The agreement of July 30, 1897, gave Whitcher the right, within one year from its date, to borrow of the plaintiff an amount of money, not to exceed $2,000, in such sums as he should desire, upon ten days' notice and a tender of his demand note therefor. While he agreed to do certain things in case he called upon the plaintiff for loans under the agreement, he did not obligate himself to borrow $2,000, or any portion thereof, from him. It was left to his discretion to say whether he would borrow any money, and if any, what amount within the limits of the plaintiff's offer. In other words, he procured an option upon the plaintiff for an amount of money not exceeding $2,000, to extend for one year; and in case he exercised it, the mortgage which he was to give was to stand as security for the payment of the sums borrowed and the performance of his other undertakings, which *Page 453 were to be collateral to the loan. Therefore, until the option was exercised and a loan procured thereunder, the obligation to which it was intended the mortgage should attach as a security did not exist.
At the date of the execution and delivery of the mortgage, the option had not been exercised in whole or in part; but that fact does not render the mortgage invalid as a security, within the meaning of the statute. P. S., c. 139, s. 3. The option was exercised to the amount of $500 on the following day, at which time the mortgage is to be considered as having come into existence and to have taken effect, so far as it relates to the loan of $500. Starers v. Philbrick, 68 N.H. 379; Weed v. Barker,35 N.H. 386.
In Stavers v. Philbrick, supra, Carpenter, J., in considering a similar question, said: "The execution and delivery of the mortgage upon one day and the mortgagee's assumption on the next day of the liability which it was intended to secure, must be regarded as parts of the same transaction. Until the indorsement of the note by the plaintiff, the mortgage, though previously delivered, had no legal existence. It and the liability it was made to secure took effect at the same instant. The plaintiff's obligation to pay the $4,000 note was not `made or contracted after the execution and delivery of the mortgage,' within the meaning of the statute."
The question, however, remains, whether the mortgage is void as a security for the advancements made by the plaintiff subsequent to the one for $500. It has been held that where a mortgagor has agreed to pay the mortgagee a specific sum, as represented by his note, and, in consideration therefor, the mortgagee has agreed to give the mortgagor credit for the amount of the note, or to assume a liability, the mortgage is not to secure future advancements and void within the meaning of the statute. Stearns v. Bennett, 48 N.H. 400; Abbott v. Thompson, 58 N.H. 255; Fessenden v. Taft,65 N.H. 39.
Upon the facts disclosed in the foregoing cases, it appeared that it was not discretionary with the mortgagor whether he would pay his note, or with the mortgagee whether he would extend the credit or assume the obligation which was the consideration for the note; but the argument was advanced, that if the payment of the note or the extension of the credit had been discretionary with either party, the mortgage would have been invalid. It would seem, however, that this argument is to some extent in conflict with the results reached in Richards v. Railroad, 44 N.H. 127, and Internat'l Trust Co. v. Company, 70 N.H. 118, when applied the facts there stated. In *Page 454 the last case, it appeared that in 1895, the Gas Electric Company contemplated issuing bonds to the amount of $50,000, secured by a mortgage running to the plaintiff Trust Company, as trustee; that such a mortgage was made, describing the bonds to be secured, and was duly recorded on August 14, 1895; that the bonds were pledged from time to time thereafter to different parties, as security for loans made to the company, the last of the bonds being pledged July 1, 1896. In September and October, 1895, creditors of the company attached its real estate. When the first attachment was made, money to the amount of $14,100 had been advanced upon the security of the bonds, and at the time of the second attachment, to the amount of $19,100. The creditors obtained judgments, and were about to levy upon the mortgaged property when they were temporarily enjoined. It was contended that the mortgage was void, on the ground that it was to secure future advancements; but the court held that the mortgage was valid, that it took effect at one time as to one pledge of bonds and at a later date as to, another and became effective after the bonds were disposed of, that it was a prior lien upon the property to the extent of the money advanced upon the bonds before the attachments, and that as to the sums thereafter advanced the attachments took precedence.
It would seem that if the argument advanced in Stearns v. Bennett, supra, had been applied in this decision, such a result would not have been reached; for it was discretionary with the Gas and Electric Company, the mortgagor, after it had pledged the first block of bonds as to which the mortgage had taken effect as a security, to say whether it would pledge the balance of the bonds to secure additional loans, and if so, when and in what amounts. But the court reasoned that as, since the decision in Richards v. Railroad, large amounts of property had been invested in reliance thereon, the interpretation put upon the statute in that case should be followed, even though its correctness might be questioned.
The facts in this case do not differ in their essentials from those in Internat'l Trust Co. v. Company; and as the plaintiff's mortgage was duly recorded, and he had advanced sums amounting to $1,000 prior to Whitcher's mortgage to the defendant Durgin, it takes precedence of that mortgage to that extent. The last advancement of $1,000 being subsequent to the Durgin mortgage, but prior to the one given to Jewell, the plaintiff's mortgage as security for this advancement is subsequent to the Durgin mortgage, but prior to the one given to Jewell.
The plaintiff is entitled to a decree. If the one made was not *Page 455 in accord with the foregoing, it should be modified in conformity thereto.
Case discharged.
CHASE, WALKER, and YOUNG, JJ., did not sit: PARSONS, C. J., concurred.