Paulson v. Kenney , 110 Or. 688 ( 1924 )

McBRIDE, C. J.

It is impracticable to discuss at length the evidence offered by the parties, but taking it as a whole, we are of the opinion that every allegation of fraud is established by competent and satisfactory testimony, and that the alleged machine was utterly valueless except for the purpose of being used by Kenney as a plausible false token to obtain money from the too credulous plaintiff in this suit. It also appears that by means of this false token and by false and lying representations as to the probability of obtaining contracts for the manufacture and sale of the machine he obtained from the plaintiff several thousand dollars in money or the equivalent of money; and that while Jack Kenney and Matters and Olson were at one time and another apparently working in Paulson’s interest, as a matter of fact they were all concerned together in a conspiracy to defraud him in the interest of F. E. Kenney, and that in the end the result of their machinations was to leave him in the condition of that certain man who went down from Jerusalem to Jericho and fell among thieves.

So far as the facts of the case are concerned, we think there is little room for controversy. Paul-son was evidently thoroughly tricked and deceived and did not, even when sued for the balance of the purchase money, realize the extent of the fraud practiced upon him; and it is no answer to this to say that the machine had been patented in the United States and Canada, as it is a matter of every-day observation that worthless inventions are patented, and persons are continually being deceived by reliance upon the theory that the article so patented must have been of some value or the patent would not have issued, whereas the truth is that perhaps not one article in fifty which receives the approval of the patent office is in fact a useful invention, and many of them prove to be upon investigation, merely colorable false tokens to deceive the unwary.

The objection that Paulson did not use due diligence to discover the fraud is answered by the fact that the men who apparently were working in his interest were either too obtuse to discover it or fraudulently refrained from giving him the information which they should have obtained. A careful reading of the testimony indicates that prior to this purchase not a single really competent mechanical engineer had made a thorough examination of the machine. Several men who had picked up odds and ends of knowledge of mechanical engineering and loggers in the woods who had seen donkey-engines at work seemed to have examined it; but its whole theory was based upon a violation of the laws of nature, the laws of mechanics, contradicted the doctrine that action and reaction are equal, and has no more foundation in fact than the idea of perpetual motion. Besides", it is a poor answer to a charge of fraud for the wrongdoer to urge that the person defrauded should have watched more closely in order to avoid being the victim of his trickery.

Another argument urged is that, the judgment in .the action at law having been the result of a verdict of a jury, the court cannot, under subdivision 3-c of Article YII of the Constitution, as amended in 1910, re-examine it in this suit. We do not think it was- the intent of this subdivision to interfere with the long-established equity jurisdiction of courts to set aside and cancel judgments fraudulently obtained, when such fraud was not discovered or an issue at the time the judgment was rendered.

It is further urged that the plaintiff should not have relief in this matter because he has not returned or tendered to return the Canadian patent and the machine turned over to him by Kenney. The Canadian patent is valueless; the machine is valueless, a mere false token which could serve no honest purpose; and the defendant has, or had, one hundred times the value of it, as junk, in what he has fraudulently received. The American patent has been returned to him and is in court, subject to his demand. The court has been more generous than just with him already in not requiring him to return the money he has already fraudulently obtained.

As both parties have appealed here, and the decree below is affirmed so that neither party can be said to have prevailed, neither party will recover costs in this court.

The decree is affirmed. Affirmed.

Burnett, Band and Brown, JJ., concur.