214 Mass. 92, 100 NE 1093, and Barnard v. Moore, 90 Mass. 273. In such cases the mortgage should fully describe the intent and should contain a maximum limit to the contemplated advances. MAINE MAJORITY RULE By decision. Bunker v. Barron, 93 Me. 87. "Though the mortgage . . . calls only for optional and not obligatory future advances, still the intervening mortgage... is only constructive notice ..., and such notice is not enough as it must be direct and personal," said the court. No limit to future advances-although prudence would dictate that a maximum limit be specified in the mortgage. MARYLAND-MAJORITY RULE By statute (1945). Section 2, Article 66, provides that additional advances for the purpose of repair, alteration or improvement may be made up to the original amount of the mortgage or $500, whichever is lesser. The actual amount or amounts of the future advances and the time or times when they are to be made must be specifically stated in the mortgage. In re Shapiro, 34 F. Supp. 737, affirmed Schumacher & Seiler v. Sandler, 118 F (2d) 348 (1940), where the court held that the statute meant exactly what it said and that any mortgage not complying with the statute as to specificity would create no lien on the property whatever. Provided the stated requirements are met, the statute provides that all such future advances "shall be secured by such mortgage equally and to the same extent as the amount originally advanced . superior to all rights of subsequent creditors, purchasers, mortgagees, and other lienors and encumbrances . . ." Apparently even actual notice will not subordinate the priority of later advances. See Wilson v. Russell, 13 Md. 532. There is doubt as to the full applicability of Section 2 to Baltimore and Prince George's Counties-witness Section 3 and the case of Welsh v. Kuntz, 75 A (2d) 345. MICHIGAN MINORITY RULE By decision. What is still apparently the ruling case is Ladue v. Detroit & M. R. Co., 13 Mich. 380, 87 Am. Dec. 759, where it was held that a mortgage securing optional future advances, duly recorded, is notice to subsequent incumbrancers, but only to the extent of the liabilities which have been actually incurred prior to the recording of the later incumbrance. Court also repeated the theory behind the decision to be that, as to optional advances, the mortgage is at any time a lien only to the extent of liabilities then incurred. See also Riess v. Old Kent Bank, 253 Mich. 557; Ginsberg v. Capitol City Wrecking Co., 300 Mich. 712. The intent to secure future advances must be set out in the mortgage, although apparently a maximum limit need not be stated. Citizens Sarings Bank v. Kock, 117 Mich. 225, 75 NW 458; Piconning State Bank v. Henry, 258 Mich. 44, 241 NW 913. MINNESOTA-MAJORITY RULE By decision. The latest pronouncement of the Supreme Court was given in 1951, Axel Newman Heating and Plumbing Co. v. Sauers, 234 Minn. 140, 47 NW (2d) 769: “Where [pursuant to a mortgage to secure future advances] the advances are optional, the subsequent encumbrance will take priority over all advances made after the mortgagee receives actual notice of the subsequent encumbrance." See also obiter dictum in Landers-Morrison-Christenson Co. v. Ambassador H. Co., 171 Minn. 445, 214 NW 503, 53 ALR 573. Apparently there is no limit to the amount of future advances, although discretion and implications found in the case of Finlayson v. Crooks, 49 NW 398, would recommend that an upper limit be set out in the mortgage. MISSISSIPPI MAJORITY RULE By decision. Although the earlier case of Witczinski v. Everman, 51 Miss. 841, had held that even actual notice of an intervening lien or incumbrance would not defeat the priority of a later optional advance where the mortgage so provided, the recent decision of the Mississippi Supreme Court in 1950, North v. J. W. Mcclintock, Inc., 44 So. (2d) 412, 208 Miss. 289, modifies this position and formally adopts the actual notice rule as to optional future advances. "We adopt the stated rule as being equitable and just." This appears to be the settled law in Mississippi. The Witczinski case appears still to govern insofar as no limit to such future advances need be set out in the mortgage: "If it contains enough to show a contract that it is to stand as security to the mortgagee for such indebtedness as may arise from future dealings between the parties, it is sufficient . ." This was later followed in Candler v. Cromwell, 101 Miss. 161, 57 So. 554, where the court said, "It is not necessary for a mortgage for future advances to specify any particular or definite sum which it is to secure." › MISSOURI—MAJORITY RULE By statute and court decision. Section 369.365 (3), Revised Statutes of Missouri, provides that associations Imay make future advances "for any purpose, to the extent authorized by the instrument evidencing a recorded first lien on home property." Although unlimited future advances are permitted (Rice Bros. v. Davis, 99 Mo. App. 636, 74 SW 431), the law has clear implication that a maximum limit to such advances must be set out in the mortgage. "Actual notice or knowledge" rule apparently prevails. Section 369.365 (2) creates a "statutory open-end" mortgage for certain purposes and to the extent of $1,000. Law provides that an association holding a first dien on home property may "make an additional loan or loans, not exceeding in the aggregate $1,000 and which hereby shall be and stand secured by such first lien for the improvement, equipment or furnishing of such home property . . ." This section apparently puts the world on notice that any home mortgage held by a savings and loan association, including a "closed-end" mortgage by its own terms, is statutorily endowed with the open-end feature for certain purposes up to $1,000. Although apparently giving such advances first lien status irrespective of notice, a construction of this section with other sections of the statute would recommend that the lender operate under the "actual notice" rule. Section 369.365 (1) provides that where advances are necessary to protect the security of any loan or the priority of lien thereon, such may be made without limit and shall "stand secured by such first lien irrespective of intervening liens . . ." In this case, even actual notice would apparently not endanger priority. MONTANA-MAJORITY RULE By statute. Section 52-201, Revised Codes of Montana: "[Any interest in real property capable of being transferred] may be mortgaged to secure existing debts, to secure debts created simultaneously with the execution of the mortgage, and to secure advances then in contemplation but to be made in the future. The total amount of all future advances contemplated and to be subject to the mortgage protection must be stated in the mortgage, provided the mortgagee may reserve the right, at the mortgagee's option, to refuse to make all or any part thereof. The lien for said stated amount of said future advances shall have priority to the same extent as if the amount thereof had been actually advanced . . . at the time of the execution of the mortgage. The mortgagee shall, upon demand of the mortgagor or a creditor, furnish a statement of all such advances and amounts paid on the principal sum secured, provided such statement shall not impair or affect the lien created for all advances. Upon receipt of such statement, or at any other time following the execution and delivery of the mortgage, the mortgagor may deliver written notice, duly acknowledged, to the mortgagee plainly stating that the mortgagor does not desire to request or apply for any . . further advances . . ., clearly identifying the mortgage by reference to its [date, parties, original debt, limit to future advances]. Upon the recording of such written notice by the mortgagor in the county and counties where the mortgage is recorded, the lien of the mortgage shall continue to have priority, but only for the aggregate amount of the indebtedness then existing, including any advances theretofore made, interest due and other charges as evidenced by the original loan-contract, and indebtedness thereafter accumulating on such basis, exclusive of any other future advances originally contemplated. Any lien entitled to actual priority over the lien of mortgage by force of any express provision of the laws of this state shall continue to have priority to the extent prescribed by law." (Italics ours.) The priority of other liens referred to in the last sentence apparently refers to Sections 45-504 and 45-506, which prefer mechanics' or materialmen's liens even to prior mortgages, but only as to the building and not the land. See the case of Interstate Lumber Co. v. Rider, 93 Mont. 489, 19 P (2d) 644. The theory of the Montana law is slightly different from most: Instead of providing for a possible future agreement to make the advances, the mortgage provides that the advances shall be made, subject to the option of either to stop the advance. Although actual notice of an intervening incumbrance would apparently not jeopardize the priority of the lien of later advances, prudence would advise proceeding upon the actual notice rule. NEBRASKA-MAJORITY RULE By decision. The Nebraska law was established by the ruling case of Omaha Coal, Coke and Lime Co. v. Suess, 74 NW 620, 54 Neb. 379: "A mortgage to secure future advances is valid between the parties and as to third persons; that if the mortgage on its face states that it is for that purpose, or if it appears to be a mortgage for a sum certain and the actual debt does not exceed that sum, a junior lienor takes subject thereto for all moneys then advanced or which may be advanced after the junior lien attaches and before the senior mortgagee has notice thereof. The recording of a junior lien, or the rendition of a judgment against the mortgagor does not charge the mortgagee with notice of such junior lien." See also Section 76-238, Revised Statutes, Recording. However, it has been held that one examining a record is thereby charged with actual notice of matters therein. Mulligan v. Snavely, 223 NW 8, 117 Neb. 765. A maximum limit to optional advances should be specified in the mortgage, witness the case of Wagner v. Breed, 29 Neb. 720, where the court, in holding an agreement for unlimited advances good as between the contracting parties, remarked that as to third parties the mortgage lien would take precedence for advances only to "the limit fixed by the terms of the instrument upon which the advances [are] to be made." NEVADA-MAJORITY RULE By decision. The law is found in Chartz v. Cardelli, 52 Nev. 1, 279 P 761: "Mortgages are but contracts, and it is the law that a mortgage made in good faith, for the purpose of securing future debts, is valid ..." Where later advances were obligatory, the court held that even "actual notice or knowledge" of intervening liens did not jeopardize the priority. As to optional future advances, the court said ". . . advances made after notice of a subsequent incumbrance are not superior to that of such subsequent incumbrance . . . prior mortgagee is not allowed knowingly to prejudice the rights of the subsequent incumbrancer, or defeat or impair his lien, by adding voluntarily to his own incumbrance." From a construction of the language above and the case of Sharon v. Minnock, 6 Nev. 378, it would appear that record notice alone would not be sufficient to endanger the priority of a later advance. "The record . . . only imparts notice of the contents thereof to subsequent purchasers and mortgagees ..." It is advised that a full description of intent and a maximum limit to the advances be set out in the mortgage; see the Sharon decision: "The record is not notice of anything not contained" in the instrument. NEW HAMPSHIRE—MAJORITY RULE By statute. Section 3A, Chapter 261, Revised Laws, provides that optional future advances to the mortgagor "for making repairs, additions or improvements to the mortgaged premises, shall be equally secured with and have the same priority as the original indebtedness, to the extent that the aggregate amount outstanding at any one time when added to the balance due on the original indebtedness shall not exceed the amount originally secured by the mortgage." The clear intent of the parties should be spelled out in the mortgage, the purpose of the advances should be confined to those mentioned, and the maximum limit specified to be that allowed by Section 3A of the statute. Although the statute would probably protect priority of advances made even with actual notice of intervening liens, the better practice would be to act as if the actual notice rule were in force. Caution should be exercised and a search of the records made in making optional advances called for by a mortgage for other than the purposes and amounts specified in Section 3A. Although Section 4 provides that 44750 0-54-pt. 1-52 mortgages for future advances may be made (if provision therefor is specifically made together with any limitations on advances; see also Mica Products Co. v. Heath, 81 N.H. 470, 128 A 805), the law provides that the advances shall be secured by the mortgage only as, when, and to the extent the advances are actually made. Thus, in accordance with the "Minority" rule discussed earlier herein, intervening recorded liens would appear to take precedence over later advances made under any provisions other than those of Section 3A. See Leeds v. Cameron, 3 Sumn. 488. NEW JERSEY-MAJORITY RULE By statute and court decision. Section 78 (2) of the savings and loan act sets up a "statutory open-end" provision. Where the association already holds a mortgage, "additional loans" may be made for repairs, alterations, or improvements to the property, or to pay the cost of certain life insurance. Amount of additional loans cannot exceed the lesser of $1,000, or the amount the principal has been reduced if a direct reduction loan, or the withdrawal value of pledged installment account if a sinking fund loan. Law provides that each such additional loan is to be evidenced by an obligation stating the terms, and that the amount will be added to the amount due under the mortgage, and that it shall be secured thereby. "All persons who acquire any rights in, or liens upon, the mortgaged real estate subsequent to the recording of any association's mortgage shall hold such rights and liens subject to the ... additional loans. For the purpose of such additional loans, no search or examination of the title . . . shall be required." The above "statutory open-end" provision is expressly "in addition to and not to the exclusion of, the power to make any other lawful loan or any other lawful additional loan, or to make advances for any purpose ex pressly or impliedly reserved or provided for in any bond, mortgage or other obligation held by or hereafter acquired by any such association." From this provision, it is clear that an association can make any open-end mortgage that it has corporate power to make. A review of decisions indicates that the mortgage, by its terms, need not state a maximum limit to such advances (First National Bank v. Byard, 26 N. J. Eq. 255), although it is recommended that such a maximum limit be set out to preclude charges of lack of notice or inequity by the intervening incumbrancer. Bell V. Fleming, 12 N. J. Eq. 13. The "actual notice" rule was well stated and firmly upheld in Ward v. Cooke, 17 N. J. Eq. 93: "A mortgage given to secure future advances, duly registered, is good, not only as against the mortgagor, but is entitled to priority over subsequent encumbrances, for all advances made prior to notice of the subsequent encumbrance . . . and the notice must be an actual, not a constructive notice." The court went on to say that the priority of the advances was "not affected by the registry of the [intervening] mortgage." See also Central Trust Co. v. Continental Iron, 51 N. J. Eq. 605. Again in Micele v. Falduti, 101 N. J. Eq. 103, 137 A 92, the court held that "where the making of future advances is . . . optional, the mortgage is a prior lien to all subsequent encumbrances until there is actual notice to the mortgagee as distinguished from constructive notice." NEW MEXICO-PROBABLY MAJORITY RULE Coon v. Bosque Bonita Land Co., 8 N. M. 123, 42 P 77, 50 ALR 576, held good a mortgage providing for future advances. "The deed of trust was a public record [when the subsequent interest was created], and the clause for future advances in it was sufficient to put the [subsequent holder] on inquiry, and it is now estopped from setting up want of notice . . ." The clause providing for future ad vances was held good, even though no maximum limit was stated in the mortgage. The same result was reached in Smith v. Montoya, 3 N. M. 39. The question as to how record notice by the first mortgagee of an intervening lien would affect priority of later advances is apparently stili an open one in New Mexico. NEW YORK-MAJORITY RULE By decision. The common law rule prevails in New York, see in re Harris, 282 N. Y. S. 571. "Actual,” not record, notice of an intervening interests is required to subordinate the lien, the latter is superior, Catskill ber Co. v. Dygert, 136 Misc. 292, 240 N. Y. S. 580. Same as above, but when the advance is made with actual notice or knowledge of intervening lien, the latter is superior. Catskill National Bank v. Saxe, 24 N. Y. S. (2d) 82. Although no limit to the amount of future advances need be stated in the mortgage (Robinson v. Williams, 22 N. Y. 380), (1) it is safer to state a limit to such future advances to preclude intervening lienor's possible claim of inequity or lack of notice (Beckman v. Frost, 18 Johns 544), and (2) it is more convenient on account of state mortgage tax, which may be paid in advance on the total amount of advances if maximum is stated in mortgage, rather than piecemeal as advances are made. NORTH CAROLINA-PROBABLY Although cases in point are few, in Moore v. Ragland, 74 N. C. 343, the court held: "It is clear that a man may lawfully mortgage his property to secure future and contingent debts ... [and that the mortgagee's rights are not affected by a prior unregistered mortgage]." The same result was reached in Todd v. Outlaw, 79 N. C. 216, except that a defectively recorded mortgage was concerned. In the latter case the court said: "... to the extent of the payments made by |