Corporations - Securities Regulation - Investment Contracts Under Securities Act of 1933

Plaintiffs purchased tracts of twenty acres, part of a larger tract owned by the defendant, for the purpose of developing the tracts into small citrus groves. Plaintiffs also executed with defendant a care and management contract, whereby plaintiff was to give directions as to the marketing of the crops on the tract; the defendant management company was to follow these directions but would still supervise harvesting and marketing and would receive its compensation therefor. Plaintiff brought an action under the Securities Act of 1933 to impose civil liability for fraudulent misrepresentations and material omissions concerning the value of the land. The lower court dismissed the complaint for lack of jurisdiction on the grounds that no security was involved.

On appeal, held, reversed. The plaintiffs were not buying land for its intrinsic value but paramount emphasis was on income to accrue; therefore the transactions constituted investment contracts as defined in the Securities Act of 1933. Blackwell v. Bentsen, (5th Cir. 1953) 203 F. (2d) 690.