that Joiner got 3,002 of the acres, leaving Anthony about 1,700 acres for his trouble. And it was his undertaking to drill the well which enabled Joiner to finance it by the sale of acreage. By selling from 1,000 to 2,000 acres at from $5 to $15 per acre, he could fulfill his obligation to drill the well, recoup his incidental expenses and those of the selling intermediaries, and have a thousand acres left for the gamble, with no investment of his own; and if he sold more, he would have a present profit. Without the drilling of the well, no one's leases had any value, and except for that undertaking they had been obtained at no substantial cost. The well was necessary not only to fulfill the hopes of purchasers but apparently even to avoid forfeiture of their leases.

Whether, as the dissenting Judge below suggests, the assignee acquired a legal right to compel the drilling of the test well is a question of state law which we find it unnecessary to determine. The terms of the offering as quoted above, either by itself or when read in connection with the agreement to drill as consideration for the original leases, might be taken to embody an implied agreement to complete the wells. But at any rate, the acceptance of the offer quoted made a contract in which payments were timed and contingent upon completion of the well and therefore a form of investment contract in which the purchaser was paying both for a lease and for a development project.

It is clear that an economic interest in this well-drilling undertaking was what brought into being the instruments that defendants were selling and gave to the instruments most of their value and all of their lure. The trading in these documents had all the evils inherent in the securities transactions which it was the aim of the Securities Act to end.

Opinion of the Court.

6

320 U.S.

It is urged that the definition of "security" which controls the scope of this Act falls short of including these transactions. Respondents invoke the "ejusdem generis rule" to constrict the more general terms substantially to the specific terms which they follow. And they invoke the ancient maxim "expressio unius est exclusio alterius" to exclude sales of leasehold subdivisions by the acre because the statute expressly includes sales of leasehold subdivisions by undivided shares.

Some rules of statutory construction come down to us from sources that were hostile toward the legislative process itself and thought it generally wise to restrict the operation of an act to its narrowest permissible compass." However well these rules may serve at times to aid in deciphering legislative intent, they long have been subordinated to the doctrine that courts will construe the details of an act in conformity with its dominating general pur

Section 2 (1) of the Act, 15 U. S. C. § 77b (1), provides:

"The term 'security' means any note, stock, treasury stock, bond, debenture, evidence of indebtedness, certificate of interest or participation in any profit-sharing agreement, collateral-trust certificate, preorganization certificate or subscription, transferable share, investment contract, voting-trust certificate, certificate of deposit for a security, fractional undivided interest in oil, gas, or other mineral rights, or, in general, any interest or instrument commonly known as a 'security,' or any certificate of interest or participation in, temporary or interim certificate for, receipt for, guarantee of, or warrant or right to subscribe to or purchase, any of the foregoing."

In the first edition of Statutes and Statutory Construction by Sutherland he no doubt expressed the impression gleaned from extensive reading of cases when he wrote in the preface (1890): "The natural tendency and growth of the law is towards system and towards certainty, towards modes of operation at once practical and just, by the process of its intelligent judicial administration; but this process is impaired by overwork and legislative interference." In the third edition (1943) Horack observes in the preface: "The third edition reflects the growing acceptance of statutes as a creative element in the law rather than, as Sutherland suggested in the first edition, as 'legislative interference'."

pose, will read text in the light of context and will interpret the text so far as the meaning of the words fairly permits so as to carry out in particular cases the generally expressed legislative policy.

In the Securities Act the term "security" was defined to include by name or description many documents in which there is common trading for speculation or investment. Some, such as notes, bonds, and stocks, are pretty much standardized and the name alone carries well-settled meaning. Others are of more variable character and were necessarily designated by more descriptive terms, such as "transferable share," "investment contract," and "in general any interest or instrument commonly known as a security." We cannot read out of the statute these general descriptive designations merely because more specific ones have been used to reach some kinds of documents. Instruments may be included within any of these definitions, as matter of law, if on their face they answer to the name or description. However, the reach of the Act does not stop with the obvious and commonplace. Novel, uncommon, or irregular devices, whatever they appear to be, are also reached if it be proved as matter of fact that they were widely offered or dealt in under terms or courses of dealing which established their character in commerce as "investment contracts," or as "any interest or instrument commonly known as a 'security.'" The proof here seems clear that these defendants' offers brought their instruments within these terms.

This Court has refused to follow the "ejusdem generis" rule, even in criminal cases, where its application seemed to conflict with the general purpose of an act. United States v. Gilliland, 312 U. S. 86, 93; Prussian v. United States, 282 U. S. 675, 679; and Gooch v. United States, 297 U. S. 124, 128; see also Helvering v. Stockholms Enskilda Bank, 293 U. S. 84, 88-89.

It has also treated the maxim "expressio unius est exclusio alterius" as but an aid to construction. United States v. Barnes, 222 U. S. 513, 519; Springer v. Philippine Islands, 277 U. S. 189, 206; Neuberger v. Commissioner, 311 U. S. 83, 88.

Opinion of the Court.

320 U.S.

It is urged that because the definition mentions "fractional undivided interest in oil, gas or other mineral rights," it excludes sales of leasehold subdivisions by parcels. Oil and gas rights posed a difficult problem to the legislative draftsman. Such rights were notorious subjects of speculation and fraud, but leases and assignments were also indispensable instruments of legitimate oil exploration and production. To include leases and assignments by name might easily burden the oil industry by controls that were designed only for the traffic in securities. This was avoided by including specifically only that form of splitting up of mineral interests which had been most utilized for speculative purposes. We do not think the draftsmen thereby immunized other forms of contracts and offerings which are proved as matter of fact to answer to such descriptive terms as "investment contracts" and "securities."

Nor can we agree with the court below that defendants' offerings were beyond the scope of the Act because they offered leases and assignments which under Texas law conveyed interests in real estate. In applying acts of this general purpose, the courts have not been guided by the nature of the assets back of a particular document or offering.10 The test rather is what character the instru

Downman v. Texas, 231 U. S. 353; Texas Co. v. Daugherty, 107 Tex. 226, 176 S. W. 2d 717; Railroad Commission v. Rowan & Nichols Oil Co., 310 U. S. 573, 579.

10 One's cemetery lot is not ordinarily thought of as an investment and is most certainly real estate. But when such interests become the subjects of speculation in connection with the cemetery enterprise, courts have held conveyances of these lots to be securities. Matter of Waldstein, 160 Misc. 763, 291 N. Y. S. 697; Holloway v. Thompson, 42 N. E. 2d 421 (Ind. App.). For other instances where purported sales of property have been held "investment contracts" see Securities & Exchange Comm'n v. Crude Oil Corp., 93 F. 2d 844 (interest in oil royalties sold as bill of sale for specified number of barrels of oil); Securities & Exchange Comm'n v. Tung Corporation, 32 F. Supp. 371; Securities & Exchange Comm'n v. Bailey, 41 F. Supp. 647 (land bearing

344

Opinion of the Court.

ment is given in commerce by the terms of the offer, the plan of distribution, and the economic inducements held out to the prospect. In the enforcement of an act such as this it is not inappropriate that promoters' offerings be judged as being what they were represented to be.

Finally it is urged that we must interpret with strictness the scope of this Act because violations of it are crimes." Some authority is cited and a great array could be assembled to support the general proposition that penal statutes must be strictly construed. An almost equally impressive collection can be made of decisions holding that remedial statutes should be liberally construed. What, then, shall we say of the construction of a section like this which may be the basis of either civil proceedings of a preventive or remedial nature or of punitive proceedings, or perhaps both?

Different courts have given different answers to the general question.12 Since 1911, all states except Nevada have enacted some type of "Blue Sky Law." While the laws are not uniform, they generally contain both civil and criminal sanctions, and all have the dominating purpose to prevent and punish fraudulent floating of securities." The weight of authority is committed to a liberal construction," although some courts tend toward strict constructung trees, to be developed by seller); Securities & Exchange Comm'n v. Payne, 35 F. Supp. 873 (silver foxes); Prohaska v. Hemmer-Miller Development Co., 256 Ill. App. 331 (farm land, to be paid for with proceeds of crops raised by vendor); Kerst v. Nelson, 171 Minn. 191, 213 N. W. 904 (land to be cultivated as a vineyard by a third party); Stevens v. Liberty Packing Corp., 111 N. J. Eq. 61, 161 A. 193 (rabbits). 11 15 U. S. C. § 77t.

12 See 3 Sutherland on Statutory Construction (3d ed. 1943) § 5703. 13 Smith, State Blue Sky Laws and the Federal Securities Act, 34 Michigan Law Review 1135.

14 See note 10 supra; Wagner v. Kelso, 195 Iowa 959, 193 N. W. 1; Wigington v. Mid-Continent Royalty Co., 130 Kan. 785, 288 P. 749; People v. Montague, 280 Mich. 610, 274 N. W. 347; State v. Hofacre,