Charles H. Lundquist v. Joe Turner

Appellant Lundquist appeals from a judgment in favor of Appellee Turner upon Lundquist’s counterclaim seeking damages for an alleged violation of the Securities Act of 1933 and of Securities and Exchange Commission Rule 10B-5, 17 C.F.R. 240.10B-5. The District Court found that there was no liability under 10B-5 or the Securities Act of 1933 and rendered judgment without reaching the questions of causation or damages. We affirm the judgment.

The basic facts are not in dispute. In December 1960 Lundquist, Turner, and thirteen other people entered a contract with United States Chemical Milling Corporation (“Chemical”) whereby Chemical agreed to sell its convertible notes to the purchasers for stated amounts of cash or cancellation of indebtedness. Among the express conditions to the purchasers’ obligations was a provision that the sale be exempt from the registration requirements of the Securities Act of 1933. Each of the purchasers represented and warranted that the notes were being acquired for private, personal investment, with no intention of reselling or otherwise distributing the notes or the common stock into which they were convertible. The purchasers covenanted to indemnify…