California Fruit Exchange v. Buck

LORIGAN, J.

This appeal presents the same essential facts and calls for the application of the same legal principles as in the case of

Frank H. Buck Co.

v.

F. M. Buck et al. and the California Fruit Exchange,

162 Cal. 300, [122 Pac. 466], where the present plaintiff was defendant and appellant.

That action was brought by the Buck Company against the present defendant Buck to foreclose a crop mortgage given to it by him on May 19, 1909, and against the present plaintiff, the California Fruit Exchange, which it was alleged, asserted some right or lien under a prior crop mortgage executed in its favor by Buck.

[224]

The California Fruit Exchange set up by answer in that suit a priority of right and lien over the crop mortgage to the Buck Company by virtue of a similar mortgage to it made in December, 1905, by the defendant Buck covering the same farm and orchard premises, and which mortgage provided that it was security for a present indebtedness of two thousand five hundred dollars and to secure future advances. The trial court in that action held that while the mortgage of Buck from the California Fruit Exchange had been executed prior to his mortgage to the Buck Company, and on October 27, 1908, there was a balance of indebtedness due to said California Fruit Exchange from Buck for advances to the amount of $5,447.70, that this indebtedness was not secured by that mortgage. This conclusion of the court was derived from the fact that as the books of account between the California Fruit Exchange and Buck, kept by the former, show that on September 15, 1907, there was a credit balance in favor of Buck of $442.32 the mortgage had thereby been paid, and in effect canceled, and that subsequent advances made by the California Fruit Exchange to Buck which aggregated the $5,447.70 found due it was not secured by that mortgage, and judgment was entered accordingly.

On the appeal from that judgment taken by the California Fruit Exchange this court, on a consideration of the conceded facts and the terms of the mortgage held that this conclusion of the trial court was erroneous; that as the mortgage provided for future advances which were represented by the indebtedness which the court found due- from Buck to the California Fruit Exchange the “mere accidental circumstance that the books of one or another of the parties show a balance in favor of the mortgagor on a given date” did not extinguish the mortgage- as a security for such future advances. A reversal of the judgment was ordered.