Response or Comment
A holds a first mortgage covering two parcels of land, B holds a second mortgage covering one of these parcels, and C holds a second mortgage covering the other parcel, B's mortgage being prior in time to C's. B's mortgage contains the following clause--"The property described in the within indenture is subject to an existing blanket mortgage held by A, with release clause of $10 per front foot." Upon a bill to foreclose A's mortgage, how should the burden of that mortgage be distributed? In Savings Investment & Trust Co. v. United Realty & Mortgage Co., 94 Atl. 588, the Court of Errors and Appeals of New Jersey held that both parcels should be sold, separately, and the paramount mortgage paid out of the proceeds, each parcel contributing in proportion to its price at the sale. The court "assumes" (as it can hardly avoid doing upon the authorities) that the "rule of sale in inverse order of alienation is applicable in favor of mortgagees, as it is in favor of grantees," but holds that the language of B's mortgage makes the rule inapplicable in this case.
Durfee, Edgar N. "Marshaling of Mortgaged Property in Favor of Subsequent Mortgagees." Mich. L. Rev. 14 (1915): 53-8.