Van Ostrand v. Reed , 1 Wend. 424 ( 1828 )

By the Court,

Savage, Ch. J.

The questions which I propose to consider are, I. Was the giving the notes equivalent to the payment of money 1 II. Was there fraud in the transaction of selling the patent right 1 and III. Was the action sustained upon either of the special counts ?-

I. There are cases, no doubt, where the giving a negotiable promissory note is equivalent to the payment of money. Thus, where a surety gave his own note, which was received in satisfaction of the debt of the principal, the surety recovered the amount of the note, as so much money paid for the use Of the principal. (Barclay v. Gooch, 2 Esp. 571, recognized as good law in Cumming v. Hackley, 8 Johns. R. 206.)

So where the surety gave his note in satisfaction of a judgment rendered against him and the principal, the giving the note was considered as payment of so much money, and the surety recovered as for money paid. (Witherby v. Mann, 11 Johns. R. 518. See also 3 Mass. R. 403.) So where an agent discharged a debt due to his principal, by paying a debt of his own with it, the agent was held liable to his principal, for the amount thus appropriated, as money had and received to his use. (Beardsley v. Root, 11 Johns. R. 464.)

It has also been held that the taking a note of a third person by the sheriff upon an execution, by the consent of the plaintiff, as payment of the execution, is equivalent to the payment of money. (Clark v. Pinney, 6 Cowen, 301. Armstrong v. Garrow, 6 Cowen, 470, 1.) But no case has been cited to shew that the giving a negotiable promissory note is the payment of money by the maker to the payee. In no case has the giving a note been held equivalent to the payment of money, unless the, note was received as such, in payment or discharge of a debt, or liability of the parly sought to be charged:

The conveyance of land received in discharge of a money debt, is equivalent in certain cases to payment in money. (7 Cowen, 668.)

Had the notes in question been given to a third person, in payment and discharge of a debt due by the defendants to such third person, then the case would have come within previous decisions.' Or had the note due on the 1st January, 1827, been transferred and paid, or even transferred to an innocent endorsee, before suit brought, there would be a strong analogy to decided cases. But I cannot find that the giving a note ever has been considered as between maker and payee, the payment of money by the former to the latter.

If such a note should be given without consideration, there is a remedy. As between payee and maker, the want of consideration is a good defence. If the maker is apprehensive that such a note, given by him, will be negotiated, he may procure an injunction from chancery in a proper case, restraining the transfer of the note. Or when such a note shall be paid to an innocent holder, the amount may be recovered back from the party who improperly obtained the note. But in my judgment, the mere giving a note cannot be considered payment of the very money, for which such note is given as a security, so as to justify a recovery of it by the maker against the payee. If i am correct in this position, there has been no money paid previous to the commencement of this suit, and therefore the plaintiffs cannot recover upon the common count.

II. Nor can I see that fraud has been proved. Fraud is never to be presumed, but must be shewn by proof. The circumstances attending the execution of the deed of transfer, look suspicious; but when an attempt was made at explanation, by shewing Ames’ authority to his co-partners to sign his name, it was required that he should be called; and when he was called, it was objected that there should be a written authority, under seal, produced, and so the judge decided. An authority to execute a deed, must be given by deed, to render the deed valid. (Com. Dig. Attorney, C. 5. 5 Bin. 615.) But the question before the court and jury was as to the fraudulent representations or conduct of the defendants. It had been already proved, that the defendants had offered to have the conveyance executed in a manner that should be satisfactory. It is worthy of consideration also, that the property to be conveyed, was only a chattel interest; that to convey such an interest, a seal is not necessary; and that the 4th section of the act of congress, of Feb. 21, 1793, xvhich í authorizes an inventor to assign his interest in his invention, does not require the assignment to be made under seal. I am inclined to the opinion, therefore, that the testimony of Ames should have been received.

III. It becomes necessary, then, to enquire whether the plaintiffs have made out a case under either of their special counts. The first count states substantially, that the defendants assumed and promised that the machine was a useful improvement; and that it was not, in fact, a useful improvement. This was fully proved; but the question at the trial was, whether parol proof could be given of what was said previous to the execution of the deed. On that point, it seems to me, that this is a case where the whole contract must be presumed to be reduced to writing. The instrument, in truth, does not contain any thing about the contract, except a bare assignment of the patent right. It contains no warranty that the machine was a useful improvement. Suppose one man sells to another a horse; he represents him sound, and gentle, and useful; but a bill of sale is given in writing, which contains a bare transfer of the animal, without any warranty or engagement as to the soundness or good qualities of the horse; could the purchaser in that case go back and prove the representations and assertions made before the execution of the bill of sale 1 I think not. Where a contract has been consummated by writing, the presumption is, that the writing contains the whole contract. If I am correct in this, then the plaintiffs have failed to prove the warranty. On the main question, whether the improvement was a valuable one, I am of opinion, that the evidence was in favor of the plaintiffs. The machine they purchased, was to be worked by hand, and they proved that amachine made according to the specification was worthless. This was not contradicted by proving that a horse power machine under the same patent, was a valuable improvement; but this evidence was irregularly before the jury, a warranty not being properly proved.

I am therefore, of opinion, that a new trial should be granted.