
    Stearns versus Barrett.
    In an action of covenant broken, the declaration averred that the parties were the joint inventors of certain machines, and that they mutually covenanted that one should have the exclusive use of them in two of the United Slates, and the other in the rest, and that neither should use them within the district of the other, “ under the forfeiture” of a certain sum for each machine so used. It was held ill to plead that neither party was the inventor, or that separate patents to them previous to the agreement, ara subsequent joint patent, were void.
    To a plea, that each, supposing himself the inventor, procured a patent, and entered into the agreement, expecting by his patent to enjoy the exclusive right within his district, and that the patents were void, a replication traversing that they entered into the agreement under that supposition and expectation was held sufficient. Whether a failure of consideration will avoid a deed, and whether the last plea was bad as tending to put in issue such failure, qucere.
    
    A stipulation in the agreement, that the defendant might use the machines in one place in the plaintiff's district upon giving certain notice, &c., was held tobe matter of defence, and not necessary to be set forth by the plaintiff.
    The agreement was not void, as being in restraint of trade, there being a reasonable consideration.
    It was held, that after obtaining a joint patent neither party could set up the prior separate patents, and that neither was estopped by the separate patents from alleging that the invention was joint. If the joint patent was void, still the agreement wot valid, the patent forming no part of the consideration.
    The action of covenant was proper in this case.
    The forfeiture above mentioned is a penalty, and not liquidated damages.
    This was an action of covenant broken. The declaration averred, that the plaintiff and defendant were the joint invents ors of two machines for dying and drying silks, the one called a reel and the other a lap-frame ; and that they mutuálly covenanted so to cooperate as to secure to themselves the benefit of the same, and that for this purpose they covenanted that the defendant should have secured to him the exclusive use and sale of the machines in Massachusetts and Rhode Island, and the plaintiff in every other part of the United States ; and that neither should use or sell the machines within the district of the other, under the forfeiture of 1000 dollars for each machine so used or sold ; yet that the defendant made fifteen machines to be used at Staten Island in the State of New York, and used and employed the same in that place, by which he forfeited and covenanted to pay 15,000 dollars.
    appeared, that the defendant was authorized to set up one es* agreement, which was made in 1817, it lablisbment in the State of New York, and to use therein any number of said machines, for which he was to pay the plaintiff in three years 500 dollars if the establishment should be fixed within one hundred miles from the city of New York, or 300 dollars if in any other part of the State ; and he was to give the plaintiff notice in thirty days from the date of the agreement in what part of New York he was to fix the establishment. It appeared by a memorandum on the back of the deed, that he accordingly gave notice that he elected to fix his establishment in the district including the city.
    The defendant pleaded six several pleas. In the first two he alleged, that neither Stearns nor himself was the inventor of either of the machines. The plaintiff replied, that they were the joint inventors, and tendered an issue to the country ; to which the defendant demurred specially.
    In the third plea it was alleged, that separate letters patent had been granted in 1809 to each of the parties as the inventor of both machines, and that each patent was for two distinct machines and inventions.
    In the fourth plea it was alleged, that previous to the agreement, letters patent had been granted to each of the parties for the machines, and that afterwards, in 1818, letters patent were granted to them jointly for the same.
    In the fifth plea it was alleged, that after the agreement a joint patent was granted, including both machines.
    To these last three pleas there was a general demurrer-
    In the sixth plea the defendant alleged, that each, supposing himself to be the true inventor of the machines, procured a patent therefor, and under such supposition entered into the agreement. The defendant then averred, that neither of them was entitled to tne patent, but that the same was wholly void.
    To this plea the plaintiff replied, that they' entered into the covenants on the supposition and belief that they were the joint inventors, and traversed that each supposed himself to be the sole inventor. To this replication there was a special demurrer.
    Bliss, for the defendant, contended, first,
    that the original agreement was void, it being an agreement in restraint of trade. Further, the consideration in the present case failed. Both parties thought they had right, under their patents ; but their patents were void, and therefore nothing passed by then grants. Barrett v. Hall, 1 Mason, 447. In Pierce v. Fuller, 8 Mass. Rep. 223, the consideration had not failed. The defendant is not estopped from making this plea. He cannot plead that his own patent is void ; but he may deny the validity of the plaintiff’s. A party is not prevented from averring any fact, that goes to the consideration of a deed. Hayne v. Maltby, 3 D. & E. 438 ; Mitchell v. Reynolds, 1 P. Wms 181.
    Secondly, the declaration does not show a breach of cove nant. It was not incumbent on the defendant to plead that he gave notice in thirty days, or made payment in three years, according to the provision in the agreement. His right to set up the establishment in New York, and to use the machines therein, vested immediately, and the giving notice and making payment were not 'conditions precedent. Campbell v. Jones, 6 D. & E. 572. The fact of non-payment does not appear. The plaintiff ought to aver it if true, in order to show a forfeiture of the right of the defendant. This right appears upon a view of the whole instrument, it being spread upon the record by oyer.
    Thirdly, covenant is not the proper form of action. The agreement says, that upon a certain event the defendant’s right shall be forfeited. He may then be liable to an action under the patent law, but not in covenant. The present is an action to recover a penalty. But where the performance of articles is secured by a penalty, the party must sue either in debt for the penalty or in covenant for damages. Lowe v. Peers, 4 Burr. 2228. The only claim that can be made against the defendant in this form of action is for the non-payment of 500 dollars , but this is an action for the penalty of 1000 dollars for each machine. Where a sum of money is to be paid in gross for the non-performance of an agreement, it is to be considered as a penalty, and not as liquidated damages. Taylor v. Sandiford, 7 Wheat. 13.
    
      G. Sullivan and Curtis, for the plaintiff,
    argued that the case was to be considered the same as if there was no provis ion in the agreement giving the defendant a right to use the machines in New York. He had the right, provided he paid the plaintiff in three years 500 dollars. But this is matter of defeasance, and was not necessary to be set forth by the plaintiff. 1 Chitty’s PI. 229, 301 ; 1 Saund. 234, note.
    As to the validity of the agreement, they contended, that in an action of covenant it is not necessary to set forth a consideration. Want or failure of consideration is no answer to an action upon a deed. Vrooman v. Phelps, 2 Johns. Rep. 177, 179, note. But here was a sufficient consideration, though the separate patents were void. Both parties looked to the invention which should be secured to them jointly by a future patent. This joint patent has never been annulled, and both are estopped from denying its validity. They are equally injured by any violation of the agreement. It was for their mutual benefit, that their manufactories should be established at a distance from each other. There was nothing illegal in this agreement, as was settled in Peirce v. Fuller, 8 Mass. Rep. 223, and Perkins v. Lyman, 9 Mass. Rep. 522. It was intimated by Story J. in Hall v. Barrett, 1 Mason, 447, that, though the separate patents were void, a joint one might be good. It was upon this supposition, that the agreement in the present case was made. In Hayne v. Maltby, the sole consideration was a patent, which was void. But it is not so in this case. Without any reference to the patent, might not one party agree not to establish a manufactory in Massachusetts, and the other none m Connecticut?
    As to the form of action, they contended that it was rightly brought. The rule of law is, that where a penalty is incurred by a misfeasance, covenant lies ; but where it is for a nonfeasance, the action should be debt. 1 Saund. 322. The misfeasance in this case was the using the machines contrary to the agreement. Covenant lies on articles under seal, and to recover money in numero. It has even been held to lie on a bond, 1 Chit. PI. 114. It is said that, if the plaintiff is damnified, he may bring an action on the statute for an infringement of his patent. But that cannot be done, for the defendant is a joint patentee. It is said that the amount claimed in this suit is a penalty and not liquidated damages. But this is no objection to the form of action. If the defendant has broken his covenant, he may, upon application, have a hearing in chancery, and the question whether it is a penalty or liquidated damages can then be argued.
   The opinion of the Court was delivered at the following November term, by

Wilde J.

This is a case depending on mutual covenants, which are stated in the declaration, according to their substance and effect, so far as is necessary to support the plaintiff’s claim This, according to a well known rule of pleading, is sufficient, without setting forth the whole deed. The defendant has pleaded several pleas, and we are now to determine whether any one of them is a sufficient bar.

As to the first and second pleas, they are manifestly immaterial. The only averment in these pleas is, that neither the plaintiff nor the defendant was the true inventor, or first inventor, of the machines mentioned in the declaration. The plaintiff does not deny this, but has averred in the declaration, that said machines were the joint invention of the parties ; which is repugnant to the supposition that either of them was the sole inventor. These pleas, therefore, do not affect the plaintiff’s title. The defendant might have as well pleaded that a stran ger was not the inventor.

The third and fourth pleas depend upon nearly the same ground ; for they go only to show that the separate patents are void. This must be admitted, if neither of the patentees was the inventor, so that it matters not that they may be considered void for another reason also. It cannot be maintained, that either party is estopped by the separate patents from asserting that the invention was joint. On the contrary, the parties having united in obtaining a joint patent, neither of them can now be permitted to set up a prior grant to himself for the same in vewtion. This doctrine is laid down by Story J. in an action inxwhich the present parties were plaintiffs, and it seems to us to be founded on sound principles. Barrett et al. v. Hall et al., 1 Mason, 472. So that the estoppel operates only in respect to the separate patents. If any one by mistake, supposing himself the inventor of some useful machine, procures a patent, and it afterwards turns out that some other person had a share in the invention, there is no principle of the law of estoppel whereby the true inventors can be prevented from claiming under a joint patent, except in case of an assignment of the separate patent; which, as to those claiming under the assignment, stands on a different footing. In such case the parties are estopped by the deed, and not by the patent. Oldham v. Longmead, cited in 3 D. & E. 441.

The fifth plea alleges that the reel and the lap-frame are distinct and separate inventions and machines ; and that a joint patent has been granted to the parties including both machines. In considering this plea, the defendant’s counsel have contended that the said patent, embracing distinct inventions and machines, cannot be supported ; and that, the patent being void, the covenants are no longer obligatory. Without deciding on the validity of the patent, it is sufficient to observe, that the inference drawn from its supposed invalidity does not appear to us well founded. The patent formed no part of the consideration of the contract, "or it existed only in contemplation when the contract was made. The most that can be said is, that the contracting parties had, at the time, the expectation of securing the profitable use of their invention by obtaining a valid patent, and nothing is averred in the pleadings from which we can infer that this expectation has been defeated, or is likely to be. If the existent patent is void for the reason assigned, as it seems to be by the law of patents, (Fessenden’s Law of Pat. 149, 150 ; Evans v. Eaton, 3 Wheat. 454, 506,) the parties may procure its repeal and obtain separate patents for each machine ; so that the ground upon which the parties stood at the time of the contract remains unchanged.

For these reasons, thus briefly stated, we feel bound to decide that the pleas are insufficient. It is not, therefore, necessary to consider the objections made to the replications to the first and second pleas.

As to the last plea, the object of it seems to be to show a (allure of consideration, and the question has been argued whether a failure of consideration will avoid a deed. We are certainly not prepared to say that it will not, though it has been so laid down in several cases, (2 Johns. Rep. 179,) for it is well settled, that if a tenant be evicted by a title paramount, he may plead it in an action for the rent, notwithstanding he has bound himself by his covenant. But we are not requ.red to consider this question, because no failure of consideration appears. The material averment in the plea, touching the consideration, is traversed in the replication, and we think the replication good. The objection that it tends to put in issue the consideration of the deed cannot prevail. If it be true, that the Court is to judge of the consideration from the deed alone, and that no averment respecting it can be submitted to the determination of the jury; the objection is fatal to the plea, and being matter of substance it is not aided by the replication. But it is not true, that no averment respecting the consideration of a deed can be submitted to the determination of the jury. It may always be done when the consideration is not expressed in the deed. The objection applies only to such averments as are inconsistent with the terms of the deed. We find no such averments in the replication. The averment in that, as well as in the declaration, is, that the invention was joint; and in the deed the parties agree to join in obtaining a patent; which must be considered as an admission that the invention was joint. It is therefore the plea, and not the replication, which is inconsistent with the terms of the deed. The ether objection to the replication is founded on a mistake as to the consideration, which has been already noticed. It is very clear that the parties did not treat the separate patents as valid grants, and that neither of them constituted any part of the consideration.

It remains for us to consider the objections to the action and to the sufficiency of the declaration.

It is said that debt, and not covenant, is the proper action. The law on this point is perfectly clear, as laid down by Lord Mansfield, in the case of Lowe v. Peters, cited by the defendant’s counsel. Where covenants are secured by a penalty or forfeiture, the obligee at his election may bring debt for the penalty, or may proceed upon the covenant, and recover more or less than the penalty toties quoties. 4 Burr. 2228. Where there are no words of covenant, but the penalty depends on a condition, it is otherwise.

The objection that the covenants a.re void, being in restraint of trade, cannot be supported, admitting that all the patents are void. Agreements to restrain trade in particular places, founded on a reasonable consideration, are valid in law and may be enforced. (1 P. Wms. 181 ; 8 Mass. Rep. 223 ; 9 Mass. Rep. 522.) Here was a sufficient consideration, whether the patents were valid or not. Being the inventors of these machines, the parties may obtain valid patents for them ; or, without thus securing a monopoly, they might reasonably expect to enjoy it in fact by means of their superior skill. For a time at least, they would have little to fear from the competition of others. It was, therefore, lawful and reasonable for them to share in the profits of their invention, either by uniting in a joiht concern, or by a more convenient arrangement, whereby, each one might have the benefit of his own capital, industry and activity.

Our next inquiry is, whether the breaches have been well assigned. In support of the objection to the declaration in this respect, we are referred to a clause in the deed, not stated in the declaration, but which appears on oyer, whereby it is agreed that the defendant should be allowed to set up an establishment in the State of New York, and to make and use there any number of said machines, he paying to the plaintiff, within three years from the date of the deed, 500 dollars, if he should elect to fix his establishment in the city of New York, or within one hundred miles of it, and 300 dollars, if he should fix it in any other part of the State ; and to give notice to the plaintiff or his agent within thirty days. By a memorandum on the back of the deed, it appears that notice was given, within the thirty days, that the defendant had elected to fix his establishment in the district including the city of New York ; and it has been argued, that, after notice, the defendant’s right to make and use said machines within the district elected became perfect, subject only to be defeated by a condition subsequent, namely, the non-payment of the money ; and that the breach, therefore, was not well assigned, for want of an averment that the money had not been paid. No answer could be made to this objection, if the covenant referred to were the only covenant, or if it were necessary for the plaintiff to show a breach of it. Bui this is not necessary ; he relies upon the breach of another covenant, which is well assigned in the words of the covenant. The clause referred to by the defendant is but a qualification of the principal covenant, in the nature of a proviso or condition subsequent, which is always matter of defence. Lawes’s PI. Ass. 120 ; Hotham v. East India Co., 1 D. & E. 645. If the defendant would rely on this conditional covenant, he should have pleaded it, making the proper averments of performance on his part of the conditions upon which it depends. The plaintiff could assign no breach of this covenant whereb) he could claim damages. The defendant has not agreed to set up an establishment in the State of New York ; nor has he agreed to pay the money mentioned in the condition, if he should. The plaintiff, therefore, very properly has assigned a breach of the principal covenant, taking no notice of the condition.

One question only remains, namely, whether the sum of 1000 dollars, mentioned as the penal sum in the agreement, is to be considered as a forfeiture, or as liquidated damages. Prima facie, certainly, it is a forfeiture or penalty, for it is so expressed in the deed. This is not an agreement to pay the 1000 dollars, but an agreement to abstain from doing certain acts under a forfeiture. It is not, therefore, like the case of Lowe v. Peers, 4 Burr. 2225, which was founded on a promise or covenant to pay a sum certain on a contingency ; but it is like the case of Smith v. Dickenson, 3 B. & P. 630, ii which the court decided, that if a party agree not to do some specified act under a penalty of £1000, such sum cannot be considered in the nature of liquidated damages. (See also Sloman v. Walter, 1 Bro. Ch. Cas. 418 ; Hardy v. Martin, ibid. 419 in notis; and Astley v. Weldon, 2 B. & P. 346.) But, without insisting upon this rule of construction, and the authority of these cases, we think it clear enough from the whole instrument, that the parties never intended that the sum mentioned should be taken as liquidated damages. We cannot determine that it should be so taken, without overlooking the estimate made by the parties themselves ; for we cannot suppose, if the plaintiff was content to receive 500 dollars foi the privilege granted to the defendant, if paid within three years, that it could be intended by the parties that the defendant was to pay 1000 dollars for a single machine.

We are, therefore, of opinion, that the sum mentioned in the deed is to be considered as a penalty, and that damages must be ascertained on a further hearing.

The 3d, 4th, and 5th pleas adjudged bad, and the replication to the 1st, 2d, and 6th pleas adjudged good. 
      
       A failure of consideration will not avoid a deed. Parker v. Parmele, Johns. R. 134.
     
      
       See Pierce v. Woodward, 6 Pick. 208; Palmer v. Stebbins, 3 Pick. 188; Harmer v. Graves, 7 Bing. 735; Davis v. Mason, 7 T. R. 118.
     
      
       See Crisdee v. Bolton, 3 Car. & Payne, 240; Davies v. Penton, 6 Barn. & Cressw. 216; Kemble v. Farren, 3 Moore & Payne, 425; Dennis v. Cummins, 3 Johns. Cas. 297; Perkins v Lyman, 11 Mass. R. 76 ; Merrill v. Merrill, 15 Mass R. 488; Slosson v. Beadle, 7 Johns. R. (2d. ed.) note (a); Dyer v. Dorsey. 1 Gill & Johns. 440.
     