Pacific Iron Works v. Newhall

Hinman, C. J. This is a bill to foreclose a mortgage upon a steam engine and the machinery connected therewith. The mortgage was made to secure certain notes to the petitioners, the consideration of which was the sale to the respondent of the engine in question. The petitioners furnished the respondent with the engine under a contract for that purpose. They were manufacturers of engines, and they represented that they were manufacturing them with an automatic or adjustable cut-off, of which one N. T. Green held letters patent; that they had a license from him to apply the cut-off to engines constructed by them ; that the invention was valuable,' and would be especially so to the respondent in his manufactory ; and they subsequently submitted to the respondent a proposal in writing to build and furnish him an engine of the style and kind known as Green’s patent cutoff, of certain dimensions, for the sum of twenty-five hundred dollars, for which notes were to be given.. This proposal was accepted and the engine furnished, and the notes with the mortgage in question were given therefor. It now appears that Green was not the inventor of the cut-off, and the respondent has been enjoined against using it by process issuing from the Circuit Court of the United States upon the application of one Corliss, who appears to be the inventor and the rightful patentee, and upon whose invention the patent issued to Green is an infringement; and the respondent, by reason of being deprived of the use of the cut-off so furnished him, is found to be injured to the amount of eight hundred dollars, which sum he claims the right to off set against the notes by way of recoupment. The equitable right of the respondent to this deduction upon the notes is quite obvious, unless there is some stubborn rule which cannot be overcome to prevent it. This cut-off, as it is called, is, we suppose, an adjunct to the engine, which may be used or not according to the pleasure of the owner, and as such is entirely distinct from the engine ; [76] and the value of it admits of estimation as much as any other machine. The petitioners claim that the contract between the parties was reduced to writing in the proposals which were accepted by the respondent, and that the representations made previously to these proposals are not proper to be proved as any part of the case. We think this claim not well founded. The contract itself was never reduced to writing. The acceptance of the proposals does • not appear to have been in writing. The proposals seem rather to have been intended to give the terms upon which they would manufacture for the respondent an engine of a certain description, and to give the dimensions of the different parts, and the power of the machine, with more precision and detail than could easily be remembered in so complicated a machine, and not as a statement of all the terms of the contract itself. Had it been intended as the only’ evidence of the contract it would have been signed by the parties. It was therefore merely the proposal of the terms upon which they would build for the respondent an engine such as they had previously represented that they were manufacturing and of the style and dimensions mentioned in the writing. But even in the writing they describe the engine as being known as “ Green’s patent cut-off.” We have no doubt therefore that the contract was by parol, and as it is expressly found by the court to have been induced by the representations made previously to the proposal, the petitioners ought to be bound by those representations as a part of it. The cases, therefore, which are cited by the petitioners, to show that an agreement afterwards reduced to writing can be proved only by the wi’iting, have no application here.- Taking the representations then as a part of the case, it appears that there was a sale of an engine to be used by the respondent in his manufactory, with a cut-off invented and patented by Green, which the petitioners were licensed by him to attach to the machine, and the respondents would have the right to use. Of course the cut-off would be wholly useless unless the respondent had the right to use it, and although this right is not expressly given by the terms of the [77] contract, yet the fact that it was purchased by the respondent and manufactured by the petitioners for use in the respondent’s manufactory, necessarily implies it. Especially is this so when taken in connection with the representation that it would be valuable to the respondent in a greater saving of coal than by the use of any other device. This representation of its particular usefulness to the respondent in his manufactory, connected- with the fact that it was expressly made for this particular use by the petitioners, brings the case within that class of cases where it is held that a purchase shown to have been made for a particular purpose, communicated at the time to the vendor, implies a warranty that the goods furnished for such a purpose shall be reasonably fit for and shall answer the object for which they are purchased. Without resorting therefore to the doctrine that in the sale of a patent right, or of a patented article, there is an implied warranty of the validity of the patent, it is enough for the purposes of this case that there was in point of law a warranty that the respondent would have the right to use “ Green’s patent cutoff,” in connection with the steam engine sold to him by the petitioners. Williamson v. Allison, 2 East, 446; Jones v. Bright, 5 Bing., 533; Brown v. Edgington, 2 Man. & Gr., 279 ; Beals v. Olmstead, 24 Verm., 114. There was in this case something more than the sale of a patented article of which the patent was void. That would not deprive the purchaser of the use of it. But here was the sale of a patented article illegally manufactured by the petitioners, which they had no right to make or sell, though they represented that they had the right, and the use of which by the vendee was also illegal, and deprived him of any benefit arising from his purchase, and moreover subjected him to damages and costs if he used it. The petitioners are seeking to recover for the. sale of an article where there is both a failure in the title to use it and illegality in the sale itself. We are of opinion, therefore, that to the extent of the value of the cutoff in question, there was a failure in the consideration of the notes described in the mortgage, and to that extent there should be a deduction from the amount found due to the peti [78] tioners. The right to make this deduction under such circumstances has not been denied by the petitioners. See Avery v. Brown, 31 Conn., 398. The finding of the court does not state in terms what is the precise value of this cut-off in connection with the engine in question. The language is, that the respondent suffered damage to the amount of eight hundred dollars by reason of his being deprived of the use of the cut-off. We are inclined to think that by this it was intended to find that the value of the engine without the cut-off was eight hundred dollars less than it would have been had the sale of the cut-off been legal, so that the respondent would have had the right to use it, as contemplated and intended at the time oí the sale. If we are correct in this there was a failure in the consideration of the whole purchase to that extent. And on this ground we advise the superior court to deduct this sum from the amount of the notes and to pass a decree of foreclosure in favor of the petitioners for the balance. In this opinion Butler and Carpenter, Js., concurred; McCurdy and Park, Js., dissented.