Peterson v. Willing - 3 U.S. 506 (1799)
U.S. Supreme Court
Peterson v. Willing, 3 U.S. 3 Dall. 506 506 (1799)
Peterson v. Willing
3 U.S. (3 Dall.) 506
This was an action for money had and received to the Plaintiff's use founded on the following facts:
On 17 December, 1796, Levinus Clarkson executed a mortgage
to Samuel Clarkson on certain stores and lots of ground in Philadelphia to secure the payment of $8,000, with interest. Before the execution of the mortgage, Samuel Clarkson had advanced or secured a considerable sum of money to accommodate Levinus Clarkson (who was in very embarrassed circumstances), and had taken a bill of sale of a ship, &c., as an indemnity, which however he thought was insufficient for the purpose, and had repeatedly pressed for an additional security. About this time, Levinus Clarkson, being indebted by note to the Plaintiff and having deposited a considerable amount of Morris and Nicholson's notes, by way of collateral security, proposed to the plaintiff to release the deposit, and accept in lieu of it, a note endorsed by Samuel Clarkson, who was then in good credit. The plaintiff acceded to the proposition, and Levinus Clarkson, in order to induce Samuel Clarkson to endorse the note, promised to execute the mortgage above mentioned, not only as a security in this transaction, but as an auxiliary to the fund for indemnifying Samuel Clarkson on account of his previous advances and engagements. Accordingly, on 13 December, 1796, the note drawn by Levinus Clarkson and endorsed by Samuel Clarkson was delivered to the plaintiff, the notes of Morris and Nicholson were restored to Levinus Clarkson, and the mortgage was executed a few days afterwards. Both the Clarksons failed before the debt due to the plaintiff was paid. Levinus Clarkson was discharged under the insolvent laws, and Samuel Clarkson assigned his property in trust for the benefit of all his creditors to the defendants, who, by virtue of the assignment, has received a considerable sum arising from the sale of the mortgaged premises, which had been enforced by a creditor having a previous lien.
The plaintiff claimed so much of the money thus received by the defendants as would be sufficient to satisfy his debt, and his counsel offered Levinus Clarkson as a witness to prove that the mortgage, although expressed in absolute terms to be for the use of Samuel Clarkson himself, was in fact given in consideration of the endorsement of the note delivered to the plaintiff and on a positive promise that the note should be paid out of the proceeds of the mortgaged premises, the surplus only being destined to exonerate Samuel Clarkson from his other engagements for Levinus Clarkson. Hence it was intended to argue that an implied trust was created for the benefit of the plaintiff to the amount of his debt.