Chilberg

Plaintiff, an assignee, brought suit against defendant to recover the sum of ten thousand dollars. His predecessor in interest had bought shares of the capital stock of defendant, paying therefor the amount mentioned, at par, and there were issued to him by defendant at the same time certain obligations, or certificates, aggregating the same amount. These papers, each entitled “Refunding Certificate,” were in the following form:

By his action plaintiff sought to recover as upon a breach by defendant of its alleged obligation to “refund” as ex pressed in the certificates. Defendant had judgment and plaintiff appeals.

[1] It is contended by respondent that the agreement to refund is void under the terms of the Civil Code, section 309, to the effect that “The directors of corporations must not make dividends, except from the surplus profits arising from the business thereof; . . . nor must they divide, withdraw, or pay to the stockholders, or any of them, any part of the capital stock, except as hereinafter provided, nor reduce or increase the capital stock, except as herein specially provided.” The trial court determined that the refunding certificates were violative of the…