Case Name: Samuel T. McDougall, Respondent, v. Charles E. Fogg, Defendant and Appellant
Court: New York Superior Court
Jurisdiction: New York
Decision Date: 1858-01-30
Citations: 2 Bosw. 387
Docket Number: 
Parties: Samuel T. McDougall, Respondent, v. Charles E. Fogg, Defendant and Appellant.
Judges: 
Reporter: Reports of cases argued and determined in the Superior Court of the city of New York
Volume: 15
Pages: 387–391

Head Matter:
Samuel T. McDougall, Respondent, v. Charles E. Fogg, Defendant and Appellant.
1. In an action upon a contract, by which the plaintiff covenants " to improve machinery for manufacturing gas, and to obtain a patent or patents therefor, and to assign to the defendant one undivided half of said patent or patents,” and by which the defendant covenants “ to pay the plaintiff $1000 when the patent or patents are issuedwhich action is brought to recover the $1000, after the plaintiff has obtained a patent for an alleged improvement, and assigned an undivided half of it to the defendant: it is competent for the defendant to allege, in his answer, and prove at the trial, “ that the alleged improvement in said patent was worthless; had never been reduced to practice, and had been known, and tried, and abandoned as worthless, before the patent was issued to plaintiff.”
2. Held, that the rejection of such evidence entitled the defendant to a new trial, he having excepted to its rejection.
(Before Hoffman and Pierrepont, J. J.)
Heard, January 14;
decided, January 30, 1858.
This is an appeal by the defendant, from a judgment entered in favor of the plaintiff, on the report of a referee. The action was brought to recover $1000, and upon an agreement in writing, dated February 5, 1855, signed and sealed by both parties, in these words, viz.:—
“ Charles E. Fogg agrees to advance Samuel T. McDougall $500, to improve machinery for manufacturing gas, and to obtain a patent or patents on the same; he also agrees to pay Samuel T. McDougall $1000 when the patent or patents are issued.
“ In consideration for the above advance and payment, Samuel T. McDougall agrees to improve machinery for manufacturing gas, and obtain a patent or patents therefor, and to assign to Charles E. Fogg one undivided half of said patent or patents; and he further agrees to leave $500 of the last payment in the business as capital, Charles E. Fogg paying a like amount ($500) as capital: said capital to be used for joint account in selling patent rights and manufacturing and selling machines.
“ Charles E. Fogg reserves the right to sell his interest in said invention to any person complying with the terms and conditions of this agreement.”
The report of the referee states, not only the facts found by him, and his conclusions of law thereon, hut it states the decisions made by' him during the progress of the trial, to which the exceptions were taken, which alone are considered in the opinion, of the Court delivered at General Térra.
The report of the referee, after stating the making of the agreement above set forth, and the substance of it, is as follows, viz.:—
“ That subsequently said plaintiff did obtain a patent for an improvement in the discovery for the manufacture of hydro-carbon vapor, (which was admitted on the trial to be an inflammable gas,) and did assign the one-half of his interest therein to'said defendant, which assignment was duly recorded in the United States Patent Office at Washington, and that said defendant did pay to the plaintiff the sum of five hundred dollars, but made no other or further payment to him.
The defendant on the trial insisted, as a matter of law, that the plaintiff, in order to sustain his action, must show that he had actually improved machinery for manufacturing gas, and that the alleged improvement of plaintiff was useful, upon which proposition of law I ruled and decided that the issuing of the patent was prima facie evidence of utility.
“The defendant likewise insisted, that the plaintiff must prove that the patent had been reduced to practice, which proposition of law I overruled. The defendant likewise, at a subsequent stage of the case, offered to prove that the alleged improvement in said patent was worthless, had never.been reduced to practú^ and had been known, and tried, and abandoned as worthless before the patent was issued to plaintiff, which offer I overruled unless the defendant should first prove false representations of plaintiff alleged in the answer.
“ The defendant then offered evidence tending to show, that the defendant and plaintiff had, after the making of the contract above referred to, settled the same by the payment of the five hundred dollars above mentioned; and that by a parol agreement between the parties, the said contract was discharged, and the defendant released therefrom; and that the said five hundred dollars so paid, was in full settlement of all plaintiff’s claims upon defendant, arising out of the matter of this agreement. And upon this point, without deciding as a matter of law whether the said contract could be legally rescinded by such an agreement in parol, I find, as a matter of fact, that although there is considerable evidence tending to that point, yet, that it is not sufficient to warrant me in coming to the conclusion, that the said contract was thereby rescinded or discharged, or intended so to be, by the parties. I further find that no special damage to the plaintiff has been proved, on the trial of this action.
“ And upon the above facts, so found by me, I find as a matter of law, that plaintiff is entitled to recover from the defendant the said sum of one thousand dollars, so by him contracted to be paid on the assignment of the one-half of said "patent, with interest thereon, from the date of said assignment, August 27, 1855, to the date of this my report, amounting in all to one thousand one hundred and seventeen dollars and sixty-three cents,
($1117*)
“ All of which is respectfully submitted. Dated, N. Y., April 30, 1857.”
“ The false representations of plaintiff alleged in the answer,” referred to in the referee’s report, are to the effect, that before the agreement was made, and “ some time in the autumn of 1854, the plaintiff called upon the defendant, and-stated that he had invented a new apparatus, or machine, for manufacturing gas from a fluid called Benzole, and represented to this defendant that his said invention was of immense value, and that he was about to procure a patent for the same.
The answer alleges, that the defendant relied on these representations, and was induced by them to enter into the agreement, and that “ they were utterly false and made without foundation.”
When the plaintiff rested, the defendant moved to dismiss the complaint, on grounds stated in the opinion of the Court. The motion was denied, and the defendant excepted. He also, in due time, filed various exceptions to the decision of the referee, and the conclusions of law included therein.
Judgment having been entered upon the referee’s report, the defendant appealed from it to the General Term.
A. B. Capwell, for appellant, contended that the plaintiff, in order to recover, must prove, affirmatively, that he had “improved machinery for manufacturing gas,” and, also, that he had “ obtained a patent or patents on the same.”
That the issuing of the patent was not prima fade evidence of the fact, that the plaintiff had improved machinery for manufacturing gas, or of the utility of the alleged invention. (Curtis on Patents, § 363, .p. 406; 2 G-reenleaf’s Ev. §§ 493, 494, p. 407; Earle v. Sawyer, 4 Mason’s R. 6.)
That the referee erred in excluding evidence to show that the alleged improvement was worthless, that it had never been reduced to practice, but had been known, and tried and abandoned, as worthless, before the patent was issued.
C. A. Nichols, for respondent.
I. The defendant makes, in his answer, no issue as to the novelty or usefulness of the invention.
II. The written agreement between the parties does not require that the invention should be useful, or reduced to practice, and no warranty as to a patent can be implied where there is a written agreement of sale. (Van Ostrand v. Reed, 1 Wend. 432; Peltier v. Collins, 3 Wend. 459.)
III. The finding of the referee is conclusive, as to the question of fact. (Woodin v. Foster, 16 Barb. R. 146.)

Opinion:
By the Court. Pierrepont, J.
The party who seeks to recover upon a contract containing mutual and dependant covenants, must show that he has performed his part of the agreement.
This contract states, that the plaintiff " agrees to improve machinery for manufacturing gas,-to obtain a patent therefor, and to assign one undivided half to the defendant."
The plaintiff gave evidence tending to show, that he had procured a patent, and had assigned one-half of the same to the defendant, and that the defendant had paid him on account of this contract $500. The defendant's counsel moved to dismiss the complaint upon various grounds; and among others, that the plaintiff had given no evidence tending to show that he had " improved machinery for manufacturing gas," as stipulated in the contract.
The referee held, that the obtaining of a patent was prima fade evidence of the utility of the invention. . The defendant then " offered to prove, that the alleged improvement in said patent was worthless, had never been reduced to practice, and had been known, and tried, and abandoned, as worthless, before the patent to the plaintiff was issued."
This offer the referee rejected, unless the defendant should first prove the false representations, alleged in his answer; thus virtually ruling, not only that the patent was prima, facie evidence that the plaintiff's invention was an improvement, but that it was conclusive, and of such a nature that no evidence could be given to rebut it, unless fraud was first shown.
We conceive the law to be quite otherwise. In the case of Cross v. Huntley, (13 Wend. 385,) the suit was upon a note given on the sale of a patent right, for an improved washing machine. The defence was, that the patent was of no validity, and, therefore, the note was without consideration. Witnesses were called to testify, that they had seen washing machines in use, prior to the granting of these letters patent, which, in material parts, corresponded with the machine in question. The defendant contended, that the machine was not a new invention. Mr. Justice Nelson held, that the patent issued was invalid, and that the note given was without consideration, and that the plaintiff could not recover.
So in the case of Head v. Stevens, (19 Wend. 411,) the suit was upon several promissory notes, the consideration of which was the assignment of a patent right. The defendant was allowed to show, what the defendant in this case, in order to defeat a recovery, proposed, but was not permitted, to show. There are other like decisions, made by the Courts of this State, by the Courts of other States, and by the Courts, of the United States. (Wright's Ohio R. 306; 11 Ohio R, 411; 4 Washington C. C. R. 13.)
The evidence offered and excluded, if uncontradicted, would establish, that the plaintiff had not improved machinery for manufacturing gas, and that the patent, the undivided half of which he had assigned, was not a patent of improved machinery; and that, as a necessary consequence,- the plaintiff had not performed the covenant on his part—full performance of which was a condition, precedent, to his right to maintain this action.
The judgment should be reversed, and a new trial granted, with costs to abide the event.
Ordered accordingly.