Summary
noting that New Jersey's interest in regulating in-state offers to out-of-state buyers is "not so much to protect the citizens of other states, as to prevent this state from being used as a base of operations for crooks marauding outside the state."
Summary of this case from A.S. Goldmen & Co. v. New Jersey Bureau of SecuritiesOpinion
04-07-1931
STEVENS, Attorney General v. WRIGLEY PHARMACEUTICAL CO. et al.
Robert D. Grosman, Asst. Atty. Gen., for complainant. Emerson L. Richards, of Atlantic City, for defendants.
Syllabus by the Court.
The Fraudulent Stocks Sales Act (Blue Sky Law), as it stood prior to 1930, did not ban the promotion of fraudulent stock within the state; for the sale of such stock outside the state the act of 1930 does.
Suit by William A. Stevens, Attorney General, against the Wrigley Pharmaceutical Company and others. On order to show cause why defendant should not be held in contempt.
Order to hold for contempt denied.
Robert D. Grosman, Asst. Atty. Gen., for complainant.
Emerson L. Richards, of Atlantic City, for defendants.
BACKES, Vice Chancellor.
The Wrigley Pharmaceutical Company, a Delaware corporation, failed to answer a questionnaire directed to it by the Attorney General as required by section 3 of the Fraudulent Stocks Sales Act (Blue Sky Law), and thereupon this court, in an appropriate proceeding by the Attorney General, * * * * ordered that in the meantime and pending further order of this Court, the defendant, Wrigley Pharmaceutical Company, a Delaware Corporation, .doing business in the State of New Jersey, its officers, directors, agents, brokers, servants as well as all other persons acting in aid or assistance of them be and they are hereby, jointly and severally, restrained and enjoined from issuing, selling, offering for sale, purchasing, offering to purchase, promoting, negotiating, advertising or distributing any securities whatsoever within the State of New Jersey and particularly the securities of the defendant company, pending the final hearing of this cause and further order of this Court."
That was in September, 1929. Thereafter the company sold 38,000 shares of its stock to nonresidents of this state; the sales of the stock were made and the certificates thereof were issued outside the state, though promoted within the state. The injunction was in the language of the statute as it then stood. P. L. 1927, p. 138, P. L. 1929, p. 773.
The object of the act, as expressed in the title and in the body of the act, was to prevent the sale of the denounced stock within this state, and the purpose was the protection of the citizens of this state. The provision of the act declaring as unlawful, inter alia, "promoting," merely prescribes one of the steps in the sale of stock within this state, and is not referable to sales of fraudulent stock made outside the state.
That apparently was the conception of the Legislature, for it later (P. L. 1930, p. 250, Comp. St. Supp. § *186—10a (2) et seq.) amended the statute (without amending the title) placing a ban on the sale of fraudulent stock within "or from this State," not so much to protect the citizens of other states, as to prevent this state from being used as a base of operations for crooks marauding outside the state.
Order to hold for contempt is denied.