Are unsecured, interest-bearing promissory notes considered a security?

Similarly, in People v. Walberg (1968) 263 Cal.App.2d 286, 69 Cal.Rptr. 457, the court found that unsecured, interest-bearing promissory notes which were issued for loans solicited to refurbish a hotel were "securities." The court relied in part on the fact that the scheme "was quite as dangerous to investors as the typical blue-sky promotion of mining stocks and royalties." (Id., at p. 291, 69 Cal.Rptr. 457.)

These cases underscore the fact that the corporate securities laws do not contain an "all-inclusive formula by which to test the facts in every case. And the courts have refrained from attempting to formulate such a test. Whether a particular instrument is to be considered a security within the meaning of the statute is a question to be determined in each case. In arriving at a determination the courts have been mindful that the general purpose of the law is to protect the public against the imposition of unsubstantial, unlawful and fraudulent stock and investment schemes and the securities based thereon. [Citation.]" (People v. Syde, supra, 37 Cal.2d at p. 768, 235 P.2d 601.)