Also known as: subrogation · subrogate · subrogated · subrogates · subrogating
Written by attorneys · grounded in primary & secondary sources — see below
An equitable principle by which a party who fully performs another's secured obligation steps into the shoes of the original creditor. The performing party acquires the creditor's rights against the primary obligor and any security to the extent necessary to prevent unjust enrichment of the debtor or intervening interests.
David Dawson promised to pay a debt owed by Dakota Industries to Dylan Duffy. When Dakota Industries defaulted, David Dawson satisfied the full amount from his own funds. David Dawson then pursued Dakota Industries directly for reimbursement under the doctrine of subrogation.
Dorothy Daniels guaranteed a mortgage loan made by Delta Dynamics to Devon Drake. After Devon Drake defaulted, Dorothy Daniels paid the lender in full. Dorothy Daniels then asserted the original mortgage lien against the property with its prior priority.
Dustin Donovan held a second mortgage on property owned by Dillon Energy. To prevent foreclosure by the senior lender, Dustin Donovan paid off the first mortgage. Dustin Donovan then claimed the senior lien position against later judgment creditors.
Select any source to read its text and confirm it supports the definition.
A guarantor who fully performs the mortgage obligation steps into the shoes of the original mortgagee. Equity preserves the mortgage lien with its original priority in the guarantor's hands to prevent junior lienholders from receiving an unearned windfall.
Supporting sources
No. The recorded satisfaction does not automatically extinguish subrogation rights. Equity looks beyond the record to treat the payor as the holder of the original mortgage when the payment was made to protect an interest and avoid unjust enrichment.
Supporting sources
Subrogation is available only to the extent necessary to prevent unjust enrichment and only when the payor acted to protect an existing interest. The subrogated lien retains the original priority date but does not expand the payor's rights beyond what equity requires.
Supporting sources
…made until November, 1962. Defendants refused to exchange the common stock for the preferred stock. Plaintiff, a bonding company subrogated to the broker's rights, instituted an action on July 2, 1968, within six years of the date on which the broker learned the identity of the defendants as the customers who wrongfully…