Cross, who was president of a bank and had been misusing its
funds, gave to Martindale two instruments of assignment, providing
that Martindale should pay himself for any paper on which Cross and
Martindale were mutually makers or indorsers. The bank and other
parties held such paper. Cross killed himself the day after the
assignment was given. There was an earlier assignment to Martindale
as trustee. The receiver of the bank alleged that the earlier
assignment was made to protect the bank. Martindale was the only
witness as to delivery of the assignment and admitted that it was
for the benefit of the bank but only to a limited amount.
in an action in which other holders of paper made by
Cross and Martindale sought to obtain the proceeds of sale of the
property assigned, that it was not error to admit testimony that
Martindale had stated that the earlier assignment had been made to
secure the bank generally for Cross' liability thereto.
The case is stated in the opinion of the Court.
MR. JUSTICE HOLMES delivered the opinion of the Court.
This is a bill in equity brought to require the defendant
Albaugh to apply a certain fund to payment of debts due to the
Fourth National Bank of St. Louis from one Cross, of whose estate
the defendant Newman is administrator, and from the defendant
Martindale. By cross-bill and intervening petitions, the other
appellants set up similar claims. The fund is the proceeds of
property of Cross sold by agreement. The appellants claim under an
alleged assignment of the property by Cross to Martindale as
trustee, dated July 15, 1898, and
Page 188 U. S. 735
another assignment to Martindale dated November 15, 1898. The
former instrument contains the provision "the said Martindale . . .
is to pay himself for any paper upon which he and I are mutually
makers or indorsers." The debts due to the appellants were on paper
of this description, and they claim the benefit of the security on
this ground. The later assignment was given to Martindale,
according to his testimony, also as security for similar
liabilities. It needs no special mention.
The defendant Albaugh, as receiver of the First National Bank of
Emporia, claims the fund under an earlier assignment to Martindale
as trustee, dated March 4, 1898. Cross was president of this bank,
and had been misusing its funds. Albaugh contends that this
assignment was made for the purpose of securing the bank, and if
that fact is established, there will be nothing left for the
appellants, assuming that otherwise they make out their case. Only
Cross and Martindale were present when the assignment was
delivered, and as Cross killed himself on November 16, 1888,
Martindale alone could testify as to the delivery and purposes of
the instrument. He was put on as a witness for the plaintiff, and
on cross-examination testified to the delivery of the paper and by
implication to the trust being in favor of the bank, but he limited
it to a sum of $7,500, which amount he testified that Cross said he
wanted to use in a particular manner. Exceptions were taken to the
allowing the cross-examination to be extended to these facts.
Subsequently other witnesses were allowed to testify, subject to
exceptions, that at different times out of court, Martindale had
stated that the assignment of March 4 was made to secure the
Emporia bank generally for Cross' liability to it. There was a
decree for the defendant Albaugh in the circuit court, which was
affirmed on appeal by the circuit court of appeals. 107 F. 819. An
appeal then was allowed to this Court.
The only error alleged which it is necessary to consider is the
admission of the above evidence. Indeed, that is the only ground on
which the appeal can be based. If that evidence was competent, and
Martindale's declarations were believed, the receiver's case was
proved. If it should have been excluded,
Page 188 U. S. 736
the decree would be hard to support either on the other evidence
to the same point or on the suggestion that the appellants had not
proved what the burden lay on them to prove.
So far as the cross-examination of Martindale goes, we see no
occasion for revising the discretion of the court. Wills v.
Russell, 100 U. S. 621
100 U. S. 626
Nor do we think the suggestion material that the defendant thereby
made Martindale his own witness. The evidence of Martindale's
declarations was put in not merely to contradict what he said on
the stand, but as evidence largely relied on to prove the facts
which he declared.
It is said that as soon as the appellants' interest under the
later assignment had vested, Martindale could do nothing to destroy
it; that he could not release it, and that therefore he could not
end it obliquely by a declaration. The conclusion does not follow
from the premises, granting those premises for the purpose of
argument, although they presuppose the rights of the appellants
under the later instruments to be established. To destroy by
release is one thing, to destroy in the sense of disproving or
qualifying by proof is another. The latter is free to anyone who
knows the facts. There is no doubt, of course, that Martindale had
a right to testify to what he was shown to have declared, however,
bad it might be for the appellants. Therefore the only question is
whether his declaration was some evidence as against them of facts
which certainly might have been established by his oath.
If ever a declaration not made under oath is to be admitted
against any other than the person making it, it should be admitted
in this case. The declaration was obviously against interest. It
was the only evidence in the nature of things that could be had,
when Martindale haltingly denied the fact upon the stand. If we
were to take it very nicely, it simply did away with a
qualification engrafted by Martindale upon his testimony that the
instrument was security for the bank, and made it easier to accept
the principal fact without the qualification. The appellants say
that they have a standing under the instrument independent of
Martindale. So no doubt they have for some purposes, if we follow
the somewhat sweeping and undiscriminating notion of equity
embodied in many decisions to be
Page 188 U. S. 737
found. Nevertheless, they claim in Martindale's right as against
the estate of Cross or any prior assignee. The fact that equity
gives them a right to have the security applied does not enlarge of
change the character of the security, and that was, as we have
quoted, to enable Martindale "to pay himself for any paper" on
which he was liable with Cross. The appellants get their rights
from and through Martindale. Their right is only to have
Martindale's right enforced as it was on July 15 or November 15.
Cunningham v. Macon & Brunswick R. Co., 156 U.
, 156 U. S. 419
It even was argued on this ground that it appeared from other
evidence that Martindale had no equity as against the Emporia bank,
and that therefore the decree could be upheld. But, as we have
said, the evidence objected to was too important not to have had an
influence on the decision, and therefore we confine ourselves to
the consideration of that.
It may be urged that, even if the appellants get their rights by
subrogation (and it is to be noticed that the only claim made in
their pleadings is to be subrogated to the rights of Martindale),
still their rights are independent when the subrogation is
complete. In reply we fall back upon the distinction between
admissions and an attempt to release the rights. The distinction
was recognized in England in the case of a suit by a naked trustee.
If he undertook fraudulently to release the cause of action and his
release was pleaded, the plea would be ordered off the files.
Innell v. Newman,
4 B. & Ald. 419. See Payne v.
1 Dougl. 407; Anonymous,
1 Salk. 260;
Troeder v. Hyams,
153 Mass. 536, 538. But his admissions
were evidence for the defendant. Bauerman v. Radenius,
Term Rep. 663; Craib v. D'Aeth,
7 Term Rep. 670 note
. The analogy by no means is perfect, but it is
sufficient. In these days, when the whole tendency of decisions and
legislation is to enlarge the admissibility of hearsay where
hearsay must be admitted or a failure of justice occur, we are not
inclined to narrow the lines. The interest of Martindale continued,
the appellants claim through it, and we are of opinion that, under
the circumstances, admissions by Martindale contrary to that
interest properly were let in. Cases of admissions by a trustee
having no interest in the suit may stand on different ground.
Page 188 U. S. 738
The decree is objected to as granting affirmative relief to
Albaugh against his defendant Newman. As the appellants are
dismissed out of court, the error, if it was one, does not concern
MR. JUSTICE BREWER and MR. JUSTICE PECKHAM dissented.