B., who had transactions with the appellees, who were bankers,
delivered to them his five promissory notes secured by mortgage.
The appellant was also a creditor of B., and had a claim upon the
fund in the appellees' hands. Held:
(1) that the fact that
the notes were in the possession of the appellees raised a legal
presumption that they were their property; (2) that the weight of
the evidence was in favor of the position that the appellees were
to be first paid before transferring the notes to appellants.
The case is stated in the opinion.
MR. JUSTICE MILLER delivered the opinion of the Court.
In the spring of the year 1865, Sage O. Butler made and
delivered to Isett & Brewster, a banking firm of Muscatine,
Iowa, his five several promissory notes for two thousand dollars
each, payable to their order in one, two, three, four, and five
years from date, and at the same time made and delivered to them a
mortgage on certain real estate to secure the payment of the
The plaintiff, Finley, on the 22d January, 1866, filed this bill
in chancery alleging that the notes and mortgage were deposited
with Isett & Brewster in trust for his benefit for the purpose
of securing Butler's indebtedness to him, and praying the court to
declare the trust and decree Isett & Brewster to assign to him
the notes and mortgage, or for such other relief as might be
appropriate. Butler is also made defendant, and all three of them
required to answer specific interrogatories, under oath, touching
the alleged trust.
Isett & Brewster file separate answers, and say that the
notes were delivered to them as security for advances made by them
to Butler to enable him to carry on the business of packing pork
during the previous winter, and with an understanding that when
their debt was paid, they would transfer the notes and mortgage
Page 154 U. S. 562
whomsoever Butler might direct. They allege that Butler is still
indebted to them in the sum of six thousand dollars, and say they
are willing to transfer the securities to plaintiff on payment of
that sum and interest.
There seems to be no doubt about Butler's indebtedness to Isett
& Brewster, and to complainant.
The issue, therefore, is a very simple question of fact --
namely, whether Isett & Brewster received the notes and
mortgage from Butler as a security, primarily for their own debt,
and then subject to his order, or as a mere trust for plaintiff,
without any beneficial interest in themselves.
The main reliance of plaintiff to establish the trust is on a
letter written by Butler to him at or about the time he delivered
the securities to Isett & Brewster.
In this letter Butler says:
"For the purpose of protecting you to some extent against
worthless securities, I executed my notes, on the 11th of March at
one, two, three, four, and five years, with interest at six
percent, to order of Messrs. Isett & Brewster, and secured the
same by mortgage on my pork house, and the mortgage was recorded,
and Messrs. Isett & Brewster hold these notes in trust, and
will at proper time, transfer them, with mortgage (without
recourse) to parties I may designate. When I know my exact
situation, I hope to do more, but in meantime please keep the above
Butler, whose deposition is in the record, swears that he read
this letter to Brewster at the time he delivered to him the notes
and mortgage, and told him that he intended them for the benefit of
plaintiff, and that Brewster assented to the arrangement and agreed
to assign them, without recourse, when requested.
In addition to this positive testimony of Butler, there is some
evidence of statements, not very clear or satisfactory, made by
Brewster when speaking of these securities afterwards.
The statement of Holden is that when he asked Brewster about
these notes and mortgage, he said "it was a trust matter." As this
was true whether the trust was to secure Finley first or only for
his use, after Isett & Brewster were paid, it does not prove
anything in the present issue.
Higgins, another witness, says that when he asked Brewster why
he had taken the mortgage, he said he did not take it on his own
account, but in trust for another. This conversation was April 18,
six days before the date of the letter from Butler to plaintiff and
is to be taken for what it is worth.
Page 154 U. S. 563
To this testimony on the part of complainant is opposed:
1. The fact that the notes and mortgage are payable to the order
of Isett & Brewster, and are in their possession, which raises
the legal presumption that they are their own property.
2. The separate answers of Isett & Brewster to plaintiff's
bill and interrogatories, in which they both deny the exclusive
trust for plaintiff and assert their interest to the extent of
3. Brewster denies in his deposition that the letter of Butler
to Finley was ever read to him or by him or that he ever gave
assent to the claim of Finley.
4. Certain letters from Finley, the plaintiff, to Brewster and
Butler, written in October, 1865, in regard to the matters now in
controversy, in none of which does he claim that these notes are
for his benefit, until after Isett & Brewster are first paid,
and in one of them, dated October 20th, to Butler, he says:
"As I understand you and Mr. Brewster, the mortgage was given
with the intention of protecting my interests as well as Mr. B.
When Mr. B.'s claim was satisfied, the transfer of the property to
be made to me. This is the way I understand my position now."
5. The statement of Butler in his deposition that at an
interview between himself and Finley and Brewster in October, Mr.
Brewster spoke of his prior claim on the notes and mortgage, and
that, while Finley did not in words admit it, he made no denial of
We are of opinion that the weight of the evidence is clearly in
favor of the statements of the defendants that they were to be
first paid out of the notes, before they were to transfer them.
The decree of the circuit court, giving the two notes last due
to plaintiff, is therefore as favorable to him as the facts
justify, and must be