from those where the advance is made at the date of the mortgage. And these few contracts, where the mortgagee, not contemplating at the time any further transactions with the mortgagor, inserts a clause, to save all possible contingencies, to cover any accidental future advances, is not very different from a second mortgage, and, there is, perhaps, no unreasonableness in treating this class of contracts, in the same way we do those which are wholly independent, making the registry of any intervening incumbrance notice to the first mortgagee. But we shall again advert to the question of notice.

8. But the numerous class of cases of dealings with banks and bankers, and guarantors and indorsers, and the like, where extensive and hazardous credits are being constantly given, from day to day and hour to hour, where it is just and equitable that security should be given, to cover future transactions, are of great interest to business, and especially commercial men, and they are not entirely free from difficulty. Hence, within the last two years, in England especially, questions connected with transactions of this character have been more discussed, than for many years preceding. Many of the cases connected with these questions have not been republished in this country, indeed very few of them have been, in any such form as to be accessible to the profession generally. We shall therefore, make no apology, for giving a somewhat detailed analysis of the recent English decisions, and of the American cases bearing upon the points discussed, being persuaded that it cannot fail to be of more practical use to the profession, than anything else we could give them, just at this time.

9. The case of Gordon vs. Graham, 2 Eq. Cas. Ab. 598, pl. 16, S. C. 7 Viner's Ab. 52 E, was the leading case in the English books, in regard to the right of the first mortgagee who had taken his mortgage to secure future advances, to continue to make such advances with safety, notwithstanding he might make them after full notice of an intervening incumbrance. There can be no question the reports of the case declare that Lord COWPER, the Chancellor, distinctly decided in that case, that if the second mortgagee, at the time of taking his mortgage, had notice of the prior mort

gage being taken to secure future advances, he was acting in bad faith towards the first mortgagee, in attempting to defeat the full effect of his security, by taking another mortgage; and that he should therefore be postponed. But where the second mortgagee took his security, without knowledge of the prior mortgage, and gave notice to the first mortgagee of the existence of his mortgage, the first mortgagee would be bound to respect such security thereafter. This was in accordance with the literal import of the first mortgage, and in analogy to the decisions of the English Equity Courts, in regard to the right of taking subordinate incumbrances. And it is generally laid down in the English treatises upon the subject, as the settled rule of law. But it had been questioned by Mr. Coventry, in his edition of Powell on Mortgages, 1822, and by Lord St. Leonards, Chancellor of Ireland, in Blunden vs. Desart, 2 Dru. & W. 431, and by others, and especially by the American Courts. But it maintained its ground in England until a very late period.

10. But when the principle of the decision came to be critically examined by counsel and by the Master of the Rolls, in Shaw vs. Neal, 20 Beavan 157; S. C. on appeal, 6 H. of Lds. Cas. 581, the rule was pointedly dissented from by Sir JOHN ROMILLY, M. R., but the case was finally disposed of without distinctly overruling the case of Gordon vs. Graham, although it has sometimes been asserted, that the case of Gordon vs. Graham was distinctly overruled in Shaw vs. Neal by the House of Lords. See Lord CAMPBELL, Chancellor, in House of Lords; Hopkinson vs. Rolt, 7 Jur. N. S. 1212, May 1861.

11. But the case of Gordon vs. Graham, came again under review in the case of Rolt vs. Hopkinson, 25 Beavan 461, and was distinctly dissented from by the learned judge Sir JOHN ROMILLY, M. R., although not formally overruled. But when this case came before the Lord Chancellor, on appeal, that learned judge (Lord CHELMSFORD), deemed it necessary to examine the foundation of its authority, and it was distinctly overruled: 4 Jur. N. S. 1119; S. C. 3 De Gex & Jones 177, as far as any case can be said to be overruled, by any court not of the last resort.. This case was

VOL. XI.-2

carried by appeal before the House of Lords, and after a labored examination of the Registrar's office, that court came to the concluston, that Gordon vs. Graham was not correctly reported, and that if it was, it could not be maintained as sound law, and was, therefore, formally overruled by the court of final jurisdiction. Lord CRANWORTH dissenting.

12. It is not important now to inquire into the grounds of this last decision, since it conforms substantially, to what had long been the American rule upon the subject. It goes mainly upon the ground, that where there is no binding contract, in regard to such future advances on the part of the mortgagee, the whole matter rests merely in negotiation, and continues optional with both parties, until the advances are actually made. The security as to such future advances, consequently has no binding force, 1 and no vitality or validity, until the advances are made. It is very obvious, therefore, that as the debtor has the election whether he will accept any further advances, there can be no obligation on his part not to negotiate with other parties for such advances upon the further credit of a mortgage upon the same estate. He must do this if the first mortgagee declines to make them, and he may do it, if for any reason he prefers to transfer his account to another house. And if the mortgagor has this election, there can be no wrong in a party, to whom he applies to make such further advances, upon the credit of the mortgagor's remaining interest in the estate doing so. The application to the second mortgagee is a virtual election on the part of the mortgagor, to nullify the optional portion of the first mortgage, as to further advances.

13. But after this is done, and the estate, in good faith, pledged to a subsequent mortgagee for such further advances, and all this is made known to the first mortgagee, it can be nothing short of bad faith, for him then to allow a further credit to the mortgagor, if he does it with the purpose of compelling payment out of the estate, at the expense of the second mortgagee: M'Daniels vs. Colvin, 16 Vert. R. 300.

14. The most important remaining inquiry is in regard to the extent, and kind of notice of the subsequent mortgage, which it is

requisite the first mortgagee should have, in order to postpone his further advances to such intervening security. As a general rule, it has been considered that the registry of the second mortgage, will only be notice of its contents to future purchasers and incumbrancers, and not to prior incumbrancers, thus operating forward and not backward. This is highly reasonable, if we apply it only to such past transactions as are not likely to direct the attention of the party to the registry. And that is the case where the future advances are contemplated to be made, from day to day, and hour to hour, and involve a continuous dealing, as with bankers and brokers, where the balance is constantly changing. The requirement that one should, under such circumstances, constantly watch the registry, or act at his peril, would tend to render such continuing security of little avail. But where the clause for securing future advances is inserted, as a mere safeguard, and with no present expectation of the parties that it will be acted upon, and the parties do subsequently negotiate a further distinct loan, there seems no hardship, in requiring the first mortgagee to examine the registry, before he make such further loan. Accordingly, we find the law established in some of the states, that the registry is full notice to the first mortgagee, not to make further advances under his mortgage: Spader vs. Lawler, 17 Ohio R. 371; Ter Hoven vs. Kerns, 2 Barr 96; Parmentier vs. Gillespie, 9 Barr 86.

15. But the general view of the American courts, and the uniform declaration of the English courts, as far as we know, is, that nothing short of notice in fact will have this effect. It is expressed under various forms of language, but the result of the whole is, that if the first mortgagee have knowledge of the existence of a second mortgage upon the estate, he cannot give further credit upon his prior mortgage, provided it is entirely optional with him, whether to make further advances or not. This has been often declared by judges and text writers, and may now be regarded as settled law, notwithstanding an occasional case seems to require something more. In McDaniels vs. Colvin, 16 Vt. R. 300, it seems to be required that the second mortgagee should give express

and formal notice of his incumbrance, by way of admonition to the first mortgagee not to deal further upon the credit of his security. But this subject was a good deal examined, and considered by that court, when the late case of Hubbard's Estate vs. Converse, supra, was before them, and although the court decided that case upon the ground that the successive discounts were mere renewals of the original gross sum of $25,000 named in the mortgage as a standing security, and although it is intimated in the rescript filed by the court, at the time of entering up judgment, that a majority of the court were not prepared to depart from the rule laid down in McDaniels vs. Colvin, as the law of that state, it having been so long received and acted upon as the settled law of the state, it is nevertheless clearly shown in the same rescript, by the judge delivering the opinion of the court, that all which the law requires in such cases is, that the first mortgagee, before he gives the credit, should have had a distinct knowledge of the existence of the intervening incumbrance; and that it is not material how this knowledge is acquired, provided it be in such a way as to gain confidence with the first mortgagee, as being authentic.

16. It scarcely seems necessary to occupy much space upon this point. With the exception of the case of McDaniels vs. Colvin, supra, the current of authority seems to be all one way. Mr. Chief Justice MARSHALL, in Shirras vs. Craig, supra, uses the language "actual notice brought home to the party." In Truscott vs. King, 6 Barb. S. C. 346, the form of language is, "actual notice of the second mortgage." In Frye vs. The Bank of Illinois, 11 Illinois R. 381, the notice to the first mortgagee was from the accident of his being the public officer, or his assistant, who made the registry of the second mortgage. In Craig vs. Tappin, 2 Sanf. Ch. R. 78, the first mortgagee was apprised of the mortgagor's intention soon to execute a mortgage to the second mortgagee, and the court held that sufficient notice, as to all advances made after the actual execution of the second mortgage. In Stuyvesant vs. Hall, 2 Barb. Ch. R. 159, the requisite notice. to affect one with fraud in equity is thus defined: "His conscience is not affected unless he is informed of the existence of the facts