it is provided that 'judgment shall be given to each creditor pro rata of the amount of the recovery. This, however, merely requires an arithmetical calculation after the different causes of action have been passed upon and the amount due upon each determined. We see no ground upon which the conclusion can be justified that the liability of the surety on its bond is to be determined in equity. The contrary has been the generally accepted and, we think, the correct practice."

On the other hand, in Illinois Surety Co. v. United States, 226 F. 665, the Circuit Court of Appeals for the Seventh Circuit held that an action at law could not be maintained on a bond given by a depository in bankruptcy under sections 50 (h) and 61 of the Bankruptcy Act. It said:

"The object of the bond is to afford protection to all beneficiaries alike. The spirit of the whole Bankruptcy Act would be violated, if the vigilant depositor could, by suit in his own interest, exhaust the obligation. Each depositor is entitled only to his proportionate share. If, however, each depositor could bring an action at law for his own use to obtain his proportionate share, the possible diversity of opinion as to what that share is might result either in subjecting the defendant to judgments in excess of the penalty or in defeating the just claims of the later litigants. Only in a proceeding in which all interested parties will have an opportunity to be heard, and resulting in a judgment or decree that will be res adjudicata as to the surety as well as to all depositors, can justice be done.

"Inasmuch as the claims, though based on a single obligation, are several, not joint, and the United States is not a trustee, empowered as such to represent the claimants as equitable beneficiaries, the common law furnishes no remedy. It has no method of compelling all interested parties to join or intervene in a single suit at the peril of being bound by the judgment that might be rendered therein."

It is to be noted that this case in the Seventh Circuit was decided before the opinion in the Illinois Surety Co. Case in 240 U. S. 214, 36 S. Ct. 321, 60 L. Ed. 609, was handed down.

With these decisions before us, let us examine the facts in the case at bar: The obligation of the bond is as follows:

"Now, therefore, the condition of this obligation is such that if the First National Bank of Jonesboro shall well and truly account for and pay over all moneys deposit

ed with it as such depository, and shall pay out the same only as provided by the act of Congress in such case made and provided and the rules of court applicable thereto, and shall abide by all lawful orders and decrees of the court in and by the premises, then this obligation to be void; otherwise to remain in full force and virtue.”

The beneficiaries are the trustees and receivers who have deposited in the bank moneys belonging to estates in bankruptcy. These beneficiaries are all known and set out in an exhibit attached to the complaint. The amount of the bond is $50,000. The amount owing beneficiaries is $15,426.90, with interest. Each beneficiary is entitled to the full amount of his deposit with interest. With these facts before it, the court found no difficulty in entering the proper judgment, to wit, for the plaintiff for the full amount for the benefit of the several estates in bankruptcy set out in detail. The obligors were jointly and severally liable. No question of the insolvency of any of the obligors was in the case. No question of contribution.

It is to be noted that in the Illinois Surety Co. Case in the Seventh Circuit (226 F. 665), the action was brought for the use of certain trustees and receivers in several bankruptcy proceedings, and "any and all other receivers or trustees of estates in bankruptcy pending in the District Court of the United States for the Northern District of Illinois, Eastern Division, similarly situated. in the premises." The beneficiaries were therefore not all disclosed. It is to be further noted that the amount of the bond was $50,000, and that the complaint alleged that the aggregate of the amounts on deposit in the bank by the receivers and trustees in bankruptcy named, and by others not named, exceeded $165,000. These facts and circumstances, none of which exist in the case at bar, were apparently of decisive importance in the mind of the court in reaching the conclusion that a suit in equity was necessary. The case at bar may thus, perhaps, be distinguished.

Furthermore, a pretty uniform practice in similar cases would seem to indicate that an action at law is proper. The following cases under the same statute were all actions at law: United States v. Ward, 257 F. 372 (C. C. A. 8), on referee's bond; United States v. Ruggles (C. C. A.) 221 F. 256, on trustee's bond; Scofield v. United States (C. C. A.) 174 F. 1, on trustee's bond; Alexander v. Union Surety & Guar. Co., 89 App. Div. 3, 85 N. Y. S. 282. Analogous cases

vestment Company, through the of accounts receivable and the credit failure or bankruptcy of customers whose accounts were so discounted.

Being so indebted, the bankrupt entered into a new agreement with the Capital Investment Company, on or about January 1, 1924, whereby it was agreed that the bankrupt would continue to secure orders for dimension stock, and would from time to time procure the lumber to fill such orders from various mills. All such purchases and sales, with possibly only an occasional exception, were made in the name of A. B. Speight Company; all purchases being made on the basis of sight draft with bill of lading attached. Upon the arrival of the draft in Memphis, the draft, freight, and switching and handling charges would be paid by the Capital Investment Company, and a bill of sale given by A. B. Speight to that company covering the specific consignment. Nearly all of such consignments were handled by immediate reconsignment to purchasers, without unloading, but a number of cars which could not be immediately reshipped upon orders were unloaded and stored in the building of the bankrupt. The agreement of January, 1924, contemplated and provided that from the proceeds of sale of all lumber handled thereunder the Capital Investment Company was to receive reimbursement for the amount of its disbursements plus a fixed profit of $5 per thousand feet of lumber. Any profits in excess of $5 per thousand feet were to be credited to the open account of the bankrupt representing the old indebtedness and any subsequent advances made to the bankrupt for living expenses, etc.

On October 27, 1925, A, B. Speight was duly adjudicated a bankrupt upon his voluntary petition filed the same day. On October 28th and 29th there were shipped and billed two cars of lumber from the stock on hand in the A. B. Speight Company building. The proceeds of sale of these two cars amounted to the sum of $1,511.14, as found by the referee in bankruptcy who, under appropriate proceedings, issued an order upon H. W. Hyman, doing business as the Capital Investment Company, to turn over this sum to the trustee in bankruptcy of A. B. Speight. The present appeal involves not only the validity of this turnover order but also the question of ownership of the remaining stock on hand in the A. B. Speight Company building at the time of bankruptcy, as to which latter stock a reclamation petition was filed by H. W. Hyman. At the time of bankruptcy all the stock on hand and sought

1

The correct determination of the issue here presented depends upon the construction to be given the contract between the appellant and the bankrupt. If the bills of sale given in pursuance of that contract were intended to convey title absolute, and if such bills of sale and the contract, under all the surrounding circumstances of the case, constituted a bona fide purchase by and sale to the Capital Investment Company of the lumber here in question, and such lumber was thereupon separately held and marked as belonging to the buyer, the right to pos. session as against the trustee may be conceded. Stelling v. G. W. Jones Lumber Co., 116 F. 261 (C. C. A. 7); In re Ozark Cooperage & Lumber Co., 180 F. 105 (C. C. A. 8). But if, on the other hand, such title as passed to the Capital Investment Company was intended to have, or in law had, effect only as security for the repayment of advances, past or coincident, then, under the law of Tennessee, such security title is subordinate to the rights of the trustee in bankruptcy, since the agreements and instruments by which it was obtained were unrecorded. Southern Bank & Tr. Co. v. Folsom (C. C. A.) 75 F. 929; Tennessee Nat. Bank v. Ebbert & Co., 56 Tenn. (9 Heisk.) 153; Snyder v. Yates, 112 Tenn. 309, 79 S. W. 796, 64 L. R. A. 353, 105 Am. St. Rep. 941; Wilkins v. McCorkle, 112 Tenn. 688, 80 S. W. 834; Williams v. First National Bank, 150 Tenn. 15, 261 S. W. 973; Shannon's Tennessee Code, § 3752. [1] In such case, it has been repeatedly held that the proper determination of the issue does not depend upon the name given to the transaction by the parties nor upon the express terms of any contract between them, but upon the nature of the transaction, the legal effect of it as a whole, and the intention of the parties as evidenced thereby. Herryford v. Davis, 102 U. S. 235, 26 L. Ed. 160; Keystone Finance Corp. v. Krueger, 17 F.(2d) 904 (C. C. A. 3); In re Bettman-Johnson Co., 250 F. 657, 664

Finance Co., 285 F. 490 (C. C. A. 6); Vander Lei v. Blakely, 284 F. 516 (C. C. A. 6); Tennessee Finance Co. v. Thompson, 278 F. 597 (C. C. A. 6). Compare also Home Bond Co. v. McChesney, Trustee, 239 U. S. 568, 36 S. Ct. 170, 60 L. Ed. 444.

[2, 3] These questions of intent, purpose, possession, and the precise nature of the dealings between the parties are questions of fact, or, at best, mixed questions of law and fact, and the concurrent findings. of referee and judge, or of master and judge, will not be set aside on appeal on anything less than a demonstration of plain mistake or error in applying the law. In re Maki, 18 F.(2d) 89 (C. C. A. 6); Bergougnan Rubber Corp. v. Bell, 8 F. (2d) 702 (C. C. A. 6); Grossberger v. B. F. Goodrich Rubber Co., 8 F. (2d) 964 (C. C. A. 6); Tennessee Finance Co. v. Thompson, supra, at page 600, and numerous other cases there cited. But we find no difficulty in arriving at the same conclusion as that reached by the District Court. The building in which the lumber was stored was leased and maintained by the bankrupt as his place of business. Practically all purchases and sales of lumber were made by the bankrupt in his own name. The lumber was in the custody and under the sole domination and control (that is to say, possession) of the bankrupt. Hyman was not engaged in the lumber trade as such, but in the financing of other enterprises. It is by no means the least significant of the features of the case that, as to transactions subsequent to January, 1924, a fixed and definite compensation was to be paid to Hyman for financing purchases, viz. $5 per thousand feet of lumber handled, nor that all sums secured from the sale of lumber in excess of such compensation were to be credited to the bankrupt upon past or future indebtedness. Finding himself heavily involved in January, 1924, the plan was quite manifestly devised to decrease the total of such indebtedness while retaining current and future purchases of lumber as security not only for contemporaneously created indebtedness, but, to the extent of any surplus profits, also for past indebtedness. We see no escape from the position that the appellant either became a partner, engaged in a joint enterprise with the bankrupt, after January, 1924, or that the interest which he secured in the stock of the bankrupt was intended to be and was solely in the nature of security. The first of these positions is denied; the second seems to us manifest. [4] The situation is in no way changed by

cards or notices were placed upon the lumber to the effect that such lumber was the property of the Capital Investment Company. As was so tersely stated by Judge Warrington in Cincinnati Equipment Co. v. Degnan (C. C. A.) 184 F. 834, 845: "The claim really means that the will of the lessor" (Hyman) "may be substituted for that expressed by the lawmaking power itself. No decision is cited in support of the claim." The bills of sale having been given for the purpose of securing the appellant, and possession of the lumber having been surrendered to the bankrupt, and the concurrent finding of the master and the District Court having been that the cards or notices of ownership were affixed to the lumber "in an indefinite and irregular manner, apparently without any effort to maintain the notices upon the lumber or to notify third parties of the ownership of the same," we are constrained to hold that such notices could not make effective an agreement or contract expressly declared null and void as to existing and subsequent creditors by the statutes of Tennessee.

Whether in case of a bona fide sale such placarding would be sufficient appropriation of the goods to the sale to justify considering it as executed under the Tennessee law, we need not here determine.

The judgment of the District Court is affirmed.

EISLER et al. v. GENERAL ELECTRIC CO. GENERAL ELECTRIC CO. v. EISLER et al. Circuit Court of Appeals, Third Circuit. May 12, 1928.

Nos. 3725, 3748.

1. Patents 328-1,128,120 for electric light bulb filament support wire-inserting machine held not infringed.

for inserting wire in glass buttons of electric Fagan patent, No. 1,128,120, for machine light bulbs to form a frame to support filament, held not infringed.

2. Patents 328-1,220,836, claims 1-5, for electric light bulb filament support wire-inserting machine, held invalid.

Patent No. 1,220,836, claims 1-5, for machine for inserting wires in glass buttons of electric light bulbs to form frame to support filament, held invalid for lack of invention.

Appeal from the District Court of the United States for the District of New Jersey; Joseph L. Bodine, Judge.

Patent infringement suit by the General Electric Company against Charles Eisler and

another. From the decree, both parties appeal. Reversed in part, and in part affirmed. Richard Eyre and Charles H. Keel, both of New York City, for Eisler.

Hubert Howson, of New York City, John H. Anderson and Charles McClair, both of Schenectady, N. Y., and Howson & Howson, of New York City, for General Electric Co.

Before BUFFINGTON, WOOLLEY, and DAVIS, Circuit Judges.

BUFFINGTON, Circuit Judge. [1] This case concerns the insertion by machinery of wires in the glass buttons of electric light bulbs to form a spider or frame to support the filament. In the earlier art this was a tedious, laborious, and somewhat unsatisfactory process. The glass button was first formed. It was then moved by hand to a position where a flame struck the spot where a wire was meant to be inserted and heated to softness, and the delicate wire was then picked up by nippers and its point pushed into the yielding glass at this spot. The button was then rotated until another desired spot was reached, where the process was repeated, and another wire was put in by hand, and so on one at a time until the desired number of wires were successively and individually inserted. This hand process the General Electric Company, as assignee of John T. Fagan, sought to improve upon by a machine shown in an application made by Fagan on June 12, 1908, which resulted in the grant on February 9, 1915, of patent No. 1,128,120, for a "machine for manipulating glass rods and forming spiders therewith." The prior hand art from which Fagan sought to depart, its method and its faults, were stated by him in his specification as follows:

"These spiders have heretofore been made by hand, and their production has been subject to those obvious disabilities which attend the manufacture by hand of articles of this nature. With the individual factor of the operator entering into the equation, the production of fused zones, ordinarily in the form of buttons, has not always been properly done, and it frequently has happened that the anchor wires inserted into the buttons are not properly spaced and touch at their inner ends, so that a shunting of the current results.

It will be apparent also that hand production is comparatively slow."

The significant departure and contemplated improvement by Fagan in the way of output quantity was in concentrating the making of a spider into a single, mechanical operation which consisted in heating the entire

desired button circumference and driving the wires simultaneously into such softened circumference. In other words, he gave up spot heating of the button and successive driving

in of the wires. It is quite evident that if Fagan's unitary heating of the button and this simultaneous driving in of all the wires proved workable, the quantity production of this rapid machine operation would be a great advance over the hand process with its series of successive tedious wire insertions. Moreover, it will be apparent that the depth of wire insertion by Fagan's machine's precision would be so uniform and accurate that the short-circuiting incident to wires being inserted to an undue depth by the hand process would be avoided. In view of these asserted advantages, the office granted the patent in question, not for a process, but for the machine Fagan described in his specification. Whatever may have been the cause, Fagan's machine, so far as the proofs in this case disclose, never made any impress on the art, or indeed was put into practical use. In view of the fact of the large use of electric bulbs and the great quantities of such articles required in business of his assignee, the General Electric Company, and its large resources which enabled it to utilize Fagan's machine, it is significant that it was not put into use; and this tends to warrant the belief that, while theoretically promising, it was disappointing practically, or at least that, if patentable, its claims should be limited to covering substantial duplications thereof.

So regarding it, we are of opinion the defendant's machine does not infringe. It has gone back to the old hand art, and, instead of discarding that art as Fagan did, has utilized it, and has simply transformed the method and means of that hand art, and embodied that hand method in two separate, nonco-operating machines. In one of such machines it forms the button just as the old hand method formed the button initially. Then it swings the cooled button around to a point where a separate mechanism utilizes the old successive hand method of spot-heating a single place on the button and inserting by machinery instead of by hand a single wire at that spot-heated part of the button. This done, the machine then spot-heats another point of the button, and then and there inserts another wire just as the hand worker did. And this operation of spot-heating and successive wire insertion is carried on until the spider is finished. In other words, the defendants' machine simply does by machinery what the old art did by hand, and it does what Fagan got his patent for discarding;