Case ID: nys_25/html/0237-01.html
Source: Caselaw Access Project
Author: {"author": "BRADLEY, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

(72 Hun, 498.)
    AUBURN BUTTON CO. v. SYLVESTER et al.
    (Supreme Court, General Term, Fifth. Department.
    October 20, 1893.)
    ■Patent—Assignment—Failure to Record—Subsequent Purchasers.
    Partners, in manufacturing, obtained a patent on certain machines used in their business. About a year afterwards, they and another formed a corporation which succeeded to the business of the firm, and the patents were assigned to it by separate instrument, which was not recorded. One S. was in the employ of the firm when the patents were issued, and was superintendent for the corporation, and assisted in using the patent machines from its organization until its property was levied on, about eight years afterwards. At the time of the levy, S, was apprehensive that the company had title to or some interest in the patent, but he did not make any inquiry to ascertain what the fact was. Held, that S. had knowledge of facts sufficient to put him on inquiry as to the ownership of the patent, and an assignment of it to him by the patentees after the levy was not entitled to preference over the assignment to the company, under Rev. St U. S. § 4898, which provides that such assignment shall be void as to subsequent purchasers without notice, unless it is recorded in the patent office within three months from its date.
    Appeal from special term.
    Action by the Auburn Button Company against Philip L. Sylvester, impleaded with E. Delevan Woodruff and J. Herman Wood-ruff, to restrain Sylvester from selling or incumbering certain letters patent issued to the other defendants in 1882, and by them assigned to plaintiff in 1883. From a judgment dismissing the complaint, plaintiff appeals.
    Reversed.
    For decision on motion to dismiss appeal, see 22 H. Y. Supp. 891.
    The improvement covered by the letters patent was useful in the manufacture of buttons from plastic material. This was within the business in which the defendants Woodruff were engaged at the time the patent was issued to them. Their firm name was Woodruff Bros., and they were in 1883 succeeded in the business by the plaintiff, a corporation then created and organized for that purpose.' The defendant Sylvester claims title to the letters patent by virtue of an assignment made to him in April, 1891, by the defendant E. D. Woodruff, in the name of Woodruff Bros. The defend•ant Sylvester alone defends.
    Argued before DWIGHT, P. J., and LEWIS, HAIGHT, and BRADLEY, JJ.
    W. E. & F. E. Hughitt, for appellant.
    E. C. Aiken, for respondents.
   BRADLEY, J.

The claim of preference for the assignment made to the defendant Sylvester in April, 1891, over that made to the plaintiff in 1883, is founded upon the fact that the latter had not been recorded, and by force of the statute which provides that “every patent or any interest therein shall be assignable in law by an instrument in writing. * * * An assignment, grant, or conveyance shall be void as against any subsequent purchaser or mortgagee for a valuable consideration without notice, unless it is recorded in the patent office within three (3) months from the date thereof.” Rev. St. U. S. § 4898. The view taken of the case is such that, for the purposes of this review, it is necessary to consider no question other than whether or not the defendant was chargeable with notice of the assignment of the patent to the plaintiff at the time he afterwards took the assignment made to him. He went into the service of the defendants Woodruff in 1877, and continued in their service until in March, 1883, when the plaintiff was incorporated and organized. He then went into its service, and continued there until after its leviable property was sold by the sheriff, by virtue of an execution issued upon a judgment against the plaintiff, which sale was prior to April, 1891. When the plaintiff was organized, it became the successor of Woodruff Bros, in the business. They and Paul C. Woodruff were the corporators. The property incident to the business, including the letters patent, was then transferred to the plaintiff. The assignment to it of the patent was by a separate instrument made March 9, 1883. The defendant Sylvester was advised of the organization of the plaintiff, understood that it was the successor of Woodruff Bros, in the business, and as such he went into its service. He was also cognizant -of the fact that the machines by which use was made of the patent in the business were in the possession of and used by the plaintiff from the time of its organization. It seems quite clear from the evidence that the defendant had knowledge of facts sufficient to put him upon inquiry as to the previous transfer of the letters patent by Woodruff Bros., to whom they were issued. !The evidence on the part of the plaintiff that the defendant was informed by Woodruff of the assignment of them to the plaintiff is not to be considered upon the question, because it is in conflict with the evidence given by the defendant. He testified that, about the time the button company was formed, he was asked by J. H. Woodruff to take stock of the company for the note he held, which had been given him by Woodruff Bros, for the patent, and he declined to take the stock. That about the time of the sale, which he thinks was on the morning of the day the sale was made by the sheriff of the property of the company, he saw the notice of the sale, and then said to Paul 0. Woodruff, who was present, and the president of the company, ‘Woodruff, the patents are not in this notice,” and the latter said, “No,” and made no further reply. That he called Woodruff’s attention to the fact that the patents were not in the notice of sale, because he (defendant) was interested in the patents, and “wanted to see where they were going,—what was going to be done with them. He made no explanation to me why the patents wasn’t in the notice of sale,—none whatever. I gave him none. I asked him that question simply because I wanted to know whether the patent was going to be sold or not, there.” That some time after the sale he asked J. H. Woodruff, ‘Who owns the patent,” and that he answered, “I don’t know.” He further testified that he did not ask him if Woodruff Bros, had assigned the patent to the button company. “Nothing of the kind; never asked him that question.” He afterwards had an assignment from Woodruff Bros, to himself drawn up, and, at his request, was executed by E. D. Woodruff in the name of Woodruff Bros, by him, after inserting in it that the firm of Woodruff Bros, had been dissolved, and that the assignee, Sylvester, was to save him harmless from any suit or other liability growing out of this assignment. He does not state what inquiry he made of E. D. Woodruff on the subject of the title, or that he did or not receive any information from him about it. His testimony of the interview with him was: “I think I next made inquiry in reference to the title to this patent of E. D. Woodruff. I said to him I had inquired of J. H. Woodruff about the patent; had asked him to resign the right to me to use it; and had been unsuccessful; that he had evaded my questions as to who owned the patent.” By reference to the evidence of J. H. Woodruff, it appears that he testified that the defendant came to him, and inquired if he could not get the right, to use the patent for himself, and the witness replied' “that that could only be given by the plaintiff.”

The defendant had the position of superintendent for the plaintiff while he was in its service, and assisted in working the patent machines. It was quite reasonable for him to suppose that the company was using it pursuant to some right or title derived from Woodruff Bros., its predecessor in the business; and it appears by the remark made by him when he saw the sheriff’s notice of sale that he was apprehensive that the plaintiff had title to the patent, or some interest in it. The answer which he says was given by J. H. Woodruff to the inquiry as to who then owned the patent—that he did not know—would seem to have indicated that it was not then owned by Woodruff Bros., for, if it had been, he could not well have said he did not know. The answer would reasonably seem to have led to the further inquiry whether they had assigned it, and to whom, if the inquirer was faithfully in pursuit of information upon the subject. The notice as to the facts which put the defendant upon «inquiry was that Woodruff Bros, had assigned the patent, and yet it seems that the defendant omitted to make any inquiry to ascertain what the fact was in that respect. The doctrine applicable to the subject is such that when there is some title or interest in conflict with that which a person is proceeding to purchase, and he has knowledge of facts sufficient to put him upon inquiry as to the existence of such title or interest, he is chargeable with notice of it. In such case the presumption is either that he has made the inquiry, and ascertained such prior right, or that he has been guilty of such negligence as to deny to him the character of a bona fide purchaser. The question is in some sense one of good faith on his part. He may repel the presumption by showing that he has diligently and du'y pursued the inquiry, and been unable to ascertain that any such title or interest in conflict with that which he is seeking to obtain exists. Williamson v. Brown, 15 N. Y. 354; Ellis v. Horrman, 90 N. Y. 466. This the defendant failed to give evidence tending to prove. The fact that Woodruff Bros, had several years before assigned the patent to the plaintiff was that in respect to which the •defendant was, by the circumstances within his knowledge, put upon inquiry; and it would seem that, if he had in good faith been seeking information in that respect, he would have made an inquiry necessarily calling for it as to that fact. His omission to do so seems somewhat significant, and, to say the least, was such a want of reasonable diligence as to permit the presumption to ■remain effectual against him, and to require the conclusion that he was charged with notice of such prior assignment. As the case ■as settled represents that it contains all the evidence of the trial “pertinent to questions on this appeal,” the record does not permit the inference that any further evidence essential to the question here considered was given on the trial. For these reasons the judgment should be reversed, and a new trial granted; costs to abide the final award of costs. All concur.