Marshaling [Marshalling]

n. 1. the process by which units participating in an amphibious or airborne operation assemble or group together when feasible or move to temporary camps in the vicinity of embarkation points, complete preparations for combat, or prepare for loading.

2. the process of assembling, holding, and organizing supplies and/or equipment, especially vehicles of transportation, for onward movement.

See the Introduction, Abbreviations and Pronunciation for further details.

"an equitable principle employed to adjust the rights of various parties by ranking their priorities and determining the order in which the mortgaged property will be sold to satisfy the mortgage debt or debts. Two common techniques are the "two funds" doctrine, and the "inverse order of alienation" rule.

The "two funds" doctrine applies when a senior mortgagee has a first mortgage on two or more parcels and a junior mortgagee has a security interest on only one. The doctrine applies to require the senior creditor to proceed first against the parcel that is subject only to his lien. In this way, the junior lienor will receive the maximum possible protection and will not be arbitrarily deprived of his security by the prior mortgagee proceeding first against the property subject also to the junior's claim. The doctrine is not applied automatically; it is incumbent on the one asserting the right to request the equity court to apply it.

The "inverse order of alienation" rule applies when a mortgaged tract of land is "sold off" or conveyed in parcels and the various grantees pay full value to the mortgagor without getting a release from the mortgagee. Thereafter, if the mortgagor defaults and the mortgagee forecloses, the "inverse order" rule will require the mortgagee to proceed first against the lands still owned by the mortgagor, and then proceed against the other parcels in the inverse order in which they were sold until the mortgage is fully satisfied. The rationale is that the buyer of the first parcel sold acquired the most equity, and likewise down the line until the land still held by the mortgagor has the least. As between the mortgagor and the grantees, the mortgagor should pay the debt, and his land should be sold first for that purpose.

The opposite of the "inverse order" rule should apply when one or more grantees of a portion of the mortgaged property assumes the mortgage debt. In this situation, as between the grantee and the mortgagor, the equity resides with the grantor-mortgagor, and the grantee should pay and his land be sold to satisfy the debt. Thus, the "direct order of alienation" rule would apply in this situation, and the mortgagor's remaining land would be last sold to satisfy the debt." Boyer, The Law of Property: An Introductory Survey 641-643 (4th ed. 1991).

Probate courts marshall assets to meet the stated wishes of a testator (testatrix) in a will when appointed property (i.e., property disposed of in the will by the exercise of a power of appointment) would because of technical impediments pass into an inappropriate residuary clause rather than within the intended disposals. Marshaling of assets in probate courts to achieve this objective is also called selective allocation.

marshaling assets a rule of ranking assets that seeks to achieve an equitable distribution of assets among as many claims as possible according to the equities of the different parties. "Broadly defined, the rule of marshaling assets is one which courts of equity sometimes invoke to compel a creditor, who has the right to make his debt out of either of two funds, to resort to that one of them which will not interfere with or defeat the rights of another creditor who has recourse to only one of these funds. It is not a vested right or lien founded on contract, but rests upon equitable principles called into action by the benevolence of the Court." 192 N.Y. 266, 282, 283.

marshaling liens "doctrine whereby one claiming a lien against two or more classes of property, one of which is also subject to a junior lien [a lien inferior to another] will be required to exact satisfaction from the property not subject to the junior lien. Thus, the junior lien is preserved where other assets exist sufficient to satisfy the senior lien." 171 F. Supp. 655, 660.

marshaling remedies "where one creditor has security on two funds of his debtor, and another creditor has security for his debt on only one of those funds, the latter has a right in equity to compel the former to resort to the other fund, if [such an action] is necessary for the satisfaction of both creditors, provided it will not prejudice the rights or interests of the party entitled to the double fund, nor do injustice to the common debtor, nor operate inequitably on the interests of other persons," 27 A. 2d 166, 174.