The rule was held not to apply to a pur chase merely of the equity of redemption in a portion of the mortgaged premises so as to relieve the purchaser upon taking an assign ment of the mortgage from his proportion of it and entitling him to enforce the law against the remaining portion; Parkey v. Veatch, 68 Mo. App. 67. See Carpenter v. Koons, 20 Pa. 222 ; Lovelace v. Webb, 62 Ala. 271. It is said that on a sale of a part of mortgaged lands the unsold portion is pri marily liable to the mortgage debt ; Ellis v. Fairbanks, 38 Fla. 257, 21 South. 107.
A trustee in bankruptcy is in the same po sition as the mortgagor himself. The court in marshalling will adjust the rights of the respective assigneeS of the mortgagor by di recting the claim of the paramount creditor to be apportioned between the assignees of the various properties according to their val ues ; 22 L. Q. Rev. 307.
The term marshalling liens has been used to express the application of the particular equity just referred to, being said to mean "the ranking or ordering of several estates or parcels of land, for the satisfaction of a judgment or mortgage to which all are lia ble, though successively conveyed away by the debtor." 1 Black, Judgm. § 440. It would seem, however, that the phrase is not an apt one in the application made of it, as the case put is the most ordinary one of mar shalling assets, though as a matter of course there is always a marshalling of liens, in a certain sense, Whenever a fund is distributed to lien creditors, as, even in an ordinary case of the application of the proceeds of a sher iff's sale. This is not, however, to be fused with the great equitable doctrine un der consideration.
Another phrase, Sometimes used, is mar shalling securities, which is an expression for the same practice of equity to secure a class of creditors having but one fund avail able front having their security exhausted by another class who have two.
This equitable doctrine cannot be invoked as against those who have superior equities, and in this light the right of a wife to her own property is superior to that of her hus band's creditors; Ayres v. Husted, 15 Conn. 504 ; Johns v. Reardon, 11 Md. 465; nor is it applied in favor of a creditor of the debt or ; Dorr v. Shaw, 4 Johns. Ch. (N. Y.) 17; Wise v. Shepherd, 13 Ill. 41; 17 Ves. 520; unless the creditor is a mere surety ; Wise v. Shepherd, 13 Ill. 41; but it does not apply where the exclusive fund is the property of the surety for the debt for which such fund is bound ; Mason v. Hull, 55 Ohio St. 256, 45
N. E. 632. The doctrine cannot be made available to create a fund, the two must ex ist; L. R. 3 Eq. 668 ; but once existing, it cannot be affected by the intervention of sub sequent creditors ; Ziegler v. Long, 2 Watts (Pa.) 205; Withers v. Carter, 4 Gratt. (Va.) 407, 50 Am. Dec. 78. A mortgagee having double security for his debt is not required by the existence of subsequent judgments against the mortgagor, of which he has no knowledge, to shape his action in the collec tion of his demand in accordance with the principle of marshalling the assets ; Annan v. Hays, 85 Md. 505, 37 Atl. 20.
The doctrine of marshalling is applied to an infinite variety of cases, and is liable to be resorted to wherever there is necessity for the distribution of two funds among cred itors, some of whom have claims On both. In the settlement of decedents' estates, five classes of persons are sometimes mentioned to whom it may be applied: (1) Creditors, (2) Legatees, (3) Between creditors and lega tees, (4) Between legatees and vendors, (5) Between widows and legatees.
As to its application in cases of successive purchasers, see 27 Am. L. Reg. 739; partner ship ; 20 id. 465; 21 id. 800; 24 Mb. L. J. 305 ; 34 id. 344, 364 ; devisees and legatees; 24 Ir. L. T. 239; homestead cases; 16 W. Jurist 28 ; 9 Ins. L. J. 677. See generally, 2 Wh. & Tud. L. Cas. Eq. 228; Bisph. Eq. §§ 341-350 and cases cited ; Tied. Eq..Jur. 532. See ASSETS; LIEN.
Marshalling is applied to mortgage liens; thus where there is an unrecorded first (chat tel) mortgage,, a second mortgage recorded but with notice of the first and a recorded third mortgage, the third mortgagee receives so much of the proceeds of a foreclosure sale as would be applicable on his mortgage after satisfying the second mortgagee's prior lien, and the latter is entitled to so much as would be applicable to his debt after satisfying the prior lien of the first, leaving the third mort gage out of the question. The first mort gagee is then entitled to the residue ; Day v. Munson, 14 Ohio St. 488.
In New Jersey where a first mortgage had priority over a second but was subordinate to a third, which was subordinate to the sec ond, the proceeds go: First, to the third mortgagee to the amount secured by the first mortgage; second, to the second mortgagee, third, to the residue of the third mortgage and lastly to the first mortgagee; Hoag v. Sayre, 33 N. J. Eq. 552.