Bauer v. Bond & Goodwin

LUMMUS, Justice. The sale of securities act (G. L. [Ter. Ed.] c. 110A), one of the class of statutes popularly known as blue
sky laws, prohibits the sale of securities, including corporate shares, with certain immaterial exceptions, 'unless and until'
a notice of intention to offer the security for sale shall have been filed with the department of public utilities. The department
may then forbid the sale until certain information shall be filed with it, and if it finds that the sale is fraudulent or
would result in fraud, it may forbid the sale altogether, subject to judicial review. It was held in Kneeland v. Emerton,
280 Mass. 371, 183 N.E. 155, that an innocent purchaser of corporate shares to which the statute applied, who had bought them,
paid for them, and received delivery of them before the notice of intention to offer the shares for sale required by section
5 of the statute had been filed was entitled to rescind his purchase and recover the purchase price from the seller. In the present case, the plaintiff bought, paid for, and received delivery of two hundred shares of the corporate stock of
National Trade Journals, Inc., sold to him by the defendant. The shares fell within the statute, and the sale was prohibited
'unless and until' the statutory notice under section 5 should be filed. The defendant through its salesman solicited the
sale and received the plaintiff's offer to buy on February 6, 1928, before the statutory notice was filed on February 8, 1928;
but the acceptance by the defendant of that offer which completed the contract did not take place until February 9, 1928,
the plaintiff did not pay for the shares until February 21, 1928, and he did not receive delivery of the certificates for
the shares until February 28, 1928. After the filing of the statutory notice on February 8, 1928, no legal impediment to the
sale of the shares existed, for all further requirements of the statute were satisfied, and the sale was never forbidden by
act of the department of public utilities.