vit, and he took judgment of assets, quando acciderint. W., and the simple contract creditors of the testator, being decreed to stand in the place of the mortgagee, and to be paid by the testator's heir at law, to whom the mortgaged land descended, and it being made a question, whether W., by virtue of his judgment, was to be preferred to the other creditors in payment, it was adjudged, that W. being only relievable in equity, all the creditors should be paid in proportion. The compelling the heir to refund is a matter it was said, purely in equity.(¿) 2. In Gifford v. Manley, where an instrument under hand and seal created a specialty debt, to affect the executor only, and not the heir, it was decreed that such specialty creditor "should stand in the room of such other creditors as had been satisfied out of the personal estate, in [ *336 ] case of deficiency.(j) And in Porey v. Marsh, where T., a judgment creditor, had exhausted the personal estate of a testator, the Court inclined, it is said, to relieve creditors by bond. These bonds did not, it is presumed, bind the heir of the testator; and the creditors prayed to have the benefit of T.'s security, or judgment, to follow the land. (k) In Lanoy v. The Duke of Athol, where, under certain marriage settlements, a widow was entitled to a jointure, and a daughter to a portion, and the husband covenanted to pay the jointure, and by his will gave the residue of his estate, real and personal, (after paying his debts,) to his wife, whom he appointed sole executrix; and in which case the Court directed the settled estates to be sold, and the purchase money to be applied to pay, first the jointure, and afterwards the portion; the Court decreed, that if the money arising by the sale should not be sufficient to answer the portion, then the plaintiff (the daughter) was to stand in the place of the defendant (the jointress,) to have the benefit of the covenant for payment of the jointure, and by virtue thereof to receive satisfaction for the deficiency of her portion out of the personal estate of of her father; and if the personal estate should prove deficient, then out of the freehold and copyhold estate devised by the will for payment of debts.(7) In Aldrich v. Cooper, the effect of a mortgage deed was to give the mortgagee a legal estate in freehold, and an equitable estate in copyhold land, and thereby to give him recourse to two funds for the payment of his debt.(m) The mortgagor died intestate. His widow took out administration, and out of the personal estate paid to the mortgagee 7677., in part of the mortgage, and of two bonds by the intestate to the mortgagee. The personal estate being exhausted, the question seems to have arisen, whether the intestate's creditors by simple contract were entitled to stand in the place of the mortgagee, in respect of what he had drawn from the personal estate, against the copyhold as well as the freehold estate. *And Lord Eldon de[ *337 ] cided, that "If it is necessary for the payment of the creditors, that the mortgagee should be compelled to take his satisfaction out of the copyhold estate; if he takes it out of the freehold, those, who are thereby disappointed, must stand in his place as to the copyhold estate.(n) (i) 2 Vern. 763, 10 Mod. 426. (j) Cas. T. Talb, 109. That a contract may be by specialty, though it does not affect real estate, as a bond not mentioning heirs, see also 1 Ves. 312, and 8 Ves. 389. (k) 2 Vern. 182. See Kearnan v. Fitz. Simon, 3 Ridgew. P. C. 1. (1) 2 Atk. ed. Sand. 444, n. (1.) La Noy v. Duchess of Athol, S. C., 9 Mod. 5th ed. 398. (m) 8 Ves. 392. (n) 8 Ves, 382; which case overrules Robinson v. Tonge, 1 P. W. 5th ed. 680, n. In Gwynne v. Edwards, a debt was secured by a mortgage of freehold land, and by a subsequent mortgage of copyholds. A suit being instituted by creditors for the administration of the mortgagor's estate, and his personalty having been exhausted, his freehold property was sold under the direction of the Court, and out of the purchase money the mortgagee was, by an order of the Court, paid his debt. And the residue of the proceeds of the sale being insufficient for the payment of the specialty creditors, Lord Gifford stated, that this case was governed by Aldrich v. Cooper, and decided, that the specialty creditors were entitled to have raised, by sale of the copyholds, the sum which the mortgagee received out of the freeholds. (0) In Selby v. Selby, a person, having contracted for the purchase of tithes, devised them by his will, and died before the sale was completed. After his death, the purchase money was paid out of his personal estate; and this estate being insufficient to pay his simple contract debts also, the Court decreed those creditors to stand, as against the devisees, in the place of the vendor, and, in respect of the lien which the vendor had on the tithes, to receive satisfaction out of this real fund.(p) 3. When assets consist of legal personal assets, and equitable assets, distributable equally among creditors by specialty and by simple contract, then, at law, the legal assets are applicable to pay the whole of the specialty debts, before the debts by simple contract.(g) And this legal right the Courts of Equity do not take from the specialty creditors. (r) If, however, the debts of these creditors, who have so taken the legal assets, are not by that fund wholly satisfied, and, to obtain pay[ *338 ] ment of the surplus, *they resort to the assets which are equitable, in this case a Court of Equity interposes, and before it permits the specialty creditors to touch this fund, allows the creditors by simple contract to take from the equitable assets, a sum equal to the money, which the specialty creditors have drawn from the assets, which are legal.(s) A decree of this nature is expressed in these or the like terms: "If any of the creditors by specialty have exhausted any part of the testator's personal estate, in satisfaction of their debts, then they are not to come upon, or receive any farther satisfaction out of, the testator's real estate, until the other creditors shall thereout be made up equal to them."() If the share so extracted by the simple contract creditors is not sufficient to pay their debts, then the effect of this interference of equity is, to oblige the specialty creditors to bring into hotchpot the personal estate, which they have exhausted. (u) In the case of specialty and simple contract creditors, a Court of Equity has, in the manner mentioned, marshalled legal and equitable assets, in the instances, amongst others, (v) where the assets, which were equitable, consisted of an equity of redemption of land, and which equity was devised to trustees (who were also executors,) in trust to sell to pay (9) 2 Russ. 289, n. (p) 4 Russ. 336. (4) 3 Salk. 83; 7 B. & C. 452. (F) 2 P. W. 416; Mos. 95; Cas. T. Talb. 220; 1 Barnard. Rep. 207. (*) Cas. T. Talb. 220; 2 Vern. 436; Prec. Ch. 193; 7 Bro. P. C. ed. Toml. 583. (1) 2 Atk. 294. (u) Deg v. Deg, 2 P. W. 416, 417, 418. (v) Case of Creditors of Sir C. Cox, 3 P. W. 5th ed. 341, and 344, n. (2); Lowhian v. Hassel, 4 Bro. C. C. 167; Kidney v. Coussmaker, 7 Bro. P. C. ed. Toml. 573, 583. debts:(w) of real estate devised to executors, in trust for the payment of debts:(x) of lands devised to trustees to pay all the testator's debts:(y) of certain real estates, which the testator empowered his executors to sell, and whom he authorized to apply the money to the payment of debts:(z) of an equity of redemption of a mortgage in fee, made by a cestui que trust of a real estate; and which equity the mortgagor devised to his son and heir at law in fee, subject to the payment of his debts: (a) of real es tate, which was *mortgaged, and which the owner charged [ *339 ] by his will with the payment of his debts, and, subject thereto, devised to his wife in fee:(b) of real estate devised, and charged by the will with the payment of debts.(c) One of the first instances, in which a Court of Equity has marshalled legal and equitable assets, is Deg v. Deg, (d) where Lord King affirmed a decree made by the Master of the Rolls; and where the equitable assets consisted of an equity of redemption devised in fee, in trust to sell to pay debts; and on the grounds of Lord King's decision seem to have been, the circumstances, that the testator " had connected together his real and personal eatate, with a view that all should go equally to pay his debts; and he might give his equitable assets in what manner, and upon what terms, he pleased."(e) And in Car v. The Countess of Burlington, a case which had occurred some years before, and where the Earl of B., owing debts by bond and by simple contract, made a lease of his lands to trustees, in trust to pay all the debts, which he should owe at his death, in just proportions, not preferring one person before another; and the bond creditors had been paid good part of their debts out of the Earl's personal estate by his executors; Lord Harcourt refused to marshal the legal and equitable assets; and for the reason, it seems, that the Earl did not intend each fund to be equally shared by both kinds of creditors; his Lordship saying- -"The bond creditors may still come in to be paid the remainder of their debts, in proportion with the simple contract creditors; for the law gives them the fund of the personal estate, and the party, namely, the late Earl, gives them the fund of the trust term; and the clause, that no debts shall have preference, must be intended only with regard to their satisfaction out of the trust term."(ƒ) The interposition of equity to marshal legal and equitable assets appears to be put by Lord Talbot, in Haslewood v. Pope, *on the [ *340 ] principle, that by the devise of lands to trustees, in trust to pay all the testator's debts, the testator "intended all his creditors should be equally paid their debts."(g) And, on another occasion, the same learned judge places the interference of equity in these cases on the broad principle," that by natural justice and conscience all debts are equal, and the debtor himself is equally bound to satisfy them all."(h) The doctrine of marshalling the legal and equitable assets of a testator extends to postpone a specialty creditor, although he is also executor of (w) Deg v. Deg, 2 P. W. 412, cited Mos. 95, 124, 329. (x) Baily v. Ploughman, Mos. 95. (c) Bradford v. Foley, 3 Bro. C. C. 351, n. (d) 2 P. W. 412, 416. (e) 2 P. W. 417, 418. See also 1 P. W. 228, 229. (f) 1P. W. 228; cited 2 Atk. 110, Barn. Ch. Rep. 229, and 2 Ves. 3€4. (g) 3 P. W. 323. (h) Morrice v. Bank of England, Cas. T. Talb. 220. the will, and the equitable assets consist of real estate devised to the executor, in trust for the payment of debts. As executor, he may retain the personal estate against all creditors of equal degree; but if, to pay the surplus of his debt, he comes upon the real estate, he must give way to the other creditors, until they have received enough to make them equal with himself.(i) A case is thus reported-" Decreed by Somers, Lord Chancellor, that where a real estate is, upon an equitable title, made subject by this Court to the payment of debts, and it appears that there is a sufficient legal estate, i. e. goods and chattels, to satisfy debts upon specialties, for which the creditors may have remedy at law against the executor; in such case, the debts upon simple contract, for which there is no remedy at law, shall be first satisfied out of the equitable estate."(j) SECTION III. OF MARSHALLING ASSETS FOR LEGATEES. 1. When Legacies are bequeathed out of Personalty only, and Real Estate is beneficially devised, or descends.-2. When bequeathed out of Personalty only, and a Debt secured by Mortgage of Real Estate is paid out of the Personal Assets.-3. When bequeathed out of Personalty only, and the purchase-money of [ Real Estate, bought by the Testator, is paid out of his "341] Personal Assets.-4. When bequeathed out of Personalty only, and the Will devises Real Estate in trust for, or charges Real Estate with, the payment of Debts, including Debts by Simple Contract.-5. When some are bequeathed out of Personalty only, and others are charged on, as an auxiliary fund, Real Estate.-6. When, by the Death of the Legatee before the Time of payment, the Legacy is sunk into Real Estate, charged, as an auxiliary fund, with the payment of it.-7. When a Legacy bequeathed to charitable uses is void under the Statute 9 George II. c. 36. 1. WHEN a will contains a beneficial devise of freehold land, and bequeaths general legacies, and the testator dies indebted by bond or covenant, in which his heirs are bound, and the creditor by bond or covenant is paid out of the testator's personal assets, which assets are, after this payment, not sufficient to pay the legacies bequeathed, a Court of Equity will not marshal the assets, and pay the legacies out of the land devised. (k) Nor, it appears, will it so pay to them, although the land is devised by a residuary devise of the rest and residue of the testator's real estate.(1) But although in these cases equity will not, against a devisee, (i) Baily v. Ploughman, Mos. 95. (j) Feverstone v. Scetle, 3 Salk. 83. (k) Herne v. Meyrick, 1 P. W. 201, 203, 2 Salk. 416, cited Cas. T. Talb. 54; Clifton v. Burt, 1 P. W. 678; Haslewood v. Pope, 3 P. W. 322, 324, Hanby v. Roberts, Amb. VOL.VIII.X 127, 1 Dick. 104; Forrester v. Lord Leigh, Yet marshal the assets, yet if freehold land descends to the testator's heir at law, such heir is not so favoured, and against him the Court will marshal the assets, and to the amount of the personal estate, which, to pay the bond or covenant debts, is taken from the legatees, will satisfy them out of the land descended. (m) This difference between a devise and descent necessarily raises an important question, when the devise is to the testator's heir at law. A material inquiry then is, whether *the [*342] heir takes by descent or purchase; for if the former, the legatees are, and if the latter, are not, entitled to stand in the place of the specialty creditors, and come upon the real estate devised.(n) On the payment of legacies, when there are both simple contract creditors and legatees, to stand in the place of creditors by specialty, it was held in Fenhoulhet v. Passavant-" If specialty creditors exhaust the personal estate, the simple contract creditors are to receive a satisfaction pro tanto out of the real assets descended. And if the debts of the simple contract creditors shall not amount to the whole of the personal estate, which the specialty creditors shall so exhaust, the legatees are to stand in the place of such specialty creditors, for the residue of what they shall exhaust out of the personal estate, and are to be paid pari passu."(0) 2. An important distinction is to be noticed between a bond debt and a debt secured by mortgage. For if lands of inheritance are mortgaged, and the personal assets of the mortgagor are not sufficient to pay both the mortgage debt, and also legacies bequeathed by him, and the mortgage is paid off out of the personal estate, then the assets will be marshalled, and the legatees empowered to receive their legacies out of the mortgaged estate, not only when this estate has descended to the mortgagor's heir at law, (p) but even when it is beneficially devised by the will.(g) The ground of this distinction, between a bond and mortgage debt, is, that a bond is not a lien on real estate, even in the testator's hands; but a mortgage is a lien on it in the hands of the testator, and of either his heir at law or devisee. (r) 3. The general principle of marshalling assets being, that when two parties have claims to be paid out of assets, and for payment one party can resort to two funds, as real and personal *estate, and the [ *343 ] other party but to one fund, as the personal estate only, the former party is not permitted, by the exercise of his choice over the funds, to disappoint the payment of the latter,(s) this principle seems to apply to the case of a vendor of real estate, and a legatee, when the vendor has, for his purchase money, a lien on the estate sold to the testator, by whom the legacy is bequeathed; and the inclination of late authori (m) Herne v. Meyrick, 1 P. W. 201, 202; Tipping v. Tipping, ib. 729; Hanby v. Roberts, Amb. 127, 1 Dick. 104; Forrester v. Lord Leigh, Amb. 171, 174; Scott v. Scott, 1 Eden, 458, Amb. 383; Fenhoulhet v. Passavant, 1 Dick. 253. See also Bowaman v. Reeve, Prec. Ch. 577, and Lucy v. Gardener, Bunb. 137. (n) Herne v. Meyrick, 1 P. W. 201; Scott v. Scott, 1 Eden, 458. T. Talb. 54; Tipping v. Tipping, 1 P. W. 730; and Robinson v. Gee, 1 Ves. 252. (9) Lutkins v. Leigh, Cas. T. Talb. 53; Forrester v. Lord Leigh, Amb. 171, 174; Norris v. Norris, 2 Dick. 542; Norman v. Morrell, 4 Ves. 769; Aldrich v. Cooper, 8 Ves. 397. (r) Cas. T. Talb. 54; Amb. 174. (8) Aldrich v. Cooper, 8 Ves. 388, 396, 397; Trimmer v. Bayne, 9 Ves. 211; Lucy v. Gardener, Bunb. 137. |