178 S.W. 668 | Tex. App. | 1915
The only question presented for our determination is whether, under the facts disclosed by the record, the E. L. Wilson Hardware Company is entitled to postpone in its favor the prior note and lien held by the intervener.
Appellant's first assignment of error is as follows:
"The court erred, to the prejudice of this intervener, in finding and holding that E. L. Wilson Hardware Company is merely taking additional security for its debts, and without paying any consideration whatsoever, and without releasing any rights, was an innocent holder for value, and entitled to give its second lien priority over the first lien held by this intervener." *669
It is undisputed that the note and lien in favor of the intervener was executed on December 20, 1909, and that the note and lien in favor of the hardware company were not executed until February 9, 1910. It is also undisputed that both of these notes were given for debts that the manufacturing company owed the respective parties prior to the dates they were executed. The notes and mortgages were both executed by the manufacturing company to gain an extension of time for the payment of the debts owing the parties respectively. This fact is recited in the mortgage executed to the intervener, Ridgill, and as to that of the hardware company, John R. Cheek, president of the manufacturing company, testified:
"At the time the deed of trust and chattel mortgage was executed to the E. L. Wilson Hardware Company, their debt was due, and they were demanding payment of it, and the mortgage was executed to get an extension to stave the matter off."
It is undisputed that, at the time the hardware company took this mortgage and granted an extension of more than a year for the payment of its debt, it had neither actual nor constructive knowledge of the lien of the intervener, Ridgill.
Under the foregoing facts, we are of the opinion that the hardware company is entitled to the protection accorded to a bona fide purchaser for value against the prior lien of the intervener, and that the trial court did not err in so holding. While it is true that a creditor who takes a mortgage merely as security for the payment of a debt already due to him, and without giving any new consideration or being induced to change his position in any manner, is not entitled to protection against prior liens of which he is not affected with notice, it is also true that, if at the time and in consideration of the giving of the mortgage the creditor grants a definite extension of time of payment, this is such a new consideration as will give him the character of a purchaser for value. 27 Cyc. 1191, 1192.
In Steffian v. Milmo National Bank,
"This court has held that, where the consideration of a deed is an antecedent debt only, or where a mortgage is taken merely to secure such indebtedness, this is not sufficient to support the claim of a bona fide purchaser for a valuable consideration. McKamey v. Thorp,
In Barnes v. Gray,
"When the consideration for a mortgage is only a pre-existing debt, there is no such consideration as will constitute the mortgagee an innocent purchaser; but, if the time of payment of the debt be extended, the extension will constitute a valuable consideration. The pre-existing debt is not the only consideration in such case."
In McKinney v. Williams, 45 S.W. 335, it is said:
"It is also shown that, when the mortgage was executed to Williams on the 20 bales of cotton, it was based upon a consideration and agreement to the effect that the time of payment of the note executed by McKinney should be extended to November, 1895. A mortgage taken to secure a pre-existing debt, based upon an agreement to extend the time of payment, is held to be a sufficient consideration to support an otherwise innocent mortgage holder."
Appellant with great earnestness assails the three cases above quoted, asserting that the language quoted from Steffian v. Bank, supra, was not necessary to a decision of any question before the court and that the holding was purely dictum, and that the other cases referred to followed it blindly without looking into the principles that should properly control. We may concede the accuracy of his contention that the holding in the Steffian Case is dictum, without in the least detracting from its soundness as a legal proposition. The rule as there stated is recognized by text-writers and applied by the courts of last resort in many of the states of the Union. In addition to these above mentioned, the following cases in this state recognize and apply the rule: Halbert v. Paddleford, 33 S.W. 592; Watts v. Corner,
The judgment of the court below is affirmed.
Affirmed.