Marshalling means to arrange or regulate. There are separate rules for marshalling in respect of sale and mortgage. In respect of sale, the rule of marshalling is that a subsequent purchaser has a right to claim marshalling. For instance, there are three properties A, B and C subjected to mortgage. The mortgagor sells A to Mr. X free from any encumbrances. Mr. X is entitled to insist that the mortgagee should realize his mortgage money out of the properties B and C as far as possible. If the whole of the debt is not capable of being realized from B and C, the mortgagee has a right to proceed against A. In that event, the purchaser Mr. X has a right to claim from the mortgagor, the amount realized from A. This rule applies in the absence of any contract to the contrary. In respect of mortgage, the subsequent mortgagee is entitled to regulate or marshall the order in which the debt is to be realized by prior mortgagees. For instance, Mr. X mortgages A and B properties to Mr. Y and then mortgages B alone to Mr. Z. If Mr. Y seeks to realize his mortgage out of B, Mr. Z can compel Mr. Y to proceed first against A and realize the debt from it. If Mr. Y is unable to realize the whole amount due to him from A, he is entitled to recover the balance from B.
