U.S. Supreme Court
Matthews v. Warner, 145 U.S. 475 (1892)
Matthews v. Warner
Argued March 28-29, 1892
Decided May 16, 1892
145 U.S. 475
N. M. was indebted to U. in the sum of $200,000 secured by railroad bonds and stock and a mortgage on real estate in Boston. The debtor, desiring to use the bonds and stock held as collateral, proposed to substitute for them a mortgage on real estate in New York to secure the bond of E. M., N. M.'s brother, who was indebted to N. M. and who gave the bond and mortgage to secure that debt. E. M., at the request of N. M., in order to enable N. M. to make the proposed substitution, wrote him a letter to be shown to U., saying, "You are hereby authorized to assign to U. the chanroblesvirtualawlibrary
mortgage for $250,000 which I have given you as collateral security for loans made to me." Held that while, as between E, and N., the mortgage was to be regarded as collateral security for loans made to E. by N., the assignment to U. was absolute as a security for the indebtedness of N. to U., without regard to the indebtedness of E, to N., and that a suit in equity to put a different construction upon it was wholly without merit.
The case is stated in the opinion.