Court Opinion

ID: 8779674
Source: CourtListenerOpinion
Date Created: 2022-11-26 13:13:52.971002+00
Date Added: 2024-06-11T17:02:46.187550
License: Public Domain

MAXEY, District Judge
(after stating the facts as above). By article 653 of the Revised Statutes of Texas of 1895 express authority is conferred upon private corporations to borrow' money on the credit *863of the corporation, not exceeding its authorized capital stock, and to execute bonds or promissory notes therefor, and to pledge the property and income of the corporation. In the present case Mitchell advanced to the bankrupt $100, and as evidence of the indebtedness the latter issued to him the trade certificate described in the statement of the case. This paper is not a stock certificate, since all the original stock had been subscribed, and the plan to increase the capital stock had been abandoned. Indeed, the instrument does not purport to be a certificate entitling the holder to shares of stock in the corporation. It is equally apparent that the certificate is not a promissory note, negotiable by the law merchant. It does, however, evidence an indebtedness due by the bankrupt to Mitchell, and guarantees the payment of at least 8 per cent, per annum for the use of the money, which is merely the equivalent of a guaranty of interest at the rate mentioned on the amount of money borrowed. The fact that the certificate is payable in merchandise, after the end of two years, on the demand of the holder, in no way detracts from its value as an obligation to pay. See Baker v. Todd, 6 Tex. 274, 55 Am. Dec. 775; Dumas v. Hardwick, 19 Tex. 239; Short v. Abernathy, 42 Tex. 94; Bummel v. City of Houston, 68 Tex. 10, 2 S. W. 740.
In the 'judgment of the court the claim of Mitchell is founded upon an express contract, the liability is fixed, and the amount was absolutely owing when the petition in bankruptcy was filed. The debt is, therefore, under section 63 of the bankruptcy act, a provable claim. It follows that the order of the referee, disallowing it, should be reversed. The cause will be referred back to the referee, with directions to allow the claim of Mitchell, the same to be paid in due course of administration of the estate.
So ordered.