## Facts

- In 1963, Harold L. Mounkes and Betty L. Mounkes executed a $12,500 note to a bank, secured by a mortgage on their homestead.
- The 1963 mortgage contained a future-advances (“dragnet”) clause stating it secured the 1963 note, later notes executed by the mortgagors, and “all other sums” later owed by “the mortgagors or any of them.”
- By the time of suit, the balance on the 1963 note was about $1,573.57.
- In 1971, Harold alone executed a $5,100 note to help a son start a restaurant business.
- In 1971, Harold alone executed a second note for $3,711; it was separately secured by a security interest in a 1970 Ford automobile and was reduced to about $529 by the time of suit.
- Neither 1971 note expressly stated it was secured by the 1963 real-estate mortgage.
- The Mounkeses filed bankruptcy in 1971 and were discharged in 1972.
- The bank sued to foreclose the homestead mortgage for both the remaining 1963 balance and the unpaid 1971 debts, relying on the dragnet clause.
- The trial court entered personal judgment and an in rem foreclosure judgment that treated the mortgage as security for the later 1971 notes as well as the 1963 note.

## Issues

1. Whether the dragnet clause in the 1963 homestead mortgage secured the later 1971 notes executed only by the husband, permitting foreclosure of the homestead to satisfy those later debts.
2. Whether, given the parties’ dealings and the documentation of the later loans, the evidence showed a mutual intent to treat the later obligations as covered by the 1963 mortgage.

## Decision

- The Kansas Supreme Court modified the foreclosure judgment.
- The court held the 1963 mortgage secured only the original 1963 mortgage note balance (and related amounts), not the later 1971 notes executed solely by the husband.
- The court rejected using the dragnet clause to reach the homestead for later, separately documented obligations lacking a clear tie to the mortgage.
- The judgment was otherwise affirmed as modified.

## Legal Principles

- Dragnet (future-advances) clauses are disfavored and are construed strictly; broad boilerplate language does not automatically secure later debts.
- A later obligation will not be treated as covered by a dragnet clause absent clear evidence that both parties intended the mortgage to secure that specific later indebtedness.
- Courts consider the nature of the later debt and the parties’ course of dealing, including whether later notes reference the mortgage and whether the lender took separate collateral, as indicators of intent.
- Where property is a homestead and the later debt is incurred by only one spouse, courts are especially reluctant to find an implied extension of the mortgage lien to that later debt without clear documentation.

## Conclusion

The court limited the reach of a homestead mortgage’s dragnet clause, holding it did not secure later notes signed only by the husband when the later instruments did not identify the mortgage as security and one was separately collateralized, so foreclosure could proceed only for the remaining balance on the original 1963 mortgage debt.


Emporia State Bank & Tr. Co. v. Mounkes, 214 Kan. 178, 519 P.2d 618 (1974)