Theriot

Appellant, a creditor of Desert Glow Oil Co., a corporation, adjudicated in bankruptcy now in course of administration, hereinafter called the Bankrupt, appeals from a judgment of the district court confirming the order of the referee holding appellant’s claim to be subordinated to the claims of other creditors.

The bankrupt was a corporation engaged in drilling for oil and gas on premises leased by it and in the operation of wells already drilled there. The outstanding stock was fully paid for. The stockholders were not liable for its debts. The capital of the bankrupt consisted of the money paid for its capital stock and the leased land, and it was to this alone that the creditors could look for the payment of their debts. At the time the creditors sold their goods and gave their services to the bankrupt, the oil field was undeveloped and the credit of the bankrupt upon which the creditors relied was in part the development of the oil and gas wells with the services and material they supplied.

The appellant facilitated the development operations by a loan to the bankrupt of some $34,055.88 for which he received the note of the bankrupt. He further added to the working capital…