New v. Walker

• Decision Date: 07 December 1886
• Docket Number: 12,851
• Parties: New v. Walker
• Court: Indiana Supreme Court

9 N.E. 386

108 Ind. 365

New v. Walker

No. 12,851

Supreme Court of Indiana

December 7, 1886

From the Hamilton Circuit Court.

Judgment reversed.

B. F Davis, J. Brownfield, T. J. Kane and T. P. Davis, for appellant.

R. R Stephenson and W. R. Fertig, for appellee.

OPINION

Elliott, C. J.

The complaint of the appellant is based on a promissory note written in the usual form, payable in a bank of this State, and payable to bearer.

The answer alleges that the note was executed in consideration of the sale and transfer to the appellee of the right to use, and sell for use, in a designated part of the State, an agricultural boiler and steam feeder, for which Puntan, to whom the note was executed, had obtained letters patent; that the sale and transfer of the patent took place in Hamilton county, in this State, on the 10th day of June, 1884; that Puntan had not then filed with the clerk of the court of that county a copy of his letters patent, nor had he filed an affidavit that the letters were genuine and had not been revoked, and that he had authority to barter or sell the right to use the patented article; nor was there any clause in the note stating that it was "given for a patent right." It is also averred that the appellant knew that the note was given in payment for a patent right before she purchased it.

We have had occasion to consider the validity of our statute imposing certain duties upon the venders of patent rights, and have expressly decided that, in so far as it requires an affidavit from the vender of his authority and charges him with the duty of filing a copy of the letters patent, it is not in conflict with the Federal Constitution. Brechbill v. Randall, 102 Ind. 528 (52 Am. R. 695, 1 N.E. 362).

The reasoning of other cases decided by this court carries the doctrine somewhat further, and they lay down a principle that would, if carried to its logical conclusion, sustain the entire statute. Fry v. State, 63 Ind. 552; Toledo Agr'l Works v. Work, 70 Ind. 253; Central Union Tel. Co. v. Bradbury, 106 Ind. 1, 5 N.E. 721; Hockett v. State, 105 Ind. 250 (55 Am. R. 201, 5 N.E. 178).

We accept as correct the conclusion to which the reasoning of these cases leads, and affirm that our entire statute is valid, and that it neither usurps any powers of the Federal government nor encroaches upon the National Constitution nor violates any law of Congress. This conclusion is fully supported by the decision of the Supreme Court of the United States in Patterson v. Kentucky, 97 U.S. 501, 24 L.Ed. 1115, and by other decided cases. Tod v. Wick, 36 Ohio St. 370; Haskell v. Jones, 86 Pa. 173.

There are, as we know, cases which assert a different doctrine, but they are all based on the decision in Ex parte Robinson, 2 Biss. 309, 20 F. Cas. 961, and as that decision has been overthrown, the cases based upon it must fall. Toledo Agr'l Works v. Work, supra; Fry v. State, supra; Brechbill v. Randall, supra.

In imposing upon venders of patent rights the duty of filing affidavits and copies of letters patent, no powers vested in the Federal government are usurped, nor are the provisions of the National Constitution trenched upon, for nothing more is done than to prescribe a system of procedure for the protection of our citizens against imposition and fraud. No more is done by that part of the statute which requires affidavits and copies of letters patent to be filed, than to establish regulations for the government of the sale and transfer of a peculiar species of intangible property, which, in its very nature, is so essentially different from other property that it must necessarily be transferred in a different manner. The regulations established by our Legislature are in the nature of police regulations; their purpose being to protect our people from being imposed upon by men who have either no authority to sell patent rights or no patent rights to sell. It has been directly decided by the Supreme Court of the United States, as well as by this court, that the National Congress can not make police regulations for the protection of the people of the States. United States v. Dewitt, 9 Wall. 41, 19 L.Ed. 593; United States v. Reese, 92 U.S. 214, 23 L.Ed. 563; Western Union Tel. Co. v. Pendleton, 95 Ind. 12 (48 Am. R. 692); Brechbill v. Randall, supra; Hockett v. State, supra.

As the Federal Legislature can not enact police regulations which will yield the citizens of the State just protection, it must be that the State Legislature may enact such regulations, or the citizens be left without protection. We are unwilling to declare that venders of patent rights can not be restrained by reasonable police regulations, and we do, therefore, declare, that the provisions of the statute under immediate mention, being in the nature of police regulations, are constitutional and valid.

The provision requiring the insertion of the clause, "given for a patent right," in promissory notes, we think, is also in the nature of a police regulation; but independent of this consideration, we regard that provision of the statute as valid, because it simply prescribes what shall be written in a promissory note given for a particular class of property. For more than half a century we have had statutes governing promissory notes, and making peculiar regulations concerning them, and during all those years their validity has remained unchallenged. To us it seems quite clear that such statutes are valid, and that the statute under discussion belongs to that class. This view of the subject finds strong support in the well reasoned case of Tod v. Wick, supra, where it was said; "The right to regulate the form and prescribe the effect of paper taken in commercial transactions has always been regarded as belonging to the States." In this view of the subject we concur, and our ultimate conclusion on this branch of the case is that the statute is valid in all its parts.

Where the assumed owner of personal property undertakes to transfer it in a method forbidden by statute, he can take no benefit from his illegal act. A patent right is property, and the States may regulate the method of its transfer, as they may any other property which is brought within its jurisdiction, provided, of course, no essential right in the property is taken away, and there is no encroachment upon the powers of the Federal Government. Tod v. Wick, supra; Ames Iron Works v. Warren, 76 Ind. 512 (40 Am. R. 258).

It is inconceivable that the vender of personal property, whether it be intangible property like a patent right or not, can acquire any rights from acts performed in direct violation of law, since enforceable legal rights only spring from transactions which violate no principle of law or equity. A legal right can not arise out of a wrong, so as to benefit the wrongdoer.

In our opinion a promissory note, executed in direct violation of a mandatory statute, is inoperative as between the parties and those who buy with notice. Where a statute, in imperative terms, forbids the performance of an act, no rights can be acquired by persons who violate the statute, nor by those who know that the act on which they ground their claim was done in violation of law. A promissory note, executed in a transaction forbidden by statute, is at least illegal as between the parties and those who have knowledge that the law was violated. It is an elementary rule that what the law prohibits, under a penalty, is illegal, and it can not, therefore, be the foundation of a right as between the immediate parties. Wilson v. Joseph, 107 Ind. 490, 8 N.E. 616; Hedderich v. State, 101 Ind. 571 (51 Am. R. 768); Case v. Johnson, 91 Ind. 477.

This rule also applies to those who assume to purchase from one of the parties to the transaction, but purchase with full knowledge that the law has been transgressed.

A man who assumes to transfer a right which the law forbids him from transferring, unless he does certain prescribed acts, can not yield a valid consideration to the person with whom he deals. Where one assumes to transfer what the law prohibits him from transferring, he parts with no rights which, as to him, at least, will constitute a sufficient consideration for another's promise. If the question were between the immediate parties, we should have no hesitation in declaring that, if the promissory note sued on was executed for a patent right, transferred in violation of the statute, there could be no recovery. Nor do we think there is any doubt that the rule should be applied where the holder of the note purchased with full knowledge of the character of the transaction.

The contention of the appellant, that the statute applies only to the sale of the patent right itself, and not to the sale of the right to use and to manufacture for sale and use the patented article, can not prevail. It is a sale of the patented right to sell the exclusive right to use and manufacture for sale and use the thing patented, for such a sale carries with it an interest in the patented right itself. Where the vender sells a right to use and to manufacture for sale and use during the existence of the patent, he parts with all substantial rights in the patent in the territory embraced in the assignment. Curtis Patents, section 181; Walker Patents, section 296.

Where it is evident that the intention of an instrument is to vest in the assignee the whole and exclusive interest in a patent right for a designated territory, no ingenuity in framing the instrument will carry the transaction beyond the reach of the statute. Schemes, however cunningly contrived, or subterfuges, however ingeniously devised, will not enable the vender of the patent right to evade the statute. Here, as elsewhere in jurisprudence, the...