Mechanics' Bank v. First National Bank of McComb City

Stevens, J., delivered the opinion of the court. This case involves controversy as to priority of liens given by certain deeds of trust covering certain real estate in Me Comb City. One Owens and wife executed four deeds of trust on the same property. The first, deed of trust to McColgan Building & Loan Association is recognized by all parties to' this litigation as a prior-lien; there is an agreement to pay the balance due on — 447 — this first lien, and the rights, therefore, of the building and loan association need not be further noticed. The three deeds of trust which occasion the present controversy are as follows: On May 25, 1915, Owens and wife executed to appellant, Mechanics’ Bank, a deed of •trust for two hundred and seventeen dollars and eighty cents, due and payable in May, 1916. On September 30, 1915, Owens and wife executed upon the same property a deed of trust to one L. T. Furley to secure the sum of eight hundred and forty-nine dollars and ninety-five cents, being a part of the purchase money for a certain stock of goods, wares, merchandise, and fixtures purchased by Owens from Furley. A promissory note was given for the eight hundred and forty-nine dollars and ninety-five cents indorsed by one Gammill, and this note and deed of trust securing the same were assigned in writing and delivered to appellee, the First National Bank of McComb City, and the trust deed was duly recorded the following day in the clerk’s office. On the 2d day of October, 1915, Owen's and wife executed another deed to trust to the Mechanics’ Bank for three hundred and eighty-nine dollars evidenced by two notes, one for one hundred dollars, due and payable December 2, 1915, and one for two hundred and eighty-nine dollars, due April 2, 1916. The last deed of trust covered the same real estate, and was recorded in the clerk’s office October 7, 1915. Pending the controversy between the parties, the trustee under the first deed of trust to •the Mechanics’ Bank by agreement of all parties sold the property, and the court in the present case directed how the money should be applied. The chancellor decreed that after paying the balance due the building and loan association the trustee should pay, first, the note of two hundred and seventeen dollars and eighty cents, with interest, costs, and trustee’s fees secured by the first deed of trust to the Mechanics’ Bank; secondly, — 448 — that the indebtedness due the appellee First National Bank should be paid; and, admittedly, the funds are insufficient to go further and discharge the second deed -of trust owned by appellant, the Mechanics ’ Bank. Without setting out the pleadings and facts in detail, the main contention made at the bar by counsel for appellant is that under the terms and provisions of the deed of trust of May 25, 1915, to the Mechanics’ Bank, future advances were secured; that the advancement of three hundred and eighty-nine dollars by the Mechanics’ Bank to Owens October 2, 1915, was made' under the terms of the first deed of trust, and in equity should be considered secured by the first deed of trust, notwithstanding the fact that the bank took a new deed of trust at the time this second loan was made. There is no serious contention that any of the parties had any notice except that given by the records, and the proof shows that the officers of both banks acted in the utmost good faith. The first deed of-trust to Mechanics’ Bank contains the following provisions: “That whereas the said' parties of the first part are indebted to party of the third- part in the sym of two hundred and seventeen dollars and eighty cents on note of even date; and whereas, the said parties of the first part have agreed to secure the payment of said indebtedness as also any further amounts that may be advanced and not mentioned herein, and any and all indebtedness that is or may become due and all renewals or extensions of notes evidencing the amounts or amount secured herein;” and “in trust, however, that if the parties of the first part shall on or before May 29, 1916, pay what may be due said party of the third part for money loaned and advanced and all other indebtedness in this deed of trust,” etc. The second deed of trust given Mechanics’ Bank has, among other provisions, the following clause: — 449 — “This deed of trust does not cancel any lien or trust deed held by the third party against the first party, but same remains in full force and effect.” When Furley accepted his deed of trust from Owens and wife dated September 30, 1915, and had the same recorded the following day, the records in the chancery clerk’s office of course did not disclose the existence of -any indebtedness to appellant, the Mechanics’ Bank, except the note of two hundred and seventeen dollars and ■eighty cents, secured by deed of trust executed in May, 1915, payable in May, 1916. At that time no further .advances had been made. In addition to the promissory note given Furley as a part of the purchase price of the stock of goods, it appears that Owens was to make a ■cash payment, and he made application to the Mechanics ’ Bank for three hundred and seventy-five dollars as a part of the cash payment to Furley for said stock. Furley did not know that the Mechanics’ Bank intended to take any other deed of trust on the property involved, and the bank did not know that Furley intended to take himself a deed of trust on the same property. These are the facts as found by the chancellor, and the proof justifies the conclusion which he reached. The First National Bank, in taking an assignment of the Furley deed of trust, did not know that the Mechanics’ Bank was anticipating making a further loan on the security mentioned, and under the facts as found by the chancellor the First National Bank accepted an assignment of this deed of trust and note without any knowledge ■except that disclosed by the records. The question is, then, under the records and the notice imparted thereby, Who has priority? We conclude that appellant is not in position to treat the second loan of three hundred and ■eighty-nine dollars to Owens as an advancement under its first deed of trust. Appellant in making this second loan took two notes, both of which were to mature before the due date of the indebtedness secured by its — 450 — first deed of trust. In making the second loan appellant did not rest its rights upon an agreement that the notes should be secured by the first deed of trust. There was no agreement to this effect, either written or verbal. In saying this, we are' mindful of the testimony of the active vice-president and manager of the Mechanics’ Bank to the effect that in making the second loan he regarded it as an advancement under the bank’s first lien. But the actual agreement of the parties made at the time must control. Appellant in fact took a new deed of trust, a new contract, expressly securing the second loan. This second loan was not a renewal of any prior indebtedness, but an independent transaction wholly unrelated to the first. There was no agreement at the time the. first deed of trust was executed that appellant would extend further accomodations to Mr. Owens, and no obligation on the part of the bank to make any further advances at all. In fact no one anticipated or could possibly know in advance that Owéns would apply for the three hundred and seventy-five dollar loan. In securing this second loan Owens gave and the banii accepted a new contract, and this contract speaks for itself. Appellant in taking this new contract did not bring forward the indebtedness secured by this first trust deed.. The two transactions are not at all part of the same business, but wholly separate and distinct agreements, having no possible connection one with the other. It cannot be said, therefore, that appellant made any additional advances under its first deed of trust. Such contention is not supported by the facts, and especially by the acts and conduct of the parties. In fact the manager of appellant bank testified that if he had known Owens had given, a deed of trust to Furley he would not have made the second loan at all. Under this view of the case it is unnecessary for us to notice the doctrine of .future advances announced in Shirras et al. v. Caig et al., 7 Cranch, 34, 3 L. Ed. 260, Witczinski v. Everman, 51 — 451 — Miss. 841, and other eases relied on by counsel for appellant. Enforcing our registry laws as written, we see no error in the decree appealed from. Affirmed.