TEIEA~LTORNEY GENEHAL 

OF TEXAS 

Honorable Homer Garrison, Jr. 

Director, Department of Public Safteg 

Cainp Mabrg 

Austin, Texas 

Dear Sir: Attention: Mr. Ralph L. Buell 

Opinion No. 0-2073 

Re: liotation on Certificate of 

Title of lien to s~ecure 

"future aebts"~; under H.B. 

407, Acts of the 46th Leglslature. .~ 

This is in dply to your letter dated March 11, 1940, 

in which you ask the following question: 

"Under the provisions of Rouge Bill 407; 

the-certificate of Title Act, Shall the Departtient of Public-~Safety issue a certificate of 

title against an automobile, the application 

for which cites under the heading of liens. a 

specific sum of money, together with the further notation "and future debts'?" 

We assume that there is no doubt in your mind that it 

is proper to Issue a certifFcate of title when the application 

lists a lien for a specific sum of money only, but that you are 

concerned with whether or not it is proper for a lien to be 

listed which is for a specific sum of money and 'also for "future 

debts". 

The parts of Rouse Bill 407, Acts of the Fortydixth 

Legislature, 

of Texas) 

(Article 1426-l of Vernon's Annotatled Penal Code 

known as the Certificate of Title A@", with which 

we are concerned in answering your question are :a8 follows: 

"Section 1. This Act shall by& referred to, 

cltea, -land known as the 'Certificate of Title. 

Act', and in the enactment hereof it is hereby 

declared to be the legislative ,lntent and public 

policy of this State to lessen and prevent the 

theft of motor vehicles, and t@e Importation 

into this State of and traffic'in stolen motor 
Honorable Homer Garrison, Jr., page 2 0-2073 

vehicles, and thewe of encumbered motor vehicles without the enforced disclosure to the 

purchaser of any and all liens for which any 

such motor vehicle or the tires, radios, parts, 

or appliances thereof stands assecurity, and 

the provisions hereof, singularly and collectively, are to be liberally construed to that 

end. The following terms as herein defined shall 

control In the enforcement and construction of 

this Act. ” 

“Sec. 3. The term 'Lien' means every kind 

of lease, conditional sales contract, deed of 

trust, chattel mortgage, trust receipt, reservation of title, or other written instrument of 

whatsoever kind OP character whereby an interest, other than absolute title, Is sought to 

be held or given in a motor vehicle, also any 

lien created or given by Constitution or Statute." 

Section 24, par. (g). "The names and addresses and dates of any liens on the motor vehicle, In chronological order of recordatlon." 

Section 43. "All liens on motor vehicles 

shall take priority according to the order of 

time the same are recorded on the receipt or 

certificate of title of all such recordings to 

be made by the Department." 

Section 44, "No lien on any motor vehicle 

to which a receipt or certificate of title has 

been Issued shall be'valld as against third 

parties without actual knowledge thereof, or 

enforceable,against the motor vehicle of any 

such third parties, unless the notation of said 

lien shall have been caused to be made on receipts and certificates of title on said motor 

vehicle, as provided in this Act." 

Section 46. "Only liens noted on a receipt OP certificate of title be valid as against creditors of the mortgagor in so far as 

concerns the motor vehicle." 

If a valid lien can be created to cover "future debts" 

we think It is proper to Issue a certificate of title listing 

a lien for a specific sum of money and also for "future debts". 

The appellate court cases in Texas are clear on this question. 

In the case of Frelbetig v. Magale, 70 Tex. 116, 7 S.W. 634, the 

Supreme Court of Texas said: 
Honorable Homer Garrison, Jr., page 3 O-2073 

"But the appellee claims that the mortgage 

does not secure the debts for which the trustee 

sold the property; that the mortgage could not 

secure future debts, and, if it could, the future 

debts contemplated by the mortgage were to be of 

the same kind proviaed for In terms by the mortgage e A mortgage can be made to cover future 

debts, and such a mortgage will be good not only 

between the parties, but as to purchasers from 

the mortgagor with notice of the mortgage. A 

mortgage providing for the security of future 

debts puts persons dealing with the mortgagor 

in reference to the mortgaged property upon notice that such debts may exist ana bind the property. They must inqui,re as to this fact, or purchase at their peril. 1 Jones, Mortg. i i 364, 

370-372;~ Lovelace V. Webb, 62 Ala. 271; Wltczlnski 

v. Everman, 51 Miss, 846, . D ." 

In the case of H. W. Williams'& Co. v. Bell, (Tex. 

Clv. App.) 8 S.W. (2a) 743, the court said: 

' . . ; It is well settled that a valid 

mortgage can be given to secure the future 

advances, and that the same will be effective, 

not only against the mortgagor, but as against 

subsequent purchasers and lienholders with notice theretif. Freiberg v."Magale; 70 Tex. 116, 

7 S-W; ,684; Bullard v.'Stewart, 46 Tex. Clv. 

App. 49;.102 S.W,,174; Gross-v. Chittlm (Tex, Civ. 

App.) loo s.w, 1006. It is also the rule that, 

In order to cover such future advances, It is not 

necessary that the mortgage show the amount of 

such Indebtedness, or to definitely fix the time 

within which the same shall accrue. . . . 0 

In the case of Poole v. Cage, (Tex, Civ. App.) 214 

S.W. 500, the court said: 

8, 0 D D It has long been a well-established rule 

of decision in this state that a recorded mortgage, 

which recites that It Is given to secure future 

Indebtedness that in contemplation of the parties 

may be incurred by the mortgagor to the mortgagee 

is a valid mortgage, not only between the parties 

to the contract, but as to subsequent purtihasers 

from the mortgagor, Any subsequent purchaser 

from a mortgagor rmst take notice of such contract or agreement as to future indebtedness, and 

any advances made or indebtedness incurred in pur- 
- . . . 

Honorable Homer Garrlson, Jr., page 4 O-2073 

suance to such contract, whether before or after 

the subsequent sale or lncumbrance, are protected 

by a prior and superior lien upon the property. 

. . . . . . 

Some other authorities that make the same or similar 

statements of the law are Brunson v. Dawson State Bank, (Tex. 

Civ. App.) ,175. S.W. 438; Askey V. Stroua, (Tex. Clv. App.) 

240 S.W. 339; Massachusetts Mutual Life 

National Bank, (Tex. Clv. App.) 50 S.W. 

Co.'v. Stockyards 

& Co. ir. Baker, (Tex. Clv. App.) 62 S.W. 

,425; Cason; Monk 

135, par 47; and 14 Cor. Jurls, Sec. 722. 

592; 9 Tex. Jur. 

We have heretofore held in our Opinion No. O-1539 that 

the certificate of title act supersedes and repeals the general 

recording statute as to motor vehicles, and that it is unnecessary for a lien on an automob,ile to be recorded In the office of 

the Count Clerk*,and the "Certificate of Title Act" says in 

‘s'ectlons % 4 and 46 that only liens on a receipt or a certificate 

of title shall be valid as against third partie.s or a5 against 

creditors of the mortgagor. .As the courts of this State hold 

that a lien for "future debts" Is valid, It certainly follows 

that the mortgagee, In order to put subsequent purchasers of the 

property on notice, has a right to have that lien noted on the 

certificate of title. 

Our answer to your questfon is that the Department of 

Public Safety should Issue a certificate of title showing a 

lien for a specific sum of money and for "future debts" If the 

application states that the lien Is for a specific sum of money 

and for "future dews”. 

The foregoing represents the considered opinion of this 

department. 

Yours very truly 

ATTORNEY GENERAL OF TEXAS 

Bg s/Cecil C. Rotsch 

Cecil C. Rotsch 

Assistant 

CCR:GO-:wc 

APPROVEO APR 1, 1940 

s/Gerald C. Mann 

ATTORNEYGENERAL OFTFXAS 

Approved Opinion CommFttee By df3WB Chairman