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COMMONWEALTH v. FERNAU ET AL. (07/13/54)

July 13, 1954

COMMONWEALTH
v.
FERNAU ET AL.



COUNSEL

W. Hensel Brown, Lancaster, for appellant.

William C. Storb, Dist. Atty., Lancaster, Daniel J. McCauley, Jr., Spec. Deputy Atty. Gen., Philadelphia, Frank F. Truscott, Atty. Gen., for appellee.

Before Hirt, Acting P. J., and Ross, Gunther, Wright, Woodside and Ervin, JJ.

Author: Ross

[ 175 Pa. Super. Page 571]

ROSS, Judge.

This is a prosecution for an alleged violation of the Pennsylvania Securities Act, Act of June 24, 1939, P.L. 748, as re-enacted and amended by the Act of July 10, 1941, P.L. 317, 70 P.S. § 31 et seq. The defendants were tried before a judge sitting without a jury pursuant to section 1 of the Act of June 11, 1935, P.L. 319 as amended, 19 P.S. § 786. The court below overruled defendants' demurrer to the Commonwealth's evidence and found them guilty, and after sentence was pronounced they took this appeal.

The defendants were found guilty of violating section 22 of the Pennsylvania Securities Act, supra, 70 P.S. § 52, which provides, inter alia: 'Any dealer or salesman who shall in this State, without being registered

[ 175 Pa. Super. Page 572]

    hereunder * * * (b) engage in the business of inducing holders of securities to effect the sale thereof through a person registered hereunder or otherwise, directly or indirectly, in order to produce funds to pay for other investments sold by such dealer or by such salesman for a dealer * * *' shall be guilty of a misdemeanor.

In 1951 the defendants, who were not registered as dealers or salesmen under the Act, made several visits to the home of Christian R. Martin in Lancaster County. On each of these occasions Martin delivered corporate stock or cash or both to the defendants and received from them oil leases on land located in New Mexico, and executed by that state, and fractional interests in certain oil wells also located there.

Section 2(f), 70 P.S. § 32(f), provides, inter alia: 'The term 'dealers' means any person other than a salesman who engages * * * either for all or part of his time, directly or through an agent who is not registered hereunder as a dealer, in selling securities issued by another person. * * * The term 'dealer' also includes any person other than a salesman who engages * * * in the business of inducing holders of securities to effect the sale thereof, through a person registered hereunder or otherwise, directly or indirectly, in order to produce funds to pay for other investments sold by such person * * *.' Section 2(f) then places various limitations on the meaning of 'dealer' as above defined, providing that 'None of the following transactions shall constitute the person engaging therein a 'dealer' within the meaning of this act, that is to say: (1) Sales of securities, or of certificates of deposit for securities, issued or guaranteed by any of the following: The United States or any territory or insular possession thereof; the District of Columbia; any state of the United States or any political subdivision,

[ 175 Pa. Super. Page 573]

    public instrumentality, or agency of a state or territory, or any board, agency or commission created by the joint action of two or more states, or a person created and acting as an instrumentality of the Government of the United ...


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