affirmed.