Also known as: subrogation · subrogate · subrogated · subrogating
Written by attorneys · grounded in primary & secondary sources — see below
An equitable right allowing a party who fully performs another's secured obligation to step into the creditor's position and enforce the claim against the primary obligor or the collateral. The right prevents unjust enrichment and preserves the original priority of the satisfied claim. It arises by operation of law when payment discharges a duty for which the payor is secondarily liable.
Parker Phillips owed a licensing debt to Preston Pratt. SkyCloud contracted with Parker to pay the debt directly. Preston obtained judgments against both parties. When SkyCloud paid Preston in full, Parker's obligation was satisfied and Parker acquired a reimbursement claim against SkyCloud by subrogation to Preston's rights.
Pierre Poulin guaranteed a factory mortgage held by Alpha Precision. After the buyer defaulted and restructured the loan without Pierre's consent, Pierre paid the full balance to avert foreclosure. Pierre then asserted subrogation to enforce the mortgage against the factory in the buyer's hands.
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Patrick Phan sold mortgaged property to Pedro Pacheco without an assumption clause but with a price credit for the loan balance. When Pedro defaulted, Patrick paid the lender to protect his secondary liability. Patrick then claimed subrogation to foreclose the mortgage against the land now owned by Pedro.
Pamela Phillips transferred mortgaged real estate to Paragon Construction with an assumption agreement. After the lender increased the principal without Pamela's consent, Paragon defaulted. Pamela paid the full debt and sought subrogation to the mortgage lien against the property in Paragon's possession.
Preston Pratt signed a note as accommodation party for Parker Phillips. When the holder demanded payment, Preston paid the full amount. Preston then asserted subrogation to enforce the note directly against Parker as the accommodated party.
Patriot Insurance issued a letter of credit naming Peak Performance as beneficiary. After honoring a compliant presentation, Patriot paid the beneficiary and claimed subrogation to the beneficiary's rights against the applicant to recover the amount paid.
A promisee who satisfies the beneficiary's claim from its own assets obtains a right of reimbursement from the promisor. That right may be enforced directly or, once the beneficiary is fully paid, by subrogation to the beneficiary's claim against the promisor and any related judgment or security.
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When the transferee assumes the mortgage, subrogation permits the transferor to enforce against both the transferee personally and the mortgaged real estate. When the transferee does not assume liability, subrogation is limited to the land itself.
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The payor must have fully performed an obligation secured by the mortgage. Subrogation then preserves the mortgage and obligation to the extent necessary to prevent unjust enrichment, allowing the payor to enforce them with the original priority.
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…in such riot, in an action in any court of competent jurisdiction. And such county, city, or parish, so paying, shall also be subrogated to all the plaintiff's rights under such judgment." Id. , 749. [^maj-42]: Cong. Globe, 42d Cong., 1st Sess. 800-801. [^maj-43]: Id. , 804. [^maj-44]: Id. , 804. [^maj-45]:…