## Facts

- In 1956, Joseph Shinstock and his wife borrowed \$25,000 from First National Bank and gave a mortgage on their real property.
- After the borrowers defaulted, the parties executed a second mortgage on August 20, 1957, to secure the same \$25,000 debt in exchange for a 90-day extension to pay.
- On August 20, 1957, Manufacturers and Traders Trust Co. obtained a federal court judgment against the borrowers.
- First National recorded the second mortgage on August 23, 1957.
- Manufacturers and Traders recorded its judgment on August 28, 1957.
- When First National took the second mortgage, it lacked actual and constructive notice of the judgment lien.
- First National sued for a declaration that its second mortgage had priority over the judgment lien; the trial court ruled for First National.

## Issues

1. Whether a mortgage given to secure a preexisting debt, supported solely by an agreement to extend time for payment, is supported by “value” so the mortgagee qualifies as a purchaser for value.
2. Whether such a mortgage, taken without notice and recorded before a competing judgment lien, has priority over the later-recorded judgment lien.

## Decision

- The appellate court affirmed the judgment for First National Bank.
- The court held that an agreement to extend the time to pay a preexisting debt is valuable consideration.
- Because the second mortgage was supported by value, First National qualified as a purchaser for value.
- Since First National lacked notice of the judgment at execution and recorded its mortgage before the judgment was recorded, the mortgage had priority over the judgment lien.

## Legal Principles

- A creditor’s forbearance or agreement to extend the time for payment of a preexisting debt constitutes valuable consideration for a mortgage.
- A mortgage supported by such consideration may qualify the mortgagee as a purchaser for value for recording-priority purposes, even if no new money is advanced.
- Under recording-priority rules, a mortgagee who takes for value without notice and records first has priority over a judgment lien recorded later.

## Conclusion

The court held that a 90-day extension of time to pay an existing debt is sufficient consideration to make a mortgage a purchase for value; therefore, a mortgage taken without notice and recorded before a judgment lien is recorded has priority over that later-recorded judgment lien.


Manufacturers & Traders Tr. Co. v. First Nat’l Bank, 113 So. 2d 869 (Fla. Dist. Ct. App. 1959)