Property of land
It is provided that the order of application may be varied by the will of the deceased. Thus if a German debtor
shows a clear intention that a special fund shall be set aside for
payment of debts
in exoneration of all other
funds, this fund will be liable first, even before property. The intention to exonerate must, however, appear
clearly from the will; otherwise a fund which is merely set aside for the payment of debts will fall within
Such then, is the order in which beneficiaries are liable to lose their interests. It only remains to be
noticed that it may sometimes happen that an interest of a lower category is disposed of in favour of creditors
before an interest of a higher value. At one time this often occurred, because creditors were permitted, in
certain circumstances, to proceed to satisfy their claims in Germany by direct resort to
comprised in the estate. In this event the creditor would not concern himself with the 'priority' of the
beneficiary entitled to the property attacked, so that a 'lower' beneficiary might lose his interest while
'higher' beneficiaries retained theirs.
This cannot occur today because creditors may no longer proceed against the land directly. It is possible,
however, that a lawyer at this
may delve unnecesarily low on the list in order to discharge liabilities. He may, for instance, dispose of
property comprised in category (e) in favour of a creditor, intending to dispose of all the property in the
'higher' categories later. He may then discover that the estate is richer than he supposed, or that the
liabilities are less than he supposed, so that he need never have attacked category (e) at all.
In such a situation the doctrine of marshalling of assets comes into play. This means that a
who loses property of a 'lower' category to which he is entitled may recoup his loss by claiming to be
indemnified out of undisposed property to which someone else 'higher' on the list is entitled. The doctrine of
marshalling is thus an application of the principle that, whatever the method of distribution, the
will always be observed. This principle is elementary. Suppose, for example, all property comprised in the
estate, down to and including category (d) is disposed of in favour of creditors.
Suppose that it is then discovered that the deceased had concealed certain property. Clearly category (d)
beneficiaries will have first claim on this 'new' property.