consent for securing her annuity, she must abide by the loss occasioned by the conversion into four per cents. Sir John Leach, V. C. said, that the appropriation of the 4000l. five per cents was not the act of the petitioner, but was the act of the Court, and that as the annuity was a charge upon the whole of the residue, the petitioner was entitled to have the deficiency, which had been occasioned by the conversion of the stock, supplied out of the other funds in the

cause.

The Reader will observe, that the nephews and nieces were by the will entitled only to the residue of the produce of the testator's personal estate, after payment of the annuity; and upon this ground the decree in favour of the annuitant was made.

But where an investment in the funds is directed of a legacy, and the trustee, after retainer or receipt of the legacy, fails to invest the legacy in stock, he must suffer for his neglect; and in case of increase in the value of the funds in which the legacy is to be invested, he must nevertheless purchase so much stock as the legacy would have produced at the period of retainer or payment.

Thus in the case of Byrchall v. Bradford,(e) an executor was constituted a trustee as to a legacy of 1200l. He accounted for the residuary estate, and retained the amount of the legacy. The will directed it to be invested in the funds; and the question in the cause was, whether the cestui que trust of the legacy were now entitled to claim against the executor as much stock as the 1200l. would have produced, if invested at the time of the settlement with the residuary legatee.

The stocks had risen in the meantime, and the executor had never invested the legacy.

Sir John Leach, V. C. observed; "Generally speaking, this Court does not enter into the consideration whether the executor could or not at an earlier period have invested a stock legacy, but directs it to be invested by its decree. But in the particular case, this executor was in the situation of another trustee, to whom a legacy is paid upon trust to invest it. His retainer, after accounting for the residuary estate, is equivalent to the payment of another trustee. If the cestui que trust sustained a loss by the trustee neglecting his duty to invest, he has a right to charge the trustee with the loss."

In this case, however, it was suggested, that the cestui que trusts, who were all of age, had consented to the delay of investment, and Sir John Leach, V. C. directed an inquiry as to that fact.

CHAPTER XV.

Of marshalling Assets in favour of Legatees.

WHERE a person dies, leaving assets subject to various claims, it is an object of equitable jurisdiction to make such an arrangement in the distribution of those assets, consistently with the nature of the respective claims, as shall best satisfy the just demands of all claimants consequently it has been a rule of the courts of equity, in the exercise of this jurisdiction, that where one claimant has more (e) 6 Mad. 13.

than one fund to resort to, and another claimant only one, the former claimant shall resort to that fund upon which the latter has not any lien.(a) Consistently with this rule, it is settled, that where a specialty creditor, whose debt is a lien on the real assets, receives satisfaction out of the personal assets, a simple contract creditor shall stand in the place of the specialty creditor, against the real assets in satisfaction of his debt.(b) A similar exercise of jurisdiction is extended to legatees; but before they can claim the advantages resulting from this equitable administration, certain preliminaries are requisite: The real estate must be charged with debts, or with the payment of one or more legacies; or, where there is not any such charge, the creditor must have a specific lien upon the estate; or if there be not any such charge or specific lien, yet where the real estate descends to the heir, the legatees will be permitted to throw the general bond debts, which are only a general lien, upon the realty, in exoneration of the personal estate. But where the real estate does not descend to the heir, but is devised, the rule is otherwise. In administering this equity, certain other subordinate rules are adopted by the Court, which it is here unncessary to anticipate. It is therefore proposed to discuss the doctrine of marshalling Assets, so far as it respects Legacies, under the following heads: SECT. I. The marshalling of assets in favour of legatees.

1.—Where the real estate is devised subject to payment of
debts.

2.-When subject to a charge of one or more legacies.
3.-When charged with both debts and legacies.

SECT. II. The marshalling of assets in favour of legatees, where the real estate is not charged by the will with debts

or legacies, but there is a specific lien on the real es

tate. And

1.-Where that real is devised.

2.-Where it descends.

SECT. III. The marshalling of assets in favour of legatees, where the real estate is neither charged with debts nor legacies, nor subject to a specific lien, but there is merely a general lien on the real estate, which descends to the heir.

SECT. IV. Exception, where the estate is devised; for where the real estate is neither charged with debts nor legacies, nor subject to a specific lien, but there is only a general lien, and the real estate is specifically devised to a stranger or to the heir taking as a devisee, assets are not marshalled in favour of a general legatee; but the rule appears otherwise in favour of a specific legatee. s. q.

(a) Lanoy v. Duke of Athol, 2 Atk. 446.

(b) Galton v. Hancock, 2 ib. 436. Lacam v. Mertins, 1 Ves. sen. 312.

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SECT. V. The extent to which equity will permit legatees to stand in the place of specialty creditors.

SECT. VI. The consideration of those legatees for whom a Court of Equity will not marshal assets.

1.-Where the legatees, at the time of their legacies becoming due, have not an established claim, &c.

2. Where the legacies are given to charities.

3.

The rule respecting contribution between charities and the next of kin, where the residue is given to charities, and part of the disposition, being within the Statute of Mortmain, fails for the benefit of the next of kin.

SECT. VII. The mode in which equitable assets are distributed among legatees.

SECT. I. Assets marshalled in favour of legatees.

1st. Where the real estate is charged with the payment of debts. In the case of Foster v. Cook, (c) Henry Cook being seised and possessed of freehold lands, leasehold and other personal estates, devised them to trustees, to pay an annuity to his wife during widowhood, and subject thereto, to and for the benefit of the child with which his wife was then pregnant (and which was afterwards stillborn,) with remainder to his five cousins by name, in fee, if such child died without leaving issue. The testator, among other legacies, gave the plaintiff Foster 100l. and directed his trustees to possess themselves of all his estates and substance, and improve the same for the benefit of his said child, and to pay all his just debts, &c. The testator made a codicil to his will, and gave to his wife 201. and another legacy; and in case of any overplus, after payment of all his just debts and legacies out of his stock and personal estates, he ordered it to be divided into two parts, and gave one moiety to his wife, and the other to the plaintiffs, over and above their legacies. The trustees filed the bill, praying, among other things, an account of the personal estate, and in case it should be insufficient to pay funeral expenses, debts, and legacies, that a sufficient sum might be raised out of the real estates to make good the deficiency. To this it was objected, that with respect to the charge of debts, there was not sufficient, in this case, to make a charge upon the real estate; it was only a discretionary power to raise out of the personalty sufficient to pay the debts; the testator clearly meant the personalty only to be liable; that there was no case, where the real estate had been devised, in which the Court had marshalled the assets. Lord Thurlow, C., observed, "With respect to the charge for payment of debts, he (the testator) directed the trustees to possess themselves of all his estate and substance, to pay debts; it is a most direct charge, and the legatees must come upon the real estate, so far as the personalty has been applied in payment of debts."

In the case of Bradford v. Foley, (d) Tempest Hay, after directing all his debts and funeral expenses to be paid, devised all his real (d) 3 Bro. C. C. 351. note.

(c) 3 Bro. C. C. 347.

estates to trustees, to the use of his son for life, remainder to his first and other sons by any future marriage in tail male, with several remainders over. The testator, after giving divers legacies, directed the residue of his personal estate to be laid out in Government securities, in the names of his executors, to be settled and applied to the same uses as his real estates. By the decree upon the hearing of the case, the will was established; and it was, among other things, ordered, that the personal estate of the testator should be applied in payment of his debts, funeral expenses, and legacies, in a course of administration; and in case the personal estate should not be sufficient to pay his debts, funeral expenses, and legacies, it was declared that the real estate was subjected by the will to the amount of the debts and funeral expenses; that the whole or a sufficient part of the real estate should be sold, and the money applied in making good the deficiencies; and in case any of the creditors had received any thing out of the personal estate towards satisfaction of their demands, then they were not to receive any part of the money arising from the sale, till the other creditors were paid up equal with them. The estate had been sold, and the personal estate not being sufficient for payment of debts and legacies, they were ordered to be paid out of the money produced by the sale of the real estate. (e)

In the case of Webster v. Alsop,(ƒ) John Taylor, by his will, directed all his just debts and funeral expenses to be paid out of his personal estate; and if his personal estate should not be sufficient, he charged his real estate with so much thereof as his personal estate would not extend to pay; and then devised his real estates to trustees, subject to annuities and other payments, to the use of the plaintiff for life, with the remainders over; and he gave several legacies. The personal estate proving deficient, it was declared that the legatees were entitled to stand in the place of the creditors, for so much of the personal estate as had been exhausted by them in the payment of their debts.(g)

It must be here noticed, that in Keeling v. Brown, Sir Richard Pepper Arden, Master of the Rolls, refused to confine the specialty creditors of the testator to the real estate disposed of by a general residuary clause, the personal estate being sufficient to pay all the debts, but not the legacies; although the Court, from the implied charge upon the land by the will, would have marshalled the assets for the simple contract creditors, if the personal estate had been sufficient to pay their demands. In that case (h) Aaron Brown began his will in these words, "Imprimis, I will and direct that all my just debts and funeral expenses be paid and discharged, as soon as conveniently may be, after my decease, by my executrix and executors hereinafter named. Item, I give, devise and bequeath to my nephew J. Brown all that my messuage, &c. wherein he now lives, at H., and also the sum of 400l., to hold to him, his heirs, executors, administrators, and assigns for ever." The testator then devised another house to his nephew Charles in fee, and gave another house (e) See the fourth resolution in Haslewood v. Pope, 3 P. Will, 323. f) 3 Bro. C. C. 352. (note.) (h) 5 Ves. 359..

(g) See Muddle v. Fry, 6 Mad. 270.

to his wife for life, with remainder to J. Brown in fee. And after bequeathing specific parts of his personal estate to his wife, &c. and giving some pecuniary legacies, he gave the residue of his estate and effects, whether real or personal, to J. Brown absolutely, and appointed his wife, S. Fernehough, and H. Hatton, executrix and executors. The testator's personal estate being large enough to pay all the debts, but insufficient to answer the legacies, the question was, whether the assets should be so marshalled, as at least to confine the specialty creditors to the real estate in favour of the legatees? and the Master of the Rolls expressed a clear opinion, that there was no charge of the debts upon the real estate, but a mere direction to the executors to pay the debts, without giving them any other fund than the personal estate, out of which they could fulfil that duty. If any of the debts were to go unpaid by the insufficiency of the personal estate, he would certainly marshal the assets; making the real estate to pay as much of the specialty debts as would be necessary to obtain a fund from the personal estate for payment of the simple contract creditors: but there it was agreed on all hands, that it was not necessary for the payment of the debts of the testator to do so.

Then, there being no charge upon the real estate for payment of debts, and there being an ample fund of personal estate for the payment both of specialty and simple contract debts, he was clearly of opinion in that case, there was no fund but the surplus of the personal estate, if there should be any, after payment of all the debts of the testator. He could not marshal the assets for payment of the legacies. He had formerly fully expressed his opinion upon that point, as to the difference between debts and legacies. He understood the Lord Chancellor expressed some doubt of it in the case of Williams v. Chitty,(i) but, upon reflection, he (the Master of the Rolls) remained of the same opinion, and decreed an account of the personal estate, and of the debts, funeral expenses, and legacies; and if, after payment of all the debts, there should not be enough of the personal estate to pay all the legacies, the legatees must abate in proportion. There was no other fund for their payment.

It is observable in the last case, that the Master of the Rolls seems to have thought the introductory clause in the will was sufficient to charge the lands with the specialty debts in favour of simple contract creditors, but not in favour of the legatees, under the persuasion that the law required a stronger mark of intention to charge the real estate with legacies than with debts: and this interpretation of his words seems strengthened by his reference to his opinion ex pressed to that effect in Kightley v. Kightley, before stated and considered.(k) This distinction has, indeed, been questioned by Lord Loughborough, C. in the case alluded to by the Master of the Rolls ; so that it seems this decision of his Honour, in Keeling v. Brown, cannot be entirely devested from doubt, while Lord Loughborough's opinion remains uncontrolled by equal authority.

2dly. Assets marshalled in favour of legatees, where the real (k) Supra, 455.

(i) 3 Ves. 551.