Case ID: ny-super-ct_3/html/0252-01.html
Source: Caselaw Access Project
Author: {"author": "Sandford, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Rudderow and others v. Huntington and others.
    Where goods were sold by an auctioneer, without any warranty or misrepresentation, and the same turned out to he spurious, and the labels upon them counterfeit; held, that it was no defence to an action upon a note given for the purchase price ; there being no proof that the auctioneer knew the fact of the spurious nature of the goods, or that he had any better means of judging of their genuineness than the buyers possessed.
    The statute of 1845, making it a penal offence to vend merchandise, having thereon forged or counterfeited trade marks, knowing them to be such, &e.? without disclosing the fact to the purchaser, would prevent the vendor from recovering the price of the goods sold, if he were aware of their spuriousness.
    But it must appear, that the vendor kneio the marks to be forged or counterfeited, or that there was a warranty of the genuineness of the goods, or some misrepresentation on his part, to prevent a recovery.
    The original fraud in the counterfeiting of trade marks, does not attach itself to the goods in the hands of an owner ignorant of the offence, and fasten upon him the penalties of a wrong of which he is innocent.
    (Before Oakley, Cii, J., and Vanderfoel and Sandford, J J.)
    Sept. 18, 20;
    Oct. 20, 1849.
    Tins was an action against the defendant Law as the maker, and the other defendants as the indorsers of a promissory note of $176.
    The answer admitted the making and indorsement of the note, its non-payment at maturity, and notice to the indorsers. It set up as a defence, that the same was giren upon a purchase by the defendant Law, from the plaintiffs, of sixteen boxes of what was supposed to be Thompson’s Eye Water, which with the labels, trade marks, and signatures, turned out to be spurious and counterfeit, and that on the discovery of the spurious character of the article, and within three days of its purchase, tlie defendant Law had tendered the same to the plaintiffs, and demanded the note in suit, to be given up, which was refused. The reply denied all knowledge as to the spurious character of the eye water; and alleged, that the same was consigned to the plaintiffs in clue course of trade, and sold by them without any warranty or representation as to its character. That the plaintiffs were auctioneers, and as such sold articles to purchasers at the risk of the latter. And that, according to the rules of sale which were posted up in their salesroom, no allowance was to be made for any deficiencies, Ac., Ac., unless application was made the day after the sale.
    At the trial in June, 1849, it appeared in evidence on the part of the defendants, that an advertisement was published in the Journal of Commerce, of a sale by the plaintiffs of “ 16 boxes of Thompson’s Eye Water.” That the defendant Law thereupon employed a person to attend the sale, with directions to purchase, and the same was bid off by him at $178. That three days after the sale, the article was discovered to be a spurious article, and that the labels and directions which came upon the bottles were counterfeited. The genuine “ Thompson’s Eye Water ” was manufactured by a person who had purchased the secret from the original inventor at a large price, and the article was known by the labels used by the manufacturer. That the labels, upon the article sold by the plaintiffs, bore a strong resemblance to the labels used upon the genuine article. That immediately oil the discovery of the spurious character of the article purchased, the defendant Law went to the plaintiffs, and offered to deliver it back, and demanded the note which liad been given on the purchase.
    It appeared in evidence on the part of the plaintiffs, that, at the time of sale, Mr. Rudderow, the auctioneer, was asked whether tire article was genuine, and he replied, “ You know more about it than we do.” A druggist, who was present, also testified that he did not suppose it to be a genuine article from its appearance, and from what ivas remarked among the bidders, and also from the low price at which it sold, being $1,84 a gross, while the genuine was worth from six to eight dollars. It also appeared that the defendant Law, previous to his offer to deliver back the eye water, had already disposed of a portion of it to different persons. It was proved, that, after the giving of the note by the defendants, the plaintiffs supposing the sale was regular, no objections having been made to it within the time specified, had paid to the consignors of the article in question, the amount of the sale, after deducting their charges and commission.
    A verdict was taken, and judgment rendered pro forma for the plaintiffs for the amount claimed, subject to the opinion of the court, on a case to be made and an appeal by consent.
    
      W. II II ILoore, for the appellants.
    1. The sale of the eyewater, with counterfeit labels, trade marks, and signatures, was illegal. (Session Laws 1845, chap. 279, p. 304 ; Coats v. Holbrook, 2 Sand. Oh, R. 586 ; Taylor v. Carpenter, 11 Paige 292 ; 2 Steph. Comm. 114, 250.)
    2. The note being given in consideration of such sale, cannot be enforced. (.Hellis v. Clark, 20 Wen. 24; S. C. in Error, 4 Hill 424; 2 Kent’s Comm. 6th Ed. 466; 22 Am. Jurist, Jan. 1840; Langton v. Hughes, 1 Maulé and Sel. 593 ; Carman v. Bryce, 3 Barn, and Al. 183; Armstrong v. Toler, 11 Wheaton 258.) These were wicked in themselves, and contrary to law. Plaintiffs had no right to sell without examining; else they could sell stolen-or prohibited goods. Same principle applies to a counterfeit bill. See 22 W. 385, where the money had been paid over, yet the vendor held liable.
    3. John Rudd ero w & Co., the auctioneers, not disclosing the names of their principals, and themselves attempting to enforce the note, are to be treated in every respect as principals. {Mills v. Hunt, 20 Wend. 431; S. C. 17 Ibid. 335 ; Hoffman v. Carroño, 22 Ibid. 285.)
    
      A. J. Willard, for the respondents.
    I. The defendant, Law, having purchased the goods in question at a public sale, when an opportunity was offered for their inspection, he is precluded by the application of the rule, caveat 
      emrptor, from affirming that the goods are worthless, or different from what he supposed himself purchasing. No fraud or misrepresentation appears to have been made ; on the contrary, all that was said and done at the sale had a tendency to put the vendee on his guard. Under such circumstances, it is no defence to an action for the purchase money, that the goods were valueless. (Welsh v. Carter, 1 Wend. 185; Johnson v. Titus, 2 Hill 606 ; Swett v. Colgate, 20 J. It. 196 ; Hart v. Wright, 17 Wend. 267; Oneida Manufacturing Co. v. Lawrence, 4 Cow. 440 ; Seims v. Wood, 2 Caines’ It. 48 ; Hyatt v. Boyle, 5 Gill & Johns. 110.) The plaintiffs have acted fairly and in good faith. There was no warranty.
    II. In the present case, however, there is no such failure of consideration as can defeat an action upon a promissory note. The defendant, Law, sold a part of the goods in question, and received the value of the same ; he cannot therefore allege a total failure of consideration.
    III. The contract of sale remains unrescinded, and must be enforced in accordance with its original terms. As the defendant had already sold a part of the property, the contract remains unrescinded.
    IV. The plaintiffs are to be regarded as bond fide holders, for a valuable consideration, without notice of any defect, of the note in question; and therefore no allegation of a failure of consideration will avail against them.
   By the Court.

Sandford, J.

There is no doubt, that the plaintiffs are to he treated as principals in this transaction ; and there is nothing in the point that they are bona fide holders of the note for value.

The defendants contend that the sale of this eye water, with counterfeit trade marks, &c., was illegal, and the note given in consideration of the sale, cannot be enforced ; and that the sale was illegal, independent of the statute of 1845.

1. As to the statute of 1845, the first section makes it a penal offence to forge or counterfeit trade marks or labels. The second section provides that every person who shall vend any merchan-clise, having thereon any forged or counterfeited trade marts or labels, knowing the same to be forged or counterfeited, without disclosing the fact to the purchaser, shall be liable to the same punishment of imprisonment as is specified in the first section, or to a fine, in the discretion of the court.

Row we have no doubt that this statute would prevent any one who has committed the offence defined in the second section, from recovering the price of goods thereby sold.

The difficulty in this case is, that the plaintiffs are not proved to have known the stamps and labels on the eye water, to be forged or counterfeited. The evidence on that point is entirely insufficient to warrant any such conclusion,

2. It is true, as the defendants allege, that before the statute, these spurious manufactures were so far unlawful, that courts of equity would restrain by injunction, their preparation and their sale. There is no decision going the length of holding that on a sale of such articles, the seller could not recover the piece because he knew the same were spurious. Whether such ought to be the rule of law, is a point foreign to this case.

Here the plaintiffs, in the usual course of trade, sold an invoice of eye water. They made no warranty; nor any representation that was untrue. So far as it appears in proof, the purchaser had as good an opportunity to judge and to ascertain whether it was genuine or spurious, as the sellers had. Surely there is nothing illegal in the transaction. The original fraud or crime in the preparation of these counterfeit trade marks, does not attach itself to the goods in the hands of owners ignorant of the offence, and fasten upon them the penalties of a wrong of which they are innocent.

If the authorities cited to us, in which parties to a sale., fraudulent as against creditors, were precluded from the aid of the courts to enforce contracts, growing out of the sale; had held also, that no subsequent owner of the property fraudulently sold, however ignorant of the wrong, could ever maintain a suit for the price on his own sale to another; they would have furnished a principle decisive of this case. We are asked to go to that extent in the application of the maxim ex turpi contractu non oritur actio; and the simple statement of the proposition, .it seems to ns, shows that it is utterly inadmissible.

The case of stolen goods is not analogous. No title passes on such a sale, however honest or remote from the transgressor.

We were also referred to the receipt of counterfeit bank notes in payment; which does not discharge the party paying them. That also is inapplicable to a sale of goods. The buyer must take care to see and know' for himself what he is purchasing. A creditor receiving in payment a forged note or spurious coin, receives nothing, and the debt remains undischarged.

The judgment at the special term must be affirmed.