right arising under the will creating the title of the original devisee, but upon the right, if any there be, arising upon the instrument creating the title of the person claiming under the devisee (f).

CHAP. XL.

demand.

Before a case of contribution can arise, the several estates Common must have been liable to one common demand. Thus where A., the first mortgagee of Whiteacre, and B., the first mortgagee of Blackacre, joined in a mortgage of both estates and consented to give to the subsequent mortgagee priority over their respective charges; and the lands were subsequently sold, and the subsequent mortgage was paid off out of the proceeds of sale of both properties; the surplus proceeds of sale of Whiteacre were not sufficient to pay off the mortgage upon it; it was held that A. was not entitled to contribution against B., there not having been any common liability to pay a common demand (g).

fund.

Moreover, the several estates must be liable equally, and not Common one as surety or collateral security for the other, and be a common fund (h).

Thus, where under Locke King's Act (i) land is specifically charged with a debt, which is also generally charged on shares of a company by a provision of the Act of Settlement, there is no contribution, because there is no common fund ().

In a case arising under the former law before Locke King's Act, where a person possessed of several leasehold estates mortgaged one of them, and then, by his will, bequeathed them separately to different parties, and directed his debts to be paid out of his residuary personal estate, and such residuary estate proved insufficient for the purpose, it was held that the legatee of the mortgaged estate must take it cum onere, and could not call on the other legatees to contribute (7).

But where several estates subject to distinct mortgages were specifically devised to different persons, and the testator directed that the mortgages should be discharged out of the personal estate, so that the devisees might hold the estates freed therefrom, and there proved to be a deficiency of personal assets for payment of the mortgage and other debts, a decree was made

(f) Stronge v. Hawkes, 4 De G. & J. 632, at p. 654.

(g) Re Keily, 9 Ir. Ch. R. 87. (h) Marq. of Bute v. Cunynghame, 2 Russ. 275, 299; Averall v. Wade, Ll. & G. t. Sug. 252; Re Dunlop, 21 Ch. D.

592, C. A.

(i) 17 & 18 Vict. c. 113.
(k) Re Dunlop, sup.

(1) Halliwell v. Tanner, 1 R. & My.
633; Emuss v. Smith, 2 De G. & S.
736.

CHAP. XL.

that the mortgage and other specialty debts should first be paid out of the personal assets pro ratâ, that the residue of the mortgage debts should be borne by the respective estates on which they were charged, and that the deficiency of the other specialty debts, and the simple contract debts, should be borne by the several devised estates, and the specific legacies, pro ratâ (m). By this decree, though it made the mortgaged estates pay each its own debt as against other creditors, yet the specific devisees of the land were in part preferred to the specific legatees. It may deserve consideration whether such weight should have been attributed to the direction in the will that the mortgages should be discharged out of the personal estate, since that is not more than the law would then have implied.

In a case where a testator devised his freehold and copyhold and leasehold estates to his seven children in equal shares, charged with payment of his debts, and bequeathed his personal estate to A., exonerated from his debts, and declared that the freeholds and copyholds should be the primary fund, and the leaseholds the secondary fund, for payment of the debts, and one of the children died in his lifetime, it was held that one-seventh share of the freeholds and other estates, after payment of the debts charged thereon, lapsed to the heir-at-law and next of kin respectively, and that the devisees of the other six shares were not entitled to have the lapsed share applied in exoneration of the devised shares (n).

By this rule, also, where legacies are charged on two mortgaged estates, one of which is of sufficient value to pay its mortgage and also the legacies, the mortgagee of the other can compel the assignees of the bankrupt mortgagor to discharge the legacies out of the proceeds of sale of the first, or stand in the place of the legatees (0).

(m) Symons v. James, 2 Y. & C. C. C. 301.

(n) Fisher v. Fisher, Keen, 610; the marginal note is inaccurate. (0) Exp. Hartley, 2 M. & A. 496.

CHAPTER XLI.

OF MARSHALLING OF MORTGAGED ASSETS.

i.-Nature and Effect of the Doctrine of Marshalling as applied Statement of the doctrine. to Mortgages. The general rule of equity is, that a person having two funds to which he may resort, shall not disappoint another person who can resort to one only of the funds (a). If, therefore, a creditor has a claim upon two funds, and another creditor has a claim upon one only of those funds, the Court will marshal the funds, without regard to the interests of the debtor, so as to satisfy the claim of the creditor having both funds, out of that fund which, paying him, will leave the other fund for the other creditor (b). The doctrine of marshalling applies not only in the administration of assets of a deceased person, but also in the appropriation of particular funds at any time, either during the life or after the death of a debtor, in satisfaction of claims arising under successive charges or interests to which the several funds are subject.

Cooper.

The leading case upon the doctrine of marshalling is that of Aldrich v. Aldrich v. Cooper (c), in which it was contended on the authority of Robinson v. Tonge (d), that specialty creditors had no right to insist that a mortgage debt, secured both on freeholds and copyholds, should be thrown on the copyholds, so as to leave the specialty creditors the freehold fund, on the ground that copyholds (the case being prior to the 3 & 4 Will. IV. c. 104) were not assets for specialty debts, and that none of the rules of equity subject any fund to a claim to which it was not before subject, but only take care that the election of one claimant shall

(a) Aldrich v. Cooper, 8 Ves. 382, 891.

And see notes to S. C. in Wh. & Tud. L. C. Eq., vol. ii. pp. 109 et seq. See also Trimmer v. Bayne, 9 Ves. 209; Gibson v. Seagrim, 20 Beav. 614; Tidd v. Lister, 3 De G. M. & G. 857.

(b) Att.-Gen. v. Tindall, Amb. 619. (c) 8 Ves. 382. And see Gwynne v. Edwards, 2 Russ. 289, note; Greenwood v. Taylor, 1 R. & My. 187.

(d) Stated in Mr. Cox's note to 1 P. Wms. 680.

CHAP. XLI.

Application

of the doctrine to cases of mortgage.

Rights of first mortgagee not interfered with.

Right of

puisne as

not prejudice the claims of others. Lord Eldon justly observed that it was clear the case was by no means a due application of the principle, for the copyholds, as well as the freeholds, were both subject to the mortgage debt; and as to copyholds not being assets for specialty debts, was freehold estate, he asked, assets for simple contract debts? which, at that time, it was not, either in law or equity. Upon what principle, then, did the Court say that in given cases simple contract debts should be paid out of the real estate? Not upon the ground of assets, but that a specialty creditor had a double fund to resort to. Upon the like principle, the Court, in that case, directed (if it were necessary for the payment of the creditors) that the mortgagee should take his satisfaction out of the copyhold estate, and that if he took it out of the freehold, those who were thereby disappointed should stand in his place as to the copyhold estate; thereby overruling Robinson v. Tonge. The reader will, of course, bear in mind that this reasoning has in a great measure become inapplicable since the passing of the statute above referred to.

The doctrine of marshalling, in relation to mortgages, results in the general rule that where an owner of several properties has mortgaged them to the same person and afterwards deals separately with the equity of redemption in one or more of those properties either by way of mortgage or otherwise, the person or persons interested in the equities of redemption so dealt with are entitled, as against the mortgagor, to require that the first mortgage shall be paid off in the first place out of the property not so dealt with, or, if that mortgage is paid off out of the property in which they are so interested, to stand pro tanto in the place of the first mortgagee in regard to the property which has not been resorted to for satisfying his security.

In applying the doctrine of marshalling, the Court will not restrain a prior mortgagee from satisfying his debt out of available property comprised in his mortgage, which is subject to a subsequent incumbrance, merely because his security comprises other property which is not so subject, he has a right to take the money that is realised by any of his securities which comes first to hand (e).

If, however, a prior mortgagee realizes several properties

(e) Wallis v. Woodyear, 2 Jur. N. S. 179.

CHAP. XLI.

first mort

gagee realizes

rities.

comprised in his security he will not be allowed to satisfy his debt out of one of those properties over which another person signee where has a claim as mortgagee or otherwise, in exoneration of the proceeds of sale of other properties which are not subject to such all his secua claim. So a second mortgagee will be entitled to the extent of the value comprised in his security to have the balance of the moneys received by the first mortgagee in respect of all the securities realized by him, after satisfying his mortgage debt, applied in or towards satisfaction of the second mortgage, and the first mortgagee will be deemed to be a trustee of such balance for the second mortgagee, and if he refuses to account for and apply the moneys received by him on that footing, he will be liable to the costs of proceedings to compel him to do so (ƒ).

mortgagee

If the prior mortgagee of several properties realizes property Where first which is subject to a subsequent incumbrance, instead of pro- realizes secuperty which is not so subject, and satisfies his debt out of the rity which is subject to proceeds of the property realized, the subsequent incumbrancer second mortwill be entitled to stand in the place of the prior mortgagee as gage. regards the property to which the latter has not resorted, so that the payment of both claims may as far as possible be worked out (g). This rule will apply where the only one of two funds to which a subsequent incumbrancer could resort has been applied in payment of the prior mortgage by order of the Court for convenience of administration ().

So, where an executor was mortgagee of real estate of the testator, and also a legatee under the will, it was held that he was not bound to satisfy the mortgage debt out of the first assets which came into his hands on the ground that on his so doing the right of marshalling would arise so as to entitle the other legatees to go pro tanto against the real estate (i).

in case of

This equity has been applied in favour of a mortgagee whose Marshalling interest in an estate was affected by an extent of the Crown; extent by the and he was held entitled to stand in the place of the Crown as Crown. to those securities which he could not affect directly because the Crown had affected them ().

Where a mortgagee of chattels has left the mortgagor in Distress for possession without fraud, and the landlord distrains those, as

(f) South v. Bloxom, 2 H. & M. 457. For forms of order, see Seton, p. 1738. (g) Trimmer v. Bayne, 9 Ves. 209. (h) Gwynne v. Edwards, 2 Russ.

289, n.

(i) Binns v. Nichols, L. R. 2 Eq.

256.

(k) Sagitary v. Hyde, 1 Vern. 455.

rent.