Rule of Marshaling Assets Law and Legal Definition

The rule of marshaling assets is an equitable doctrine that when a creditor has two liens or funds to which s/he may look for the satisfaction of his/her debt, and another creditor has a lien on only one of those funds, then the creditor who has a lien on both of such funds must first look to the fund or source on which the other creditor has no lien or interest therein. This rule is applied when the ends of justice require its application.

The rule of marshaling assets does not prevail except where both funds are in the hands of the common debtor of both creditors. [Myer v. Kendall, 142 La. 361 (La. 1917)] The rule of marshaling assets must be applied to protect, and not destroy equities.[Slater v. Breese, 36 Mich. 77 (Mich. 1877)]

This is also known as marshaling doctrine; rule of marshaling securities; rule of marshaling remedies.