Union Nat. Bank of Bartlesville v. Leidecker Tool/Co.

HARDV. J. P. H. Mitchell, doing busi ness at times under tbe name of P. H. Mitchell & Co., executed a mortgage upon one string of No. 20 Leidecker drilling machine complete, including boiler and all tools, an undivided one-'half interest in two strings No. 24 Leidecker drilling machine complete, together with any and alb increase and all other personal property of like kind which the mortgagor might thereafter in any way acquire, as security for the payment of certain promissory notes payable to the Union National Bank. On September 9, 1912, and on October 30, 1912, Mitebell purchased of the Leidecker Tool Company other property of like character, and as a part of the contract of purchase, agreed to execute to the Leidecker Tool Company. notes and mortgages upon said property to secure the purchase price thereof, blanks for which purpose were furnished at the time the property was delivered* but execution was delayed for some time thereafter. Tbe controlling-question involved in this litigation is whether the prior mortgage, with the “after-acquired property,” clause of the Union Nation, al Bank, is superior to the mortgages of.the Leidecker Tool Company to secure the purchase price of the property sold by it to Mitchell. The trial court held the latter to be superior, and in this there was no error. Section 3829, Revised Laws 1910 is ns follows : “An agreement may bel made to create a lien upon property not yet acquired by the party agreeing to give the lien, or not yet in existence; In such case the lien agreed for attaches from the time when the party agreeing to give it', acquires an interest in the thing to the extent of such interest.” Construing this statute, it has been held in a number of cases that a mortgage upon property to be thereafter acquired by the mortgagor is valid, and the lien created thereby attaches to such property as soon as the same is acquired by the person executing the mortgage. Payne v. McCormick Harvesting Machine Co., 11 Okla. 318, 66 Pac. 287; Garrison v. Street & Harper Fur. & Carpet Co., 21 Okla. 643, 97 Pac. 978, 129 Am. .St. Rep. 799. But the lien only attaches to -the extent of the interest acquired by the mortgagor. Such is the language of the statute. When Mitchell purchased the property of the Leidecker Tool Company it was a part of the agreement- of purchase that a mortgage should be executed hack to secure the purchase price, and this agreement was sufficient in equity to create an equitable lien upon the property when acquired, and is treated in equity as .a mortgage upon the property, for the reason that equity will consider as done that which by agreement is to be done, and such agreement is valid and *122 enforceable as between tbe parties. U. S. Fidelity & Guaranty Co. v. Fidelity Trust Co. et al., 49 Okla. 398, 153 Pac. 195. It is not a correct statement of tbe law to say that an “after-acquired property clause” in a mortgage displaces all junior liens upon sucb property. Tbe purpose of tbe rule is to promote justice, and not to serve as an instrument of injustice, and where property comes into tbe mortgagor’s bands subject to a mortgage or other lien, tbe “after-acquired property clause” in the prior mortgage will not displace them, but will only attach to tbe interest acquired by tbe mortgagor, and if tbe property is subject to a lien for tbe purchase money, this lien will have priority. Tbe sale by the Leidecker Tool Company and the agreement to give tbe mortgage back were concurrent and were one and the same transaction, and tbe equitable lien arising therefrom is equal in point of time with tbe agreement to execute tbe mortgage. Tbe Union National Bank was not prejudiced in any way by tbe purchase of tbe property, and its security was not diminished nor affected in any way, unless per-h-ps it were enhanced by tbe lien it acquired upon tbe pcpperty, subject to the lien of' tbe Liedecker Tool Company. Tbe Union National Bank was not a purchaser or an in-cumbrancer for value, and did not alter its position to its prejudice in any way after Mitchell acquired tbe property. If íhe property had never been acquired by Mitchell, its position would have remained tbe same, and for these reasons it is generally held that a mortgage with an “after-acquired property clause” attaches to tbe “after-acquired property,” subject to all liens and equities against it at tbe time of its acquisition. United States v. New Orleans & Ohio R. Co.. 79 U. S. (12 Wall.) 362. 20 L. Ed. 434; Harris v. Youngstown Bridge Co.. 90 Fed. 322, 33 C. C. A. 69; Farmers’ Loan & Trust Co. v. Denver L. & G. R. Co.. 126 Fed. 46 60 C. C. A. 588: Daly v. New York & G. L. Rv. Co.. 55 N. J. Eq. 595. 38 Atl. 202; Kickerbocker Trust Co., v. Carteret Steel Co.. 79 N. J. Eq. 501. 82 Atl. 146: Hammel v. First National Bank. 129 Mich. 176. 88 N. W. 397, 95 Am. St. Rep. 431: Jones on Mortgages § 158. The judgment is affirmed..