Land Title & Trust Co. v. Shoemaker

Citations

• 257 Pa. 213
• 101 A. 335
• 1917 Pa. LEXIS 709

Syllabus

<p>Mortgages — Mortgagees — Future advances and liabilities — Consideration — Bights of junior mortgagee — Priority.</p> <p>1. When a contract for advances or for the assumption of future obligations accompanies a mortgage it is not essential to its validity that the engagement governing the advances be placed upon record or. even expressely referred to in the mortgage. When such a contract obligates the mortgagee either to make advances or assume future responsibilities on behalf of the mortgagor, this lends a sufficient consideration to the mortgage and the lien of payments made under such an agreement relates back to the date of the mortgage, and this is true even though the advances are liquidations of assumed responsibilities incurred after the date of a subsequent or junior encumbrance placed upon the mortgaged premises.</p> <p>2. The owner of real estate mortgaged the property to a trust company for $40,000. At the time of the execution of the mortgage but $32,000 had been loaned to the mortgagor by the mortgagee; at that time the mortgagor gave the mortgagee a demand note wherein it was agreed that “the securities hereby pledged together with any that may be pledged hereafter shall be applicable in like manner to secure the payment of any future obligations of the undersigned held by the holders of this obligation, and all such securities in their hands shall stand as one general continuing collateral security for the whole of said obligation.” Thereafter the mortgagor gave the trust company a bond to indemnify it against loss which it might sustain by issuing a title policy in favor of the mortgagee of certain other property owned by the mortgagor. Thereafter the mortgagor gave a second mortgage upon the property covered by the $40,000 mortgage. The second mortgagee had notice that only $32,000 was loaned on the first mortgage. The mortgagor became indebted to the trust company for a large amount under the provisions of his bond. The mortgage was subsequent