Opinion
Rehearing Granted June 1, 1937.
Appeal from Superior Court, Los Angeles County; Arthur Crum, Judge.
Noel Davenport was convicted of violating the Corporate Securities Act, and he appeals.
Affirmed.
COUNSEL
Morris Lavine, of Los Angeles, for appellant.
U.S. Webb, Atty. Gen., Walter L. Bowers, Deputy Atty. Gen., and Buron Fitts. Dist. Atty., and A. H. Van Cott, Deputy Dist. Atty., both of Los Angeles, for the People.
OPINION
WOOD, Justice.
The defendant appeals from judgments pronounced in the superior court after his pleas of guilty to ten counts of a complaint charging him with violations of the Corporate Securities Act (St.1917, p. 673, as amended). Defendant entered a plea of guilty in the municipal court of the city of Long Beach to each of the ten counts. That court thereupon certified the proceedings to the superior court, where the judgments were pronounced.
Defendant now contends that the various counts of the complaint do not state facts sufficient to constitute public offenses. The ten charges may be divided into two groups. Count XXIII, which may be taken as typical of one of the groups, is in the following words: "That on or about the 29th day of March, 1934, at and in the County of Los Angeles, State of California, the crime of violation Corporate Securities Act, a felony, was committed by Noel Davenport and Lyle H. Lee, who, at the time and place last aforesaid, did wilfully, unlawfully, feloniously and knowingly issue and sell, and cause to be issued and sold to Margaret Nelson, a security for value, to-wit, an investment contract entitled ‘Agreement Noel Davenport and Margaret Nelson,’ without having first secured a permit from the Commissioner of Corporations of the State of California so to do." Except as to dates and names the other four counts of this group are similar.
The Corporate Securities Act provides in section 2 (a), subdivision 7, "The word ‘security’ shall include any * * * investment contract; " in subdivision 8, "‘Sale’ or ‘sell’ shall include every disposition, or attempt to dispose, of a security or interest in a security for value; " subdivision 3, "The word ‘company’ includes * * * individuals as hereinafter defined; " subdivision 6, "The word ‘individual’ in so far as it is included in the definition of a ‘company,’ includes only persons selling, offering for sale, negotiating for the sale of or taking subscriptions for any security of their own issue." (As amended by St.1933, p. 2309.) Section 3 of the act (as amended by St.1931, p. 941) provides: "No company shall sell * * * any security of its own issue until it shall have first applied for and secured from the commissioner a permit authorizing it so to do." As shown above the word "company" includes individuals. Section 18 of the act (as amended by St.1931, p. 950) prescribes the penalties for violations thereof. Section 952 of the Penal Code provides that the charge "may be in the words of the enactment describing the offense or declaring the matter to be a public offense, or in any words sufficient to give the accused notice of the offense of which he is accused." The counts to which defendant entered pleas of guilty are in the language of the statute. All of the elements necessary to constitute public offenses are set forth therein. It will be noted that in the count above copied it is charged that defendant knowingly issued and sold an investment contract, setting forth dates and names and the fact that a permit had not been secured. In People v. Rubens, 11 Cal.App.(2d) 576, 54 P.2d 98, 1107, the indictment charged that defendant "did wilfully, unlawfully and knowingly authorize, direct and aid in the issue and sale of, and did issue, execute and sell, and cause, and assist in causing to be issued, executed and sold for value to" individuals named therein, "a security of their own issue, as defined in said Corporate Securities Act, to-wit: A certain certificate of interest in an oil and gas lease" on specifically described real property in Sacramento county, "without first having applied for and secured from the Commissioner of Corporations of the State of California a permit authorizing them so to do" It was held that the charge was sufficient to constitute a public offense as defined by the Corporate Securities Act.
Count XIV, which is typical of the other group, charges that defendant "did wilfully, unlawfully and feloniously engage in part in the business of purchasing a security issued by another, with the purpose of reselling such security, to-wit, the said Noel Davenport and Lyle H. Lee, purchased from Alexander Husband and Mabel C. Husband Mutual Building and Loan Association certificates Nos. 5456 and 5558 of the aggregate face value of $2443.00, with the purpose of reselling such certificates, the said defendants Noel Davenport and Lyle H. Lee not having first secured a broker’s license from the Commissioner of Corporations of the State of California."
It is provided in subdivision 10 of section 2 (a) of the Corporate Securities Act (as amended by St.1933, p. 2309) that, "The word ‘broker’ includes every person or company, other than an agent, who shall, in this State, engage either wholly or in part in the business of selling, offering for sale, negotiating for the sale of, or otherwise dealing in any security issued by others * * * or of purchasing such securities with the purpose of reselling them, or of offering them for sale to the public; " and in section 6 (as amended by St.1933, p. 2315), "No person or company shall act as an agent or broker until such person or company shall have first applied for and secured from the commissioner a certificate, then in effect, authorizing such person or company so to do." This count also charges the offense in ordinary and concise language and in the language of the statute. It sufficiently sets forth facts constituting a public offense. People v. Ratliff, 131 Cal.App. 763, 22 P.2d 245; People v. Woolsey, 13 Cal.App.(2d) 54, 56 P.2d 557.
Defendant contends that the proceedings leading up to the point of judgment are in violation of the Fourteenth Amendment to the Constitution of the United States in that, as claimed, he has been deprived of his liberty without due process of law and that the proceedings deny to citizens the equal protection of the law.
In 1934 the People amended the Constitution of California and added to section 8 of article 1 the following: "When a defendant is charged with the commission of a felony, by a written complaint subscribed under oath and on file in a court within the county in which the felony is triable, he shall, without unnecessary delay, be taken before a magistrate of such court. The magistrate shall immediately deliver to him a copy of the complaint, inform him of his right to the aid of counsel, ask him if he desires the aid of counsel, and allow him a reasonable time to send for counsel; and the magistrate must, upon the request of the defendant, require a peace-officer to take a message to any counsel whom the defendant may name, in the city or township in which the court is situated. If the felony charged is not punishable with death, the magistrate shall immediately upon the appearance of counsel for the defendant read the complaint to the defendant and ask him whether he pleads guilty or not guilty to the offense charged therein; thereupon, or at any time thereafter while the charge remains pending before the magistrate and when his counsel is present, the defendant may, with the consent of the magistrate and the district attorney or other counsel for the people, plead guilty to the offense charged or to any other offense the commission of which is necessarily included in that with which he is charged, or to an attempt to commit the offense charged; and upon such plea of guilty, the magistrate shall immediately commit the defendant to the sheriff and certify the case, including a copy of all proceedings therein and such testimony as in his discretion he may require to be taken, to the superior court, and thereupon such proceedings shall be had as if such defendant had pleaded guilty in such court. The foregoing provisions of this section shall be self-executing. The Legislature may prescribe such procedure in cases herein provided for as is not inconsistent herewith. In cases not hereinabove provided for, such proceedings shall be had as are now or may be hereafter prescribed by law, not inconsistent herewith."
We find nothing in the amendment to the California Constitution which violates the Constitution of the United States. The procedure adopted provides a fair judicial hearing and applies to all citizens alike. It is provided that a written charge must be made in writing and under oath, that the accused must be advised of his right to counsel and actually represented by counsel who must be present at the time the defendant enters his plea of guilty, and that the magistrate and counsel for the People must consent to the plea. Defendant argues that persons financially unable to employ counsel are treated in a different manner from those who are able to employ counsel. The amendment to the California Constitution expressly provides that in cases not therein provided for "such proceedings shall be had as are now or may be hereafter prescribed by law not inconsistent herewith." In 1935 (St.1935, p. 493) the Legislature added to the Penal Code section 859a, which substantially embodies the constitutional amendment and contains the following: "The foregoing provisions of this section shall not be construed to authorize the receiving of a plea of guilty from any defendant not represented by counsel." Both in the constitutional amendment and the legislative enactment the rights of impecunious defendants have been preserved. All citizens have been accorded equal rights by the procedure adopted and under which the defendant with the advice of and in the presence of his counsel entered pleas of guilty. The defendant was not compelled to submit to the procedure but voluntarily did so.
The judgments are affirmed.
I concur: CRAIL, P. J.
Opinion adopted on rehearing as the opinion of the court 69 P.2d 862.
I dissent. Defendant appeals from judgments and sentences pronounced by the superior court after his plea of guilty to ten counts of a complaint, charging him with violations of the Corporate Securities Act.
The essential facts are these:
Defendant entered a plea of guilty in the municipal court of the city of Long Beach to ten counts of a complaint, charging him with violations of the Corporate Securities Act. That court thereupon certified the proceedings to the superior court of Los Angeles county, in which court judgment and sentence on each count were pronounced.
A. Count XIII read as follows: "That on or about the 29th day of March, 1934, at and in the County of Los Angeles, State of California, the crime of Violation Corporate Securities Act, a felony, was committed by Noel Davenport and Lyle H. Lee, who, at the time and place aforesaid, did wilfully, unlawfully, feloniously and knowingly issue and sell, and cause to be sold to Margaret Nelson, a security for value, to-wit, an investment contract entitled ‘Agreement Noel Davenport and Margaret Nelson’ without having first secured a permit from the Commissioner of Corporations of the State of California so to do."
Except as to dates and names, counts XV, XVII, XIX, and XXI were identical.
B. Count XIV read as follows: "That the appellant ‘did willfully, unlawfully and feloniously engage in part in the business of purchasing a security issued by another, with the purpose of reselling such security, to-wit, the said Noel Davenport and Lyle H. Lee purchased from Alexander Husband and Mabel C. Husband Mutual Building and Loan Association certificates Nos. 5456 and 5558, of the aggregate face value of $2443.00 with the purpose of selling such certificates, the said defendants, Noel Davenport and Lyle H. Lee, not having first secured a broker’s license form the Commissioner of Corporations of the State of California."’
Except as to dates and names, counts XVI, XVIII, XX, and XXII were identical.
Defendant relies for reversal of the judgments on the following proposition:
Each of the counts as to which he entered a plea of guilty failed to state a public offense.
This proposition is valid. As hereinabove set forth, the charges against defendant of violation of the Corporate Securities Act fell into two classes:
I. Count XIII is an example of the first class. This count, stripped of its surplus verbiage, simply charged defendant with having sold an interest in an investment contract without first having secured a permit from the commissioner of corporations of the state of California. The pleader’s designation of the character of the contract is a mere conclusion, and, since there is no evidence before this court of the nature of the contract, we are unable to determine whether the investment contract was one falling within the provisions of the Corporate Securities Act or not. Therefore, since in the generic sense of the word, every contract is an investment contract, and it is perfectly lawful to sell, assign, or otherwise transfer or dispose of one’s rights in or to any investment contract without first securing a permit from the commissioner of corporations of the State of California, unless it falls within the class described in the Corporate Securities Act, we must accord defendant the benefit of the presumption, which is one of the inalienable rights of every citizen of the State of California, to wit, that of innocence of crime until the contrary is proven beyond a reasonable doubt (section 1096, Pen.Code; section 1963, subdivision 1, Code Civ.Proc.); and assume that the contract described in this count was one, the rights of which could lawfully be sold without the seller first obtaining a permit from the commissioner of corporations. It is therefore apparent that neither count XIII, XV, XVII, XIX, nor XXI stated a public offense.
II. Count XIV is an example of the second class. Stripped of its surplus verbiage, it simply charges defendant with having purchased a security for the purpose of reselling it without having first secured a broker’s license from the commissioner of corporations of the state of California. We find nothing in the Corporate Securities Act which requires an individual to secure a broker’s license before selling securities which he has purchased and owns himself. Indeed, were the act to so provide, it would be unconstitutional as depriving a citizen of the state of an inalienable right of which he may be legally deprived only by the sovereign people of the State of California, to whose will the legislative, executive and judicial departments alike must bow. The sovereign people of the State of California in the most solemn manner known to the civilized world have guaranteed to each citizen the right of acquiring and possessing property which includes the right to dispose of such property in such innocent manner as he pleases and to sell it for such price as he can obtain. Article 1, § 1, Const. of Cal.
The foregoing principles have been repeatedly announced and enforced by the Supreme and Appellate Courts of this state. In Billings v. Hall, 7 Cal. 1, 6, Mr. Chief Justice Murray, speaking for our Supreme Court, says:
"Section first of Article I of the Constitution of California, declares that ‘all men are by nature free and independent, and have certain inalienable rights, amongst which are those of enjoying and defending life and liberty, acquiring possession, protecting property, and pursuing and obtaining safety and happiness.’ This principle is as old as the Magna Charta. It lies at the foundation of every constitutional government, and is necessary to the existence of civil liberty and free institutions. It was not lightly incorporated into the Constitution of this State as one of those political dogmas designed to tickle the popular ear, and conveying no substantial meaning or idea; but as one of those fundamental principles of enlightened government, without a rigorous observance of which there could be neither liberty nor safety to the citizen.
"If, then, one of the primary objects of government is to enable the citizen to acquire, possess, and defend property, and this right has been guarantied by the Constitution, how can it be impaired by legislation?"
In Roystone Co. v. Darling, 171 Cal. 526, 531, 154 P. 15, Mr. Justice Shaw says: "* * * that section 1 of article 1, declaring that all men possess ‘certain inalienable rights,’ among them the right of ‘acquiring, possessing, and protecting property,’ is a guaranty which includes the right to contract concerning the use, enjoyment, and disposition of property, and which cannot be taken away or restricted by the Legislature except by reasonable regulations made in the exercise of the police power."
In Ex parte Quarg, 149 Cal. 79, 80, 84 P. 766, 5 L.R.A.(N.S.) 183, 117 Am.St.Rep. 115, 9 Ann.Cas. 747, Mr. Justice Shaw says: "The constitutional guaranty securing to every person the right of ‘acquiring, possessing and protecting property, refers to the right to acquire and possess the absolute and unqualified title to every species of property recognized by law, with all the rights incidental thereto, and, in connection with the right of personal liberty, it includes the right to dispose of such property in such innocent manner as he pleases, and to sell it for such price as he can obtain in fair barter. * * * These rights are in fact inherent in every natural person, and do not depend on constitutional grant or guaranty. Under our form of government by Constitutions the individual, in becoming a member of organized society, unless the Constitution states otherwise, surrenders only so much of these personal rights as may be considered essential to the just and reasonable exercise of the police power in furtherance of the objects for which it exists. Cooley on Stat. Lim., pp. 68, 244; 1 Barb. on Rights, pp. 122, 284."
Again in People v. Pace, 73 Cal.App. 548, 561, 238 P. 1089, 1095, Mr. Justice Hahn, after quoting with approval from Ex parte Quarg, supra, says:
"The principle enunciated by Mr. Justice Shaw has been declared in frequent decisions, and needs no additional citations. However, it is urged that the opinion in Ex parte Quarg is not in point, because the sale of theater tickets does not involve the ‘general welfare.’ It must be conceded that the ownership of a theater ticket finds its basis in the same personal right that the ownership of a bond or any other security finds its law; and if the owner of a theater ticket may sell it unhampered by legislative regulation or prohibition, we are unable to ascertain upon what theory the owner of a bond or other security may not exercise the same untrammeled right.
"The Attorney General concedes that it would invade the constitutional rights of a citizen if he were prohibited from selling his securities, which he would have the legal right to buy and possess, but contends that the law under consideration is simply a regulation, and in support of this argument cites certain cases which have sustained laws which were merely regulatory in their requirements. If the act under consideration were confined simply to a requirement that all owners of certain types of securities, before selling them, should file with some official certain information, and thereupon they would have the right to dispose of their property without any other burden or interference, the position of the Attorney General might be maintained. But this is not the situation that confronts us. The act in part provides for regulation, but also provides a power to refuse a permit, which would make absolute prohibition in the sale of one’s securities. The only purpose of the act in requiring the filing of certain information in the form of a petition by a person desiring to sell securities is to lay the foundation for action by the corporation commissioner that may or may not, according to his finding, result in an absolute prohibition of the sale of his securities.
"In these days when the urge is strong upon legislative bodies to extend the paternal arm of government into the realm of economic activities, it is particularly important that courts in the exercise of the particular functions imposed upon them by the Constitution, shall scrutinize with care legislation which tends to encroach upon the constitutional guaranties, to the end that the right of the individual to liberty and possession of property shall become, not a mere theory, but shall be maintained as a practical reality. And while it is true that the increasing conflict between the rights of the individual and the general welfare of society presents ofttimes difficult and perplexing problems, nevertheless courts should not and will not permit the violation of those most fundamental rights that underlie our very existence as a nation."
The decision last cited was written in 1925. Since that time it is a matter of common knowledge that legislative bodies have not only been urged to extend but have "extended the paternal arm of government into the realm of economic activities" to an extent which in 1925 would have seemed totally impossible.
It is therefore evident that it behooves the courts to scan with ever-increasing vigilance and care legislation which may have the slightest tendency to encroach upon the constitutional guarantees of our citizens and ever to bear in mind our Supreme Court’s pronouncement in Ex parte Quarg, supra, to the effect that the constitutional guarantee securing to every person the right of acquiring, possessing, and protecting property refers to the right to possess absolutely and unqualifiedly every species of property recognized by law with all rights incidental thereto, including the right to dispose of such property in such innocent manner as he pleases, and that these rights are guaranteed to citizens of the State of California by our State Constitution.
In my opinion, for the foregoing reasons, the judgments should be reversed.