MARSHALLING SECURITIES
(bouvier) | MARSHALLING SECURITIES, equity. When a party has two funds by which his debt
is secured, and another creditor has a claim only on one of these funds, a
court of equity will compel the creditor having a double security to resort
to that fund which will leave the other creditor his security, this is
called marshalling assets. 4 Bouv. Inst. n. 3788; 1 Story, Eq. Jur. Sec. 633
Amb. 91; 8 Ves. 389; 9 Ves. 209.
2. Marshalling of assets respects two different funds, and two
different sets of parties, where one set can resort to either fund, the
other only to one. It is grounded on obvious equity. It does no prejudice to
anybody, and it effectuates the testator's intent. It takes place in favor
of simple contract creditors, and of legatees, devisees and heirs, and in a
few other cases, but not in favor of the next of kin. 4 Bro. C. C. 411; 1 P.
Wms. 680.
3. The cases in which a court of equity marshals real and personal
assets for the payment of simple contract debts and legacies, may be classed
as follows: 1. Where there are specialty and simple contract debts and
legacies and lands left to descend. In this case if the specialty creditors
take a satisfaction for their debts out of the personal estate, the simple
contract creditors first, and then the legatees, shall stand in the place of
the specialty creditors, for obtaining satisfaction out of the lands, to the
amount of so much as was received by the specialty creditors out of the
personal estate.
4.-2. Where there are specialty and simple contract debts, and lands
are specifically devised. In this case if the creditors take a satisfaction
for their debts out of the personal estate, the simple contract creditors
shall stand in the place of the specialty creditors for obtaining a
satisfaction out of the lands to the amount of so much as was received by
the specialty creditors out of the personal estate, but then there can be no
relief for the legatees, because there is as much equity to support the,
specific devise of the lands, as to support the bequest of the legatees.
5.-3. Where the debts are charged upon the lands. Here the legatees
shall have the personal estate towards their satisfaction, and if the
creditors take it in payment or towards the discharge of their debts, the
legatees shall stand in their place pro tanto to have a discharge out of the
lands.
6.-4. When simple contract debts and legacies are both charged on the
land. In this case the land shall be sold and all paid equally. 1 Madd. Ch.
Pr. 617.
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