John Woods & Sons v. Carl

Background

This case arose after a man bought a patented machine and the patent right in Arkansas and gave a promissory note to pay. The note was later endorsed and transferred to the plaintiffs who sued to collect. The note, however, did not follow an Arkansas law that required such notes to be on a printed form and to state on their face that they were given for a patented machine.

Reasoning

The single question the Court considered was whether that Arkansas statute was valid. The defendant argued the statute allowed him to defend against collection because the note did not show on its face that it was for a patented machine. The Court said the case was governed by a closely related prior decision, found the difference unimportant, and affirmed the lower court’s judgment. In effect, the Court treated the statute as valid and permitted the maker to argue the defect, leaving the noncompliant note without enforceable effect.

Real world impact

Sellers who take negotiable notes for patented machines in Arkansas must follow the statute’s form requirement or risk the note being unenforceable. Buyers who later hold such notes cannot be treated as protected “innocent” holders if the note fails to show it was for a patent sale. The decision affirms the Arkansas courts’ outcome and resolves the case in favor of the buyer who raised the statutory defense.

Dissents or concurrances

One Justice (Day) recorded a dissent. The opinion here states his disagreement but does not provide his reasons.