Home/W.D. Wisconsin/Securities & Exchange Commission v. Crude Oil Corp. of America

Securities & Exchange Commission v. Crude Oil Corp. of America

17 F. Supp. 164, 1 SEC Jud. Dec. 274, 1936 U.S. Dist. LEXIS 1752
CourtDistrict Court, W.D. Wisconsin
DecidedDecember 1, 1936
DocketNo. 2309
StatusPublished

This text of 17 F. Supp. 164 (Securities & Exchange Commission v. Crude Oil Corp. of America) is published on Counsel Stack Legal Research, covering District Court, W.D. Wisconsin primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Securities & Exchange Commission v. Crude Oil Corp. of America, 17 F. Supp. 164, 1 SEC Jud. Dec. 274, 1936 U.S. Dist. LEXIS 1752 (W.D. Wis. 1936).

Opinion

STONE, District Judge.

Findings of Fact.

1. That the bill of complaint herein was properly filed in the District Court of the United States in and for the Western District of Wisconsin, and that the court has jurisdiction of the subject matter and of the parties hereto.

2. That the Crude Oil Corporation of America is a corporation organized under the laws of the state of Delaware, with its principal place of business in the city of Tulsa, state of Oklahoma; that the defendant B. E. Buckman & Co. is a corporation organized under the laws of Wisconsin, with its home office at Madison, Wis.; that the Wells-Kendall Company is a corporation organized under the laws of the state of Delaware, and has its principal place of business at Madison, Wis.

3. That the Crude Oil Corporation of America, hereinafter referred to as “Corporation,” is now, and has been since 1934, engaged in the transaction of business in the manner following: It purchased oil royalties, sometimes referred to as “farmers’ oil,” of an estimated oil content one and one-half times as great as the aggregate number of barrels of oil called for, in the delivery contracts hereinafter referred to. It pays for the royalties at the rate of 25 cents a barrel of the estimated content. The farmer or owner who leases his property to a producer to market the oil' removed therefrom ordinarily receives from the producer one-eighth of the proceeds of the oil produced on his property. It is a part of this one-eighth interest that the “Corporation” purchases in the form of a royalty. These royalties are transferred to one W. C. Franklin as trustee under a trust agreement, a copy of which is markéd Exhibit I and made a part hereof. Franklin is a director and treasurer of the “Corporation.” He is also its attorney. The “Corporation” then, through its salesmen in Wisconsin, Illinois, Minnesota, New York, and other states, enters into delivery contracts with residents of those states. A copy of this delivery contract is marked Exhibit II and made a part hereof. The other party to the contract signs an application made out in triplicate in the following form:

“Crude Oil Corporation of America
_193_
Place Date
I hereby make application to purchase -barrels of crude oil of-gravity at $-per barrel, to be deliverable in accordance with the terms and conditions set forth in your Draft
for $-is handed you herewith, Check
representing payment in full.
Name-
Address-
Representative
Make Drafts and Checks Payable to Crude Oil Corporation of America.”

At the time of signing the application he pays to the “Corporation” salesman the sum of 50 cents (now 57 cents) for each barrel of oil specified in the application. The salesman mails the check or draft received as payment and copies of the application to the “Corporation” at Tulsa, Okl. The “Corporation” mails, either to its salesmen or to the purchasers, delivery contracts in the form mentioned (Exhibit II), together with a so-called trust certificate, a copy of which is marked Exhibit III and made a part hereof. Approximately 275 of these contracts, mentioning nearly 1,000,000 barrels of oil, have been entered into between the “Corporation” and the buyers. The average number of barrels of oil mentioned in each contract [166]*166is 3000, although some of the contracts specify amounts less than 500 barrels.

Franklin, the trustee, receives from those operating the pipe lines, out of the proceeds of oil runs to the pipe lines, the royalty interests the “Corporation” owns, and he deposits these remittances in a special account in the First National Bank of Tulsa, Okl., subject to the check of “Crude Oil Corporation of America, Special, by Harry L. Mourer,” and countersigned by “W. C. Franklin, Trustee.” Checks for sums indicating that the delivery contracts are being fulfilled at a rate of approximately 4 per cent, of the whole each year are drawn against this account each month in favor of the purchasers. The checks and accompanying vouchers in the form following are- sent from Tulsa, Okl., through the United States mail each month to the purchasers:

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Related

Short title
15 U.S.C. § 77a
Definitions; promotion of efficiency, competition, and capital formation
15 U.S.C. § 77b(1)
Prohibitions relating to interstate commerce and the mails
15 U.S.C. § 77e

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Bluebook (online)
17 F. Supp. 164, 1 SEC Jud. Dec. 274, 1936 U.S. Dist. LEXIS 1752, Counsel Stack Legal Research, https://law.counselstack.com/opinion/securities-exchange-commission-v-crude-oil-corp-of-america-wiwd-1936.