A TREATISE ON THE LAW OF LEGACIES. CHAPTER XV. Of marshalling* Assets in favour of Legatees. WHERE a person dies, leaving assets subject to various claims, it is an object of equitable jurisdiction to make such an arrangement in the distribution of those assets, consistently with the nature of the respective claims, as shall best satisfy the just demands of all claimants: consequently it has been a rule of the Courts of Equity, in the exercise of this jurisdiction, that where one claimant has more than one fund to resort to, and another claimant only one, the former claimant shall resort to that fund upon which the latter has not any lien (a). Consistently with this rule, it had been long settled before the passing of the recent statute 3 & 4 Wm. 4, c. 104 (29 August, 1833), that where a specialty creditor, whose debt was a lien on the real assets, received satisfaction out of the personal assets, a simple contract creditor should stand in the place of the specialty creditor, against the real assets in satisfaction of his debt (b). The above rule still prevails in the application of the assets of a testator dying after the 29th August, 1833, in favour of his creditors by simple contract, but upon a different principle: before the above statute the real estate was made available for them through the equitable doctrine of marshalling, but now by virtue of that statute, *The right to have assets marshalled may of course be lost by lapse of time, Bushby v. Seymour, 1 Jones & Lat. 527. VOL. 11. B (a) Lanoy v. Duke of Athol, 2 Atk. 446. (b) Galton v. Hancock, Ib. 436; Lacam v. Mertins, 1 Ves. sen. 312. 30 which makes the freehold and copyhold estate assets for the payment of the creditor by simple contract, subject to the prior claims of the creditor by specialty, the former in his own right may now resort to the real estate (c). The exercise of the equitable jurisdiction now under consideration is extended to legatees; so that if there be two legatees, and one has both the real and personal estate, and the other has only the personal estate to resort to, and that is not sufficient to satisfy both; the former legatee shall be paid out of the real estate, in order that the personal estate may be applied in satisfaction of the latter. But before legatees can claim the advantages resulting from this equitable administration, certain preliminaries are requisite: The real estate must be charged with debts, or with the payment of one or more legacies; or, where there is not any such charge, the creditor must have a specific lien upon the estate; or if there be not any such charge or specific lien, yet where the real estate descends to the heir, the legatees will be permitted to throw the general bond debts, and now under the above statute the simple contract debts also which are only a general lien, upon the realty, in exoneration of the personal estate. But where the real estate does not descend to the heir, but is devised, the rule is otherwise. In administering this equity, certain other subordinate rules are adopted by the Court, which it is here unnecessary to anticipate. It is therefore proposed to discuss the doctrine of marshalling Assets, so far as it respects Legacies, under the following heads: SECT. I. The marshalling of assets in favour of legatees. 1.-Where the real estate is devised subject to pay ment of debts. 2.-When subject to a charge of one or more legacies. 3.—When charged with both debts and legacies. SECT. II. The marshalling of assets in favour of lega tees, where the real estate is not charged by the will with debts nor legacies, but there is a specific lien on the real estate. And (c) 2 Myl. & Cr. 695; 2 Sim. & Stu. 451. 1.- Where that real estate is devised. 2.-Where it descends. SECT. III. The marshalling of assets in favour of legatees, where the real estate is neither charged with debts nor legacies, nor subject to a specific lien, but there is merely a general lien on the real estate, which descends to the heir. SECT. IV. Exception, where the estate is devised; for where the real estate is neither charged with debts nor legacies, nor subject to a specific lien, but there is only a general lien, and the real estate is specifically devised to a stranger or to the heir taking as a devisee, assets are not marshalled in favour of a general legatee; but the rule appears otherwise in favour of a specific legatee. s. q: SECT. V. The extent to which equity will permit legatees to stand in the place of specialty creditors. SECT. VI. The consideration of those legatees for whom a Court of Equity will not marshal assets. 1.-Where the legatees, at the time of their legacies 2.-Where the legacies are given to charities. 4. Where legacies given to an alien. SECT. VII. The mode in which equitable assets are distributed among legatees. Where real with debts. SECT. I. Assets marshalled in favour of legatees. In the case of Foster v. Cook (c), Henry Cook being seised and estate charged possessed of freehold lands, leasehold and other personal estates, devised them to trustees, to pay an annuity to his wife during widowhood, and subject thereto, to and for the benefit of the child with which his wife was then pregnant (and which was afterwards still-born), with remainder to his five cousins by name, in fee, if such child died without leaving issue. The testator, among other legacies, gave the plaintiff Foster 1001., and directed his trustees to possess themselves of all his estates and substance, and improve the same for the benefit of his said child, and to pay all his just debts, &c. The testator made a codicil to his will, and gave to his wife 201. and another legacy; and in case of any overplus, after payment of all his just debts and legacies out of his stock and personal estates, he ordered it to be divided into two parts, and gave one moiety to his wife, and the other to the plaintiffs, over and above their legacies. The trustees filed the bill, praying, among other things, an account of the personal estate, and in case it should be insufficient to pay funeral expenses, debts, and legacies, that a sufficient sum might be raised out of the real estates to make good the deficiency. To this it was objected, that with respect to the charge of debts, there was not sufficient, in this case, to make a charge upon the real estate; it was only a discretionary power to raise out of the personalty sufficient to pay the debts; the testator clearly meant the personalty only to be liable; that there was no case, where the real estate had been devised, in which the Court had marshalled the assets. Lord Thurlow, C., observed, "With respect to the charge for payment of debts, he (the testator) directed the trustees to possess themselves of all his estate and substance, to pay debts; it is a most direct charge, and the legatees must come upon the real estate, so far as the personalty has been applied in payment of debts." In the case of Bradford v. Foley (d), Tempest Hay, after directing all his debts and funeral expenses to be paid, devised all his real estates to trustees, to the use of his son for life, remainder to his first and other sons by any future marriage in tail male, with several remainders over. The testator, after giving several legacies, directed the residue of his personal estate Marshalling, to be laid out in Government securities, in the names of his &c. where real estate charged executors, to be settled and applied to the same uses as his real with debts. estates. By the decree upon the hearing of the case, the will was established; and it was, among other things, ordered, that the personal estate of the testator should be applied in payment of his debts, funeral expenses, and legacies, in a course of administration; and in case the personal estate should not be sufficient to pay his debts, funeral expenses, and legacies, it was declared that the real estate was subjected by the will to the amount of the debts and funeral expenses; that the whole or a sufficient part of the real estate should be sold, and the money applied in making good the deficiencies; and in case any of the creditors had received any thing out of the personal estate towards satisfaction of their demands, then they were not to receive any part of the money arising from the sale, till the other creditors were paid up equal with them. The estate had been sold, and the personal estate not being sufficient for payment of debts and legacies, they were ordered to be paid out of the money produced by the sale of the real estate (e). In the case of Webster v. Alsop (ƒ), John Taylor, by his will, directed all his just debts and funeral expenses to be paid out of his personal estate; and if his personal estate should not be sufficient, he charged his real estate with so much thereof as his personal estate would not extend to pay; and then devised his real estates to trustees, subject to annuities and other payments, to the use of the plaintiff for life, with remainders over; and he gave several legacies. The personal estate proving deficient, it was declared that the legatees were entitled to stand in the place of the creditors, for so much of the personal estate as had been exhausted by them in the payment of their debts (g). It must be here noticed, that in Keeling v. Brown, Sir Richard Pepper Arden, Master of the Rolls, refused to confine the specialty creditors of the testator to the real estate disposed of by a general residuary clause, the personal estate being sufficient to pay all the debts, but not the legacies; although the Court, from the implied charge upon the land by the will, would have marshalled the assets for the simple contract creditors, if the personal estate had been insufficient to pay their demands. In (e) See the fourth resolution in Haslewood v. Pope, 3 P. Wms. 323. (f) 3 Bro. C. C. 352, (note). (g) See Muddle v. Fry, 6 Mad. 270. |