## Facts

- Hobart W. Gentry, Jr. and Georgia C. Gentry owned a residence in Hattiesburg, Mississippi, subject to a first deed of trust held by Deposit Guaranty Mortgage Company.
- In 1981, the Gentrys obtained a second-mortgage home-equity loan from Credithrift of America, Inc. and executed a second deed of trust that was recorded in the county land records.
- The second deed of trust included a broad future-advance (“dragnet”) clause stating it secured the stated debt and any future debts or obligations to Credithrift arising before the instrument’s cancellation of record.
- The documents did not obligate Credithrift to make any future advances; additional lending was discretionary.
- In 1983, the Gentrys refinanced their Credithrift balance by executing a new note and an additional deed of trust.
- In 1984, Thomas E. Shutze obtained and recorded a judgment against Hobart Gentry, thereby perfecting a judgment lien on the property.
- In 1985, after Shutze’s lien was perfected, Credithrift made an additional advance/renewal to the Gentrys under the 1981 deed of trust’s future-advance clause.
- The Gentrys later defaulted; Credithrift foreclosed. Deposit Guaranty’s first deed of trust was conceded to be senior; the dispute concerned priority between Shutze’s judgment lien and Credithrift’s lien for the 1985 advance.

## Issues

1. Whether future-advance (“dragnet”) clauses in deeds of trust are valid and enforceable under Mississippi law.
2. Whether a later advance made under a recorded future-advance deed of trust has priority over an intervening judgment lien, by relating back to the deed of trust’s recording date.

## Decision

- The Mississippi Supreme Court affirmed the chancellor’s ruling that the dragnet clause was enforceable.
- The court held that the lien securing a future advance under a recorded deed of trust takes priority as of the original recording date, even as to advances made after intervening liens are perfected.
- Because Credithrift’s deed of trust was recorded before Shutze’s judgment lien, Credithrift’s lien securing the 1985 advance was senior to Shutze’s lien.
- The court affirmed the priority determination and remanded for further proceedings on an unrelated issue.

## Legal Principles

- Future-advance (“dragnet”) clauses in deeds of trust are enforceable as ordinary contractual provisions, subject to standard contract defenses.
- A recorded deed of trust containing a future-advance clause provides constructive notice to subsequent creditors and purchasers of the potential scope of the secured lien.
- The lien securing a future advance made under a recorded deed of trust relates back to the recording of the original deed of trust and may prime intervening judgment liens perfected after recording but before the advance.
- The absence of a lender’s contractual duty to make future advances does not prevent enforcement of a recorded clause that secures advances the lender later elects to make.

## Conclusion

Mississippi law enforces recorded dragnet clauses and gives future advances made under such clauses priority dating from the original deed-of-trust recording, defeating later-perfected intervening judgment liens when the clause places third parties on constructive notice.


Shutze v. Credithrift of Am., Inc., 607 So. 2d 55 (Miss. 1992)