Facts:
Interport Resources Corporation (Petitioner) sought review of the Court of Appeals' February 11, 2002 decision affirming the Securities and Exchange Commission's determination in
SEC AC No. 501-502 concerning Oceanic subscription agreements. In January 1977, Oceanic Oil & Mineral Resources, Inc. entered into a subscription agreement with
R.C. Lee Securities, Inc. covering five million shares, with R.C. Lee paying twenty-five percent and leaving seventy-five percent unpaid, whereupon Oceanic issued Subscription Agreements Nos. 1805 and 1808–1811 to R.C. Lee. On July 28, 1978, Oceanic merged into Interport, the surviving corporation, with share conversion provided under the merger. On April 16 and 18, 1979,
Securities Specialist, Inc. (SSI) received in the ordinary course of business the Oceanic subscription agreements indorsed in blank by R.C. Lee and Oceanic receipts showing the twenty-five percent payment. R.C. Lee later requested from Interport a list of subscription agreements and stock certificates, and Interport's corporate secretary provided the list. R.C. Lee subsequently paid the unpaid subscriptions and received stock certificates. On February 8, 1989, Interport called for full payment with a March 15, 1989 deadline. SSI tendered payment through brokers and directly on the deadline, but Interport refused to honor the Oceanic subscriptions and declined to produce any board resolution requiring conversion of Oceanic shares to Interport shares; the SEC likewise had no record of such a resolution. On March 31, 1989, SSI learned that Interport had issued the five million shares to R.C. Lee relying on its books and an affidavit by R.C. Lee's president. SSI demanded delivery of the shares on April 27, 1989; R.C. Lee could not deliver as it had sold the shares. SSI filed a complaint with the SEC on October 6, 1989 alleging fraud and collusion and seeking delivery of the shares or their value and damages. The SEC Hearing Officer on October 25, 1994 ordered delivery of the five million shares or their market value and awarded damages and litigation expenses. The SEC En Banc modified the award to require delivery only to the extent of twenty-five percent, or its value, and imposed exemplary damages and litigation expenses. The Court of Appeals affirmed the SEC on February 11, 2002, and denied reconsideration on June 25, 2002. The petition for review reached the Supreme Court and the Court promulgated its decision on June 6, 2016.
Issues:
Was
Interport Resources Corporation liable to deliver to
Securities Specialist, Inc. the Oceanic shares covered by Subscription Agreements Nos. 1805 and 1808–1811, or the value thereof? Was
Securities Specialist, Inc. entitled to exemplary damages and attorney's fees against Interport and
R.C. Lee Securities, Inc.?
Ruling:
Ratio:
Doctrine: