604 F.2d 639 (1979)
Defendant solicited buyer-investors to raise earthworms, in order to help him reach his quota of selling earthworms to fishermen in a promotional newsletter. The newsletter promised that defendant's growing instructions would enable them to have a profitable farm with little effort, because earthworms double in quantity every sixty days, and that defendant would buy back all bait size worms at a set price per pound. Plaintiffs were promised that they need not worry about the market because defendant would handle marketing.
- On appeal, the court reversed the district court.
- The court held that the alleged facts were sufficient to establish an investment contract under the Securities Act of 1933, 15 U.S.C.S. § 77b(1), 78c(a)(10), because the plaintiffs alleged that they invested money in a common enterprise of earthworm growing with the defendants, with the profits to come from the significant efforts of defendants, who would purchase and market the worms.
The court reversed the decision of the district court, holding that the plaintiffs alleged an action on an investment contract.
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