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Opinion of the Court.
is no room for doubt upon this point. Besides, Edward was hard pressed for money, being then - as he admitted in a letter of May 4, 1875 -- indebted to Nathan alone in the sum of $200,000, and expected Nathan to raise for him the further sum of $50,000 if required. In his letter to Nathan of May 11, 1875 — on which day the mortgage was filed in New York for record - Edward said: “I enclose the bond for $250,000 mortgage, and I thought it might be more satisfactory to Mr. Upham to have Brander and Watson guarantee it; which they lave done.” Now, it may be — and we think such was the fact - that, as between Edward Matthews and Nathan Matthews, the mortgage of $250,000 was to stand as collateral security for Edward's debts or liabilities to Nathan. While this idea was expressed in the letters of May 6 and 10, and while Upham, who saw the letter of the 10th, when he took the assignment of the mortgage and bond, must be presumed to have known of the arrangement thus made by the brothers, as between themselves, he had no notice from anything contained in that letter, or from any communication made to him by either of the brothers, that restrictions of any character were placed upon Nathan's use of the mortgage. The fair meaning of the letter was this: That while, as between Edward and Nathan, the mortgage was to be regarded as collateral security for loans made to the former, the latter was authorized to assign it to Upham without restriction or limitation in respect to the purposes for which such assignment might be made by Nathan. Edward knew that Upham was to part
. with something of value in consideration of the assignment. But what would have been the inducement to Upham to accept the assignment of the mortgage, if, as is now claimed, the letter of the 10th was notice to him that the mortgage could not be used by Nathan, except as collateral security for Edward's debts to him? Upham had no interest in providing for the loans made by Nathan to Edward, unless he held the notes given by Edward to Nathan for such loans. But he did not hold those notes. He held securities for the debts due for money loaned by him to Nathan, and the latter, in order to get possession of those securities, offered to his creditor the
Opinion of the Court.
mortgage given by Edward to him. If Upham had taken an assignment of the bond and mortgage, with knowledge or notice that his assignor could use them only as collateral security for loans made to the mortgagor by the mortgagee, such assignment would have been of no value to him, after such loans were extinguished by payment.
But when the mortgagor said, as he did by the letter of May 10, (written expressly to be shown to Upham,) that the mortgagee might assign the mortgage to him - the letter imposing no conditions as to the purposes for which the assignment could be made — he meant, and intended Upham to understand, that the mortgagee could use the mortgage according to his own discretion, and for any purposes he chose, subject only to the condition that, as between them, it was to be deemed collateral security for the debts then due from the mortgagor to the mortgagee for money loaned. When Nathan wrote under date of May 6 to Edward, “I want to give him [Upham) the assignment, and I want you to write me a letter authorizing me to assign it to Thomas Upham, I, of course, giving you my agreement that I hold it as collateral,” he meant, and Edward must have understood him to mean, that while, as between them, the mortgage was not executed because of any new and additional liability upon the part of Edward to Nathan, the assignment to Upham must be unconditional and absolute, so as to give the latter the full benefit of the mortgage. Nathan well knew that he could not get the securities put into Upham's hand as security for his own debts to Upham, nor obtain further loans from Upham, unless he presented to the latter such an assignment of Edward's mortgage and bond as would give him a security of equal value with those then held by him for Nathan's debts. There is not the slightest doubt, from the evidence, that Edward fully understood, at the time, all the details of Nathan's plan for obtaining not only the securities he had placed in Upham's hands, but further loans of money from him.
The interpretation we have given to the writing of May 10, 1875, authorizing Nathan Matthews to assign to Upham the mortgage executed by Edward Matthews, is supported by the
Opinion of the Court.
subsequent conduct of the parties. We allude here particularly to the written agreement of March 6, 1877. Edward admits in the original bill that Nathan desired to substitute for the bond and mortgage of 1875, the 150 first mortgage bonds of the Memphis and Little Rock Railroad Company, and the 50 first mortgage bonds of the Carolina Central Railroad Company -- the proceeds of the sales of which are here in question -- together with the Furber note for $5000; and that the agreement of 1877 was made in order to effect that result. Now, this agreement provides that the bonds and note just referred to should be received and held, in place of Edward's mortgage on the New York property, and be dealt with in every way as that mortgage might have been, and "shall be collateral security for the claims now held by the said Warner & Smith (trustees of Upham) against Nathan Matthews ; ” such bonds and note to be delivered to, and held by, certain named parties, as security for Edward Matthews' performance of what was called the Hartford agreement, provided Nathan Matthews carried out his plan for paying his debts to Warner and Smith. By these and other provisions in the agreement of 1877 it was distinctly admitted that the railroad bonds and the Furber note were to take the place of the mortgage of 1875, and stand as security for the debts of Nathan Matthews, held by Uphain's trustees. Having consented to this substitution, Edward Matthews brought this suit, without even offering to reinstate the mortgage. He knew when the agreement of 1877 was signed that Nathan was largely indebted to Upham at the time the latter made an assignment to Warner and Smith for the benefit of his creditors. He knew that Warner and Smith, in behalf of Upham and his creditors, claimed to hold the mortgage and bond of 1875 as security for the debts of Nathan, and that such debts were none the less Nathan's, because his own name was upon the notes, or some of them, representing those debts. He induced the trustees to surrender the mortgage and take in place of it certain railroad bonds and a promissory note, which, he agreed, should be collateral security for the claims then held by Warner and Smith against Nathan Matthews. The suggestion
that he agreed to the substitution, only because induced by Warner and Smith to believe that they then held the notes he had given to his brother Nathan, and for which the mortgage of 1875 was collateral security, as between him and his brother, is inconsistent with any reasonable inference from the undisputed facts of the case. Even if that suggestion were supported by the evidence, the relief asked ought not to be granted, because, as already shown, Warner and Smith, trustees, had the right originally to hold the mortgage of 1875 as security for Nathan's debts to Upham; and that security having been surrendered by them to Edward Matthews in consideration of the transfer of the railroad bonds and promissory note described in the agreement of 1877, to be held as collateral security for Nathan's debts, Edward could not, in equity, reclaim those bonds and the Furber note, or recover their proceeds, without restoring the security for which they were substituted. The suit is wholly without merit, and it is unnecessary to cite authorities to support the conclusions reached by the court.
MR. JUSTICE GRay did not hear the argument or take part in the decision.
BAKER'S EXECUTORS v. KILGORE.
ERROR TO THE SUPREME COURT OF THE STATE OF TENNESSEE.
No. 322. Argued and submitted April 20, 1892. - Decided May 16, 1892.
The act of the legislature of Tennessee of March 26, 1879, c. 141, providing
that “the rents and profits of any property or estate of a married woman, which she now owns or may hereafter become seized or possessed of
shall in no manner he subject to the debts or contracts of her husband, except by her consent,” does not take away or infringe upon any vested right of the husband, or any right belonging to his creditors, and does not deny any right or privilege secured by the Constitution of the United States.
Opinion of the Court.
The case is stated in the opinion.
Mr. F. A. Reeve, for plaintiff in error, submitted on hi brief.
Mr. Henry H. Ingersoll for defendants in error.
MR. JUSTICE Harlan delivered the opinion of the court.
This action was commenced, October 12, 1886, before a Justice of the Peace of Greene County, Tennessee, and involves the right of property in three heifers and one steer, levied upon as the property of Frederick Scruggs, but claimed by his wife to belong to her, and not subject to seizure or sale for the debts of her husband. Judgment having been rendered for her, the case was carried by appeal to the Circuit Court of that county.
It appears that Scruggs and wife were married about eighteen years before the commencement of this action, and lived, during most of their married life, on lands deeded to her, as follows: one hundred and thirty acres, by deed of January 1, 1881; two hundred and seventy-four acres, by deed of April 19, 1877; one hundred and eight acres, by deed of May 8, 1886. The deeds to Mrs. Scruggs were in fee simple, bụt did not create a technical separate estate. Some years prior to this litigation her husband failed in business, after which he attended to his wife's affairs, trading for her in stock, hogs, etc., and superintending farm work, etc., as her agent. He occasionally traded in live stock for himself. From 1879 to 1881 he engaged, in the name of his father, in merchandising in a house in the yard of the home dwelling lot, and from 1881 to 1884 in the name of his brother William, and with their money, he receiving and keeping all the profits. He and Mrs. Scruggs took from the store whatever each wanted, paid hands on the farm partly out of it, and put back into the store the proceeds of the farm, but without strict account being kept between them as husband and wife, or between them and William Scruggs, as in the case of strangers. The husband did