¶ 1 At issue in this case is whether a mortgage given to secure a current indebtedness as well as future advances has priority over an intervening lien that attached after the original debt but before a later advance. Following Garey v. Rufus Lillard Co., 1945 OK 305, 165 P.2d 344, we hold the intervening lien is superior to the lien represented by the later advance if the mortgage agreement does not obligate the mortgagee to make future advances. ¶ 2 Defendant Brent Worley and a nonparty, David Couch, cosigned a note (1999 Note) for $421,835.00 to Defendant/Appellant Coppermark Bank's (Coppermark) predecessor on August 24, 1999.
See n. 2. supra.Garey v. Rufus Lillard Co., 196 Okla. 421, 165 P.2d 344 (1945). Lien claimants would estop the lender from asserting the priority of its mortgage lien under authority of Apex Siding Roof. Co. v. First Federal Sav. L. Ass'n, Okla., 301 P.2d 352 (1956) and Palmer v. Crews Lumber Co., Inc., Okla., 510 P.2d 269 (1973).
Briggs v. McAdams Pipe and Supply Co, 359 P.2d 572 (Okla.); Wilkins v. Fecht, 356 S.W.2d 855 (Tex.); Young v. Mayfield, 316 P.2d 162 (Okla.); Tarheel Drilling and Equipment Co. v. Valley Steel Products Co., 231 Ark. 510, 330 S.W.2d 717; United States v. Texas Eastern Transmission Corp., 254 F. Supp. 114 (D.C. La.); Garey v. Rufus Lillard Co., 196 Okla. 421, 165 P.2d 344; Southport Petroleum Co. v. Fithian, 203 La. 49, 13 So.2d 382; Stanolind Crude Oil Purchasing Co. v. Busey, 185 Okla. 200, 90 P.2d 876; Crowley v. Adams Bros. Prince, 262 S.W. 883 (Tex.Civ.App.); Black v. Giarth, 88 Kan. 338, 128 P. 183; P. Dufford and R. Helmick, Mechanics' Liens Relative to Oil and Gas Operations, 34 DICTA 207, 384 (1957). See also American Law of Mining, § 25.3a at 518 (1971). The proceeds of the sale of oil and gas are not listed in the Colorado statute, C.R.S. 1963, 86-5-1, as property within the scope of the lien.
The pleadings and the uncontroverted evidence in this case established as a matter of law that the principal did owe the claim; that the defendant was liable for it under its bond; and that no meritorious defense was offered by defendant to it. See Garey v. Rufus Lillard Co., 196 Okla. 421, 165 P.2d 344; and Upham Shoe Company v. Pollard, 111 Okla. 228, 239 P. 244, as limited by Barlas v. Catechis, 129 Okla. 142, 263 P. 647. The trial court's specific finding that "No promise to pay the claim was made by the defendant."
We agree that the lienholders would be entitled to priority if the plaintiff had reserved the option to pay the proceeds of the loan as he saw fit or to refuse payment until construction had been completed. See Antrim Lumber Co. v. Claremore Federal Savings Loan Ass'n, 204 Okla. 387, 230 P.2d 274; and Garey v. Rufus Lillard Co., 196 Okla. 421, 165 P.2d 344. In the present case, however, the plaintiff did not reserve this option.
In the circumstances there is no injustice in giving effect to the application agreed upon by Shell and Lamb. Stephenson v. Ketchikan Spruce Mills, 412 P.2d 496 (Alaska 1966). Shell's ready acquiescence in Lamb's suggestion had the same effect as if the application had been made by Shell in the first place. Garey v. Ruffus Lillard Co., 196 Okla. 421, 165 P.2d 344 (1945). Second, the Wawaks raised a question of fact about whether all the materials charged to them had really been used in the construction of their home.
In Stanolind Crude Oil Purchasing Co. v. Busey, 185 Okla. 200, 90 P.2d 876, we held that this lien statute specified certain properties to which a lien could attach, but oil and gas as produced is not mentioned in the lien statute and the proceeds from the sale thereof are not brought into the custody of the court by the assertion of such a lien. In Garey v. Rufus Lillard Co., 196 Okla. 421, 165 P.2d 344, 352, we said: "* * * The lien claimants had no lien on this money from oil sales, therefore no right to have it applied on their liens.
The Supreme Court of Oklahoma has adopted the position just stated. ( Home Sav. Loan Ass'n v. Sullivan, 140 Okla. 300, 284 P. 30; and Garey v. Rufus Lillard Co., 196 Okla. 421, 165 P.2d 344.) Kansas, however, has not heretofore adopted the corollary to this rule concerning priority of liens — where a mortgage is for future advances when the amount is neither fixed nor clearly stated and the making of the advance is optional with the mortgagee. In 19 J.B.K., p. 70 (August, 1950), a comment on Priority of Mortgages v. Mechanics Liens, states:
It is, of course, settled that liens against the lease are not liens on proceeds of oil runs from the lease. Garey v. Rufus Lillard Co., 196 Okla. 421, 165 P.2d 344. But these answers to the Trustee's cross-petition are in the nature of a creditor's bill to recover assets of an insolvent, and were so considered by the parties, and the trial court in the trial of the case. It was pleaded that the mining partners were insolvent at the time of the assignment and that the transfer operated as a fraud on the partnership creditors.
Allied contends that Tilley in his pleadings in the Pottawatomie county suit limited his oil payment to $15,000 to the Louis Tipken well. The record does not bear out Allied's contention. Copies of the pleadings filed by Tilley in the Pottawatomie case disclose that the only question raised by him was that his contract with Thornton of May 2, 1939, by mutual mistake, failed to include gas, as well as oil, out of the $30,000 oil payment to be paid. The journal entry of judgment in that case discloses that the court specifically approved the report of the Referee to the effect that the oil payment should come out of gas as well as oil from the production of both leases, subject only to the right of Eugene L. Garey under his mortgage from Yorkan. That judgment in no manner foreclosed Tilley's rights to the oil payment under his recorded contract with Thornton. The priority of Garey's mortgage upon appeal was affirmed by this court in Garey v. Rufus Lillard Co., 196 Okla. 421, 165 P.2d 344. The judgment in the Pottawatomie case, upon which Allied relies, foreclosed all the right, title and interest of Yorkan Production Corporation in the leases. Yorkan's interest was inferior to Tilley's interest, as Yorkan acquired its interest in the leases subject to Tilley's recorded contract.