sulting from the defective manner in which the wagon was secured.

In the case of Texas Central Ry. Co. v. O'Loughlin (Tex. Civ. App.), 84 S. W. 1104, decided by the court of civil appeals for the second district, the railroad company received beef cattle for shipment to St. Louis, limiting its liability to its own line, and the shipment upon that line terminated at Cisco, where the car was delivered to the Texas and Pacific Railroad Company, which delivered it to the Missouri, Kansas and Texas Railroad Company at Fort Worth. The Texas Central Railroad Company bedded the car, but failed to make the bedding sufficient to protect the cattle from injury. The Texas Central delivered the car at Cisco within a few hours after receiving it and the cattle were not seriously damaged up to that time, but the shipment was continued in the same car to Muskogee, Indian Territory, without removing the cattle from the car or renewing the bedding. The principal damage done to the cattle in the shipment occurred after the car left the Central Railroad, and that company, being sued for damages, defended upon the ground that its liability was limited to its own road, but the court held that as it had made the bedding and improperly loaded the cattle in a car which was to continue as loaded after it was delivered to the succeeding carrier, its liability continued, and the next carrier which received it did not become liable for the damages arising from the improper bedding furnished by the first carrier, because it transported the cattle as loaded when delivered to it. This court refused an application for writ of error in that case.

The authorities cited and from which we have made the quotations above establish the proposition that it is not the duty of a railroad company, which receives from the owner or from another railroad company a loaded car, to make an inspection of the manner of the loading when the defect cannot be discovered by an external examination. If, in this case, the oil had been lost by the failure to set the valve, and Runge & Co. had sued the plaintiff in error for the value of the oil, no recovery could have been had, because no duty of inspection existed; therefore, no negligence would be shown by the facts.

The railroad company in the capacity of common carrier not being liable for property lost under like circumstances, how can it be that a railroad company with regard to the same freight would be under obligation to make an inspec

tion in order to protect persons in the employ of the consignee when unloading the car? The only connection that the railroad company had with the unloading of the car was to place it in a proper position to be unloaded, and in doing so it would have been liable for any injury which might have occurred through negligence on its part in performing that duty. But it was in no sense bound to see that the contents of the tank were in proper condition for unloading. In order to make the 376 inspection claimed, the inspector at Victoria would have been required to go upon the top of the oil tank, unscrew the cap from the dome and test the valve to ascertain whether it was properly set. As we have seen, no such duty of inspection rested upon the railroad company with regard to loaded cars, received from another road, either to secure the freight or to protect its own servants while operating the train. We have found no precedent for holding that the railroad company owed such duty to the consignee, nor do we know of any rule of law that would support such a conclusion.

If the man who assisted Wittnebert had received the injury and had sued Runge & Co., it would present a more serious question whether Wittnebert's failure to inspect and adjust the valve would not be such negligence as would make Runge & Co. liable. There are sounder reasons for holding that Runge & Co. were charged with that duty to their employés than for placing it on the plaintiff in error.

We are of the opinion that Wittnebert had no cause of action against the railroad company in this case upon the facts as detailed, and, as his own testimony shows that he could make no better case upon another trial, it is useless to remand the case to the district court. It is therefore ordered that the judgments of the court of civil appeals and the district court be reversed and that judgment be here rendered that the defendant in error take nothing by his suit and pay all costs of all of the courts.

If Goods are Transported in Closed Cars, so that when received from one carrier by another the latter cannot, without opening the doors, see the condition of their contents, it is under no duty to open the doors, and is not answerable for a loss or injury to the goods resulting solely from their condition and not from any fault of the carrier: McCarthy v. Louisville etc. R. R. Co., 102 Ala. 193, 48 Am. St. Rep. 29. And it has been held that if a consignor selects for the transportation of goods sold a car which, by reason of defects discernible upon inspection, is unsuitable for that particular class of goods, the carrier is not liable for a loss of the goods due to the unsuitableness and defective condition of the car: Frohlich v. Pennsylvania Co., 138 Mich. 116, 110 Am. St. Rep. 310.

O'BEAR-NESTER GLASS COMPANY v. ANTIEXPLO

COMPANY.

[101 Tex. 431, 108 S. W. 967.]

UNPATENTED FORMULA.-There is No Substantial Property in an unpatented recipe or formula, but only a qualified property right. (p. 867.)

CORPORATIONS-Stock Subscriptions-Payment in Property. An Unpatented Formula is not property within the constitutional provision that corporations shall issue stock only for property actually received. (p. 867.)

STOCK SUBSCRIPTIONS-Responsibility to Creditors.-Persons receiving stock issued in violation of the constitutional provi sion that corporations shall issue stock only for property actually received are responsible to creditors of the corporation for the face value of the shares received by them. (p. 868.)

John W. Davis and George M. Shelton, for the plaintiff in error.

Prendergast & Williamson and Sanford & Denton, for the defendants in error.

433 BROWN, J. John Skimming, A. S. Dennison and Sam H. Hamilton owned a secret formula of "a compound to be mixed with gasoline, kerosene and other oils, to prevent explosion," and on the second day of January, 1904, the said Skimming, Dennison and Hamilton organized a corporation, the Antiexplo Company, under the laws of the state of Texas, for the purpose of manufacturing and selling the said compound. The capital stock was stated in the charter to be $100,000, and the incorporators sold to the said corporation the formula for making the said compound at the price of $100,000, taking stock therefor as follows: Hamilton, $35,000, Skimming, $35,000; Dennison, $12,500, and $17,500 was left for sale, the proceeds to go into the treasury of the company. The $17,500 in stock was sold to the other defendants herein, but, for the purposes of this opinion, it is unnecessary for us to state in detail the transactions or the amount of stock owned by each. The said Hamilton, Skimming and Dennison believed that the formula which they owned and transferred to the company was worth the sum of $100,000, and all of the parties who bought stock, as well as the incorporators, acted in good faith in the transaction. The corporation was organized and entered upon its business in the city of Waco and was doing a prosperous business when "the fire insurance 434 companies Am. St. Rep., Vol. 130-55

issued circular letters to all of their policy-holders and to all persons who were then handling the product of the said formula warning them against buying or selling any of the said compound in their business, and threatening that if they did so the companies would cancel the insurance held by said policies, and would not insure them, whereby the business of the said corporation was wrecked and largely ruined."

O'Bear-Nester Glass Company, a creditor of the Antiexplo Company, brought this suit against the company to recover its debt and against the other defendants to recover the difference between the face value of the stock held by them and the value of the payments actually made by them to the company for the stock. A trial was had before the court without a jury, and judgment was rendered in favor of the O'Bear-Nester Glass Company against the Antiexplo Company for $1,604.50, and judgment was rendered in favor of all the other defendants against the said O'Bear-Nester Glass Company.

Section 6 of article 12 of our state constitution is in this language: "No corporation shall issue stock or bonds except for money paid, labor done, or property actually received." The purpose of the convention in enacting that provision of the constitution was to secure creditors as well as stockholders of corporations against the practice which was too common of corporations issuing fictitious stock and stock upon an insufficient consideration, whereby the actual capital was much less than the amount represented by the shares issued and sold by the corporation. The terms in which this section of the constitution is expressed indicates the purpose that the assets of the corporation should be something substantial and of such character that they could be subjected to the payment of claims against the corporation as well as to secure the shareholders in their rights in the capital stock. The question presented for our consideration is, Was the secret formula for preparing "a compound to be mixed with gasoline, kerosene and other oils to prevent explosions" property, within the meaning of our constitution?

It is true that the inventor or discoverer of a secret such as the Antiexplo has a qualified right in it to the extent that he is entitled to maintain the secrecy of his invention, and to prevent its disclosure or use by one who obtained knowledge of it through fraud or breach of contract with him. Chadwick v. Covell, 151 Mass. 190, 21 Am. St. Rep. 442, 23 N. E. 1068, 6 L. R. A. 839. But it is held in the case just

cited that one who acquires information of such secret formula by lawful means may use it, and that neither the original discoverer nor any transferee of his can prevent it. In that case the discoverer of the formula, Dr. Spencer, after using it for a number of years, died, and left a request that it should be given to Mrs. Chadwick, and the administrator of his estate delivered to her the written recipe and she began the manufacture and sale of the medicine under the name of the original discoverer. Subsequently the administrator de bonis non of the estate transferred the secret formula to Covell, who began the 435 manufacture and sale of the same medicine under the name of the original discoverer. Mrs. Chadwick brought the action to restrain Covell from using the formula, but the court held that the defendant having lawfully gotten possession of the secret was entitled to use it notwithstanding the prior right of the plaintiff.

The qualified property right of the discoverer of an unpatented recipe or formula is of such a character that it constitutes no substantial property, and could not under any circumstances be subjected to the payment of the debts of the corporation, nor could the shareholders have it sold and the proceeds distributed by process of court. Such unsubstantial and shadowy right when delivered in payment of stock constitutes no payment within the terms of the above-quoted section of our constitution: Van Cleve v. Berkey, 143 Mo. 109, 44 S. W. 743, 42 L. R. A. 593; Camden v. Stuart, 144 U. S. 104, 12 Sup. Ct. Rep. 585, 36 L. ed. 363. In the case last cited the supreme court of the United States said: "The experience and goodwill of the partners, which it is claimed were transferred to the corporation, are of too unsubstantial and shadowy a nature to be capable of pecuniary estimation in this connection. It is not denied that the goodwill of a business may be the subject of barter and sale as between the parties to it, but in a case of this kind there is no proper basis for ascertaining its value, and the claim is evidently an afterthought." The Antiexplo was more unsubstantial and shadowy than the goodwill of the partnership. Its value was entirely speculative.

If the court should dissolve the corporation it would have no assets to distribute, except such property as it may have acquired in the course of its business, and its assets, the secret formula, would be of such absolutely unsubstantial and shadowy a nature that there could be no application of it to the payment of the debts, or by distribution to the