WEE MAC CORPORATION, DOING BUSINESS AS COMMODITY OPTIONS OF FLORIDA, A FLORIDA CORPORATION AND WESLEY J. MOFFATT, APPELLANTS,
v.
STATE OF FLORIDA, BY FRED O. DICKINSON, JR., COMPTROLLER, AS HEAD OF THE DEPARTMENT OF BANKING AND FINANCE, DIVISION OF SECURITIES, APPELLEE
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The Florida District Court of Appeal upheld an injunction against Wee Mac Corporation and Wesley Moffatt for selling unregistered commodity options in violation of Florida's securities law, but reversed the portion requiring them to repay private investors who were not parties to the suit, finding the State lacked statutory authority to seek such recovery on behalf of non-parties.
The court held that (1) commodity options sold by appellants are investment contracts within the meaning of Florida securities law; (2) the trial court lacked authority to require repayment to private investors because neither the statute nor the State's enforcement powers authorize recovery on behalf of non-parties not heard in the proceeding; and (3) the court properly assessed the accountant's fee as costs within its discretion.
[1] Commodity options sold as part of an investment scheme can be classified as securities under Florida's Sale of Securities Law.
[2] A court may not order the repayment of purchase price to private investors in a securities fraud case when those investors are not parties to the suit.
Previewing 2 of 4 headnotes on this case. FLexlaw’s editorially structured points of law — every proposition, pinpointed — are reserved for members.
Join FLexlaw to unlock all legal intelligence“There is ample evidence in this record to support the trial court's finding that the commmodity options sold by the appellants are investment contracts.”
Establishes the court's affirmation that commodity options qualify as securities under Florida law
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Join FLexlaw to unlock all legal intelligenceWee Mac Corporation and Wesley Moffatt sold commodity options to investors in Florida without registering with the Florida Division of Securities. The…
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PEARSON, Judge.
The appellants, the defendants in the trial court, appeal a final judgment finding that they sold commodity options in Florida in violation of the Florida Sale of Securities Law, Chapter 517, Fla.Stat. The trial court held that the defendants (1) had operated in violation of the law, (2) are permanently enjoined from selling any securities unless they are properly registered with the Florida Division of Securities, (3) are ordered to divest themselves of the proceeds of all sales made to two purchasers in Florida in contravention of the law, and (4) are subject to the right reserved by the court to order the appellants to divest themselves of the proceeds of other sales. Thereafter, the court directed the payment by the defendants of a fee for an accountant appointed by the court to audit their books.
On this appeal appellants contend (1) that the commodity options which they sold were not proved to be securities within the meaning of Chapter 517.02(1), Fla.Stat., (2) that the court was without authority to require the repayment to private investors of the purchase price of the alleged securities where the private investors were not parties to the suit, and (3) that the court improperly taxed as costs the fee of the court-appointed accountant.
There is ample evidence in this record to support the trial court’s finding that the commmodity options sold by the appellants are investment contracts. See Florida Discount Centers, Inc. v. Antinori, Fla. 1970, 232 So. 2d 17; Frye v. Taylor, Fla.App.1972, 263 So. 2d 835. The appellant has, with admirable candor, admitted in argument that these same contracts have been held to be investment contracts by the United States District Court, District of Nevada, in the case of In re Traders International, Ltd., case no. 7350, opinion filed January 30, 1974.
Appellant’s second point presents error which calls for a reversal in part of the judgment rendered. Section 517.19, Fla.Stat., empowers the Department of Banking and Finance to enjoin the unlawful sale of securities, and section 517.21 gives purchasers the right to recover the purchase price of securities sold in violation of the act. Nothing in the statute authorizes the State to seek recovery on behalf of private purchasers. The wisdom of this decision of the legislature is evident since the private purchasers are not parties to this suit and therefore have not been heard upon the business decision involved.
In our opinion, the third point does not present reversible error in view of the obvious need of the court for an accountant’s help in such actions and in view of the discretion vested in the court in such matters. See Price v. Airlift International, Inc., Fla.App. 1967, 201 So. 2d 264.
Accordingly, paragraphs numbered “5” and “6” of the final judgment are reversed. In all other aspects the judgment stands affirmed.
Affirmed in part, reversed in part.
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Tinwood N.V. v. SUN Banks, Inc., 570 So. 2d 955 (Fla. 5th DCA 1990)…tton & Co., Inc. v. Rousseff, 537 So. 2d 978 (Fla.1989) (§ 517.211 requires buyer/seller privity). Indeed, in the absence of a joinder of the private investors, the court could not require repayment to such private investors. Wee Mac Corp. v. State, 301 So. 2d 101 (Fla. 3d DCA 1974). The directed verdict on this claim is affirmed. BREACH OF FIDUCIARY DUTY (Agents Failure to Disclose Secret Profit) Under Florida corporate law,3 a director has the duty to perform his duties “in good faith, in a manner he reas…
Authorities Cited
- Fla. Disc. Ctrs., Inc. v. Antinori, 232 So. 2d 17 (Fla. 1970)
- Colegrove v. State, 263 So. 2d 835 (Fla. 2d DCA 1972)
- Frye v. Taylor, 263 So. 2d 835 (Fla. 4th DCA 1972)
- Price v. Airlift Int'l, Inc., 201 So. 2d 264 (Fla. 3d DCA 1967)
- WEE MAC Corp. v. State, 291 So. 2d 286 (Fla. 3d DCA 1974)