As a contingent liability, it is clear that no ‘outstanding indebtedness' existed as required by the statutory definition of borrowed capital. Cf. Frazer-Smith Co., 14 T.C. 892, 899-900; C.L. Downey Co., 10 T.C. 837, 839-840, affirmed 172 F.2d 810, 812 (C.A. 8). Thus, in form as well as in substance, the certificates in issue fail to qualify as borrowed capital. We hold that the Commissioner correctly refused to allow the inclusion of any value for these certificates in the determination of petitioner's allowable invested capital credit.

With respect to any assigned contract which did not become delinquent for as long as 60 days, Brizard was under no liability to the bank. We previously have held that a contingent liability does not represent an outstanding indebtedness sufficient to constitute ‘borrowed capital’ within the meaning of section 719 of the 1939 Code. Fraser— Smith Co., 14 T.C. 892. The form of notice used by the bank in notifying the installment purchaser of the assignment of the note or contract states: ‘Your dealer has sold to us your contract or note,‘ indicating that the bank regarded the assignment transaction as a sale.

This definition of a debt or an indebtedness has been uniformly applied in cases dealing not only with deductions under section 23(k), but also cases involving interest deductions and the meaning of borrowed invested capital as contained in section 719(a)(1). Gilman v. Commissioner, 53 F.2d 47, affirming 18 B.T.A. 1277; C. l. Downey Co., 10 T.C. 837; Fraser-Smith Co., 14 T.C. 892. In addition, it has been recently reaffirmed in Alexander & Baldwin, Ltd. v. Kanne, supra, wherein the court stated: ‘Here where there is no certainty that the debtor-creditor relationship ever will arise, the instant promise to pay money does not create a deductible debt.

Petitioner borrowed regularly from the bank on its sight drafts and the amount thereof constituted an outstanding indebtedness, within the meaning of section 719. In reaching this conclusion we are not unmindful of our decision in Fraser-Smith Co., 14 T.C. 892 (1950). In that case we followed the City of Douglas rule, supra, which, as hereinbefore pointed out, governs where there is no agreement or understanding between the bank and its depositor as to the ownership of the deposited paper.