The simplest case of marshalling (h) is that of a first mortgage of two parcels to A and a second mortgage of one of the two parcels to B. If the first mortgagee realizes his claim out of the parcel which is also subject to the second mortgage the second mortgagee is entitled to a charge on the other parcel in the place of the first mortgagee so as to indemnify himself for the security which has been rendered unavailable by the action of the first mortgagee. It is immaterial whether the second mortgagee, when he took the mortgage, had or had not notice of the existence of the first mortgage (i).

The doctrine of marshalling may apply in favour of the purchaser or mortgagee of one of two parcels which are subject to mortgage for one debt against the person who owned the two parcels prior to the conveyance or mortgage of one parcel or against persons claiming under him otherwise than by conveyance or mortgage (j). If the owner of both parcels himself created the mortgage on them and conveys or mortgages one of the parcels without any reference to the existing mortgage (k) and a fortiori if he conveys or mortgages with a covenant against encumbrances (I), he is obliged to indemnify his grantee or mortgagee against the existing mortgage (m). If, however, the owner of the two parcels was not the creator of the mortgage on them, but such mortgage is paramount to his title, and he conveys or mortgages one of the parcels, without indicating an intention to exonerate such parcel, then as between him and the grantee or mortgagee of one parcel there is a mutual right to compel contribution for the purpose of paying off the paramount mortgage (n).

(f) See also Dolphin v. Aylward, 1870, L.R. 4 H.L. 486.

(g) Noyes v. Pollock, 1886, 32 Ch.D. 53, 70; Manks v. Whiteley, [1911] 2 Ch. 448, at p. 466, S.C. reversed on other grounds, [1912] 1 Ch. 735, restored sub nom. Whiteley v. Delaney, [1914] A.C. 132.

(h) See Sec. 137, supra.

(i) Hughes v. Williams, 1852, 3 Mac. & G. 683, 690.