Court Opinion

ID: 9856847
Source: CourtListenerOpinion
Date Created: 2023-09-24 07:01:48.280127+00
Date Added: 2024-06-11T09:37:26.579783
License: Public Domain

On Denial of Petition for Rehearing.
McQUADE, Justice.
Appellant, in its petition for rehearing suggests that we have departed from the rule articulated in Boise Payette Lumber Co. v. Winward, 47 Idaho 485, 276 P. 971 (1929), and Goss v. Iverson, 72 Idaho 240, 238 P.2d 1151 (1951). This suggestion is mistaken; the rule has not been changed. A senior mortgage for future advances will maintain seniority for advances made after actual notice of a junior lien if, but only if, there was a contractual obligation to make such advances existing prior to the notice of the junior lien. See G. Osborne, Mortgages § 120, at 295-296 (1951). This is true even though the agreement to make the advances is oral. See Whelan v. Exchange Trust Co., 214 Mass. 121, 100 N.E. 1095 (1913); Lumber & Builders Supply Co. v. Ritz, 134 Cal.App. 607, 25 P.2d 1002 (1933).
This case involved a mortgage which stated a total sum larger than the amount owed when the mortgage was delivered and, by extrinsic oral agreement, was meant to secure subsequent advances up to the amount stated on the recorded mortgage. Absent fraud, this is a perfectly acceptable transaction, and it will secure amounts loaned aggregating up to, but only up to, the total sum stated on the face of the mortgage. See Savings & Loan Soc. v. Burnett, 106 Cal. 514, 39 P. 922 (1895); Wardman v. Iseman, 99 Pa.Super. 551 (1930).
The district court addressed itself to the question of whether advances made by respondent after appellant had perfected its attachment had retained their priority. In its fourth finding of fact, quoted in the *574opinion, the lower court found that Biersdorff was obligated to continue servicing Brumfield’s equipment. The advances of service made after any actual notice of appellant’s lien was received by respondent were, therefore, secured up to an accrued value of $16,000.
Rehearing denied.