This section is from the book "The Law Of Real Property and Other Interests In Land", by Herbert Thorn Dike Tiffany. Also available from Amazon: A Treatise on the Modern Law of Real Property and Other Interests in Land .
Since the discharge of the obligation secured, by payment or otherwise, extinguishes the mortgage lien, it would seem necessarily to follow that that lien cannot be subsequently utilized to secure another debt. Occasionally, however, in spite of the fact that the debt has been paid, the mortgagor, or his transferee, thereafter in effect agrees that the same mortgage shall operate to secure another debt, to the same or a different creditor, or undertakes to deliver the same instrument to secure another debt. This is in legal effect an attempt to utilize the instrument which created the first lien, for the purpose of creating another lien, the first lien having ceased to exist on the discharge of the debt. It has been decided that a mortgage cannot be thus "reissued," as it is ordinarily expressed, as against an intervening incumbrancer,85 as against creditors,86 or as against a subsequent purchaser or mortgagee of the property.87 In a number of cases such a transaction appears to be regarded as an absolute nullity.88 It would seem, however, that the original instrument, being no longer operative to secure the former debt, this having been paid, might be delivered as an entirely new instrument, creating a new lien to secure a dif85. Peiffer v. Bates, 45 N. J. Eq. 311, 19 Atl.* 612: Marvin v. Vedder, 5 Cow. (N. Y.) 671; Angel v Boner, 38 Barb. (N. Y.) 425; McCown v. Westbury, 52 S. C. 421, 29 S. E. 663, 30 S. E. 142; see Flye v. Berry, 181 Mass. 442. 63 N. E. 1071.
86. Mead v. York, 6 N. Y. 449, 57 Am. Dec. 467; Bowman v. Man-ter, 33 N. H. 530, 66 Am. Dec. 743; Mitchell v. Combs, 96 Pa. St. 430; Gardner v. James, 7 R. I. 396.
87. Bogert v. Bliss, 148 N. Y.
194, 51 Am. St. Rep. 684, 42 N. E. 582.
88. Crampton v. Massie, 236 Fed. 900, 150 C. C. A. 162; Bailey v. Rockafellow, 57 Ark. 216, 21 S. W. 227; Ross v. Hodges, 108 Ark. 270, 157 S. W. 391; Thompson's Adm'r v. George, 86 Ky. 311, 5 S. W. 760; Roberts' Trustee v. Terry, 161 Ky. 397, 170 S. W. 965; Hayhurst v. Morin, 104 Me. 169, 71 Atl. 707; Merrill v. Chase, 3 Allen (Mass.) 239; Mead v. York, 6 N. Y. 449, 57 Am. Dee. 467; Anderson v. Neff, 11 Serg. ft ferent debt;89 and occasionally, as against an innocent purchaser, the owner of the land might be estopped to deny that the mortgage thus reissued was a valid security.90
It may happen that an assignment of the mortgage debt to a third person is effected by arrangement with the mortgagor, who, in behalf of the assignee, pays over to the assignor the amount of the debt. This, it has been decided, does not involve a payment of the mortgage debt, and the debt and mortgage security remain unaffected thereby in the hands of the assignee.91
A written, as distinct from an oral, agreement that the mortgage, though the debt originally secured has been paid, shall secure another debt, would, at least if based on a valid consideration, be effective as creating an equitable lien,92 the reference to the previously existing mortgage serving to incorporate in such agreement by reference the description of the mortgaged premises and, if such agreement were executed as a mortgage instrument is required to be executed, it would presumably operate as a new mortgage, the description of the premises being incorporated therein by reference.93