
    Hild v. Woodcrest Association et al.
    (No. 75-2289
    Decided May 23, 1977.)
    Court of Common Pleas of Montgomery County.
    
      Mr. William G. Compton, for plaintiff.
    
      Mr. John J. West, for defendant Osborn.
    
      
      MrJSfañton G. Darling, for defendant Defenbaugh. '
    
      Mr. Joseph C. Bruchér, for defendant Johnson.
    Mr. Hugh Barnett, for defendant Kissell-'Co.
    
      Mr. John 0. Henry and Mr. Robert E. Po-rtu/ne,'-for defendant Coopers & Lybrand.'
   Meagher, J.

Presently before the Court are several motions:.-

Plaintiff, Donald Hild has moved for summary judgment against all of the defendants.

Defendant, the Kissell Company (hereinafter Kissell) has moved the Court for an order of summary judgment with respect to the plaintiff, the cross-claim of defendant Stanley Q. Johnson, and the cross-claim of defendant John Osborn.

, •• . Defendant Coopers ¡& Lybrand (hereinafter Coopers) ¿ an accounting firm, has also moved the Court for summary judgment-in its favor against the'plaintiff and-against the* cross-claim of defendants Osborn and Johnson.' .■ ?'->

, .. Defendant K. L. Defenbaugh has moved, for summary judgment against the, plaintiff, or in the.alternative an order granting judgment against, defendants Johnson, Coopers and Kissell.

.' Lastly, defendant Osborn, has inoved .for summary judgment in its favor against' the plaintiff Hild. ,

’ The parties have submitted a lengthy, joint stipulation of facts foy the purpose of .presenting and ruling upon these-motions., t.Various,. affidavits, '¿¿positions, -exhibits,and' memoranda have alsp been .submitted by the parties rendering additional factual, ayd legal support to .which the .Court may from time, to' time .refer. The joint stipulation.of facts reads in' its entirety,7" .

“Now come the undersigned, constituting all of the parties to the AbóVe-captioned:'action, and submit this joint stipulation of facts for the purpose of filing cross-motions for summitry- 'jtidgifidn.'Lr reserving all- ‘objections'.-to 'relevancy of the matters agreed upon:
“1. On or a-bohi' December514y 1972^ Stanley‘'Q:-Johnson approached':rCoópers:; & -'Tjybrand' (then' known. as Ly-brand, Ross Bros. & Montgomery) certified public accountr ants to request that they prepare certain financial projections. regarding a real estate transaction to-be undertaken by the Wooderést,Association, a limited partnership.-
“2. Stanley Q. Johnson, an employee of the Sterling Group Associates, although not a client , of Coopers & Ly-brand was .referred to them by. the Mortgage Corporatipn-of Ohio, a subsidiary of the Winters' National Bank.
■ : “3. On or about January 16, 1973, Coopers & Lybrand was engaged to-prepare,..the following projections,' based on information in the Federal Housing - Administration’s Form 2013, Application for Project Mortgage Insurance^ on the development, and upon assumptions furnished by Stanley Q. Johnson as- to- income,, expenses, cash flow-and other matters: ■ , '
“(a)-Projected rate of return per unit of investment
“(b)-. Projection of partner’s share of projected income, cash flow and cash generated
“(c) Projection of income, and cash flow-
“(d)-Projection of cash requirements and sources from inception of development to final endorsement
.“(e) Projection fpr annual operating expenses y
“(f) Projection of depreciation. •...•■
. “ (g) Projection of mortgage principal and interest-payments
“(h) Projected reserve for replacements
“This engagement was undertaken with- .the understanding of Coopers .& Lybrand apd Stanley Q.-Johnson that since the projections-represented, estimates-of; income,, expenses.-and cash flow and were based1 upon, assumptions about future events,.-the occurrence of which-was by..no means certain, and were also based.-upon then existing federal income tax law. and regulations which were and are subject to change,.¡Coopers & Lybrand did.not express an opinion on the projections.:. ,. . - , , .y
“4. Coopers & Lybrand further, under stood, that Stanley Q. Johnson would engage an attorney familiar with these types,of transactions .tp; advise concerning cqm^áance with federal securities laws, state blue, sky -law.and securities acts and other legal requirements which might have been applicable to the transaction.
“5. The terms of the engagement of Coopers & Lybrand were set forth in its letter of engagement dated January 19,. 1973. • • •
“6. Coopers & Lybrand received from Stanley Q. Johnson FHA Form No. 2264, FHA Form No. 2264-A* * * * and FHA Form No. 2013 * * *.
“7. Coopers & Lybrand received from Stanley Q. Johnson a draft limited partnership agreement * * * prepared by William Atteberry, Esq., an attorney who was employed by The Kissell Company.
“8. On January 18, 1973, Francis Schubert, an accountant with Coopers & Lybrand and William Atteberry discussed by phone the limited partnership agreement, reviewed its provisions and agreed upon certain revisions. Mr. Schubert wrote in these revisions which appear at paragraphs 2(c); 3; 3(a); 4(a); 9(c); 9(d); 9(e); 10(a)(4); 10(a)(6); 11; 12(b) of Exhibit E.
“9. Pursuant to its engagement under the terms of the January 19,1973, letter * * * Coopers & Lybrand, using the FHA Form No.’s 2264, 2264-A and 2013 prepared the following projections of the Woodcrest Association:
“(a) Projection of Income and Cash Flow to All Partners — Limited and General
“(b) Projected Allocation of Income and Cash Flow to All Limited Partners
“(c) Projected Allocation of Income and Cash Flow to a Limited Partner Acquiring One Unit ($11,667)
“(d) Projected Rate of Return to a 50% Tax Bracket Individual Acquiring One $11,667 Unit
“A. Assuming cash is distributed
“B. Assuming no cash distribution
“(e) Projected Rate of Return to a 60% Tax Bracket Individual Acquiring One $11,667 Unit
“A. Assuming cash is distributed
“B. Assuming ho cash distribution
“(f) Projected Sources and Requirements from Inception to Final Endorsement
“(g) Depreciation Assumptions Used in Projections
“10. Using the limited partnership agreement and the ETTA forms, Coopers & Lybrand drafted the description of the Woodcrest Association Project, added the financial projections and combined them with the limited partnership agreement. Together they constituted a draft of the Wood-crest Association Private Placement Memorandum. Two copies of this draft were given to Stanley Q. Johnson with the request that he and William Atteberry review it.
“11. Stanley Q. Johnson phoned approval to Coopers & Lybrand and 25 copies of the document were made. * * * Johnson picked up these 25 copies from Coopers & Ly-brand.
“12. The limited partnership agreement dated January 1, 1973 * * * established the Woodcrest Association limited partnership, with the following individuals signing as general partners:
“(a) John A. Osborn
“(b) Stanley Q. Johnson
“(c) R. L. Defenbaugh
“13. Woodcrest Association had applied to The Kissell Company a promissory note in the sum of $476,300 to fund the construction of an apartment project in Urbana, Ohio. This application was approved by The Kissell Company on January 19, 1973. On March 5, 1973, the mortgage loan closing was held at which Woodcrest Association, a limited partnership, executed and delivered to The Kissell Company a promissory note in he sum of $476,-300.00 with a mortgage upon the Urbana, Ohio, real estate securing said note. The mortgage loan proceeds were then periodically disbursed on a percentage of completion basis. A limited partnership agreement # * * was executed along with the other FHA mortgage loan documents and recorded on March 7, 1973, with the Champaign County Recorder, along with the mortgage deed to The Kissell Company.
“14. Coopers & Lybrand contacted the following clients who had, prior to the contact about Woodcrest Association, expressed an interest in investments and had requested .Coopers &. Lybrand to contact them if they became aware of such investment opportunity. These pérsons were in a federal income tax' bracket of approximately 50%' to 60% and were as follows: ' ■■C
“(a) Louis Wozarj 258 Thurston Boulevard West*'Day-^ tony Ohio45419 <. :v-
- “ (b). Thomas Bab, 'M-; D., Ill West First Street, Day-1 ton, Ohio 45402.. ’?■ ■■ ■•' ■ ■■ ■ ■ ■
“(c) W. H. Weltge,- M; D., Ill- West First Street} Dayton, Ohio 45402 ■
“(d) Leslie C. Mapp, 320 Marlay Boad, Dayton, Ohio 45405
“Fran Schubert, an accountant- with Coopers & Ly-brand, to his best recollection remembers that in addition to the above clients the following persons were contacted by Coopers & Lybrand:' • ■
“(e) Paul W. Wyeoff, 932 Cottonwood Boad, Dayton, Ohio 45419
“(f) Charles B. Adrian, 330 Thelma Avenue, Dayton, Ohio, 45415
“(g) Bobert C. Gray, 2305 Far Hills Avenue, Dayton, Ohio 45419 -
. “(h) Donald M. Hild* 4900 Bellann Boad, Columbus, Ohio 43220 ' -
. “(i) Andrew P. Spiegel* 1135 Bidgeway Boad, Dayton, Ohio 45419
“15. The above names were given to Stanley Q. Johnson by Coopers & Lybrand as being people who might be interested in the tax advantages of such an investment.
“16. These people were contacted by Stanley Q. Johnson and of that list Donald Hild, Andrew Spiegel and Leslie Mapp purchased interests.
“17. On March 20,1973, Coopers & Lybrand submitted to Woodcrest Association a bill * * * in the amount of $5,000.00 for the following:
“‘Professional accounting services relating to consultation-and'preparation of projections - for Woodcrest Apartments' (á limited partnership)* It Was paid bn April 14,1075.;
“18. After the mortgage loan closing on March 5, 1973, .the/ only; subsequent /connection between- Tbe; Kissell Company, and; William Atteberry ¡with- tbe general partners of.Wpodcrest Association: was in-connection;,-with tbe dis: b/ursement of tbe mortgage Iban; proceeds. Neither. Wilv-liam Atteberry. nor any other officer, or employee of The Kissell Company ever rendered an opinion with respect to the-legality of . the; limited partnership interests offered for sale. -, i ■; :
“19. On. October 3, 1973, Donald. Hild, .the Wóódcrest Association and First National .Bank of. Springfield, Qhioi executed a document entitled ‘Escrow Agreement,’ * * * for tbe purchase of one limited partnership share.Mr. Hild paid $6,000.00. with the remaining. $5,667.00 payable upon the date the project was accepted by the FHA as complete or oir January 10, 1974, whichever was later... . .
“20. A Certificate of Limited, Partnership."* was Executed by two of the general partners of . Wóódcrest . Association on October 18, 1973,' and recorded on the sainé day with the Clerk of Courts of Champaign County, .Ohio!
“21. At the time the limited partnership interests were sold to the Plaintiff, they were not registered,with the Ohio Division of Securities. * * * At the Jime^theJirnited partnership interests were sold to the Plaintiff,, neither Wood-crest Association nor any other defendant was- licensed as a dealer or salesperson by the Ohio Division .of Securities. * * *
“22. During late October, 1973,. Stanley Johnson,purchased the last available limited partnership- share and paid $6,000.00 in order to fully subscribe the, Limited Partnership, satisfy the conditions of escrow *..* * and.release the purchase money to use in the project.
“23;': An amended •'.certificate of limited partnership *' * - *nwas executed by .alii of.-' the general and; limitediparN ners of Wooderest Association'oh fhé'dateset forth therein and was recorded with the Clerk of Courts of Champaign County* (Mo.-p: • '■
:-il1 “24. /On December 18, 1973, Stanley Johnson-assigned his share over to Donald Hild pursuant to the terms of a eeríóin;,'X,sáignment',*’1’''#; 's
“25. In February, 1974, the Wooderest project was certified as complete by the FHA. Thereafter, in March, 1974, the general partners were advised that Government-insured financing had been obtained for the project. On March 15, 1974, the Plaintiff was notified that his obligation to make final payment for the partnership interests was due and payable and, pursuant to the terms of the escrow agreement on March 26, 1974, the Plaintiff paid $11,334.00 to Woodcrest Association.
“26. Woodcrest Association had losses in the following amounts for these years:
“(a) 1973 — $34,775
“(b) 1974 — $40,020
“(c) 1975 — approximately $22,100
“These losses have been passed through to the partners for use on their own tax returns.
“27. During the duration of this project the limited partners have been able to deduct from their individual income tax returns the following amounts:
“(a) Donald Hild
1973 — $11,013
1974 — $12,668
1975 — $ 7,144
“(b) Andrew P. Spiegel
1973 — $ 5,505
1974 — $ 6,334
1975 — $ 3,500
“ (e) Leslie C. Mapp
1973 — $11,013
1974 — $12,673
*1975 — $ 7,144
“If the Plaintiff is successful in the prosecution of this action all of his deductions will be subject to the recapture provisions of the federal tax law or will be taxed as a capital gain.
“28. After the construction was completed Coopers & Lybrand’s subsequent contact with the project was the preparation of a eost certification. This was done pursuant to the requirements of the FHA and was completed on July 3,1974. * • •
“29. Pursuant to that examination Coopers & Lybrand requested all project creditors shown by open billings and unpaid invoices to prepare a breakdown on what had been paid and- what remained unpaid. The Kissell Company sent a letter dated July 1,1974, to Coopers & Lybrand. * * # This letter states at paragraph 5 that on March 12, 1973, $10,526 was collected by The Kissell Company in the form of a finance fee for $9,526 and a legal and organizational fee in the amount of $1,000.
“30. Upon repayment of the purchase price, the Plaintiff will tender to the seller the Woodcrest Association limited partnership interests.
“The above paragraphs 1 through 30 represent those matters which the parties agree are not in issue. These paragraphs do not, however, operate to limit the presentation and consideration of additional facts which show that there is no genuine issue as to facts which have not been agreed upon. Provided, however, that any additional facts presented by any party shall not be inconsistent with the facts as set forth in paragraphs 1 through 30.
“It is agreed that this stipulation may be executed in multiple counterparts.”

On October 2, 1975, plaintiff filed a complaint against Woodcrest Association (hereinafter Woodcrest) and its general partners requesting rescission of the sales of the two above mentioned limited partnership shares and recovery of the purchase price of these interests pursuant to Ohio Revised Code Section 1707.43. On October 29, 1975, defendants Wooderest, Osborn, and Johnson filed a third-party complaint against Coopers. (This complaint was dismissed December 11, 1975.) Thereafter, on November 7, 1975, plaintiff amended his complaint to bring in Kissell and Coopers as additional party defendants. Johnson and Osborn then cross-claimed against Kissell and Coopers. The plaintiff’s complaint was amended a second time on March 31,1976.

I. BlaintifFs- claim, is, .founded upon.Bíi.Cí.,?Í707,¡43, paragraph one, which states, in pertinent part: ■ y...

t .. ^Jivery sale or contract ,f.or ;sale made, in violation of sections; 17Ó7.07,to, 1707-.45, inclusive, of the..Beyised Code, ;is voidable at the .election of the purchaser., .The person making such sale or contract of sale, and .every person who lias, participated fmor aided the seller in any way in making sijch a.ále or .contract for sale'are jointly and severally liable -torsnch:purchaser * * for -the. full amount paid, by such purchaser. * * F unless ,£he court determines, that . the, violar tion did not materially affect;- the protection.; ¡contemplated by ;fhe. violated -provision.”;,; y ... ...

; '\'-The stipulated, facts-.indicate .that; afythe time the limited partnership interests were, sold to,-.the ‘plaintiff,-by the* seller/issueiy Woodcrest, by and through;, its, general -partners,, they were not-registered with the,-Chip Division ofrS.ecurities, ,nop was Woodcrest or.any ofher defendant a ¡dealer .or-salesperson'licensed by the Ohio,.División of •.Securities,. ■ (See-.Stipulation No...21.) .These-interests are clearly, “securities’; psidefined- •by,.0R«.,^: 1)707,01(3), and -the sale of- a -security -which-is; mot registered with,-the- Ohio Division of Securities 'is a violation of B. ,0..:1707,44 (C-) (1)-. ..Also,;sthes sale of -annunexenjpted? security,.-or the sale of a security in an nnexempted transaction by-a .per sqn, who, is not. .licensed-as-ia dealer violates B; C. 17Q7í44(A).t

bThe íforfegóin4‘<;illnstrates..-thÍit plaintiff has? .presented «a-primai.faeie.case- foxiueheissipn-iof .the salesrof .the[limited .partnership- ánterésts with /respect y. to,; -the ::,seiler/issner fWcoder est..and iitjs general.-partners:-Osborn, .«Johnson,-.and .Defenbaugh..-,«Defendant:- Osbornk iny-support.-pf his- sum-■mhr^". judgment motion;,against:the-.plaintiff,.contends that -plaintiffs purchase ;,ofr-the .shares was pm .exempt transaction -pursuant ,to¡ B. ;C.:1707.03(B), in.thatiit was made.in .good faith, arid mot in the-course-of repeated, rind successive .ttanfcacftihs,df avsiriplm-'character, ..Thiscontention.is'alsp maintained -by" rdofóhdarits Coopers ! and.- JiSssefl-, inregard •¡only. ;to. thri• ¡ December18> f 1973, -sale. -. (assignmentj, from .Johnson to the plaintiff, in support qf th<Úri’re>spective summary judgment motions- - R. C. 1707.45 places1 the burden of proving sfich'án exemption upon he who asserts It.

R; C. 1707.0S(B) states, in pertinent part:’ •;

“A sale-of securities'-made by or on behalf' of a- bond fide owner, neither the issuer nor a dealer, is exempt^ if such sale is made in good faith and not for the purpósá of avoiding sections 1707.01 to 1707.45, inclusive, óf the Revised Code, - and‘is not made in the course of repeated and successive transactions 'of a similar character;” (Emphasis added.) '

The plain wording of the statute indicates- that the exemption the defendants seek to rely upon cannot bé invoked by the issuer of the security. Nor can the exemption be available if the sale is made by or on behalf of one other than a bona fide owner. The Supreme Court of: Ohio in Bronaugh v. R. & E. Dredging Co. (1968), 16 Ohio St. 2d 35, 242 N. E. 2d 572, accordingly has held that a sale on behalf of the issuer cannot qualify for an exemption under R. C. 1707.03(B). Defendants Johnson, Osborn, and Defen-baugh, as the1 general partners comprising the issuer/seller Wooderest, were in fact, and must be considered the issuers of the limited pártneship shares purchased by the plaintiff: For this reason none of the defendants is able to satisfy each of the necessary conditions of‘obtaining the R. C: 1707.03(B) exemption-as required by Bronough.'

Defendants Coopers and Kissell insist, however, that plaintiff’s purchase of his second share from 'Johnson was exempt, reasoning that Johnson sold this share in his capacity as a limited partner, not in his capacity as a general partner, by virtue of buying that share with personal funds,5 thereby making- him a bona fide' owner acting foNhis'owii behalf. The Court cannot agree with this proposition. It has been established that Wooderest devised' a plan whereby it would' seiba total of six limited partnership shares to achieve a predetermined amount of capital contribution to the partnership; As the units were offered and; sold;'the proceeds were -reeevied and held by an escrow1 agent whó could not reléase any of these funds until alhof 'th’e units were sold.' .''-: :

Stipulation twenty-two reads;

“During late October, 1973, Stanley Johnson purchased the last available limited partnership share and paid $6,000.00 in order to fully subscribe the Limited Partnership, satisfy the conditions of escrow set forth in Exhibit I, and release the purchase money to use in the project.”

Johnson states in deposition, in response to why he purchased the sixth limited partnership share:

“I purchased it because we hadn’t been able to sell the other one, and the money was all in escrow, and if I was able to purchase this, then we could take the money out of escrow and use it in the project.”

When asked, “Why did you sell your interest to Mr. Hild?” Johnson replied:

“Because I needed the money, and I had no original intent in buying it. I did not want to be a limited partner, but due to the fact, as I mentioned before, the need for money out of escrow, I bought the share only because I wanted to complete the escrow agreement.”

The statements of defendant Johnson himself illustrate that he was not the bona fide owner of a security held for investment purposes. Furthermore, he purchased this security on behalf of Woodcrest so that the investment funds in escrow could be released to the partnership project. Thus, the conditions of an exemption under R. C. 1707.03(B) and Bronaugh v. R. & E. Dredging Co., supra, have not been met. Accordingly, the Court holds in favor of the plaintiff upon its motion for summary judgment as against defendants Woodcrest, Johnson, Osborn and Defen-baugh; and overrules the summary judgment motions of .defendants Osborn and Defenbaugh as against the plaintiff.,

n.

[{. C. 1707.43, paragraph two, provides:

“No action for the recovery of the purchase price as provided for in this section, and no other action for any recovery based upon or arising out of a sale or contract for sale made in violation of sections 1707.01 to 1707.45, inclusive, of the Revised Code, whether based apon contract or tort, and whether legal or equitable in nature, shall be brought after two years from the date of such sale or contract for sale.”

It has been stipulated by the parties that plaintiff purchased two Woodcrest Limited Partnership securities. Defendants Kissell and Coopers contend that the first of these purchases occurred more than two years prior to their joinder in the lawsuit. Joint stipulation nineteen reads,

“On October 3,1973, Donald Hild, the Woodcrest Association, and First National Bank of Springfield, Ohio executed a document entitled ‘Escrow Agreement,’ for the purchase of one limited partnership share. Mr. Hild paid $6,000.00 with the remaining $5,667.00 payable upon the date the project was accepted by the FHA as complete or on January 10, 1974, whichever was later.”

Kissell and Coopers were added as party defendants by the plantiff on November 7, 1975. They maintain that plaintiff “purchased,” or the “sale” of the first security to the plaintiff occurred, on October 3,1973, the date on which the cause of action accrued to the plaintiff, and the date on which the statute of limitations begins to run on a statutory action.

Conversely, it is plaintiff’s contention that because of the very broad definition of “sale” in R. C. 1707.01(C) (1), each act by which an unlawful sale is made constitutes a distinct violation triggering the statute of limitations. Therefore, although the signing of the conditional escrow agreement is a “sale” within the meaning of the statute, it is likewise true that “the eventual maturation of plaintiff’s obligation embodied in the escrow and plaintiff’s subsequent payment are also ‘sales’ within the meaning of the Securities Act.” And thus plaintiff’s payment did not occur until 1974, and the sale is well within the two year period.

The Court is of the opinion that the Statute of Limitations does not bar any part of plaintiff’s claim. Several factors exist to compel this conclusion. Throughout the Ohio Securities Act a broad remedial purpose is apparent. The definition of the sale of a security in R. C. 1707.-' 01(C)(2) as “any act by which a sale is made,” coupled with E. ,C. 1707.01 (C), (1) , enumerating numerous events synonymous with the concept of sale elaborates the necessity of permitting plaintiff’s cause of action if brought-within two years of any act whereby a sale is effected, such as the act of final: payment. In Silverman v. Chicago Ramada Inn, Inc. (1965), 63 Ill. App. 2d 96, 211 N. E. 2d 596, a similar context, it was held that solicitation, agreements to purchase, and -subsequent final payments made on stock were all “sales” under the Illinois Securities Laws. See, also, Parrent v. Midwest Rug Mills, Inc. (C. A. 7, 1972), 455 F. 2d 123. The Court in Silverman, at page 599, stated,

“The final payment * * * transaction * * * was part of the sale and was, in contemplation of the statute, a sale in itself. This is the sale the plaintiffs seek to rescind and it is from the date of this sale that the limitation period mut be computed.”

This Court recognizes that the holding of another Illinois Court of- Appeals in Levine v. Unruh (Ill. App. 1968), 240 N. E. 2d 521, is somewhat in conflict with the Silverman, holding. The Levine Court held that the date on which initial payment was made by the plaintiff for unregistered securities triggered the statute of limitations. The Levine Court also found that on that same date the title to the securities was conveyed and the sale consummated.

The distinction between Silverman and Levine although not precisely identifiable, seems to revolve around the degree of. ownership interest in the share acquired by each plaintiff at the initial formation of the sales contract. In light of the broad language of the Ohio Securities Act such a distinction cannot control the case; at bar. The protection afforded by the registration provisions of the Act exists, for a frill two years following the. completion of the • security sale.

■ Nor is the rationale or holding in Bryant v. Uland (S. D. Tex. 1971), 327 F. Supp. 439, a case decided under the Federal Securities Act of 1933, applicable to the present controversy. Even so, the Court notes that plaintiffs suing for rescission of unregistered securities under comparable Federal Securities laws are also' given the benefit of a liberal interpretation of the applicable statute of limitations. For example, the statute only-runs from the latest date of offer, sale or delivery of a security through the mails. Buchholtz v. Renard (S. D. N. Y. 1960), 188 F. Supp. 888; Mason v. Marshall (N. D. Tex. 1074), 412 F. Supp. 294. In yet another area of law providing protection through remedial legislation, private antitrust actions, the statute commences from the last overt act causing injury or damage. Akron Presform Mold Co. v. McNeil Corp. (C. A. 6, 1974), 496 F. 2d 230, certiorari denied, 419 U. S. 997, 95 S. Ct. 310.

III.

B. C. 1707.43 provides that:

‘•Every sale or contract for sale made in violation of- sections 1707.01 to 1707.45, inclusive of’ the Revised Code is 'vibdable at the election of the purchaser * * * unless the court determines that the violation did not materially affect the protection contemplated by the violated provision.”

Defendant Coopers contends that a review of the protection accorded to the plaintiff and the benefits reaped from his ownership of the limited partnership intere-ests indicates that he was neither denied protection nor damaged by the fact that the securities he purchased were not properly registered. Plaintiff, however, directs the Court to the case of Miller v. Griffith (C. P. 1961), 92 Ohio Law Abs. 488, in which the identical defense was raised by defendant against a plaintiff seeking to recover the purchase price of ten unregistered securities. The Court, at page 491, stated:

‘‘If a .registration was made which was perhaps incomplete in some respects but which substantially followed the Securities Act, then there might be some question whether the failure to include certain items materially affected such- protection.' But where no attempt was ever made by the corporation to file any registration or to even obtain an exemption ' from 'registration, there would be no protection whatsoever that could be affected one way or the other.’’ (Emphasis by the Miller Court.)

This Court fully concurs with the rationale and holding of Miller There being no attempt to register or obtain an exemption by any of the defendants in this case, the defense is equally without merit.

IV.

K. C. 1707.43 also describes the parties who may be liable for a violation of the registration provision of the Ohio Securities Act.

“The person making such sale or contract for sale, and every person who has participated in or aided the seller in any way in making such sale or contract for sale, are jointly and severally liable to such purchaser * *

Defendants Kissell and Coopers propose that the connection between each of them to the sale of the securities in question by the Woodcrest Association to the plaintiff does not amount to “participation or aid in the sale” as to render them liable under R. C. 1707.43. Each claim shall be separately considered.

A.

The joint stipulations of fact indicate that Coopers, an accounting firm, was retained by Woodcrest to develop financial and investment information and to prepare a Private Placement Memorandum for the purpose of attracting potential investors in Woodcrest. Coopers also contacted a number of its own clients (including the plaintiff) interested in making the type of investment available with Woodcrest. It was through Coopers that Johnson eventually contacted plaintiff and sold him the securities (See Joint Stipulations 1, 3, 10, 1.1, 14, 16, 17).

Clearly, the language of R. C. 1707.43 and liability thereunder extends beyond the actual seller/issuer of the security. Although there is little Ohio case law defining the precise limits of liability, Crane v. Courtright (1964), 2 Ohio App. 2d 125, 206 N. E. 2d 913, and Miller v. Griffith, supra, stress the language any person who participated in or aided the seller “in cmy way” on making the illegal sale is also liable. In other states, participation or aid has ■been interpreted as implying “some activity in inducing the purchaser to invest.” Nichols v. Yandre (Fla. 1942), 9 So. 2d 157; Trump v. Badet (Ariz. 1958), 327 P. 2d 1001; Davis v. Walker (Neb. 1960), 104 N. W. 2d 479. Undoubtedly, Coopers has participated in the security sales to the plaintiff to an extent well within the liberal language of R. C. 1707.43. Coopers, however, urges the Court to apply a rule of reason arguing that as an accounting firm the type of work it did and the documents it prepared should not be construed as participation or aid in the sale. Furthermore, it argues that according to stipulation four, any responsibility which might have originally been on Coopers with respect to compliance with the State Blue Sky Laws was discharged by a letter to Woodcrest stating:

“We understand that you will engage an attorney familiar with these types of transactions who will advise you concerning compliance with the several Federal Securties Laws, State Blue Sky Laws, and Securities Acts and other legal requirements which might be applicable to the transaction.”

Coopers in fact did request of Woodcrest that attorney William Atteberry review the Private Placement Memorandum it prepared, which contained the statement,

“The legality of the Partnership interests offered has been passed upon for the Partnership by Mr. William Atteberry, Corporation Lawyer for the mortgage banking firm, Kissell Mortgage Banking Company, Springfield, Ohio.”

These facts, however, are not sufficient to absolve Coopers of liability under the statute. For it was at this point that Coopers should have insisted upon compliance with its request. Indeed, as the affidavit of Mr. Atteberry points out, he never reviewed the memorandum nor did he render such an opinion. Had Coopers actually acquired such an opinion from him the question of liability would seemingly be less clear, despite its extensive participation in the sale.

B.

Defendant Kissell also contends that it did not par'ticipate or aid in the sales of the limited partnership interests. Plaintiff submits that the actions of Kissell’s attorney, William Atteberry, are sufficient to demonstrate the contrary.

Stipulations 7, 8, 10, 13, 18 and 29 illustrate that thé general partners of Woodcrest applied to Kissell for a mortgage loan to finance their construction project. As part of the loan documentation, Atteberry, general counsel for Kissell, prepared a limited partnership agreement along with the note, mortgage and other various loan and PH A documents. Atteberry states on affidavit:

“* * * 7. Prior to closing the loan, the prospective borrowers indicated they wished to operate as a limited partnership and to execute the mortgage note in that manner. Since they were not at that time represented by counsel, I prepared a limited partnership agreement in a form which I knew would be acceptable to PHA as part of' the general loan documentation. * * *
“8. At the time of the closing, to my knowledge, the only persons connected with the Woodcrest Association were Johnson, Osborn, and Hefenbaugh. While I was aware of their general intention to sell limited partnership interests, I did not know of any specifics, nor did I advise them regarding the procedures or legal requirements relating to such sales.
“9. After the closing, the only connection between the Kissell Company, myself, and the partners of Wood-crest Association was with respect to. the disbursement and administration of the mortgage loan, which was disbursed periodically on a percentage of completion basis.
“10. T was not consulted by the general partners of Woodcrest-Association regarding, nor did I render any legal advice or have anything to do whatsoever with;' the issuance of limited partnership shares of Woodcrest Association or the sale or solicitation for sale of such limited partnership shares. •
“11. Other than the preparation of the limited’ partnership agreement (done for purposes of the loan closing), I performed no legal services for Woodcrest Association «or the general partners thereof; I did not receive any .compensation from them for legal services and was not involved in any way with the issuance of limited partnership shares and the subsequent sale or solicitation for sale of such shares. I was.not contacted nor did I render .any advice regarding the requirement for registration of .such shares.
“12. I rendered no opinions to Coopers & Lybrand ■or to any other person or firm regarding the legality of ■the limited partnership shares, nor was I requested to .-give any such opinion, I did not give Coopers & Lybrand •or any other person any authority to use my name in the private placement memorandum prepared by Coopers & Lybrand for Woodcrest Associates and was not aware that my name had been used in that document until after (the commencement of this action.-”

Though there appear to be no Ohio cases directly on point, it was held by a Florida Appellate Court in Hughes v. Bie (Fla. App. 1966), 183 So. 2d 281, that a corporate attorney could not be held liable under that state’s voida-bility provision where the attorney’s participation was limited to the preparation and execution of legal documents involved in the sale. The participation in Hughes is at least as great, if not greater than, Kissell’s participation in the sales at bar through Atteberry.

Similarly, the willingness of a bank to become the •depository of funds does not amount to a personal participation or aid in the making of a sale. Sorenson v. Mac-Elrod (C. A. 5, 1960), 286 F. 2d 72.

In light of the cited stipulations and the undisputed •affidavit of Atteberry, Kissell has neither induced the •sales of the securities nor participated or aided in their sale within the scope of R. 0. 1707.43. Accordingly, no liability exists upon Kissell to the plaintiff with respect to the sales in question.

V.

The Court finds no basis in law to support the cross-•claims of defendants Osborn and Johnson against defendants Kissell and Coopers upon the facts at bar.

VI.

In view of the foregoing, the Court rules as follows:

Plaintiff’s motion for summary judgment is sustained as to defendants, the Woodcrest Association, Stanley Johnson, ft. L. Defenbaugh, John Osborn and Coopers & Lybrand: plaintiff's summary judgment motion against defendant The Kiss ell Co. is overruled.

Defendant, Kissel Company’s motion for summary judgment as against plaintiff, and the cross-claims of defendants Johnson and Osborn is sustained.

Defendant Coopers & Lybrand’s motion for summary judgment against the plaintiff is overruled; Coopers motion against the cross-claims of defendants Osborn and Johnson is sustained.

Defendant Defenbaugh’s motion for summary judgment against the plaintiff, or in the alternative judgment, against Johnson, Coopers, and Kissell is overruled.

Defendant Osborn’s motion for summary judgment, against the plaintiff is overruled.

Judgment accordingly. 
      
      (The 1975 losses are only partial since the returns are not yet completed.)
     