Doran v. Petroleum Management Corp. case brief

Doran v. Petroleum Management Corp. case brief summary
545 F.2d 893 (1977)

CASE SYNOPSIS

Plaintiff appealed from the denial of relief by United States District Court for the Northern District of Texas in a case to rescind the purchase of a limited partnership interest under § 4(2) of the Securities Act of 1933, 15 U.S.C.S. § 77d(2) and under §§ 5, 12(1), 15 U.S.C.S. §§ 77e, 77I(1).

CASE FACTS
Defendants organized a limited partnership for the purpose of drilling wells. When plaintiff became a participant in the partnership, he assumed responsibility for payment of a promissory note to be paid from production payments. The wells were shut down because of violations of production allowances and the note went into default. The lender obtained a state judgment against plaintiff and defendants.

CLAIMS

• Plaintiff filed suit for rescission of the contract based on violations of the securities registration requirements of the Securities Act of 1933 and 1934. 
• Defendants claimed the offering was private and, therefore, exempt from the requirements. 

HOLDING

• The court held that, in the absence of findings of fact, plaintiff had been furnished information about the issuer that a registration statement would have disclosed or that plaintiff had effective access to such information, and the district court's conclusion of private offering was erroneous.

CONCLUSION

The court reversed the denial of relief to plaintiff where trial court's conclusion of private offering was erroneous in the absence of findings of fact that plaintiff had been furnished or had access to information about the issuer that the registration statement would have disclosed. The court remanded for a demonstration by defendants that plaintiff had such information.

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Securities Regulation in a Nutshell, 10th (Nutshell Series)
Securities Regulation: Examples & Explanations, 5th Edition
Securities Regulations: The Essentials