Massachusetts Agencies

Revival of Second Mortgage

Estoppel by Deed

The doctrine of estoppel by deed has been applied to revive a second mortgage after the foreclosure of the first mortgage where the borrower has reacquired the property. Ayer v. Philadelphia & Boston Face Brick Company, 159 Mass. 84, 34 N.E. 177 (1893).

However, in Huzzey v. Heffernan, 143 Mass. 232 (1887) A gave a mortgage to M-1 and a second mortgage to M-2. The mortgage to M-2 specifically excepted from the covenants of warranty the mortgage that had been given to M-1. M-1 foreclosed its mortgage and sold the property to a stranger who reconveyed the property to A. The question was whether the mortgage to M-2 was revived. The court recited the general rule:

If a man convey, with full covenants of warranty, land to which he had not title, and he afterwards acquires a good title, his after-acquired title inures to the benefit of his grantee in the prior deed, upon the ground that he is estopped to say that he was not seized in fee to the estate which he has conveyed with warranty.

The court, however, put great weight on the exception in the covenants in M-2's mortgage as to the prior mortgage that was granted to M-1, and said:

[t]o give the doctrine of estoppel operation [in this case] . . . would be to enlarge [the] covenant [given in M-2's mortgage] to a general covenant of warranty.

The result is that there is revival only if there is no mention of the first mortgage on the body of the second mortgage. M-2's, lien, in such a case, would not be revived, although M-2 could still sue on the underlying note.