Herdic v. Roessler

• Decision Date: 10 April 1888
• Parties: HERDIC v. ROESSLER.
• Court: New York Court of Appeals Court of Appeals

109 N.Y. 127

16 N.E. 198

HERDIC

v.ROESSLER.²

Court of Appeals of New York.

April 10, 1888.

Appeal from general term, supreme court, Fifth department.

The verdict of the jury sustained the defense of failure of consideration of the note. The consideration was the sale by the payee to the defendant of the right to make, use, and vend a patented article, under an invention patented by the payee, and of a collateral agreement on his part to promote, by means of orders and in other specified ways, the business of the defendant. The words, ‘given for a patent-right,’ were not written or printed in the note, as required by the act, (chapter 65, Laws 1877.) The note was in the ordinary form of commercial paper, and was given, dated, and payable at Buffalo, in this state, where the defendant risides, and where the agreement was made in pursuance of which the note was given. It was subsequently, before maturity, transferred by the payee to the plaintiff in the state of Pennsylvania, where the parties to the transfer resided. It was claimed, and there was evidence tending to show, that the plaintiff paid value for the note, without notice of any defense, but it was proved and found by the jury that he had notice, when he purchased it, of the consideration for which it was given. The defendant was permitted, against the objection and exception of the plaintiff, to read in evidence a statute of Pennsylvania similar to the statute of New York above referred to. The plaintiff requested the court to charge the jury that the statute (chapter 65, Laws 1877) was unconstitutional and void. The court refused to charge as requested, to which refusal the plaintiff excepted.

Truman C. White, for appellant.

J. M. Chipman, for respondent.

ANDREWS, J., ( after stating the facts as above.)

The validity of the statute (chapter 65, Laws 1877) is the principal question in this case. It is entitled ‘An act to regulate the execution and transfer of negotiable instruments given for patent-rights.’ The first section declares that ‘whenever any promissory note or other negotiable instrument shall be given, the consideration of which shall consist in whole or in part of the right to make, use, or vend any patent invention or inventions claimed or represented by the vendor at the time of the sale to be patented, the words, ‘given for a patent-right,’ shall be prominently and legibly written or printed on the face of such note or instrument above the signature thereto; and such note or instrument in the hands of any purchaser or holder shall be subject to the same defenses as in the hands of the original owner.' Then follows a provision in the second section, to the effect that if any person shall take, sell, or transfer any promissory note or other negotiable instrument not having such words therein, knowing the consideration of such note or instrument to consist in whole or in part of the right to make, use, and vend any patent invention, shall be guilty of a misdemeanor. The constitutionality of the act is assailed on the ground that it is in contravention of article 1, § 8, Const. U. S., and the acts of congress enacted in pursuance thereof, which secure to a patentee for a limited time ‘the full and exclusive right and liberty of making, using, and vending to others to be used,’ his invention or discovery. 5 U. S. St. at Large, 117. It is insisted that the statute of the state operates as an unlawful restraint upon the right of sale conferred upon the patentee by the acts of congress. This question has been considered by the highest courts in the states of Pennsylvania and Ohio, under statutes substantially like the statute in this state, and in the opinions delivered the constitutionality of the legislation was maintained. Tod v. Wick, 36 Ohio St. 370;Haskell v. Jones, 86 Pa. St. 173. The plaintiff, however, in opposition to this view, cites several cases: Ex parte Robinson, 2 Biss. 309;Woolen v. Banker, 17 Alb. Law J. 72, U. S. Cir. Ct. S. D. Ohio, SWAYNE, J.; In re Lake, U. S. Cir. Ct. N. D. Ohio, MATTHEWS, J.; Cranson v. Smith, 37 Mich. 309;Wilch v. Phelps, 14 Neb. 134, 15 N. W. Rep. 361;State v. Lockwood, 43 Wis. 403.

The leading case, Ex parte Robinson, arose under a statute of Indiana making it unlawful for a person to sell or offer to sell any patent-right within that state, without first filing an authenticated copy of the letters patent with the clerk of the court, and at the same time making an affidavit before the clerk that the letters patent were genuine, and had not been revoked or annulled, and that he had full authority to sell, etc. It was held by Mr. Justice DAVIS, sitting at circuit, that the law then in question was unconstitutional and void, as an infringement upon the right of sale secured to a patentee by the letters patent. The other cases mentioned are founded mainly upon the authority of Ex parte Robinson. It will be observed that even if that case was well decided, it would not necessarily determine a case arising under our statute, which does not undertake to impose conditions upon the right to sell a patented invention, but simply prescribes that if a negotiable instrument is taken upon such sale the words, ‘given for a patent-right,’ shall be inserted, and subjects the note to defenses existing against its original holder, notwithstanding its transfer. The supreme court of the...