First Security Bank of Utah v. Shiew
Supreme Court of Utah
609 P.2d 952 (1980)
Bill and Linda Shiew (defendants) mortgaged their home to First Security Bank of Utah (plaintiff), and the mortgage contained a dragnet clause purporting to secure any future debt owed to the Bank. The Shiews separately obtained a second loan from a different branch of the Bank to fund a cattle-raising business, secured by their cattle; that loan agreement stated it was the parties' entire agreement and never mentioned the home mortgage. After the Shiews defaulted on the cattle loan and the cattle collateral was insufficient, the Bank sued to recover the deficiency and, after the Shiews' home burned down and Utah Farm Bureau Insurance Company (defendant) paid Linda Shiew's fire-insurance proceeds, the Bank amended its complaint to try to reach those proceeds under the home mortgage's dragnet clause. The trial court ruled for the Bank, and Utah Farm appealed.
Whether a mortgage containing a dragnet clause extends to secure a later advance that does not relate to the same transaction as the mortgage, where the document evidencing the later advance does not itself refer to the mortgage.