§ 3927. Letter as continuing guaranty in certain cases If the parties to a letter of credit appear, by its terms, to contemplate a course of future dealing between the parties, it is not exhausted by giving a credit, even to the amount limited by the letter, which is subsequently reduced or satisfied by payments made by the debtor, but is to be deemed a continuing guaranty. § 3928. Notice to writer of letter The writer of a letter of credit is liable for credit given upon it without notice to him, unless its terms express or imply the necessity of giving notice. § 3929. Agreement of credit with terms of letter If a letter of credit prescribes the persons by whom, or the mode in which, the credit is to be given, or the term of credit, or limits the amount thereof, the writer is not bound except for transactions which, in these respects, conform strictly to the terms of the letter. SUBCHAPTER VI-EXTINCTION OF LIENS 4071. Lien as accessory to act whose performance it secures. 4072. Extinction by sale or conversion. 4073. Extinction under statute of limitations. 4074. Partial performance. 4075. Restoration of property as extinguishing lien dependent upon possession. Subchapter I-General Provisions § 3961. Definition of lien A lien is a charge imposed in a mode other than by a transfer in trust upon specific property by which it is made security for the performance of an act. § 3962. General or special liens Liens are either general or special. § 3963. Definition of general lien A general lien is one which the holder thereof may enforce as a security for the performance of all the obligations, or all of a particular class of obligations, which exist in his favor against the owner of the property. § 3964. Definition of special lien A special lien is one which the holder thereof may enforce only as security for the performance of a particular act or obligation, and of such obligations as may be incidental thereto. § 3965. Satisfaction of prior lien by holder of special lien Where the holder of a special lien is compelled to satisfy a prior lien for his own protection, he may enforce payment of the amount so paid by him, as a part of the claim for which his own lien exists. § 3966. Contracts governed by this chapter Contracts of mortgage and pledge are subject to all the provisions of this chapter. Subchapter II-Creation of Liens § 3991. Manner of creation A lien is created: (1) by contract of the parties; or § 3992. No lien for claim not due A lien does not arise by mere operation of law until the time at which the act to be secured thereby ought to be performed. § 3993. Lien on future interest An agreement may be made to create a lien upon property not yet acquired by the party agreeing to give the lien, or not yet in existence. In such a case the lien agreed for attaches from the time when the party agreeing to give it acquires an interest in the thing, to the extent of the interest. § 3994. Obligations not in existence when lien created A lien may be created by contract, to take immediate effect, as security for the performance of obligations not then in existence. Subchapter III-Effect of Liens § 4011. Title not transferred by lien Notwithstanding an agreement to the contrary, a lien or a contract for a lien, does not transfer any title to the property subject to the lien. § 4012. Certain contracts void All contracts for the forfeiture of property subject to a lien, in satisfaction of the obligation secured thereby, and all contracts in restraint of the right of redemption from a lien, are void. 84013. Creation as not implying personal obligation The creation of a lien does not of itself imply that any person is bound to perform the act for which the lien is a security. 84014. Lien as security for other obligations The existence of a lien upon property does not of itself entitle the person in whose favor it exists to a lien upon the same property for the performance of any other obligation than that which the lien originally secured. § 4015. Compensation of holder of lien One who holds property by virtue of a lien thereon is not entitled to compensation from the owner thereof for any trouble or expense which he incurs respecting it, except to the same extent as a borrower, under sections 1969 and 1970 of this title. Subchapter IV-Priority of Liens 84031. Time of creation as controlling; exception Other things being equal, different liens upon the same property have priority according to the time of their creation, except in cases of bottomry and respondentia. § 4032. Marshaling liens Where one has a lien upon several things, and other persons have subordinate liens upon, or interests in, some but not all of the same things, the person having the prior lien, if he can do so without risk of loss to himself or of injustice to other persons, shall resort to the property in the following order, on the demand of any party interested: (1) to the things upon which he has an exclusive lien; (2) to the things which are subject to the fewest subordinate liens; (3) in like manner inversely to the number of subordinate liens upon the same things; and (4) when several things are within one of the foregoing classes, and subject to the same number of liens: (A) to the things which have not been transferred since the prior lien was created; (B) to the things which have been so tranferred without a valuable consideration; and (C) to the things which have been so transferred for a valuable consideration in the inverse order of the transfer. Subchapter V-Redemption from Liens 84051. Right to redeem; subrogation A person having an interest in property subject to a lien may redeem it from the lien at any time after the claim is due and before his right of redemption is foreclosed. By the redemption, he becomes subrogated to all the benefits of the lien, as against all owners of other interests in the property, except insofar as he was bound to make the redemption for their benefit. § 4052. Rights of inferior lienor One who has a lien inferior to another, upon the same property, may: (1) redeem the property in the same manner as its owner might, from the superior lien; and (2) be subrogated to all the benefits of the superior lien, when necessary for the protection of his interests, upon satisfying the claim secured thereby. § 4053. Procedure for redemption from lien Redemption from a lien is made by performing, or offering to perform, the act for the performance of which it is a security, and paying, or offering to pay, the damages, if any, to which the holder of the lien is entitled for delay. Subchapter VI-Extinction of Liens § 4071. Lien as accessory to act whose performance it secures A lien is to be deemed accessory to the act for the performance of which it is a security, whether any person is bound for the performance or not, and is extinguishable in like manner with any other accessory obligation. § 4072. Extinction by sale or conversion The sale of any property on which there is a lien, in satisfaction of the claim secured thereby or in case of personal property, its wrongful conversion by the person holding the lien, extinguishes the lien thereon. § 4073. Extinction under statute of limitations A lien is extinguished by the lapse of the time within which, under Title 5, an action may be brought upon the principal obligation. § 4074. Partial performance The partial performance of an act secured by a lien does not extinguish the lien upon any part of the property subject thereto, even if it is divisible. § 4075. Restoration of property as extinguishing lien dependent upon possession The voluntary restoration of property to its owner by the holder of a lien thereon dependent upon possession extinguishes the lien as to the property, unless otherwise agreed by the parties, and extinguishes it, notwithstanding any such agreement, as to creditors of the owner and persons subsequently acquiring a title to the property, or a lien thereon, in good faith, and for value. Sec. CHAPTER 99-MORTGAGE SUBCHAPTER I-GENERAL PROVISIONS 4111. Definition of mortgage. 4112. Formalities of creation. 4113. Lien of mortgage as special. 4114. Transfer as creating mortgage or pledge. 4115. Proof of transfer made subject to defeasance on a condition. 4116. Extent of mortgage lien. 4117. Possession of mortgaged property. 4118. Mortgage not a personal obligation. 4119. Waste. 4120. Subsequent acquisition of title by mortgagor. 4121. Power of sale. 4122. Power of attorney to execute. 4123. Validity of mortgage with respect to third persons. 4124. Recording assignment of mortgage; notice. 4125. Recording assignment of mortgage not notice to mortgagor; validity of payments. 4126. Mortgage passes by assignment of debt. 4127. Discharge; marginal entry; form. 4128. Same; recording certificate of payment, satisfaction, or discharge. 4129. Duty of mortgagee on satisfaction of mortgage. 4130. Bottomry and respondentia excluded from chapter. SUBCHAPTER II-MORTGAGES OF PERSONAL PROPERTY 4151. Mortgageable personal property. 4152. Stock in trade of merchant. 4153. Form of personal property mortgage. 4154. Essentials for validity as to third persons. Sec. 4155. Duties of registrar with respect to filing; fee. 4156. Filing assignment of mortgage; notice. 4157. Removal of mortgaged property from Canal Zone. 4158. Foreclosure of mortgage; manner. 4159. Attachment or execution upon mortgaged property. 4160. Inapplicability of sections 4154-4157 to certain ships and aircraft. 4161. Continuance of lien of mortgage on crops. 4162. Validity of certain mortgages. 4163. Discharge of mortgage of personal property. Subchapter I-General Provisions 8 4111. Definition of mortgage Mortgage is a contract by which specific property is hypothecated for the performance of an act, without the necessity of a change of possession. § 4112. Formalities of creation A mortgage may be created, renewed, or extended, only by writing, subscribed by the party to be charged or by his agent thereunto authorized in writing. § 4113. Lien of mortgage as special The lien of a mortgage is special, unless otherwise expressly agreed, and is independent of possession. 84114. Transfer as creating mortgage or pledge A transfer of an interest in property, other than in trust, made only as a security for the performance of another act, is to be deemed a mortgage, except when it is accompanied by actual change of possession, in which case it is to be deemed a pledge. § 4115. Proof of transfer made subject to defeasance on a condition Except as against a subsequent purchaser or encumbrancer for value and without notice, the fact that a transfer was made subject to defeasance on a condition may, for the purpose of showing the transfer to be a mortgage, be proved, though the fact does not appear by the terms of the instrument. § 4116. Extent of mortgage lien A mortgage is a lien upon everything that would pass by a grant of the property. § 4117. Possession of mortgaged property Unless authorized by the express terms of the mortgage, a mortgage does not entitle the mortgagee to the possession of the property; but after the execution of the mortgage the mortgagor may agree to a change of possession without a new consideration. § 4118. Mortgage not a personal obligation A mortgage does not bind the mortgagor personally to perform the act for the performance of which it is a security, unless there is an express covenant therein to that effect. 8 4119. Waste A person whose interest is subject to the lien of a mortgage may not do any act which will substantially impair the mortgagee's security. 8 4120. Subsequent acquisition of title by mortgagor Title acquired by the mortgagor subsequent to the execution of the mortgage, inures to the mortgagee as security for the debt in like manner as if acquired before the execution. |