Trimble v. Hill
Rule established
Equity requires the senior creditor with access to multiple funds to first exhaust the fund unavailable to the junior creditor (marshalling)
Facts
- A debtor mortgaged two properties (A and B) to a senior creditor
- The debtor later mortgaged only property B to a junior creditor
- The senior creditor chose to realize from property B alone, which would exhaust the junior creditor's only security
Issue
- Whether equity requires the senior creditor to first realize from property A (where the junior has no claim) to preserve property B for the junior creditor.
Held
- Yes. Equity will marshal the securities. The senior creditor must first exhaust property A (to which the junior has no claim). This protects the junior creditor without prejudicing the senior creditor (who still gets full payment, just from a different property).
Ratio Decidendi
"A person having two funds to satisfy his demand shall not, by his election, disappoint a party who has only one fund." Marshalling is an equitable doctrine that adjusts priorities to prevent one creditor's arbitrary choice from defeating another's legitimate security.
How to use it in an exam
Foundation case for marshalling doctrine. Key line: "Equity requires the senior creditor to exhaust the fund unavailable to the junior creditor, thereby preserving the junior's only security."
Source
Source: Mulla TPA 13th ed.
This is an educational summary, not the judgment itself. Cite the reported version in professional or academic work.