The W.J. Howey Co. owned a large citrus grove in Florida. The citrus grove was serviced by Howey - in-the-Hills, Inc., a corporation owned and operated by the same people who ran the Howey Co.

When the Howey Co. needed money, it sold tracts of land in the grove. Each buyer had to purchase both land from the Howey Co. and a service contract from Howey -in-the-Hills. The purchasers had no right to enter the land or to market the crop. All cultivating and marketing were done by the service company. Most of the buyers were from out of state. In return for their purchase, they received a share of the profits after the crops were harvested and sold. The SEC brought suit against both companies, arguing that the land and service contracts were actually securities that should have been registered with the commission. Was the SEC correct? Explain. Securities and Exchange Commission v. W.J. Howey Co., 66 S.Ct . 1100 (U.S. Sup. Ct.).