R. M. Walmsley & Co. v. Resweber

Citations

• 105 La. 522

Syllabus

<p>Syllabus.</p> <p>A factor to whom a customer has delivered his negotiable notes to his own order and by him endorsed to secure him for advances made and to be made, subordinates his own rights under the notes and mortgage in favor of a second factor making advances to the same person, by transferring to him the notes with the maker’s consent to be held as collateral security until the latter’s advances made and to be made, are satisfied, at which time they are to be returned to the first holder.</p> <p>The notes under such an agreement pass with their mortgage to the second factor and his mortgage rights are unaffected by the fact that the transfer of the notes is made after their .maturity and that the accounts between the first factor and the common debtor may be subsequently settled and paid. (Levy vs. Ford, 41 Ann. 873.)</p> <p>A junior mortgage creditor has no ground of complaint so long as his own righ+s are not primed for a larger amount than they were before.</p> <p>In the case at bar the first factor at the time of such .an agreement was bound towards the second as security for advances already made to his customer, and in consideration of this transfer he was released as such.</p> <p>There were no equities existing at the date of the transfer.</p> <p>On Rehearing.</p> <p>Holders of notes, secured by mortgage, transferred in good faith, are entitled to hold them between themselves and their transferrors. Third persons had not acquired an adverse right prior to their transfer.</p> <p>As relates to tbe second series of notes, tbe condition being different, tbe right of the mortgage creditors, second in rank, is recognized as priming the mortgage first in rank to the extent that it was without consideration at the date that the mortgage creditors second in rank acquired their right.</p>