Hampton v. Gulf Federal Savings & Loan Association

In Auburn Insurance Agency v. First National Bank, 263 Ala. 30, 81 So.2d 600 (1955), a second mortgage was expressly made inferior to a first mortgage. One of the questions involved in that case was the *179priority of advancements over the claim of a second mortgage. The opinion noted that the general rule is that “if the first mortgagee has the option by the terms of the mortgage to make future advances, and does so after a second mortgage is made and with knowledge of that mortgage, those advances are ordinarily subordinate to the second mortgage,” citing 138 A.L.R. 566. (Emphasis supplied.)…