Hammer v. Sanders

Full title: H.C. HAMMER et al., Appellants, vs. CHARLES W. SANDERS et al., Appellees

Court: Supreme Court of Illinois

Date published: Mar 22, 1956

Facts

In the circuit court of Cook County, the plaintiffs, H.C. Hammer, Morris Norian and Richard Norian, obtained judgments against the defendants, Charles W. Sanders, John L. Fye and O.R. Thoureen, individually and as co-partners doing business as the Sanders-Fye Drilling Company, for sums paid the latter pursuant to 51 separate oil transactions. The judgments were for $40,328.18, $31,279.86 and $6,988.36, respectively.

The plaintiffs successfully maintained in the trial court that the money was for the purchase of “securities” within the meaning of Section 2 of the Illinois Securities Act of 1919 (Ill. Rev. Stat. 1953, chap. 121 1/2, par. 97,) and since the defendants had not complied with this statute relative to registration, etc., the sales could be rescinded and, upon tender, the consideration paid, plus reasonable attorney’s fees, could be recovered. Ill. Rev. Stat. 1953, chap. 121 1/2, par. 132.

Issue

Decision

In my opinion, the fact that both parties sought to take advantage of the special provisions of the Internal Revenue  Code does not militate against this view. The purposes and policies behind the deductions and exemptions allowed by our federal tax laws are far different from those that form the basis of our state and federal “Blue Sky” laws. Even though the Congress of the United States sees fit to permit the deduction of these expenses, this circumstance neither lessens the imminent danger of fraud that our Securities Acts were designed to prevent, nor aids in their construction. The tax treatment of these expenditures by the parties should not serve to abrogate a regulatory statute of this state or nation.

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