## Facts

- The 186th St. Land Trust #3240 (the trust) owned real property in Washington County, Oklahoma; Kent D. Stitt served as trustee.
- The trust granted RCB Bank (RCB) a mortgage on the Washington County property, and M. Keith Stitt & Associates, Inc. (Keith) held a junior mortgage on the same property.
- Kent Stitt (Kent), individually, owned separate real property in Tulsa County, Oklahoma.
- Kent granted RCB a mortgage on the Tulsa County property.
- Kent and the trust executed reciprocal guaranties of each other’s obligations, and the parties’ mortgages served as security connected to those guaranteed obligations.
- After defaults on the obligations covered by the lending and guaranty arrangements, RCB and Keith each filed actions to foreclose their respective mortgages against the Washington County property.
- The foreclosure cases were consolidated in the Washington County District Court.
- On summary judgment, the trial court entered foreclosure judgments in favor of both RCB and Keith, ruled that RCB’s Washington County mortgage had priority over Keith’s junior mortgage, and ordered that RCB’s entire judgment could be satisfied from the Washington County sale proceeds before any distribution to Keith.
- Keith appealed, seeking equitable marshaling and asking the appellate court to require RCB to pursue satisfaction first from Kent’s Tulsa County property before resorting to the Washington County property.

## Issues

1. Whether the trial court should have required RCB, as a senior creditor with access to more than one source of payment (Washington County and Tulsa County collateral), to marshal assets by proceeding first against the Tulsa County property before taking Washington County foreclosure proceeds that would otherwise be available to Keith’s junior lien.

## Decision

- The Oklahoma Court of Civil Appeals affirmed.
- The court held the trial court did not err by declining to apply marshaling to force RCB to seek recovery from the Tulsa County collateral before applying Washington County sale proceeds.
- As a result, RCB was entitled to receive Washington County foreclosure proceeds to satisfy its judgment before any proceeds could be paid to Keith as the junior mortgagee.

## Legal Principles

- Marshaling is an equitable remedy that may be applied when a senior creditor can reach two funds for payment and a junior creditor can reach only one, but it is discretionary and not automatic.
- Marshaling will not be ordered if it would be inequitable, materially injure the senior creditor, or interfere with the senior creditor’s contractual rights and lawful choice of remedies.
- A junior lienholder takes its lien subject to the senior lienholder’s rights and generally cannot use equity to reorder the senior creditor’s enforcement of valid security interests.
- Marshaling commonly requires that the doctrine operate on funds of the same debtor; where the additional fund is tied to a different obligor or to guaranty-based liability, a court may decline to compel the senior creditor to pursue that separate collateral first.

## Conclusion

RCB Bank v. Stitt affirmed a foreclosure distribution that paid the senior lender first from the Washington County collateral and rejected the junior mortgagee’s request for marshaling. Because marshaling is discretionary and cannot be imposed in a way that harms the senior creditor or rewrites the senior creditor’s bargained-for remedies—especially where the alternative collateral is associated with a separate obligor and guaranty structure—the trial court properly allowed RCB to satisfy its judgment from the Washington County sale proceeds before any payment to the junior lienholder.


RCB Bank v. Stitt, 517 P.3d 986 (2021)