marshalling securities

1 definition found

marshalling securities - Bouvier's Law Dictionary, Revised 6th Ed (1856) :

  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.