DAVIS et al. v. CARLISLE, 142 F. 106

HOOK, Circuit Judge, after stating the case as above, delivered the opinion of the court. The mortgage to Carlisle contained an express and unambiguous provision that it should secure future advances, and, such advances having been made, his lien cannot be defeated by parol evidence that when the mortgage was given nothing more was contemplated than the debt then existing. To this effect is Moore v. Terry, 66 Ark. 393, 50 S. W. 998. The case of Martin v. Halbrooks, 55 Ark. 569, 18 S. W. 1046, does not conflict with this conclusion.

There a mortgage given to secure a present indebtedness due at a specified date and also all other indebtedness then due was held not to include a pre-existing judgment in. favor of a third party, which the mortgagee afterwards bought at a discount and charged in full to the mortgagor. The judgment purchased was not of the same character of indebtedness as that existing at the time the mortgage was given, and the court upon consideration of all the circumstances concluded that it was not within the intention of the parties as manifested by the language of the mortgage.

That, however, is not the case now before us. Carlisle had a lien upon the property in controversy securing not only his original note, but also his subsequent advances; but under the evidence the question still remained whether, as to the latter, it was superior to the lien of the mercantile company whose mortgage was given after that of Carlisle but before his subsequent advances were actually made.

In this connection it should be observed that the recital in the mortgage to the mercantile company that it was second to that of Car-lisle was confined to the original note therein described, and did not extend to indebtedness that might thereafter arise. It is not claimed that Carlisle had obligated himself to make any further advances to Davis. On the contrary, it was entirely optional with him whether he should do so. There was evidence in the case that when first applied to for the additional loans he declined to make them,, and that Davis then informed him that he would have to go elsewhere.

There was also evidence that Carlisle was subsequently informed of the transaction with the mercantile company, and that this information was-given him before he made the additional loans which he now asserts as of the date of his mortgage. When, under a mortgage providing for future advances, hut leaving it optional with the mortgagee whether he shall make them, they are-made after he has been advised that a subsequent mortgage has been given upon the property, his lien for such advances will be postponed to that of the junior incumbrance. Schiffer v. Feagin, 51 Ala. 335; Preble v.

Conger, 66 Ill. 370; Barnard v. Moore, 90 Mass. 273; Nicklin v. Nelson, 11 Or. 406, 5 Pac. 51, 50 Am. Rep. 477; Bank Mont. Co.’s Appeal, 36 Pa. 172; Shirras v. Caig, 7 Cranch, 34, 3 L. Ed. 260; United States v. Lenox, Fed. Cas. No. 15,592; Ward v. Cooke, 17 N. J. Eq. 93; National Bank v. Gunhouse, 17 S. C. 489; Ter-Hoven v. Kerns, 2 Pa. 96; Brinkerhoff v. Marvin, 5 Johns. Ch. 320, 326; Brinkmeyer v. Browneller, 55 Ind. 487; Ladue v. Railroad Co., 13 Mich. 380, 87 Am. Dec. 759.

If the mortgage of Carlisle was, as to the subsequent loans, subordinate to that of the mercantile company, he had no right, without the consent of the latter, to apply the proceeds of the mortgaged property as-he did. In such a case, being sufficient for the purpose, they should have been applied to the complete discharge of the original note. The-rights of the parties in the remainder of the mortgaged property now in-controversy should be determined as though the application of payments-had been made in the manner prescribed by law.

The trial court instructed the jury that Carlisle’s mortgage was a valid one securing not only his original note, but also his subsequent advances.

This instruction was correct as far as it went, but it was supplemented by the following: “Unless all tlie items of indebtedness made by Davis with Carlisle from the •date of mortgage to October 1, 1901, have been paid, your verdict should be •for plaintiff.” These instructions taken together, and they were not qualified in the remainder of the charge, had the effect to withdraw from the jury all of the evidence touching the notice to Carlisle of the mortgage of the ■mercantile company, and they prevented the application of the pertinent and controlling rule of law to such a situation.

Under these instructions there was nothing left for the jury to do but to return a verdict for Carlisle, for it was conceded that the payments made him were insufficient to wholly discharge all of his claims. It is said in the opinion of the appellate court of the territory, with reference to the last instruction : “There is no doubt, as an abstract proposition of law, that this instruction •ought to be allowed to stand.” Even were, this true, the objection would still remain that instructions should not be mere abstract propositions of law.

They should not be given unless pertinent to the particular issues of the case; and they •cause reversible error where they serve to mislead the jury or result in a denial of a substantial right. As grievous and prejudicial an error may be committed by the misapplication to the facts of a well-settled proposition of law as by the announcement of one inherently unsound. The° judgments of the United States Court of Appeals in the Indian Territory and of the United States Court for the Western District of the Indian Territory are reversed, with direction to award a new •trial.