DEBENTURE (from debentur mihi. Lat., with which various old forms of acknowledg ments of debt commenced). A certificate giv en in pursuance of law, by the collector of a port of entry, for a certain sum due by the United States, payable at a time therein men tioned, to an importer for drawback of duties on merchandise imported and exported by him, provided the duties on the said merchandise shall have been discharged prior to the time aforesaid. U. S. Rev. Stat. §§ 3037-40.
In some government departments a term used to denote a bond or bill by which the government is charged to pay a creditor or his assigns the money due on auditing his ac count.
An instrument in writing, generally un der seal, creating a definite charge on a def inite or indefinite fund or subject of prop erty, payable to a given person, etc., and usu ally constituting one of a series of similar instruments. Cavanagh, Mon. Sec. 267. See 56 L. J. R. Ch. D. 815 ; Brice, Ultra Vires (2d ed.) 279.
A charge in writing on certain property, with the repayment at a time fixed, of money lent by a person therein named at a given interest.
frequently resorted to by public com panies to raise money for the prosecution of their undertakings.
Any instrument (other than a covering or trust deed) which either creates or agrees to I create a debt in favor of one person or cor poration, or several persons or corporations, or acknowledges such debt. Simonson, De bentures, 5, where this is given as the result of a critical examination and discussion of the cases bearing on the definition of the term.
As a rule, both text writers and courts content themselves with a statement of inability to define them. An English writer says: "No one seems to know exactly what debenture means ;" Buckley, Companies Act 169 ; and Chitty, J., said in one case that "a debenture means a document which either creates a debt or acknowledges it, and any document whibh fulfils either of these conditions is a deben ture ;" 37 Ch. D. 260, 264 ; but in the same case North, J., would not go so far. In another case the aame judge (Chitty) said: "The term itself imports a debt and acknowledgment of a debt, and generally if not always imports an obligation to pay ;" 36 Ch. D. 216; and again in another case he thus ex presses the doubt existing as to the exact legal idea involved in the expression: "So far as I am aware, the term debenture has never received any precise legal definition. It is, comparatively speaking, a new term. I do not mean a new term in the English language, because there is a passage in Swift (quot ed in Latham's Diet.) where the term debenture is used." The lines referred to are: "You modern wits, should each man bring his claim, Have desperate debentures an your fame: And little would be left you, I'm afraid, If all your debts to Greece and Rome were paid." And the judge continued: "But although it is not a term with any legal definition, it is a term which has been used by lawyers frequently with reference to instruments under acts of parliament, which, when you turn to the acts themselves, are not so described:" 66 L. J. Ch. 817,
"Debentures, which are the commonest form of security issued by English corporations, are defined to be instruments under seal creating a charge ac cording to their wording upon the property of the corporation, and to that extent conferring a priority over subsequent creditors and over existing creditors not possessed of such Charge. This is the true and proper use of the term; although it is frequently applied on the one hand to instruments which do not confer a charge and which are nothing more nor less than ordinary unsecured bonds, and on the other_ to instruments which are more than a mere charge, being in effect mortgages, and are properly termed mortgage debentures." Jones, Corp. B. t, M. § 32.
In the case of an instrument engaging for the pay ment of "the amount of this debenture," with cou pons for interest payable half-yearly, Grove, J., said: "In several dictionaries which we are in the habit of consulting, no satisfactory definition can be found, and neither of the learned counsel has been able to afford us any. I do not remember the term being used otherwise than in an acknowledg ment of indebtedness by a corporate body having power by act of parliament or otherwise to increase its capital by borrowing money." It was something different from a promissory note, having a different stamp duty, different form, and a special made of paying interest. The paper was held a debenture and subject to a higher stamp duty than a promis sory note. In the same case Lindley, J., said that what were known as debentures were of various kinds ;—mortgage debentures which were charges on some kinds of property, debenture bonds which were not, debentures which were nothing more than an acknowledgment of indebtedness and "a thing like this which is something mare." 7 Q. B. D. 165. Manson, treating • of ''The Growth of the Deben ture" in 13 L. Q. R. 418, says that its origin was a mere acknoWledgment of indebtednese from the crown, first for wages, etc., of servants, then to soldiers for arrears due them, and in various cases for amounts due from the exchenuer and the cus tom house; it was in its primitive meaning just what its derivation from debentur implies—an ad mission of indebtedness, importing, as quoted supra from Chitty, J., an obligation or covenant to pay. From this root, slender as it is," continues the same writer, "have branched all the variety of forms. . . . Debentures to Bearer, Registered Debentures, Perpetual, Debentures, Mortgage Debentures, Deben ture Bonds, Debenture Stack, Trust or Covering Deeds, Debenture Stock Certificate to Bearer." Originally not one of a series, now inseparably con nected with serial form. "An issue of debentures is in effect one great contributory charge made up of a series of securities, identical in form and amount." id.