Also known as: legal subrogations · subrogation · legal subro
Written by attorneys · grounded in primary & secondary sources — see below
Subrogation that arises by operation of law or by implication in equity to prevent fraud or injustice. It typically occurs when a paying party has a liability, claim, or fiduciary relationship with the debtor, pays to fulfill a legal duty or because of public policy, acts as a secondary debtor or surety, or pays to protect its own rights or property.
Leah Lamb as promisee contracts with Lucia Lopez as promisor to pay a debt owed to a third-party creditor. When the creditor obtains judgment against Leah, she satisfies the full amount from her own funds. Leah then steps into the creditor's position against Lucia to recover the payment and avoid unjust enrichment of the promisor.
Lila Lin guarantees a mortgage loan made by a bank to Liam Larson secured by real estate. After default, Lila pays the bank in full to protect her exposure. Equity treats Lila as subrogated to the bank's mortgage position, preserving the original priority against junior lienholders rather than extinguishing the lien.
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Legal subrogation arises when the paying party has a liability or fiduciary relationship with the debtor, pays to fulfill a legal duty or public policy, acts as a secondary obligor or surety, or pays to protect its own rights or property.
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Legal subrogation arises by operation of law to prevent injustice, while conventional subrogation arises by contract or express agreement of the parties.
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Yes. When a guarantor fully performs a mortgage obligation to protect its own interest, equity subrogates the guarantor to the mortgagee's position and priority to prevent unjust enrichment of junior lienholders.
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Yes. A junior mortgagee who pays the senior mortgage to protect its own lien is equitably subrogated to the senior position, preserving priority against intervening creditors.
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…146 A.2d 105, 110 (1958) (liability insurer having paid judgment for assault on behalf of insured partnership has a right of subrogation against the individual partner who committed the assault). Affirmed in part and reversed in part. Footnotes [^maj-1]: Judge McRae's order in Rice v. Perl , dated August 11, 1980, as…