
    INVESTORS SYNDICATE, Plaintiff, v. HIRNING et al, Defendants.
    (167 N. W. 141.)
    (File No. 4352.
    Opinion filed March 26, 1918.)
    1. State Securities -Commission. — Certiorari—Assumption, of Authority to lácense Investment -Company, Effect, re Statute Governing Building Association.
    In a certiorari proceeding to review action of State Securities Commission in making an order requiring, as conditional precedent to plaintiff’s continuance in business as an investment company, held, that by assuming authority to grant such permit if securities are deposited, the Commission conceded that plaintiff’s business does not bring it within provisions óf Laws 1915, Cfi. 108, regulatory of ‘building and loan associations and savings associations.
    2. State Securities Commission — Jurisdiction to Require Deposits as Condition to Granting Business Permit to Investment Company — Statute.
    Tbe State Securities Commission, is without jurisdiction to require deposit of securities as a condition precedent to granting to a concern whose business is substantially that of an investment company, a permit to do business within this state; construing Laws 1915, Ch. 27 5, conferring upon State Securities Commission authority to examine statements and documents filed in its office hy any investment company, etc., and to disapprove of the sale of its proposed stocks, etc.
    McCoy, J., and Smith, J., concurring specially.
    Original pcoicieeding in certiorari, in Supreme Court, by Investors Syndicate, a foreign cioirpomafloo, against John1 Hirning, Clarence C. Caldwell, 'and W. N. Van Camp, coUsltitutiing ithe State Securities Commission of the Sítate of South Dabdtfa, and L. W. Henderson, as secretary of sa'i'cl' Commission, far review of an cir-dier requiring, as a condition precedent .to plaintiff's being alllloiwedi to oomltinue in business in thiis state, :a deposit of certain!" seioulri'ties with said Commission, -ancl of an order of said Commission 'Cancelling and 'Setting asidle plaintiff’s permit to do business.
    Orders annulled.
    
      Gardner & Churchill, for Plaintiff.
    
      Clarence C. Caldwell, Attorney General, and Byron S. Payne, Assistant Attorney General, for Defendants.
   WHITING, P. J.

This is- a cerltibrari proceeding brought to review. certain action of the state securities commission, hereinafter 'designated “'ccnimiissiion.’’ From the return it appears that tlhe Investors’ Syndicate, plaintiff -herein, 'has been 'doing business in ¡this state for 'several years under a permit granted to it by the 'commission ini the year 1914; that the commlis'sion, being of the opinion that 'the plaintiff’s business was such- as to' bring- it under -the provisions -of chapter 108, Laws 1915, and therefore under the superviisiion af the 'slbate pufohe examiner instead off the commission, 'Served upon Sa'idi plaintiff an order to show cause why 'the license theretofore iss'ued by tole 'commission should not ■be canceled; that, upon toe hearing on such order to 'show cause, toe commission, did not revoke plaintiff’s license, but, retaining juirisdiiction aver the plaintiff, the commission' did on November 22, 1917, make an ¡order requiring, as a condition precedent to plaintiff's being allowed to continue ¡doing business in this sítate, ¡that it deposit 'certain .'securities vyltb the said eommis'slion; that plaintiff failed! to deposit tihie securities as .ordered'; 'and that the commission, on February 6, 1918, issued .an order canceling, vacating, and setting aside the said permit ¡above mentioned.

It is 'apparent that, by assuming to have authority to grant such permit 'if securities are ¡deposited, the commission concedes that plaintiff's business is not such as to'bring it under the ¡pnorvisitons of chalpteir 108, Laws 1915. Furthermore, that the commission w!as in error in ever Supposing that plaintiff was not under its jurisdiction w¡as conceded upon argument. Thus the sole question presented to us is whether the commission has jurisdiction', ¡under chapter 275, Laws 1915, to require the deposit of securities 'as 'a condition precedent to granting to an applicant a permit to do business within this State. The commission Iras failed to point oult any .provision of suCli law giving them .any such authority, 'and it is cle'ar that -it is wholly without such authority.

The order® otf sutíh commission herein referred to, one of November 22, 1917, 'the other of February 6, 1918, are hereby in all things annulled, Vacated, and set aside.

McCOY land SMITH, JJ.

(concurring specially). We are of the view, 'that the opinion .as written by Presiding Justice WHITING wholly omits to consider or pass .on the farts presented! by th'e record1 land ithe return of Ithe defendants. We can only concur in the result on the grounds hereinafter stated. It must be observed ¡thlat defendants' 'are here resisting- the proceedings of plaintiff to have the order of February 6, 1918, annulled. Such resistance -is based on the return made and filed as a part of the record of thli'S' oa'se. It becomes very material to 1a 'oonsfcferatkmi of this case to lcnlow on what ¡alleged1 grounds the order was made. The return of defendants shows beyond any doubt (that this order canceling plaintiff's permit was ¡based on plaintiff’s ‘ 'failure to deposit security under the provision's! of Chapter 108, Laws of 19x5, relating- to building and loan and savings ¡associations. If there was ¡any sufficient or lawful ground for cancelling plaintiff's ¡permit to transact business in ithis state, the order slhould stand; otherwise not.

Tine plaintiff i© a foreign corporation, 'Organized.1 and existing .since the year 1894 under .anldl by virtue of the Haw© of the state of Minnesota, for the purpose. of buying-,. selling1, 'dealing in any and all classes of bonds, ¡securities, stocks -and! mortgages, notes, ■obligations, tax certificates, dioses in action, an'd in all other kinds of 'personal' property, in buying and selling the same foi lather persons, and in issuing notes, certificates and Other 'obligation's aind evidences of debt. As a part of its. business the plaintiff 'issues contracts denqmiinalbedl “installment savings certificates,” in substance providing that in consideration of 'the payment Of a certain sum, 'annually in advance, during .the period of ten years from date thereof, the plaintiff would pay to' the person named or the recorded owner thereof, at tide expiration (Of said period, a 'certain stated sum. Said contract contained a provision for the payment of interest in case of full! payment of all installlmenita before maturity ithereof; also .contained surrender and loan value provisions; further provided that in case of the death of idhle Ownler thereof bis 'legal representatives might -have !tlhe option of paying the instalments or of receiving 'a paid-up certificate, provided a method for reinstatement after default. None of the 'holders of such contracts participate directly lor indirectly ¡and have no interest in fflbe earnings of plaintiff and have no right to, and daon'ot, participate in the 'management of plaintiff corporation, and are Wit stockholders thereof.

We are of the opinion !thlat plaintiff is neither a bulking and loan association noir a savings association within the meaning of Chapter 108. In all its essential characteristics and' nature, what is called by plaintiff its “installment savings certificate” differs but little, if any, from the ordinary tontine insurance contract or policy issued by many life insurance companies, and while said certificates issued by plaintiff, ’as well ’as the ordinary tontine insurance policy contract, have certain savings features and aspects in 'doninieation with them, still that fact would not necessarily constitute ¡the corporation tihiat issued! either of them !a savings association, as distinguished from $ corporation whose object and purpose w¡asi the mutual 'slaving© benefits ¡thlat might -accrue to tine stockholders or members of the -as'siad-ation itsdlf, instead' of to others who bad no oontnectitoln with the corporation as members or stockholder© thereof. We are of the view that plaintiff is just what its mame aniel purposes indicate, viz an investment corporation, and' that said investment 'Savings certificate's issued by it are' investment contracts within the meaning of the provisions elf -dhialpitier 275, Laws of 1915, § 2, which provide that every person, .corporation, copartnership, company at- association, organized or which shah hereafter be oirganlized in this -state, which shall either by himself or itself, -or by or through others, engages in the business loif selling or negotiating for sale of any stocks, bonds, investaent contracts or other securities issued by him or 'it, within the state of Stouthi Dakota; shall be known, for the purposes of. this act, as a domestic investment company, 'and that every person, 'corporatiioln, .or association resident of or organized -in any other state shall be known- for the purpose© of this act as a foreign investment 'dompany. W'e are of the opinion that plaintiff is a foreign 'investment company under the provisions of this lasit-mentliloinied act. This last-mentioned act provides that ¡before ■transacting any business within, this state every such •foreign investment Company must make .and file application with the state securities commission to 'be permitted! to sell its stocks, bonds, ¡investment contracts, or other securities' wlilthin this state, and that such foreign investment company shall file certain decuments with and give to said commission siudh other information as may be required by it ¡doocernintg siaid business, and that siaid commission liits'elf may investigate ainid! ascertain facts relevant to such foreign investment .company’s bu'siness; and, if said commission fihdls that the plans, .and proposed plans, of buslines» of said investment company, or that its proposed contracts, Stocks, bonds, investment Contralcts, or other 'securities, are fraudulent, or are of such la nature thalt the sale thereof would in ¡the opinion of said commission wlolrk a fraud upon the purchaser thereof, then said! commission 'shall disapprove said application, and refuse 'a permit to said foreign investment company to trausia'dt business within this state; bufo, if said commission should not finid siaid proposed- plan of business, icif such 'investment company to be fraudulent, them ilt ¡shall approve of such -business and1 issue to such foreign investment company la certificate authorizing and permitting it to transact sulch business within this -state.

Drom 'the record it appears that plaintiff had transacted business within this state prior to the enactment of said .haper 275, under and by virtue of other laws then in force, and had been granted a permit ta so Branslaet such business. So far as applicable iba .the issues of this case, the only authority or cause or ground! for cancelling a permit, and1 refusling bo. grant a new permit, under chapter 275, wlcuM be a finding by the securities commission that the business proposed to be bransncited by the foreign investment company was 'friauicMent or of such a nature that the transaction of suclhi proposed, busin'ess would, in the opinion of said commission, work a fraud upon those who might deal with such investment eomp'any in the branisialction >olf its siakll 'business. By the provisions of chapter 275 'the securities .commission' has been invested with discretionary power to decide and' form an opinion as 'to what business of such foreign •inveislmenit companiesi is fraudulent ainidl what is. not; but this deles not mean that such commis'slloin may arbitrarily fin'd the business of any such corporation firauidullenit wli'tlboiut any justification or cause 'therefor. The decisions and orders of-ail like commissions must be based upon some reasicinable and justifiable ground sufficient to warrant such order or decision. Courts will not intervene' to disturb such orders andi decisions unless Itlhe commission's have abused their sta'utory discretion by 'acting orbiltralril}''; thlalt is, without any cause or justifiable reason .tbereflor. In this case, so far as shown by the evidence, the plaintiff is transacting a perfectly legitimate and trustworthy business,, and is .perfectly solvent. We are therefore of the opinion that i'bs permit to so tnansalct such business should not have been canceled.  