Chope v. Detroit and Howell Plank Road Company.

Co., 17 N. J. Eq. 75. Contra, Middleton v. Flat River Booming Co., 27 Mich. 533; Geiger v. Filor, 8 Fla. 325; Laughlin v. Lamasco, 6 Ind. 223; Williams v. N. Y., etc., R. R. Co., 18 Barb. 222; Bell v. O. & P. R. R. Co., 25 Penn. St. 161; Com. v. Upton, 6 Gray, 473; Robinson v. Baugh, 31 Mich. 295.

GRAVES, J. This is a suit in equity in the name of the State to enjoin the setting up a new toll gate structure in place of a former one removed by the company.

The complaint is, that if made, the intended erection will be a public nuisance. After answer and proofs the court below dismissed the cause, and from this decree an appeal was taken.

[Omitting a minor point.]

When the State gave the company the right to build their road from a point in the city, and the right to erect gates according to their reasonable discretion, but subject to the condition that none should be placed in the city, it contemplated the city as it then was in respect to limits, and meant that the privilege given within the city should not extend so far as to allow gates to be set up there, and on the other hand, that the restriction should be confined territorially to the then fixed and known bounds of the city. The State could not have designed that as fast as it might enlarge the city boundaries, the defendant's franchise covering the right to place toll-gates should be correspondingly annihilated and the gates themselves, thereby brought within the limits, be instantly converted into a public nuisance. Hall v. The State, 20 Ohio, 7; City of Somerville v. O'Neil, 114 Mass. 353; Barber v. Rorabeck, 36 Mich. 399. It is noteworthy in this connection that it is the State and not the city which complains. In view of the power and privilege given by the charter, the gate ought to be regarded for the purpose of this case as though the site had been directly designated by the State.

The company orignally chose it in the exercise of a discretion the State had conferred, and this discretion does not seem to have been improperly used. Certainly for many years the State acquiesced. The privilege has never been withdrawn and the charter has not expired. The impediment could not have become unlawful by the mere flow of time. The fact that the State itself tolerates railroad crossings near the place and has thereby consented to the incidents which naturally happen there in consequence of the concentration and combination of different ways will hardly entitle it VOL. XXVI.- 65

Cranson v. Smith.

to turn round and assail the defendant's gate as a public nuisance. This privilege of crossing was granted to two of the three roads possessing it sometime after the defendants located their gate, and if either franchise ought to be modified by conditions or give way on the ground that the coterie of interferences is injurious to the public, it is not certain that it should be that of the defendants. But the case does not prove that the gate or the railroads or all together make a public nuisance there.

The plan of structure does not appear to be one not competent to be adopted in the exercise of that discretion the defendants possess under their charter. What the State authorizes it cannot prosecute as a nuisance. Among other authorities see First Baptist Church v. Utica & Schenectady R. R. Co., 6 Barb. 313, and cases; Hentz v. Long Island R. R. Co., 13 id. 646; People v. Denslow, 1 Caines, 177; Cooley's Const. Lim. 594.

The decree of dismissal must be affirmed with costs against the relator.

CRANSON V. SMITH.

(37 Mich. 309.)

Constitutional law — patent right notes.

A statute requiring notes given for transfers of patent rights to state the particular consideration, is a violation of the Federal Constitution, as conflicting with the exclusive power of Congress to regulate patents and as imposing conditions on the transfer of that kind of property which do not apply to other kinds. (See note, p. 517.)

A

SSUMPSIT. The opinion states the facts.

Henry C. Briggs, for plaintiff in error. A statute interdicting that which Congress in regulating commerce has permitted cannot be sustained. Brown v. Maryland, 12 Wheat. 419; State v. Robinson, 49 Me. 285; People v. Lawrence, 54 Barb. 589; Cooley's Const. Lim. 581, 587. Statutes imposing conditions on the transfer of patent right notes are unconstitutional. Gilman v. Philadelphia, 3 Wall. 713; Helm v. First Nat. Bank of Huntington, 43 Ind. 167; 13 Am. Rep. 395.

T. G. Smith, for defendant in error. A patent right can be col

Cranson v. Smith.

laterally attacked in State courts for invalidity, fraud and want of value, as in an action on a bond or note given for it. Page v. Dickerson, 28 Wis. 694; 9 Am. Rep. 532; Rowe v. Blanchard, 18 Wis. 441; Head v. Stevens, 19 Wend. 411; Cross v. Huntly, 13 id. 385; Rich v. Hotchkiss, 16 Conn. 409; Middlebrook v. Broadbent, 47 N. Y. 443.

CAMPBELL, J. Cranson, who was a bona fide holder of a promissory note given for the purchase of an interest in a patented invention, who had notice that such was the consideration, but who had no reason to believe there was any fraud in the transaction, brought suit on the note against the maker, and was defeated on the ground that the statute of this State, which requires such notes to show upon their face the fact that they were given for patent rights, had not been complied with.

The court below refused to charge that this statute was invalid, and directed the jury to follow its provisions.

The statute, approved April 13, 1871, is entitled as follows: "An act to regulate the execution and transfer of notes or other obligations given for patent rights." It consists of two sections. The first section requires all notes and other negotiable or assignable instruments, the consideration of which, in whole or in part, consists of the right to make use of or vend any patent invention, to have prominently and legibly written or printed on its face the words "given for patent right." Such notes are made subject to the same defense in the hands of every holder as exist against the original holder; and notes without this inscription are equally subject to such defense when the holder knows they were given for such consideration.

The second section makes it a misdemeanor to take, purchase, sell or transfer any such note not so inscribed, knowing it to have been given on such consideration.

The general laws of Michigan concerning negotiable paper correspond with the law merchant, and protect all bona fide holders for value from defenses of which they have no knowledge.

The plain and avowed purpose of the statute of 1871 is to impose conditions on the transfer of patent rights, which do not apply to any other kinds of property, thereby interfering with the value and enjoyment of such rights, and treating them as a species of interests to be regarded with disfavor.

Cranson v. Smith.

The subject of granting patents and regulating the rights of patentees has been placed by the Constitution of the United States in the control of Congress. It is for that body alone to deterinine to whom and on what conditions they shall be granted, and how the patented privileges are to be transferred or disposed of. Where any right or privilege is subject to the regulations of Congress it is not competent for State laws to impose conditions which shall interfere with the rights or diminish their value. In those cases where the congressional power is lawfully exercised it is supreme. In the absence of any policy to the contrary, the transfer of such rights may follow, as it usually does, the State rules applicable to similar property, as to sales or inheritances. But any attempt to discriminate against it is a direct invasion of the authority of the United States, and is invalid.

This doctrine is so elementary that reference to particular cases seems needless. It has been applied to interference with exports and imports, to navigation laws and the instruments of commerce, to the taxation of government instrumentalities, to discriminating privileges against persons or interests protected by the Constitution, and to numerous unclassified cases involving conflicts of authority. In many instances there may have been difficulties in determining whether any real conflict existed, but where it is recognized as existing there can be no doubt as to the immunity of the rights assured by the laws of the United States.

It is unfortunately true that many frauds are committed under color of patent rights, and that the patent laws are not so framed as to secure the public from being cheated by worthless inventions. The State may punish frauds upon its citizens committed by any manner of false pretenses. But it cannot lawfully assume that the rights granted by the United States are presumably fraudulent, nor can it punish frauds committed by persons holding those privileges on any different grounds from others. Such presumptions are in plain violation of every principle of justice and constitutional obligation. Miller v. Finley, 26 Mich. 249; s. c., 12 Am. Rep. 306.

While we cannot but recognize the magnitude of an evil which has brought patents into popular discredit, and has provoked legislation in several States similar to that of Michigan, we cannot on the other hand fail to see in these laws a plain and clear purpose to check the evil by hindering parties owning patents from dealing with them as they may deal with their other possessions. The

Cranson v. Smith.

Constitution of the United States not only allows, but favors, the special protection of inventors. The measure of that protection, and its conditions, cannot be fixed by any power but Congress, and the remedy for abuses or defects in the legislation of that body must be found in its own revision of its own laws. It is not competent for State statutes to deal with them, or to revise the national policy.

We are compelled to hold the law of 1871 as a manifest violation of the Constitution of the United States, and as, therefore, void. The court below erred in holding otherwise. The judgment must be reversed with costs and a new trial granted.

Judgment reversed.

NOTE BY THE REPORTER. The same conclusion was reached under like circumstances in Helm v. First Nat. Bank (43 Ind. 167), 13 Am. Rep. 395; Crittenden v. White (23 Minn. 24), 23 Am. Rep. 677; Hollida v. Hunt (70 Ill. 109), 22 Am. Rep. 63. See, also, Grover & Baker Sewing Machine Co. v. Butler (53 Ind. 454), 21 Am. Rep, 200; Walter A. Wood Mowing Machine Co. v. Caldwell (54 Ind. 270), 20 Am. Rep. 611.

In Patterson v. Commonwealth (11 Bush, 311), 21 Am. Rep. 220, it was held that a State statute providing for the inspection of illuminating oils was constitutional as applied to patented oils, as well as in other cases. This decision was affirmed by the Supreme Court of the United States, at the October Term, 1878 (19 Alb. L. J. 156). In delivering the opinion of the court, HARLAN, J., said:

"Congress is given power to promote the progress of science and the useful arts. To that end it may, by all necessary and proper laws, secure to inventors, for limited times, the exclusive right to their discoveries. That power has been exerted in the various statutes prescribing the terms and conditions upon which inventors may obtain letters-patent. It is true that letters-patent, pursuing the words of the statute, do, in terms, grant to the inventor, his heirs and assigns, the exclusive right to make, use and vend to others his invention or discovery, throughout the United States, and the Territories thereof. But, obviously, this right is not granted or secured, without reference to the general powers which the several States of the Union unquestionably possess in reference to their purely domestic affairs, whether of internal commerce or of police. In the American constitutional system,' says Mr. Cooley, 'the power to establish the ordinary regulations of police has been left with the individual States, and cannot be assumed by the national government." Cooley's Const. Lim. 574. While it is confessedly difficult to mark the precise boundaries of that power, or to indicate, by any general rule, the exact limitations which the States must observe in its exercise, the existence of such a power in the States has Deen uniformly recognized in this court. Gibbons v. Ogden, 9 Wheat. 1; License Cases, 5 How. 504; Gilman v. City of Philadelphia, 3 Wall. 713; Henderson v. Mayor, 92 U. S. 259, 275; Railroad Co. v. Husen, 95 id. 465; Beer Co. v. Massachusetts, 97 id.; Northwestern Fertilizing Co. v. Hyde Park, id. It is embraced in what Chief Justice MARSHALL, in Gibbons v. Ogden, calls that immense mass of legislation' which can be most advantageously exercised by the States, and over which the national authorities cannot assume supervision and control. If the power only extends to a just regulation of rights, with a view to the due protection and enjoyment of all, and does not deprive any one of that which is justly and properly his own, it is obvious that its possession by the State, and its exercise for the regulation of the property and actions of its citizens, cannot well constitute an invasion of national jurisdiction or afford a basis for an appeal to the protection of the national authorities.' Cooley's Const. Lim. 574. By the settled doctrines of this court the police power extends, at least, to the protection of the lives, the health, and the property of the community against the injurious exercise by any citizen of his own rights. State legisla tion, strictly and legitimately for police purposes, does not, in the sense of the Constitu