In the Matter Of: H. J. Cohn Furniture (No. 2) Co., Bankrupt. H. J. Cohn Furniture (No. 2) Co. v. Texas Western Financial Corporation

GOLDBERG, Circuit Judge:

This case raises the question whether a Texas corporation’s written guaranty of a debt owed by a second corporation is a “stock or bond” of the guarantor for purposes of article XII, § 6 of the Texas Constitution. Article XII, § 6 provides:

No corporation shall issue stock or bonds except for money paid, labor done, or property actually received, and all fictitious increase of stock or indebtedness shall be void.

We hold that in the circumstances of this case a corporate guaranty is not a “stock or bond.” Accordingly, the guaranties are not rendered unenforceable against…