Chemical Electric Light & Power Co. v. Howard

Knowlton, J. The promissory note upon which this suit is brought was only a part of a contract, of which the rest appears in the writing called the Howard Agreement, executed on the same day. The defendant, at the trial, introduced evidence tending to show that the English Handford patent, referred to in the contract, was invalid by reason of a prior publication “of that portion thereof relating to the use of bichromate of soda in galvanic batteries in an English patent of one Highton,” in 1871. So far as appears by the reference to the patent in the .several contracts before us, this use is all that it professed to cover, and if there was such prior publication it is void. Even [359] if it purported to include an additional invention which is new and useful, under the English law, which differs in this particular from the American, a prior publication of this part would render the whole invalid. Morgan v. Seaward, 2 M. & W. 544. Brunton v. Hawkes, 4 B. & Ald. 541. We must assume, therefore, that the jury might have found the patent to be void because the invention was not new. The only consideration for the defendant’s promise to pay the • one thousand dollars was the plaintiff’s agreement to assign this patent; and it has often been held in this Commonwealth, that a promissory note, given for an assignment of an invalid patent, is without consideration. Dickinson v. Hall, 14 Pick. 217. Lester v. Palmer, 4 Allen, 145. Nash v. Lull, 102 Mass. 60. Harlow v. Putnam, 124 Mass. 553. If this had been an American instead of an English patent, there would be no doubt that the evidence offered, if convincing, would have shown the note to be worthless for want of consideration. But the English courts have given to assignments of patents, and to contracts purporting to grant licenses and convey rights under patents, an interpretation different from that which is given to them here. Perhaps from a disinclination to go so far as the American courts in holding that a vendor impliedly warrants his title to a chattel sold while in his possession, and perhaps in part on account of the practice there in relation to issuing patents, the courts in England hold that one who purchases a patent, or rights under a patent, in the absence of fraud and of express stipulation, must be presumed to look to the existence of the patent as a document which prima facie gives a right, rather .han to the facts behind the patent upon which its validity depends. Hall v. Conder, 2 C. B. (N. S.) 22, 53. Smith v. Neale, 2 C. B. (N. S.) 67. Noton v. Brooks, 7 H. & N. 499. Trotman v. Wood, 16 C. B. (N. S.) 479. Lawes v. Purser, 6 El. & Bl. 930. Adie v. Clark, 3 Ch. D. 134. Of such a contract Lord Campbell said, in Hall v. Conder, “ The thing contracted for here was a real patent under the Great Seal, although, by reason of circumstances not within the knowledge of either party at the time of the contract, it might ultimately prove valueless.” See also cases in which it is held that one contracting in reference to a patent is estopped to deny [360] its validity. Bowman v. Taylor, 2 A. & E. 278. Hills v. Laming, 9 Exch. 256. Cutler v. Bower, 11 A. & E. (N. S.) 973. Wiles v. Woodward, 5 Exch. 557. The subject matter of the contract in the present case is a patent which can have no existence outside of the country in which it was granted. Its nature, and to a great extent its value, depends upon English law. Under the decisions of the English courts, it is so far property that it may constitute a valuable consideration, and may be a subject of a valid contract, even if void for want of novelty. We are of opinion, therefore, that the evidence offered would not have warranted a verdict that the note was without consideration. The contract contains this clause: “ It is understood that said English patent, No. 1,956, is in full force and effect, otherwise said Howard is to be relieved from the payment of said one thousand dollars in cash under this agreement.” The plaintiff contends that the first part of this clause means no more than that all the formal requirements of the law in relation to granting patents had been complied with. The defendant contends that the words “ full force and effect ” relate, not merely to the form of the patent, but to its substance and validity. We must look carefully at the situation of the parties when the contract was made, to see if we can ascertain their meaning. The plaintiff had just purchased of Jarriant his patent for France and for England, with such rights as could be conveyed to the use of the invention in other parts of the world, and had paid him therefor three hundred and ninety-two dollars. The entire expense incurred by the plaintiff in obtaining these rights was about one thousand dollars. The last clause of the contract indicates that the defendant was the plaintiff’s business and financial manager, and was presumably familiar with this part of its business. The plaintiff retained the invention for use in the United States, and arranged to apply for a patent here, which the bill of exceptions shows that it afterwards obtained. It agreed with the defendant to convey him the patent for England for one hundred shares of the stock of the plaintiff corporation, which were then delivered, and for one thousand dollars cash, to be paid according to the terms of the note, and for an agreement by the defendant to transfer to it two patents, for [361] which the defendant had already applied in the United States, and which he was to pay the expense of obtaining, and for an agreement to make no claim for services as business manager of the plaintiff up to May 1,1886. It can hardly be supposed that either of the parties was in doubt as to there being an English patent in proper form, upon which the required fees had been paid to the government; for the purchase had just been made through an agent sent from America to transact the business, and the last fees due upon the patent had been paid about two years before. But they may well have been doubtful as to the “force and effect ” of the patent in securing the exclusive rights for which the defendant wanted it. The plaintiff, in his argument, seems to disregard the ordinary meaning of the words in question. The existence of the patent, as a document formally correct, is assumed throughout all the contracts. The provision as to its “ force and effect ” relates to something more. Upon this question of interpretation, the fact that the parties were Americans, contracting here in reference to property in a foreign land, is proper for consideration. They may be presumed to have known that an American patent, void for want of novelty, would not even be a sufficient consideration for a promise. This stipulation seems intended to require a patent which should be of “ effect,” in a sense that an American patent must be to obtain recognition in our courts. Moreover, it is to be observed that this provision relieves the defendant only from the payment of the money. It leaves the plaintiff to retain the one hundred shares of stock, and the two American patents, and the defendant’s services as manager. If the parties had been providing for a mistake as to the existence of the patent as a document, or for a case where a patent had become void for non-payment of fees, they naturally would have contracted for a restoration to the defendant of the entire consideration. The provision that the defendant should pay an additional sum if the patent secured “ the exclusive use of bichromate of soda in all galvanic cells wherein soda can be used,” should not be overlooked. We have not the patent before us, and have no means of knowing its contents except as they are referred to in the several contracts, and so we can only draw inferences doubtfully. But it seems probable that the parties, not knowing [362] whether the patent was in force and effect in reference to the public use of the invention named in it, and of other similar inventions, intended to stipulate that, if it should prove to be void for want of novelty or for other like cause, the defendant should lose all that he had given for it in stock, patents, and services, but should not pay the one thousand dollars in cash; and that if, on the other hand, it should not only secure the use of bichromate of soda in the particular way described in it, but should also cover the use of it in galvanic cells in every possible way, he should pay an additional sum. The evidence in reference to the invalidity of the patent should, therefore, have been submitted to the jury. The contract of August 5, 1886, called the Howard Release, and the acts of the parties on that day and subsequently, were equivalent to a performance by the plaintiff of the contract of April 23,1886. The delivery to Kidder, Peabody, and Company was assented to by the defendant, and no fraud was practised upon him in connection with it; but his execution of the release puts him in no worse position than if the English patent had been assigned to him in the manner contemplated by the first agreement. If that had been done, he would still have been entitled to be relieved from paying the note, if it appeared that the patent was invalid. The exception in regard to the evidence of a decision in Canada was waived at the argument. We discover no other error in the rulings at the trial. The bill of exceptions does not show that evidence was introduced which would have warranted a finding that the defendant was induced to execute the original agreement by fraud. We do not understand that any question was raised in regard to the cost of obtaining the English patent, except whether the reasonably necessary expenses of transacting the business, beyond the payments to the inventor, to the patent solicitors, and to the consul for fees, should be included. By.the ruling of the court, that' question was properly answered in the affirmative. Exceptions sustained.