CHAPTER 7.04. Marshaling

• Jurisdiction: United States

7.04. Marshaling

Marshaling is an equitable principle to the effect that a person having two funds (or security) to satisfy a demand for repayment may not elect to disappoint another person who has only one fund (or security) from which to repay its debt.²³ In other words, if a mortgagee holds a mortgage on two separate properties, and a junior mortgagee holds a mortgage on only one of those properties, marshaling would require that the senior mortgagee, as far as possible, proceed against the property on which the junior mortgagee does not have a mortgage lien. The concept is that if the senior mortgagee can satisfy its debt out of the property on which the junior mortgagee does not hold a mortgage, it should do so in order to preserve for the junior mortgagee a means for that person to recover its debt. Because this is an equitable doctrine, intended merely to help guide a court in doing right, marshaling can be waived by contract.²⁴ Although there do not appear to be any Delaware cases on waiver of this right, such a waiver should be enforceable under the common law of Delaware for the general enforceability of waivers that are knowingly, voluntarily, and intelligently made.²⁵

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