Leib v. Stribling

Robinson, J. delivered the opinion of the Court. The late Ferdinand Stansbury leased from George E. Vickers, four lots of ground on North Gilmor street, in Baltimore City, and at the same time borrowed of him twelve hundred dollars for the purpose of improving said property. To secure the payment of this loan, Stansbury mortgaged his leasehold interest in the four lots. Vickers and wife then entered into a written agreement with Stansbury, stipulating that upon the erection by him of four dwelling houses on said lots, and upon the payment of the twelve hundred dollars thus loaned to him, they would convey in fee simple, a lot of ground on the east side of Vincent alley.

The four houses on Gilmor street were subsequently sold under proceedings instituted by mechanic lien creditors, and after the payment of Vickers’ mortgage, the balance of the proceeds was insufficient to pay the mechanic lien claims. Stansbury having died without leaving personal property enough to pay his debts, his interest in the Vincent alley lot was sold under a general creditors’ bill. The appellant, assignee of a mechanic’s lien claim contends, that inasmuch as Vickers had a lien both upon the Gilmor street houses, and the Vincent alley lot, for the payment of the twelve hundred dollars due him, and the said debt having been paid entirely out of the proceeds from the Gilmor street houses, the mechanic lien creditors are entitled to be subrogated to Vickers’ lien on the Vincent alley lot, and are therefore entitled to a priority in the distribution of the proceeds arising from the sale of said lot. It appears however, that before the mechanic lien claims were filed against the Gilmor street property, Stansbury mortgaged his interest in the Vincent alley lot, to one ²⁸⁸ Corneliüs Stribling, to secure the payment of eight hundred dollars, and the appellees contend that this mortgage is entitled to a priority over the claim of the appellant.

Where a creditor has a lien upon two funds for the payment of his debt, and a subsequent creditor has a lien upon one fund only, the doctrine of marshalling of securities, by which the creditor having a lien upon two funds will he compelled to resort to that fund which is not common to both, is not founded on contract, hut rests solely upon equitable principles. • ■ In such cases, no injustice is done to the creditor having liens upon two funds, because in any event his debt is paid; whereas by the application of the doctrine, the debt of the subsequent creditor may also he paid. To the end therefore, that both debts may be paid, it is but just to compel the creditor having a lien upon two funds, to resort to that upon which a subsequent creditor has no lien; or if the prior creditor has been paid out of a fund not common to both, to subrogate the subsequent lien creditor, to the rights of the prior creditor, as against the fund to which such subsequent creditor had no lien. But this equity will not beenforced against