Superior Oil Syndicate v. Handley

BEAN, J.

1. It is the position of counsel for plaintiff that the syndicate offers to sell its own paper to finance itself, and comes within the purview of the “blue sky law” of this state, to wit, Title XXXIX, Chapter II, Or. L., and therefore under the supervision of the corporation commissioner, and that it is neither a bank nor a trust company within the meaning of our statute.

Section 6838, Or. L., defines a dealer in stocks, bonds, notes, etc. It provides in part as follows:

“The word ‘dealer’ within the meaning of this act shall include every person, partnership, corporation, *153 or association which is now engaged, or which shall hereafter engage, in the selling to others at a profit or in the contemplation of so selling, any stocks, bonds, notes, contracts or other securities of whatsoever kind or character; * * And, provided further, that any partnership, domestic corporation, foreign corporation doing business within this state, or association which shall hereafter offer its own securities for sale to the public shall be considered a dealer within the meaning of this act.”

Section 6839 directs what a “dealer” shall file with the corporation commissioner before advertising or offering for sale any corporate securities “to be hereafter issued,” and then reads thus:

“Provided, however, that the provisions of this act shall not apply to * * (d) state and national bank and trust company stock. * * ”

According to defendant’s view, the sale within the State of Oregon of plaintiff’s share certificates would constitute the doing of a trust business. Title XXXV, Chapter V, Or. L., deals with the incorporation and regulation of trust companies. Section 6228, Or. L., defines trust business thus:

“A ‘trust business,’ as that expression is used in this act, means the business of doing any or all of the things specified in subdivisions 1, 3, 4, 5, 6, 7, 8 and 9 of Section 6233.”

Section 6233, as far as deemed material, reads:

“Additional Powers of Trust Companies. In addition to the powers conferred by the general corporation laws, every company shall have the following powers, subject to the restrictions and limitations contained in this chapter: * *

“ (9) To Act as Trustee in Execution of Private Trust. To take, accept and execute any and all trusts and powers of whatever nature or description as may be conferred upon or intrusted or submitted to it by *154 any person or persons, firm, company or any body politic, corporation, foreign or domestic, or other authority by grant, assignment, transfer, devise, bequest, or otherwise, or which may be intrusted or committed or transferred to it or vested in it by order of any court of competent jurisdiction; and to receive, take, manag-e, hold and dispose of, according to the terms of such trust or power, any property or estate, real or personal, which may be subject to any such trust and power. ”

Section 6257 enacts, inter alia:

“Regulation of Foreign Trust Companies. No foreign copartnership, firm, joint stock company, association or corporation, shall hold real or personal property in trust in this state, nor act in any trust or fiduciary capacity therein unless it shall have complied with all of the provisions of this act; * * And provided further, that this act shall not apply to any foreign copartnership, firm, joint stock company, association or corporation engaged in the business of loaning money on mortgage security which does not accept deposits or receive from citizens or residents of the State of Oregon property or money in trust on deposit, or for investment.”

The plaintiff may well be designated an association, as indicated in its brief. It is a matter of minor importance whether plaintiff is termed an association or a copartnership (for the distinction see reference to Frost v. Thompson 219 Mass. 360 [ 106 N. E. 1009 , in note, 7 A. L. R. 623]). In Bouvier’s Law Dictionary (3 ed.), Volume 1, page 269, an association is defined as follows:

“ * * In the United States, this term is used to signify a body of persons united without a charter but upon the methods and forms used by incorporated bodies for the prosecution of some enterprise: Abbott, L. Dict.”

*155 In Enc. Dig. Texas Rep., page 275, we find:

“The: words ‘company’ and ‘association’ may be applied to an ordinary commercial partnership; bnt they are in mercantile or commercial language, most frequently, and most properly, applied to many persons acting together, through officers or agents, in the prosecution of important enterprises, and it is only where a greater number of persons are associated together than usually constitute a commercial partnership, that they are expected to act, or do in point of fact act through officers: Mills v. State, 23 Tex. 295, 304 .”

The real inquiry is: In what business does plaintiff propose to engage? It is clear from its “Declaration of Trust” that it proposes to do a trust business within the State of Oregon. The association desires to engage in the business of receiving money from the citizens of the state, and issue a certificate therefor. After such funds have been so received, and after the same have been invested in property, either real, personal, or mixed, the association in its “Articles” declares that the same “shall be taken and held in its name, for the use, benefit, and behalf of the shareholders of said syndicate.” The legal title to all such property of the syndicate is vested in the trustees, who have absolute power over the same, and the certificates issued to purchasers of shares in the syndicate expressly provide that the money.paid for the certificates has been paid to the trustees exclusively for the purposes expressed in the Declaration of Trust. Section 2, under the title “Miscellaneous Provisions,” page 13, provides in part:

“ * * There shall be no personal liability in any event of said trustees, or any of them or of any shareholder, hereunder, save and except the liability which might accrue by reason of the personal breach of trust, upon the part of any trustee or trustees.”

*156 The certificate holder is given the right to participate in the profits and in the corpus of the property of the concern, in case of its dissolution. It is the. bounden duty of the syndicate to execute the trust confided to it by the shareholders in accordance with its declaration of trust, and to “receive, take, manage, hold and dispose of” the money'and property, real or personal, acquired and held for the use and benefit of its certificate holders or beneficiaries. We conclude that the business proposed to be transacted by plaintiff comes within the purview of Section 6233, subdivision 9, Or. L. It is a foreign trust company within the letter and spirit of Section 6257, Or. L.

It may be conceded that the plaintiff syndicate has some of the attributes of a “dealer,” as described in Section 6838, but it is more than that. It extends into the realm of “trust business,” as described and governed by Sections 6228 and 6233, Or. L. The officers of the state are not challenging the right of plaintiff to make contracts by virtue of the common law, or under any law. We are not aware that anyone questions the right of the State, in the exercise of its police powers, reasonably to regulate the business of trust companies within its borders. It is appropriate that the state, through its duly constituted officials, in accordance with the legislative mandate, supervise the execution of such trusts as are contemplated by the declaration of trust of the plaintiff syndicate: Kimball v. Lower Columbia Fire Assn., 67 Or. 249, 253 ( 135 Pac. 877 ); Liggett v. Ladd, 17 Or. 89, 95 ( 21 Pac. 133 ).

2, 3. In construing a statute, words of common use are ordinarily to be taken in their natural, plain and obvious meaning and signification. That sense of words should be adopted which best harmonizes with the context and promotes in the fullest manner the *157 policy and objects of the legislature: City of Portland v. Meyer, 32 Or. 368, 370 ( 52 Pac. 21 , 67 Am. St. Rep. 538 ); Caminetti v. United States, 242 U. S. 470 ( 61 L. Ed. 442 , Ann. Cas. 1917B, 1168, 1171, L. R. A. 1917F, 502, 37 Sup. Ct. Rep. 192); Lake County v. Rollins, 130 U. S. 662, 665 ( 32 L. Ed. 1060 , 9 Sup. Ct. Rep. 651, see, also, Rose’s U. S. Notes); 2 Lewis’ Sutherland on Statutory Construction (2 ed.), § 390; 25 R. C. L. 968, § 234. In determining the meaning of a statute, the particular mischief which it was designed to remedy and the history of the period and of the act itself may be considered, and the statutory meaning of the word or phrase must be gathered from the purpose for which the statute was enacted: Northern Counties Trust Co. v. Sears, 30 Or. 388, 395 ( 41 Pac. 931 , 35 L. R. A. 188); Wiley v. Solvay Process Co., 215 N. Y. 584, 588 ( 109 N. E. 606 , Ann. Cas. 1917A, 314, 316) ; State v. Huxford, 35 R. I. 387, 393 ( 87 Atl. 171 , Ann. Cas. 1915C, 1135, 1138); State v. Bass Pub. Co., 104 Me. 288 ( 71 Atl. 894, 895 , 20 L. R. A. (N. S.) 495).

4. Plaintiff claims that the act in regard to trust business relates only to statutory trust companies, and not to common-law trusts. Such character of associations have been in organization for at least twenty-five years: Thompson, Business Trusts, p. 43. They were in existence for a long time before the statute in question regulating trust companies was enacted in 1917. If the law was not intended to apply to an association like the plaintiff, then the people of the state are unprotected from the operations of concerns which have all the powers of a corporation engaged in the trust business, without the restrictions applied to the operation of such corporations. The statute so construed would be unfair and discriminatory. In order to render it practically inefficacious it would only be necessary for corporations to change their form of organi *158 zation. We cannot conceive that the statute evinces such a legislative intent.

We conclude that the application of plaintiff for a permit does not come within the jurisdiction of the corporation commissioner. The peremptory writ, therefore, will he denied, and the proceeding dismissed.

Dismissed.