specially concurring:
Although I concurred in the decision reached by Division Two in Washington National Corp. v. Thomas, supra, I am now convinced that scienter should be required as an element of a claim based upon a violation of A.R.S. § 44-1991. I, therefore, concur in both the reasoning and the result reached in Judge Froeb’s opinion.
APPENDIX
FINDINGS OF FACT:
1. In July 1973, all of the stock of Sun-liner Aircraft Leasing Corporation, an Arizona corporation, d. b. a. Lease-A-Plane of Phoenix, was owned by STEVEN H. GREENFIELD, the manager of the corporation’s business, and by Burton J. Greenfield and Helen P. Greenfield, his wife, investors, who lived in Chicago and were STEVEN GREENFIELD’S parents. STEVEN GREENFIELD owned 100 shares of common stock and his parents owned 500 shares of common stock.
2. On or about July 22, 1973, STEVEN GREENFIELD’S parents gave him authority to act as their attorney-in-fact in arranging a sale of the stock of Sunliner Aircraft Leasing Corporation. They participated in no way in the making of representations in the said sale.
3. Burton J. Greenfield and Helen P. Greenfield had no contact or role in the sale transaction which was subsequently arranged by their son STEVEN GREENFIELD and never received (nor were to receive) any of the proceeds from such sale.
4. On July 23, 1973, after STEVEN GREENFIELD took the sale documents to California on a commercial airliner, STEVEN GREENFIELD and DOUGLAS ELLIS CHEEK (hereafter “DOUG ELLIS”) signed the July 23, 1973 Agreement by which the Sunliner stock was sold to DOUG ELLIS. The signing was done in Anaheim, California.
5. The terms of the July 23,1973 Agreement required, among other things, that DOUG ELLIS pay to STEVEN GREENFIELD:
(a) $30,000.00 in cash,
(b) $15,000.00 over 4 years pursuant to a promissory note requiring payments of $312.50 per month,
(c) a certain percent of future profits.
6. Attached to the July 23, 1973 Agreement was a pro forma financial statement as of May 31, 1973, which excluded Sunliner’s debt of $30,000.00 to Lease-A-Plane International Licensing Corporation.
7. This $30,000.00 indebtedness was excluded from the pro forma financial statement because STEVEN GREENFIELD had agreed to take the $30,000.00 cash down payment which he was to receive from DOUG ELLIS and pay off that $30,000.00 corporate indebtedness to Lease-A-Plane International Licensing Corporation.
8. STEVEN GREENFIELD, received the $30,000.00 cash down-payment from DOUG ELLIS in two checks during July and September, 1973. He paid over all of that $30,000.00 which he received to Lease-A-Plane International Licensing Corporation, as agreed.
9. STEVEN GREENFIELD also received the following amounts from DOUG ELLIS as payment on the promissory note:
CHECK DATE AMOUNT TRIAL EXHIBIT
9/21/73 $314.78 58
10/10/73 $312.50 58
11/1/73 $312.50 58 12/22/73 $312.50 58
These were corporate checks drawn on Sun-liner payable to STEVEN GREENFIELD, reflected by entries in Sunliner’s books showing “advances” to DOUG ELLIS. DOUG ELLIS made no other payments to STEVEN GREENFIELD.
10. DOUG ELLIS never repaid to Sun-liner any of the advances which the records show he received.
11. STEVEN GREENFIELD suggested that DOUG ELLIS should, in July 1973, provide to Sunliner Aircraft Leasing Corpo*77ration $15,000.00 in additional working capital.
12. DOUG ELLIS did, in July 1973, provide to Sunliner Aircraft Leasing Corporation $15,000.00 in additional working capital.
13. In addition to the $31,250.00 paid to STEVEN GREENFIELD, Burton J. Greenfield and Helen P. Greenfield, and to the $15,000.00 in additional working capital, DOUG ELLIS caused to be expended on behalf of Sunliner Aircraft Leasing Corporation $41,750.00 in the form of funds provided by his mother, Mrs. Henrietta Ellis.
14. Prior to coming to work at Sunliner in the spring of 1973, DOUG ELLIS had two years of business training at a junior college and held several jobs as a service writer in automobile agencies in the Phoenix area and elsewhere.
15. Prior to his being presented with the July 23, 1973 Agreement attaching the pro forma financial statement of May 31, 1973, DOUG ELLIS had:
(a) worked as an employee of Sunliner for approximately 16 weeks, 12 weeks of which had been spent as a “Manager in Training”;
(b) been instructed by STEVEN GREENFIELD in the financial operations of the corporation’s business, including:
(i) how to make up a monthly budget,
(ii) what the monthly financial statements were and how to use them in making up a monthly budget,
(iii) how the checkbook operated,
(iv) how the accounts payable and receivable systems were operated.
16. STEVEN GREENFIELD made no representations to DOUG ELLIS as to whether Sunliner was a solvent or insolvent business.
17. DOUG ELLIS was warned by James Aiman (a fellow employee) prior to his signing the July 23, 1973 Agreement that he should obtain an accountant to review it to be sure that he understood it. DOUG ELLIS chose not to do so, never asked Sunliner’s accountant any questions about the finances of the corporation, and signed the July 23, 1973 Agreement without fully understanding the pro forma financial statement as of May 31, 1973, which was attached thereto.
18. The Liabilities shown on the May 31, 1973 pro forma financial statement attached to the July 23,1973 Agreement were incorrectly stated in that:
(a) the arrearages on aircraft payments were understated,
(b) flying revenues were understated by reason of Defendant STEVEN GREENFIELD personally paying for “clearing accounts”.
19. While the May 31, 1973 pro forma financial statement contained no “going concern” disclaimer,
(a) the May 31, 1973 pro forma financial statement was not prepared by an accountant, nor was it represented as being prepared by an accountant;
(b) it is not required under general [sic] accepted accounting principles applied on a consistent basis that such a disclaimer be stated in a pro forma financial statement.
20. STEVEN GREENFIELD had obtained the figures as to liabilities which were shown in the May 31, 1975 [sic] pro forma financial statement from Sunliner’s accountant and reasonably believed them to be correct. He had received a communication from Fidelity Acceptance Corp. dated May 27, 1973 indicating the aircraft arrearages were correctly stated.
21. STEVEN GREENFIELD made the statement as to liabilities in the May 31, 1973 pro forma financial statement (a) without any knowledge that it was not true and (b) without any intent to deceive, i. e., without any scienter.
22. STEVEN GREENFIELD partially understands financial statements and explained to DOUG ELLIS the financial statements of May 31, 1973 of Sunliner Aircraft Leasing Corporation.
23. DOUG ELLIS was not damaged in any way by the alleged misstatement of liabilities in the May 31, 1973 pro forma financial statement, since Fidelity Accept*78anee Corp., the party to whom the “unstated” liabilities were allegedly owed, agreed, that they were not owed and would not be collected by it.
24. DOUG ELLIS did not rely upon the truth of the statements as to liabilities in the May 31, 1973 pro forma financial statement in deciding to enter into the July 23, 1973 Agreement.
25. Following his purchase of Sunliner, DOUG ELLIS operated the business as an owner-manager from July 1973 until July of 1974 when the business closed its doors. He operated the business inefficiently and partly caused its close.
26. Within two weeks of taking over the ownership and operation of Sunliner, DOUG ELLIS cut short the training which STEVEN GREENFIELD was giving him by ordering STEVEN GREENFIELD to leave the premises of Sunliner and not to return. Though STEVEN GREENFIELD called frequently during the four months thereafter, DOUG ELLIS told his employees not to give him the calls as he did not want to talk to STEVEN GREENFIELD.
27. During that twelve-month period that he operated Sunliner, DOUG ELLIS never invested any money in Sunliner or paid any sums to the corporation.
28. During that twelve-month period, DOUG’s mother, Mrs. Henrietta Ellis, paid various sums of money to Sunliner, having first borrowed those sums from the Valley National Bank pursuant to papers in which she stated the funds were “to make additional investment in family corporation”. The checks which indicate the transfers of some sums were annotated “Lease-A-Plane of Phoenix — Loan—60 days” and other similar legends.
29. None of the funds which were paid to Sunliner by Mrs. Henrietta Ellis ever resulted in DOUG’s personally signing any notes to Mrs. Ellis, though one such note was prepared in January of 1975 [sic], and never signed by DOUG.
30. At one point, in October of 1973, Sunliner issued common stock to Mrs. Ellis, although the certificate was subsequently voided.
31. DOUG ELLIS has no enforceable legal obligation to repay Mrs. Henrietta Ellis any of the sums which she paid to Sunliner. Only the corporation has that legal obligation.
32. In all but one instance, the various legal and accounting fees which Plaintiff has sued for in Count 7 of his Complaint were not paid by him and he was not personally liable for those sums.
33. In the sole instance of his attorneys’ fees incurred in the processing of this case, DOUG ELLIS has proved and is entitled to attorneys’ fees in the amount of $10,000.00.
34. In November of 1973, after having operated the business of Sunliner for over three months, DOUG ELLIS complained to STEVEN GREENFIELD of plane arrearages having been understated on the May 31, 1973 pro forma financial statement. A meeting was held in Phoenix and during the meeting STEVEN GREENFIELD and another person who was an authorized representative of Fidelity Acceptance Corp. (to which the arrearages were allegedly owed) stated to DOUG ELLIS that the “unstated” arrearages which he asserted that Sunliner might owe to Fidelity Acceptance Corp. were not owed and would not be collected from Sunliner.
35. After September 1973, Fidelity Acceptance Corp. never attempted to collect from Sunliner any arrearages in excess of those which were stated in the May 31,1973 pro forma financial statement attached to the July 23, 1973 Agreement.
CONCLUSIONS OF LAW
1. The actions of STEVEN GREENFIELD constituted civil fraud and were therefore violations of the laws of the State of Arizona, specifically A.R.S. Section 44-1991(2) and 15 U.S.C. Section 77(q), the Federal Securities Exchange Act of 1933, per Count 4 of the Complaint.
2. Under Count 4 of the Complaint, DOUG ELLIS was damaged by the civil fraud to the extent of his $30,000.00 cash down payment which he paid to STEVEN GREENFIELD, $1,252.28 in payments which DOUG ELLIS had made to STEVEN GREENFIELD under the $15,000.00 prom*79issory note. Any sums which might have been given or loaned to the corporation after July 23, 1973 are not recoverable because they were not DOUG ELLIS’ funds and because the giving of such funds to a “dying” business after the facts about it were fully known was not a reasonable act.
3. DOUG ELLIS is entitled to $10,000.00 as and for his attorneys’ fees, under Counts 4 and 7 of the Complaint.
4. STEVEN GREENFIELD is entitled to no amounts under his Counterclaim for sums allegedly owed to him by DOUG ELLIS under the $15,000.00 promissory note.
5. Burton J. Greenfield and Helen P. Greenfield, his wife, did not aid in, participate in, or induce any illegal sale or purchase of securities under A.R.S. Section 44— 1991 or Section 44 — 2003.
6. Burton J. Greenfield and Helen P. Greenfield, his wife, are not responsible to DOUG ELLIS for any damages.
7. The circumstances proved at trial were such that there was no conduct by any of the defendants justifying the punitive damages which were requested in the Complaint.
8. As to the Securities Registration Counts of the Complaint, the laws of California and Illinois are inapplicable to the facts of this case, there being no significant contacts with those states; further this was an exempt transaction because, among other things, there was no public offering under the Arizona Act and the sale was an isolated one made by a non-issuer, non-broker and non-underwriter in good faith and not for the purpose of avoiding the registration requirements; finally, Federal Courts have exclusive jurisdiction of Federal Registration questions and, in any event, this was an exempt transaction under the Federal law for the reasons set out above.
IT IS, THEREFORE, ORDERED Granting Plaintiff Judgment against Defendant, STEVEN GREENFIELD, only in the sum of $31,248.00 compensatory damages, plus attorneys’ fees in the sum of $10,000.00, plus Plaintiff’s costs.
IT IS FURTHER ORDERED Judgment for Defendant on remaining issues.
IT IS FURTHER ORDERED Judgment for Plaintiff on Defendant’s Counterclaim.