Opinion
6 Div. 527.
June 15, 1939. Rehearing Denied October 12, 1939.
Appeal from Circuit Court, Cullman County; A. A. Griffith, Judge.
St. John St. John, of Cullman, for appellants.
Conveyances of personal property to secure a debt or to provide indemnity are inoperative as against purchasers without notice until recorded. Plaintiff's mortgage not being recorded at the time the mortgage to Leeth National Bank was executed, the last mortgage in point of time acquired the better title. Williams v. White, 165 Ala. 336, 51 So. 559. The subordination agreement does not in any way connect plaintiff with the title of Kinney, nor has plaintiff paid the Kinney mortgage and become subrogated to his rights. Draper v. Walker, 98 Ala. 310, 13 So. 595; Keith v. Ham, 89 Ala. 590, 7 So. 234; Curb v. Dabbs Tannehill, 19 Ala. App. 149, 97 So. 109; Henderson v. Murphree, 124 Ala. 223, 27 So. 405.
Julian Harris and Norman W. Harris, both of Decatur, for appellee.
Where property is subject to three liens and by agreement between the first and third lienors the first lien is subordinated to the third, the legal effect is that the third lien becomes first in priority, subject of course to the limitation that it is not prior to the second lien for an amount greater than the amount secured by the first lien which was subordinated. Ohio Sav. Ass'n v. Bell, 25 Ohio App. 84, 158 N.E. 548.
The result in this case depends upon the effect of § 6890 of the Code, which provides: "Conveyances of personal property to secure debts, or to provide indemnity, are inoperative against creditors and purchasers without notice, until recorded," etc.
The settled construction of this statute is that a prior unrecorded mortgage, as to a subsequent mortgagee who without notice takes a subsequent mortgage and parts with value, is void. Nolen v. Farrow, 154 Ala. 269, 45 So. 183; Williams v. White, 165 Ala. 336, 51 So. 559.
The sole effect of the "subordination" agreement between Kinney and appellee was to subordinate Kinney's prior lien to that of appellee's mortgage. It did not circumvent or destroy the effect of the statute which protects appellants against the prior unrecorded mortgage of appellee.
In Ohio Sav. Ass'n v. Bell et al., 25 Ohio App. 84, 158 N.E. 548, decided by the Ohio Court of Appeals, the mortgage of the plaintiff was a first mortgage and was the first filed for record. Therefore the recording statutes of that State seem to have been without influence. We are not able to follow that case in the interpretation of the "subordination" agreement as giving to the plaintiff in that case the benefit of the superior vendor's lien held by Pomeroy and Fuller, simply because their second mortgage stated that it was "subject to a first mortgage with the Ohio Savings Association." Moreover both parties to the "subordination" agreement in that case were before the court.
This is an agreed case, and the judgment here is that the circuit court erred in giving judgment for the plaintiff. That judgment is reversed, and one here rendered in favor of the defendants, appellants here.
Reversed and rendered.
ANDERSON, C. J., and THOMAS and KNIGHT, JJ., concur.