{ "id": 1598978, "name": "Regina M. WHITE, Michael White and Charles Rose, Plaintiffs-Appellants, v. Roy H. SOLOMON, et al., Defendants-Appellees", "name_abbreviation": "White v. Solomon", "decision_date": "1986-12-30", "docket_number": "No. 8289", "first_page": "366", "last_page": "369", "citations": [ { "type": "official", "cite": "105 N.M. 366" }, { "type": "parallel", "cite": "732 P.2d 1389" } ], "court": { "name_abbreviation": "N.M. Ct. App.", "id": 9025, "name": "Court of Appeals of New Mexico" }, "jurisdiction": { "id": 52, "name_long": "New Mexico", "name": "N.M." }, "cites_to": [ { "cite": "389 U.S. 332", "category": "reporters:federal", "reporter": "U.S.", "case_ids": [ 11339040 ], "weight": 3, "year": 1967, "opinion_index": 0, "case_paths": [ "/us/389/0332-01" ] }, { "cite": "691 F.2d 443", "category": "reporters:federal", "reporter": "F.2d", "case_ids": [ 1478152 ], "opinion_index": 0, "case_paths": [ "/f2d/691/0443-01" ] }, { "cite": "151 Fla. 140", "category": "reporters:state", "reporter": "Fla.", "case_ids": [ 1970834 ], "weight": 2, "year": 1942, "opinion_index": 0, "case_paths": [ "/fla/151/0140-01" ] }, { "cite": "43 L.Ed.2d 402", "category": "reporters:federal", "reporter": "L. Ed. 2d", "year": 1975, "opinion_index": 0 }, { "cite": "95 S.Ct. 1132", "category": "reporters:federal", "reporter": "S. Ct.", "year": 1975, "opinion_index": 0 }, { "cite": "420 U.S. 930", "category": "reporters:federal", "reporter": "U.S.", "case_ids": [ 11651841, 11651653, 11651879, 11651784, 11652074, 11651961, 11651602, 11652115, 11651732, 11651990, 11651929, 11652025, 11651901 ], "year": 1975, "opinion_index": 0, "case_paths": [ "/us/420/0930-05", "/us/420/0930-02", "/us/420/0930-06", "/us/420/0930-04", "/us/420/0930-12", "/us/420/0930-09", "/us/420/0930-01", "/us/420/0930-13", "/us/420/0930-03", "/us/420/0930-10", "/us/420/0930-08", "/us/420/0930-11", "/us/420/0930-07" ] }, { "cite": "352 F.Supp. 454", "category": "reporters:federal", "reporter": "F. Supp.", "case_ids": [ 3557103 ], "opinion_index": 0, "case_paths": [ "/f-supp/352/0454-01" ] }, { "cite": "94 N.M. 356", "category": "reporters:state", "reporter": "N.M.", "case_ids": [ 1573173 ], "weight": 5, "pin_cites": [ { "page": "365" }, { "page": "769" } ], "opinion_index": 0, "case_paths": [ "/nm/94/0356-01" ] }, { "cite": "11 N.M.L.Rev. 255", "category": "journals:journal", "reporter": "N.M. L. Rev.", "year": 1980, "opinion_index": 0 }, { "cite": "2 N.M.L. Rev. 1", "category": "journals:journal", "reporter": "N.M. L. Rev.", "year": 1972, "pin_cites": [ { "page": "37-38" } ], "opinion_index": 0 } ], "analysis": { "cardinality": 527, "char_count": 8760, "ocr_confidence": 0.781, "pagerank": { "raw": 7.170483090261056e-08, "percentile": 0.42946442051254724 }, "sha256": "182444597f7801a5ddfc9d26e1d46e0e0617c66c33cddd97e2ffecdeba54ea12", "simhash": "1:bb2a5fb73568f89e", "word_count": 1432 }, "last_updated": "2023-07-14T20:20:30.820213+00:00", "provenance": { "date_added": "2019-08-29", "source": "Harvard", "batch": "2018" }, "casebody": { "judges": [ "GARCIA and FRUMAN, JJ., concur." ], "parties": [ "Regina M. WHITE, Michael White and Charles Rose, Plaintiffs-Appellants, v. Roy H. SOLOMON, et al., Defendants-Appellees." ], "opinions": [ { "text": "OPINION\nNORMAN HODGES, District Judge.\nPlaintiffs appeal from a denial of their motion for summary judgment to rescind the sale of a corporation and the entry of judgment for defendants. We affirm the trial court on two grounds.\nRoy H. Solomon, Jeffrey A. Solomon, Burt Glucksman and Ralph Kaplan (defendants) sold all of their common stock in R.S., Incorporated, a New Mexico corporation (R.S., Inc.), to Regina M. White, Charles F. Rose and Michael H. White (plaintiffs). R.S., Inc. owned a business known as Friar\u2019s East at 1200 Wyoming Blvd., N.E. in Albuquerque including a liquor license, furniture, fixtures, inventory and a lease on real estate which was binding on R.S., Inc.\nPlaintiffs paid $100,000 down and the balance of $450,000 was payable in certain terms specified in the agreement dated June 13, 1979. A commission, on the sale of the business, was paid to a realtor.\nIn June, 1979, new shares of R.S., Inc. stock were issued by plaintiffs Charles F. Rose, president, and Regina M. White, secretary, to the new owners, Charles F. Rose, Regina M. White and Michael H. White. In March, 1981, plaintiffs filed a complaint against defendants claiming a violation of the New Mexico Securities Act and requesting a rescission of their purchase and return of all money paid to defendants.\nPlaintiffs then filed a motion for summary judgment which was heard by the trial court and, by order filed November 26, 1984, the trial court found and ruled that the transaction (sale of common stock) between defendants and plaintiffs was incidental to the sale of a business and therefore the registration requirements of the New Mexico Securities Act did not apply.\nISSUES\nPlaintiffs raise three issues on appeal: (1) whether the sale of all of the R.S., Inc. stock by defendants to plaintiffs complies with the exemption under NMSA 1978, Section 58-13-30(J); (2) whether the stock sale is an isolated transaction under NMSA 1978, Section 58-13-30(A); and (3) whether the \u201csale of business\u201d exception exists in New Mexico so as to relieve a seller of stock from the requirements of the New Mexico Securities Act.\nISSUE I\nSection 58-13-30(J), as it existed in 1979, provides in pertinent part that an exempt transaction includes:\nJ. [T]he issuance and sale by any corporation organized under the laws of this state of its securities at a time when the number of security holders does not, and will not in consequence of the sale, exceed twenty-five and:\n(1) the seller reasonably believes that all buyers are purchasing for investment; and\n(2) no commission or other remuneration is paid or given directly or indirectly for soliciting any prospective buyer[.]\nHere, R.S., Inc. did not issue and sell stock in June, 1979. After the sale of all stock in R.S., Inc. by defendants to plaintiffs, R.S., Inc., through its new officers, plaintiffs, issued new stock. Since defendants never issued stock to plaintiffs, the Section 58-13-30(J) exemption cannot apply to this case. Thus, we agree with plaintiffs as to the inapplicability of this exemption. However, this does not affect our affirmance of the trial court since we find the transaction is exempted on two other grounds.\nISSUE II\nPlaintiffs argue in their second issue that, in light of surrounding circumstances, defendants\u2019 sale of the corporation was not an isolated transaction. Plaintiffs offered evidence that in November, 1979, five months after the transaction between the parties, defendant Roy Solomon formed another corporation called Friar\u2019s Inc. which purchased Victor\u2019s Good Times Lounge in Albuquerque and renamed it Friar\u2019s North. Solomon sold all outstanding stock in Friar\u2019s Inc. in October, 1980. This stock was not registered with the New Mexico Securities Bureau. The purchasers then sold part of their stock to other people to finance the purchase. Plaintiffs contend these subsequent events constitute a series of stock sales and, when considered with defendants\u2019 June sale to plaintiffs, denote a course of successive transactions and not an isolated transaction which would be exempt from the Act. We disagree.\nIn Parnall and Ticer, A Survey of the Securities Act of New Mexico, 2 N.M.L. Rev. 1, 37-38 (1972), the authors state:\nA non-issuer may sell unregistered securities in \u201cisolated transactions.\u201d As the Act does not define the term \u201cisolated,\u201d the exemption is somewhat vague. The present New Mexico Commissioner has construed the term as inapplicable to a planned sale to two persons, and other states have similarly limited the exemption to from anywhere from two to five contemporaneous transactions.\nWe believe the term \u201cisolated transaction\u201d is not equivalent to \u201csingle transaction.\u201d The mere fact that defendants sold two incorporated businesses in separate transactions does not require a determination that defendants have brought themselves within the requirements of the New Mexico Securities Act. See 69 Am.Jur.2d, Securities Regulation-State \u00a7 79 (1973). See also Note, The Paper Trail to Jail, 11 N.M.L.Rev. 255 (1980-81).\nIn State v. Sheets, 94 N.M. 356, 610 P.2d 760 (Ct.App.1980), we noted that \u201cisolated\u201d was not defined in our Securities Act and we utilized its ordinary meaning. We defined an isolated transaction as one that is \u201cunique; occurring alone or once, sporadic; not likely to recur.\u201d Id. at 365, 610 P.2d at 769. Because of the repetitive issuance of promissory notes and the dates involved, we determined that the transactions in Sheets could not be considered isolated transactions and the exemption did not apply. Id. The facts in this case, however, differ. The transfer of stock by defendants to plaintiffs in June, 1979, should be governed by the facts surrounding that sale. The sales were not connected in any way. The formation of another lounge-restaurant corporation and the sale of its stock some sixteen months later does not amount to a series of transactions by defendants that would cause the 1979 sale to be governed by the New Mexico Securities Act. The sale of stock by defendants to plaintiffs was an isolated transaction exempt from the Act. For the Act to apply, the transactions must have some tangible connection to one another, more than just the same seller. Sheets did not make this distinction and to the limited extent this broader approach conflicts with State v. Sheets, Sheets is modified.\nISSUE III\nWe also affirm the trial court by virtue of the \u201csale of business\u201d exception. The purpose of securities laws is generally held to be the protection of the public from various methods of deceit and fraud in the sales of securities, not the regulation of commercial transactions. See McClure v. First National Bank of Lubbock, Texas, 352 F.Supp. 454 (N.D.Tex.1973), cert. denied, 420 U.S. 930, 95 S.Ct. 1132, 43 L.Ed.2d 402 (1975); McElfresh v. State, 151 Fla. 140, 9 So.2d 277 (1942).\nIn a case similar to the one at bar, the Tenth Circuit Court of Appeals held that a transaction, in which plaintiff bought a liquor store and, as an indicia of ownership, received 100% of the stock of the company owning the store, was not a \u201csecurity transaction\u201d within the purview of federal securities law. Chandler v. Kew, Inc., 691 F.2d 443 (10th Cir.1977). We believe the circuit court\u2019s analysis is applicable in the instant case. Defendants argue, and we agree, that although the Sheets case stands for the proposition that New Mexico will not follow federal decisions as to the definition of \u201csecurity\u201d or \u201ccommercial paper\u201d because of the difference in wording of (he federal and state definitions, it does not stand for the proposition that New Mexico will ignore the laws of other states or the federal cases in dealing with the economic realities of the business world. To read Sheets too narrowly is to render useless its utility.\nIn the instant cas\u00e9, also, the transfer of stock was merely an indicia of ownership. Plaintiffs\u2019 purchase was, in reality, a purchase of the entire business. Cf. Tcherepnin v. Knight, 389 U.S. 332, 88 S.Ct. 548, 19 L.Ed.2d 564 (1967). The New Mexico Securities Act was never intended to govern this type of situation.\nIn sum, not only is the sale by defendants exempted from the New Mexico Securities Act by the isolated transaction exemption but, also, the sale represented an exception to the Securities Act since it was the sale of a business.\nAffirmed.\nIT IS SO ORDERED.\nGARCIA and FRUMAN, JJ., concur.", "type": "majority", "author": "NORMAN HODGES, District Judge." } ], "attorneys": [ "A. Patrick Maynez, Messina, Madrid & Maynez, P.A., Albuquerque, for plaintiffs-appellants.", "Richard B. Addis, Albuquerque, for defendants-appellees." ], "corrections": "", "head_matter": "732 P.2d 1389\nRegina M. WHITE, Michael White and Charles Rose, Plaintiffs-Appellants, v. Roy H. SOLOMON, et al., Defendants-Appellees.\nNo. 8289.\nCourt of Appeals of New Mexico.\nDec. 30, 1986.\nCertiorari Denied Feb. 2, 1987.\nA. Patrick Maynez, Messina, Madrid & Maynez, P.A., Albuquerque, for plaintiffs-appellants.\nRichard B. Addis, Albuquerque, for defendants-appellees." }, "file_name": "0366-01", "first_page_order": 406, "last_page_order": 409 }