Smith v. Burgess

• Decision Date: 28 November 1882
• Citation: 133 Mass. 511
• Parties: Heman Smith, trustee, v. Alexander Burgess
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

133 Mass. 511

Heman Smith, trustee, v. Alexander Burgess

Supreme Court of Massachusetts

November 28, 1882

Hampden. Bill in equity by the trustee for Clara M. Pyne under the will of John H. Lucas, to compel the defendant to surrender, for the benefit of the trust estate, a note and mortgage given by Richard W. Gardner to James Lewis, and by him assigned to the defendant. Hearing before W. Allen, J. who reported, for the consideration of the full court, the following case:

Lewis was the predecessor of the plaintiff as trustee, and, while trustee, lent to Gardner $ 2000 belonging to the trust estate, and took therefor the note and mortgage in question dated April 23, 1874, the note payable in five years from date to the order of James Lewis. By the mortgage, Gardner, "in consideration of $ 2000 paid by James Lewis, trustee of Clara M. Pyne," conveyed certain real estate in Springfield to "the said Lewis, trustee as aforesaid." The note was described in the condition of the mortgage as "payable to said James Lewis." The mortgage was recorded on June 4, 1874.

On August 4, 1874, Lewis applied to the defendant for a loan of $ 1000, and offered the note and mortgage as security. The defendant filled out a blank form of assignment attached to the mortgage, which was executed and delivered by Lewis, with the note and mortgage, and his note for $ 1000, payable to the defendant, to the latter, who thereupon paid to Lewis the $ 1000. The assignment of the mortgage was recorded on January 3, 1876, and was absolute in its terms, and by it Lewis, "the grantee mentioned in the deed of mortgage dated April 23, 1874, and recorded," etc., sold, assigned and transferred to the defendant "the aforesaid deed of mortgage, and all my right, title and interest in and to the real estate therein conveyed, and the note therein described." The note was not indorsed by Lewis. When Lewis produced the mortgage to the defendant, it was apparently in the same condition as when executed, and had upon it the certificate of the register that it had been recorded; but it did not then contain the words "trustee of Clara M. Pyne," those words having been erased by Lewis, after the mortgage was recorded. The defendant did not examine the record, but relied upon the paper shown him as the original mortgage. He had no notice of the erasure, and his attention was not attracted to the words "trustee as aforesaid," following the name of Lewis, as grantee, in the mortgage. He knew that the money was for the use of Lewis, and paid it in good faith, relying on the security of the note and mortgage, and without notice of the trust, unless such notice is to be inferred from the words "trustee as aforesaid," in the mortgage, or from the record of it.

Decree for the plaintiff.

E. B. Maynard, for the plaintiff.

G. Wells & E. P. Kendrick, for the defendant.

C. Allen, J. Lord, Field & Colburn, JJ., absent.

OPINION

C. Allen, J.

It has heretofore been held in this Commonwealth, that, where a mortgage was assigned to A. B., trustee, in consideration of money paid by him, trustee, and where the mortgage note was also indorsed to him, trustee, a presumption was raised that he took the same in trust, so that his heirs at law could not convey a good title thereto without showing that in point of fact no trust existed. Sturtevant v. Jaques, 14 Allen 523. It has also been held that, if a guardian of minor children uses his wards' money to buy land, and takes a deed acknowledging the receipt of the consideration paid by him as guardian, but running to himself, his heirs and assigns, without otherwise referring to his guardianship, this is sufficient to give notice to his creditors that the land is held by him in trust. Bancroft v. Consen, 13 Allen 50. A similar doctrine was held, under somewhat different circumstances, in Hayward v. Cain, 110 Mass. 273. And in Shaw v. Spencer, 100 Mass. 382, it was held that a certificate of shares in a corporation, in the name of A. B. trustee, if pledged by him to secure his own debt, gives notice of the trust to the pledgee. This case was much considered, and elaborately discussed at the bar and in the opinion of the court; it was reaffirmed in Fisher v. Brown, 104 Mass. 259; and it has been approved by the Supreme Court of the United States, in Duncan v. Jaudon, 82 U.S. 165, 15 Wall. 165, 175, 21 L.Ed. 142.

The defendant in the present case made a loan of money to James Lewis, knowing that the same was for the personal use of Lewis, and took as security therefor an assignment of the note and mortgage in question. The note ran to Lewis personally, and was by him delivered, though not...