Case ID: misc_19/html/0305-01.html
Source: Caselaw Access Project
Author: {"author": "\n      Dummobb, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Fred. N. Paddock, Respondent, v. Charles J. Coates et al., Appellants.
    (County Court, Oneida County,
    January, 1897.)
    1. Negotiable instruments — Failure of consideration.
    The mere fact that the maker of a note given for a patent right had received nothing from the patent, in the absence of proof that the patent was worth less than the amount he agreed to pay for it, is insufficient to show a failure of consideration for the note.
    2. Same — Mote given for patent right — Bona fide holder.
    A note given for a patent right which does not contain a statement to that effect on its face is not for that reason illegal, and in the. hands of a bona fide transferee for value before maturity, without notice of the consideration, is entitled to the same protection as commercial paper.
    Appeal by defendants from a judgment rendered by A. W. Craig, justice of the peace, on the 8th day of August, 1896, in favor of plaintiff and against defendants, for $29.18, damages and costs. Defendants gave their note to Peter Hydom for a patent right. That note was transferred to A. A. Paddock about the time it was given. After that note became due Paddock took it to defendants and delivered it to them and received a new note of defendants in place thereof. That note was thereafter transferred to this plaintiff and this action was brought to recover the amount of the renewal note. The answer consisted of a general denial and also alleged that the note was given for a patent right and that the words “ given for a patent right ” were not written upon the note as required by statute, chapter 65, Laws 1877.
    P. H. Fitzgerald, for appellants.
    R. S. Johnson, for respondent.
   Dummobb, J.

Ho claim was made upon the trial that ány fraud , was practiced upon defendants at the time of the sale to them of the patent. Defendant Charles J. Coates testified that the only consideration for the note was the patent right and that he had received nothing from the patent. Ho-proof was given or offered, however, that the patent was worth less than the amount, defend- ' ants' agreed to pay for it. There was, therefore,, no proof of any failure of consideration of the note. Defendants contend that the note was void for the reason that it did not -contain the words “ given for a patent right.”

Section 1 of the statute is as follows: “ Whenever any promisr sory 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 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 or holder.”

The. second section provides that any person who shall take, sell or transfer any note or other negotiable, instrument not having said words legibly written on the face thereof above the signature, knowing the consideration to have been a patent right, shall be deemed guilty of a misdemeanor.

The statute does not provide that the note shall be. invalid, but provides that the note in the hands of any. purchaser shall be-subject to the same defenses as m the hands of the original owner or holder. . •

A note given for a patent right, which does hot contain the-statutory words, is not for that reason illegal,, and in the hands of -a bona fide transferee for value before, maturity, without, notice of the consideration, is entitled to. the protection accorded to commercial paper by, the law merchant. Herdic v. Roessler, 109 N. Y. 127.

The defendants offered no proof upon the trial which- would have rendered the note invalid in the hands of the original. owner, Certainly the rights of the transfereé were equal to those of the, original payee. ■'

The judgment should be affirmed, with costs.

Judgment affirmed, with costs.