Patent Title Co. v. Stratton

RINER, District Judge (orally). In this case a motion to strike out ■a portion of the first defense set out in the answer and a demurrer to the second defense set out in the answer were filed on the 9th of June, 1898. This motion and demurrer were argued both orally and by brief in July, and the court, after an examination of the numerous decisions cited in the briefs, has reached the following conclusions : 1. That the instrument sued on is a negotiable promissory note, and, having been made in Colorado, is to be governed by the statute of Colorado, instead of the general principles of the law merchant; that the plaintiff, having received the paper from a bona fide holder, acquired a good title thereto. 2. The fact that the note does not contain the words “to order” or "to bearer” does not affect its negotiability. The statute does not require the use of these or similar words to make the instrument negotiable. It becomes negotiable by effect and operation of law, and the assignment transfers the interest in the same manner as bills of exchange. 3. The defendant had 10 months in which to determine whether he would keep the stock and pay the money, or return the stock and thus discharge the note, and his failure to return the stock within the time provided in the contract must be held to be an election to keep it and to pay the money. á. The answer shows that the defendant had knowledge of the fraud of which he complains for more than a year prior to the 12th of March, 1898. The rule is well settled that a party must elect as soon as he discovers the fraud practiced upon him whether he will abide by the contract or not. He cannot adopt the contract if it proves to be beneficial and profitable, and also have the right to repudiate it if it proves to be a bad speculation. 5. The second defense in the answer is insufficient, because the statements and representations complained of do not relate to past or existing material facts, but rather to the supposed value of the inventions, and to what could be done with them in the future. The demurrer to the second defense will be sustained. The conclusion reached by the court upon the demurrer necessarily disposes of the motion to strike, and that will also be sustained.