Opinion
No. 3620.
Decided December 3, 1946.
The equitable rule of marshalling of assets is not administered at the instance of a debtor or unsecured creditor, but is limited in its application to grant relief as between different judgment, attaching or lienholding creditors.
ACTION to recover balance due on a note given by Guy E. Darker (hereinafter referred to as defendant) to the plaintiff February 21, 1945. Trial by the Court, Goodnow, J., who made a ruling to which defendant excepted.
The pertinent facts are as follows: The note read "payable when the amount due me, under a certain contract entered into between myself and H. A. Stiles Company dated February 2, 1945, becomes due and payable." It was accompanied by an assignment of said contract, August 3, 1945, defendant having made no payment on the note, and no part of the contract referred to having been performed, plaintiff sued defendant and attached his equity in real estate and certain personal property. Among the personal property attached was an automobile which was sold by agreement and the proceeds of the sale turned over to the plaintiff and credited on the note. There has been no other payment made. After the attachment plaintiff began performance of his contract and in due time there became due him from the Stiles Co. $1,505.30, which the Stiles Co. will not turn over to the plaintiff until he secures releases of two other subsequent assignments made by the defendant to other creditors. This these other assignees will not do.
The Stiles Co. is a Massachusetts concern, and in order to recover the amount due by it suit would have to be brought in that state.
August 31, 1945, defendant filed a bill in equity seeking a decree to the effect that the note sued on was not then due and payable. After hearing the bill was dismissed, and on January 23, 1946, the parties filed a stipulation in the action at law in which it was agreed that "if the above entitled action is not settled to the satisfaction of both parties on or before February 5, 1946, said action shall be marked either `continued for judgment', or `judgment' at the election of the plaintiff."
April 30, 1946, defendant for himself and his wife Esther Darker, who is a part owner in common with her husband of the attached real estate, moved to intervene, and that plaintiff be ordered to exhaust the security furnished by the assignment of the Stiles contract before resorting to the attached property. The first part of the motion was granted and the second part denied. It is to this denial that defendants excepted.
Findings: "The Court, feeling that Lessard's ability to collect on the Stiles contract was not clear and undisputed, and further feeling that even if his right to collect on that contract might eventually be enforced, it was not a reasonably prompt and efficient method for him to use under all the circumstances, denied the motion that he be ordered to exhaust the security furnished by the assignment of that contract."
A bill of exception was allowed.
Harold E. Wescott (by brief and orally), for the plaintiff.
Maurice A. Broderick (by brief and orally), for the defendant.
Ordinarily the rule of marshalling assets does not apply as between debtor and creditor; the doctrine applies only as between different judgment, attaching or lienholding creditors. The equity is not administered at the instance of the debtor or unsecured creditors. 35 Am.Jur. 394; 38 C. J. 1378; Searle v. Chapman, 121 Mass. 19; General Ins. Co. v. U.S. Ins. Co., 10 Md. 517; Sowell v. Federal Reserve Bank, 268 U.S. 449.
Our cases in which the above doctrine has been considered are all cases dealing with claims of lienholders and secured creditors, and lend support to the above doctrine. Kidder v. Page, 48 N.H. 380; Gregg v. Thurber, 69 N.H. 480; Staniels v. Whitcher, 73 N.H. 152; Barbin v. Moore, 85 N.H. 362; Sanborn Co. v. Keefe, 88 N.H. 236.
The motion made to have plaintiff exhaust his remedy against the Stiles Co. before he proceed to levy on defendant's real estate, though stating it was brought in favor of himself and his wife Esther, and such other creditors as may elect to join, is signed only by the defendant himself. No claim is made therein that Esther is a creditor. As appears she is only a part owner in common with her husband of the real estate attached. This real estate is subject to a prior mortgage, and of course all the interest that plaintiff could attach was the defendant's equity therein. Defendant's allegation in the motion that his wife's real estate has been attached is not supported by any evidence or finding in the case. Any attempt at attaching her interest would be ineffective since there is no claim of any indebtedness to the plaintiff on her part. Her interest is fully protected, since levy on execution can be made only on defendant's equitable interest in the property.
Other subsequent attaching creditors not having intervened and asked that the assets be marshalled, the issue is not before us.
Plaintiff having two courses available to enforce his claim, he may select the one he prefers. Kidder v. Page, supra, 383; Morton v. Grafflin, 68 Md. 545. The Presiding Justice was right in so ruling; the reasons given therefor are sound. The plaintiff is entitled to judgment and execution to levy thereon.
Exception overruled.
All concurred.