Securities and Exchange Commission v. W. J. Howey Co.

Securities and Exchange Commission v. W. J. Howey Co., 328 U.S. 293 (1946), was a case in which the Supreme Court of the United States held that the offer of a land sales and service contract was an “investment contract” within the meaning of the Securities Act of 1933, , and that the use of the mails and interstate commerce in the offer and sale of these securities was a violation of §5 of the Act, . It was an important case in determining the general applicability of the federal securities laws.

Facts and Procedural History

The defendants, W. J. Howey Co. and Howey-in-the-Hills Service, Inc., were corporations organized under the laws of the state of Florida. W. J. Howey owned large tracts of citrus grove in Florida. Howey kept half of the groves for its own use, and sold real estate contracts for the other half to finance its future developments. Howey would sell the land for a uniform price per acre (or per fraction of an acre for smaller parcels), and convey to the purchaser a warranty deed upon payment in full of the purchase price. The purchaser of the land could then lease it back to the service company Howey-in-the-Hills via a service contract, who would tend to the land, and harvest, pool, and market the produce. The service contract gave Howey-in-the-Hills “full and complete” possession of the land specified in the contract, leaving no right of entry nor any right to the produce harvested. Purchasers of the land had the option of making other...
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