namely, spot-heating of the button and successive insertions of successive wires. It will thus be seen there was no identity of operation in Fagan's and the defendants' machines. On the contrary, they worked on two divergent and indeed contrasted methods. The defendants' machine uses the old hand method, while Fagan discards that hand method and substitutes therefor a machine method which it is physically impossible to do by hand because both hands and the most concentrated attention were required to fuse the glass and insert one wire at a time in such hand method. And it is significant that the plaintiff's machine, which it is contended embodies Fagan's patent, resembles the defendant's machine, in that it heats the button in spots and inserts single wires successively. [2] Seeing then, that Fagan's machine did not embody the old hand process, we note the fact that shortly thereafter, to wit, on November 22, 1909, George W. Beadle applied for, and on December 10, 1912, was granted, patent No. 1,046,724, for a machine for manufacturing supports for incandescent lamp filaments. Without entering into details, it suffices to say that his specification discloses a mechanism which utilizes and automatically uses, without manual aid, the old hand operations of heating successive spots on the button and inserting successive wires at such spots. Such being the case, it is apparent that when Fagan, in conjunction with Frech, on October 1, 1913, applied for their patent No. 1,220,836 for a filament support wire-inserting machine, which utilized the hand process, the disclosure in Beadle's patent of a mechanical adaptation of the hand process gave Fagan and Frech a secondary and minor place in the art of adapting the hand process to machine operation. And, as the defendants' machine follows the particular mechanism of Beadle more closely than it does that of Fagan and Frech, it is not an infringement, unless it uses some valid detail of the latter's device. Such infringement is alleged of claims 3, 4, and 5, which embody the use of a cold blast jet after the wire is inserted. This feature is thus described in their specification: "Moreover, means are provided for fusing that portion of the button which is to receive a wire, and a cooling means is provided which is brought into action immediately after the insertion of the wire to cause the rapid solidification of the glass around the end of the said wire." No such blast was shown in the Beadle device, but the court below held it was nevertheless invalid, saying: "The claims 3, 4, and 5 relate to a cooling blast feature, after

the wire is inserted. I fail to see anything new in this. There certainly cannot be patentable novelty in cooling glass after it has been heated and the wire fused. This makes it unnecessary to consider the patents cited in anticipation of this feature"-conclusions in which we concur.

Another detail of Fagan and Frech's patent was the delivery of the fusing gas flame angularly which is embodied in claims 1 and 2, and which is thus described in their specification: "The glass-fusing means comprises means for directing a flame against a portion of the edge of the button on the glass rod, and the said means is angularly disposed relative to the plane of the said button so that there is no danger of injuring wires previously inserted in the button." In view of the advanced state of development of this art of glass blowing, of the high grade of engineering skill employed therein, we are of opinion that, when the old hand process was sought to be employed mechanically, such angular disposition of the flame was a natural and evolutionary mechanical advance, and involved no invention.

Summarizing our conclusion, we hold patent No. 1,128,120 has not been infringed, and claims 1, 2, 3, 4, and 5 of patent No. 1,220,836 are invalid; the costs here and below to be paid by the plaintiff.

LOUISIANA OIL REFINING CORPORATION v. REED.*

Circuit Court of Appeals, Fifth Circuit. May 12, 1928.

No. 5274.

1. Explosives 9-Seller's furnishing solvent with low flash point does not give right of action to buyer's employee unless proximately causing injury.

Seller's breach of duty in furnishing buyer a solvent having a flash point substantially lower than 96 degrees Fahrenheit, pursuant to agreement, does not give rise to a right of action in favor of buyer's employee for injuries unless such breach of duty was a proximate cause of injury.

2. Explosives 9-Buyer's employee, claiming injury because of seller's furnishing solvent with low flash point, had burden of proving injury was caused thereby.

In action by buyer's employee against seller of solvent for injuries alleged to have been sustained by reason of seller's failure to furnish solvent with a flash point at temperature of not less than 96 degrees Fahrenheit, burden was on plaintiff to prove that explosion and consequent injury were due to flash point's being less than 96 degrees Fahrenheit.

"Rehearing denied June 29, 1928.

cause of injury to plaintiff, and the burden was on the plaintiff to prove that the explosion and consequent injury to plaintiff were due to the flash point of the solvent furnished by defendant being less than 96 degrees Fahrenheit. A finding that the explosion was due to the flash point of that solvent being less than 96 degrees Fahrenheit would not be warranted in the absence of evidence tending to prove that the temperature at the time and place of the explosion was less than 96 degrees Fahrenheit, as the difference between the actual flash point of defendant's product and what defendant represented its flash point to be was not a cause of the injury complained of unless fumes or vapor emitted from that product when it was subjected to a temperature lower than its represented flash point was a cause of the explosion which resulted in the injury complained of. No allegation or proof indicated that defendant was under any duty to protect plaintiff from the risk involved in his working as an employee where and when the solvent furnished by the defendant was subjected to a temperature as high as 96 degrees Fahrenheit. An essential element of the cause of action asserted was the existence, at the time and place of the explosion which resulted in plaintiff's injury, of a temperature less than 96 degrees Fahrenheit, and the burden was on the plaintiff to prove that fact.

[3] The evidence as to the temperature at the place where the explosion occurred was testimony which was admitted over defendant's objection. A witness for the plaintiff was asked the following question: "Mr. Overcash, did you make a test of the temperature of the room of the Model Cleaners & Dyers, Incorporated, where this explosion occurred, while the plant was in operation?" Defendant's counsel objected to this question and the answer sought, for the reason that it was not admissible until its relevancy was indicated by proof that the temperature was taken at a time sufficiently approximating the date of the accident. After that objection was overruled and that ruling was excepted to, the witness, in response to the question, stated, in substance, that he took the temperature close to the tumbler over the washer while the machinery in the dry-cleaning room was in operation, and the thermometer showed 88 close to the line shaft. We think the question and the answer sought were subject to objection on the ground stated, especially as the evidence elicited was unaccompanied by evidence having any tendency to prove that the circumstances attending the deposed to taking of the temperature

were substantially the same as those attending the explosion which resulted in plaintiff's injury. The evidence objected to and elicited furnished no substantial support for a finding as to the temperature of the room in which the explosion occurred at the time of, or in the circumstances attending, that explosion. Evidence as to the temperature in that room at an unidentified time, unaccompanied by any showing or offer to show that the conditions existing when the temperature was taken were the same or similar to those existing when the explosion occurred, was lacking in relevancy. Nothing in the record negatives the conclusion that the conditions affecting the temperature in the room mentioned when the deposed to taking of the temperature occurred were substantially different from those existing when the plaintiff was injured.

[4] The court refused to give the following instruction to the jury, requested by the defendant:

"If you do find that there were misrepresentations concerning the flash point of the commodity sold by the defendant to the Model Cleaners & Dyers, Incorporated, to hold the defendant liable you must find further that the explosion complained of would not have occurred if the product sold had actually been as represented and had had a flash point 96 degrees Fahrenheit."

The court's charge to the jury did not embody the proposition stated in the just quoted requested instruction or the equivalent of that proposition. The fault charged against the defendant being the furnishing by it of a solvent having a flash point substantially lower than the alleged represented flash point, and there being no allegation to the effect that any breach of duty owing by the defendant to the plaintiff was involved in plaintiff being exposed to the danger of an explosion by reason of the product furnished by defendant being subjected to a temperature of not less than 96 degrees Fahrenheit, a breach of the duty charged, and that such breach was a proximate cause of the injury complained of would not be shown by evidence having no tendency to prove that the explosion in question would not have happened if the product furnished by defendant had actually been as represented and had had a flash point at not less than 96 degrees Fahrenheit. The cause of action asserted could not have been sustained by evidence which failed to negative the conclusion that, at or about the time of the explosion in question, the product furnished by defendant was subjected to a tem

liabilities without violating Act 267 of the 1914 Legislature, which provides that a trading corporation shall not incur unsecured liabilities greater than twice the amount of its fully paid-up capital and surplus. Mr. and Mrs. Coates wanted a large cash dividend declared, but the other stockholders were opposed to doing that, because the corporation did not have the cash necessary to conduct its business.

To satisfy Coates and his wife, it was agreed that they should receive cash dividends at the end of each fiscal year on May 31, and the individual stockholders owning 50 per cent. of the stock agreed in writing with the corporation that annual dividends to all stockholders should be declared, but that the dividends payable to those signing the agreement should be deferred until such time as in the opinion of the corporation there should be accumulated in its treasury a fund sufficient to operate the business successfully, when they should receive their dividends in cash, together with 6 per cent. per annum on their share of the dividends, payment of which had been postponed. The amount so to be retained in the treasury is described as paid-in surplus. Mr. Geoghegan, who was president, on behalf of himself and associates who signed the agreement, and who together owned 50 per cent. of the stock, paid into the treasury of the company $100,000 in installments of $65,000 on June 1, 1917, and $35,000 on June 1, 1918. Geoghegan testified that there was no written agreement in regard to the $100,000, but that the purpose of paying it was to furnish the company with additional surplus to enable it to function until such time as it was able to liquidate that surplus. On May 1, 1916, a resolution declaring a dividend of $250,000 was adopted, and on May 9, 1917, another resolution declaring a dividend of $145,000 was adopted.

The dividends were paid in cash to Coates and wife, and presumably to the New Orleans Export Company. The parties to the agreement were credited with half the dividends, but the total of these amounts, $197,500, was credited to "paid-in surplus special as per agreement." In May, 1919, resolutions were adopted authorizing payment to the stockholders whose dividends had been deferred, in two amounts of $100,000 and $197,500, but

no interest or so-called extra dividend of 0 per cent. was paid on either amount.

It is clear that the $100,000 was borrowed money. It was not surplus, because it was not to be paid back to all stockholders alike, but only to those who furnished it. When the corporation paid it back, it discharged a debt which it owed to the stockholders who advanced the money. To designate this fund as surplus did not make it so, or change its character. The intention of the parties not to treat this fund as a corporate asset is indicated by the fact that it was returned to those from whom it was obtained. The amount of $197,500 is the exact total of 50 per cent. of dividends deferred during the fiscal years 1918 and 1919. The stockholders who agreed that their dividends be deferred were in the meantime the creditors of the corporation. The effect of the agreement was to make a loan to the corporation of funds of some of the stockholders.

The provision for the payment of 6 per cent. on the deferred dividends was for the purpose of paying interest on the loan, so as to adjust satisfactorily between the stockholders the payment of cash dividends to Coates and his wife. It is argued as to each of the amounts involved that there was no definite time stated for liquidation, but in each instance the time was ascertainable, and payment was required to be made when the company's financial condition was satisfactory. Even if the time were indefinite, the only effect would be that the loan would be uncollectible. The effect would not thereby be produced of changing an unenforceable loan into a paid-in surplus.

Petitioner contends that the accrued interest provided in the agreement would equal the amount of the deficiency for which it was held liable, and therefore that the decision under review was erroneous. Whether the amounts should be treated as invested or borrowed capital was the question at issue. Petitioner did not proceed before the Board of Tax Appeals upon the theory that it was entitled to deduct interest from income.

The decision under review is affirmed, without prejudice to petitioner to make application to the Board of Tax Appeals for an allowance for interest on borrowed capital. Affirmed.