James Sacket, Nathan Smith and William Hawley against William Hillhouse

James Sacket, Nathan Smith and William Hawley against William Hillhouse : IN ERROR. THIS was a petition in chancery, brought to the Superi- or Court, by the defendant in error, against the plaintiffs in error, praying for an injunction against proceedings at law upon certain promissory notes, executed by Hillhmtse to Sachet. These notes were executed and delivered under the following circumstances, vis. Timothy Kirk, James Truman and Samuel Bolton, having, severally, obtained patents for certain inventions to be used in heating water and other liquids, by certain articles of agreement, united their several inventions, and became joint partners therein, and constituted Kirk, as their agent, to vend the same for tbí h joint benefit. Kirk proceed! d to ,\t n:-l laven, ami by means of certain false and fraudulent, affirmations and-representations relating to the originality and utility of such inventions, together will: the aid of Sack; l, induced the defendant, and Josiah B. Morse, one John Morris, jun. and others, to purchase the right of using such inventions within certain limits, for which they paid him a certain sum in money, and gave their promissory notes to a large amount. Immediately after the execution of these contracts, Sacket proceeded to Philadilphia, and procured from Bolton an assignment of one third part of the avails of the sales above mentioned, and of all future sales of such patents within certain limits ; whereby, Sacket became a joint partner with Kirk and Bolton ; Bolton having, before this time, by the aiil ot Sacket, fraudulently obtained an assignment of Truman's share in the avails of such sales. Whereupon, Socket returned to Nerv-Havcn, and claimed of Kirk one third part of the avails of the sales aforesaid ; and it was finally agreed, that Sacket was entitled to the sum of 856 dollars, 63 cents in money, and the sum of 1840 dollars, in the notes of tin-defendant, Morse, Morris and others, in the hands of Kirk, as his proportion of the avails of such sales. It was then agreed between Sacket and the defendant, that if he would execute his note to Sacket for 143 dollars, 37 cents, and another note for 1000 dollars, he, the defendant, should be entitled to Sachet's share of the notes in the hands of Kirk, a considerable part of which, consisted of the notes executed by Morris, who then was, and ever after continued to be, a bankrupt : And Sacket having refused to give any evidence in writing of this agreement, Kirk, at the request of Sacket, executed and delivered to the defendant, a writing of the tenor following, vis. “ I promise to deliver and pay over to William Hillhouse 1840 dollars in notes which 1 took of him and others, when he shall demand the same. October 6th, 1810. [Signed.] Timothy Kirk." A., Jl. and (J. being jointly interested in certain pretended new inventions,for which they had severally obtained patents, constituted A. their agent, to sell tne right of using the same, for their joint benefit. .4., with bv false and fraudulent representations, induced I)., E, and F. to purchase the right of using such inventions, for which they paid a certain sum in money, and executed their promissory notes to a large amount. Immediately afterwards, S. purchased one half of the share of S, in the avails of such sales, thereby becoming equally interested with Jl. and 11,11 having previously, by the aid of S., fraudulently purchased C.’s share in the avails of such sales. 6'., under a concealment of the fraud practised in obtaining the notes, and with a view to purge such fraud, induced 1). to enter into an agreement to execute to him one note for 143 dollars, 37 cents, and another note for 1000 dollars ; in consideration whereof, I). should be entitled to the share of S. in the notes executed to .1., by 1) , and F., on the sale of the patent rights, a considerable part of which consisted of the notes of F., a bankrupt. In virtue of this agreement, II. executed the notes above mentioned ; and the sum of 1540 dollars was endorsed on the notes originally given by D. and E. to Jl. in consideration of the sale of the patent rights, and 300 dollars were endorsed on the notes of F., given to Jl. for the like consideration ; and F., in consideration of the endorsement on his notes, executed a note to D. for the sum of 300 dollars. The note for 143 dollars, 37 cents, was paid ; and an action was brought upon the note for 1000 dollars, and judgment was rendered thereon in favour of S. before the Ne-w-Maven City Court. The action was appealed to the Superior Court, and was pending. S. took out execution on the judgment of the City Court, on which the sum of 550 dollars was paid. During the time of these transactions, D. was ignorant of the fraud practised in obtaining the original notes from 1)., E. and F. to Jl. On a petition in chancery, brought by It. against S., founded upon the existence of these facts, and praying for an injunction against proceedings in the action at law, and the re-payment of the money paid on the execution and note, it was held, that the petitioner was entitled to the relief for. the aid of S., In a petition in chancery, praying for relief on the ground of fraud, it is not necessary that the facts jje proved precisely as alleged ; it ⅛ sufficient, if they are shbi stantially proved. In pursuance of this agreement, Kirk endorsed the sum of 1540 dollars on the notes of the defendant and Morse, being Hie notes executed to him on the sale of the patent rights; and endorsed the remaining sum of 300 dollars on a note given to Kirk by Morris, also for tbe purchase of the patent rights ; and Morris, thereupon, in consideration of the iast-monlioHed endorsement, executed his note to the defendant, for the sum of 3i>0 dollars ; which note remained-in the hands of the defendant, unpaid. The transactions between the parties, in relation to (hi; consideration and execution of the note for 143 dollars, 37 cents, and the note for 1000 dollars, before mentioned, were alleged in the petition in the following manner, mi. And said Socket, on obtaining the assignment of Bolton's share of (lie avails of the sales made by Kirk to the defendant anti others, on or about the 6th of October, 1810, returned to .V< tr Harm, and receiver! from said Kirk a large sum of money as a part of his share of said spoil; and for that part of said sales, which remained in notes against the said John Morris, jun., against the petitioner and said Morse and others, the said Socket proposed to the petitioner that he should become responsible to him, said Socket, said Morse then being absent from said Ncw-Ifyvm ; and the petitioner still relying on the representations and affirmations of said Socket and Kirk, made as aforesaid, at the time of said sale, executed to said Socket one note of 143 dollars, 37 cents, payable in four days; and one note for 1000 dollars, both dated on said 6th of October, 1810 ; ant! the only consideration for said notes was ¡in agreement from said Kirk, to make an a pplication or endorsement on the notes given by the petitioner and said Morse to said Kirk, as aforesaid, for the purchase of said pretended improvements and patent fights ; nor was there any other ; and said application was made accordingly.” The note for 143 dollars, 37 cents, was paid ; and a suit was commenced, by Socket, on the note for 1000 dollars, before the New-Haven City Court, and judgment was rendered therein, in Socket's favour. The eause was appealed to Hie Superior Court, and was then pending. Socket, however, took out execution on the judgment of the City Court, on which the sum of 550 dollars was paid; which sum was placed in the hands of Smith and Hawley, by Sachet, to secure them against their bond given on talcing out the exe-cotioju Kirk was a bankrupt. It was admitted, that the notes executed by the defend-* ant an<] Morse;and Morris and others, to Kirk, on the sale of the patent rights, were obtained by the fraudulent affirmations and practices of Kirk and Sachet, and «ere void; and that the fraud was concealed from the knowledge of the defendant, Morse, Morris, and others, until long after the execution and delivery of the notes by the defendant to Sachet. Upon this state of facts, the Superior Court dt <■•< ed, that Sachet be enjoined not to proceed any further in the suit at law ; and that within a limited time, he should repay the sum of 550 dollars received upon the execution, and the money received upon the note of 143 dollars, 37 cents, together with the interest on these sums, and also the costs in the suit at law, and of the petition. To reverse this decree, this writ of error was brought. Daggett and Denison, in behalf of the plaintiffs in error, contended, that the notes executed by the defendant to Socket, were not a substitution for the original notes given to 'Kirk on the sale of the patent rights, but that they were executed in consideration of the sale of Sockets share of the avails of the patents; that this was a new consideration ; and that the notes were, therefore, valid. They also contended, that there ought to be a reversal, on the ground of a material variance between the facts alleged in the petition, and those found by the court. And they further contended, that llillhousc, from the facts alleged and found, was not entitled to relief in chancery ; but that he had adequate remedy at law. Socket was liable for the fraud, if any had been committed : He was not a bankrupt. N. Smith and R. M. Sherman, contra. [MAJORITY — Swift, J.] Swift, J. The question in this case, is, whether the notes given by the petitioner to the respondent Socket, were obtained by fraud, and are void 1 It appears, that Timothy Kirk, for himself and James Truman anil Samuel Holton, sold to Hillhousc and Morse and fo John Morris jun. certain' patent rights, and received their notes ; that this transaction was a gross fraud, which rendered their notes void ; and that Sachet aided Kirk in practising the fraud, and was a parfy to it : After which, he purchased the right of Bolton to one third of the notes and money obtained by this fraud; that he then sold the same to Hilllmise, the petitioner, for the notes stated in the petition, who was ignorant of the fraud ; that Kirk then endorsed on the notes given by Hillhousc and Morse 1540 dollars, and gave him a note on Morris for 300 dollars, which was obtained by the fraudulent sale of said patent rights, the said Morris being a bankrupt; and that this was all the consideration which Hillhousc ever received for the notes prayed to be relieved against. It has been contended, that this is not a substitution of notes ; but a sale of the share of Socket in the avails of the sales of the patent rights, which constitutes a new consideration, and renders the notes valid; but I am of opinion that this transaction was, substantially, a substitution of notes; and that the original fraud is not purged. The consideration remained the same, except the note against Mom's, which having been obtained by a like fraud, and being of no value, does not constitute a consideration to support the notes. Indeed, the last transaction was a fraud. Sachet, knowing tiie whole claims of Bolton to be founded in fraud, that all the notes, beiug for the avails of (he patent rights, were void, and that Hillhousc was ignorant of it, he concealed the fact, and received from him a new note. This fraud vitiates the contract, and renders the note obtained by it, a nullity. As to any variance between the facts stated in the petition, and those found by the court* it may be observed, that they are not materially different, but are, substantially, the same; and in a petition in equity for relief on the ground of fraud, it is not necessary fo prove the facts precisely as laid: It is sufficient to prove them in substance. All the other Judges concurred in this opinion. Judgment affirmed,