Also known as: subrogation claims · subrogated claim · subrogated claims · subrogation
Written by attorneys · grounded in primary & secondary sources — see below
An equitable right arising when one party satisfies the obligation of another. The paying party steps into the position of the original creditor and may enforce the claim against the primary obligor to the extent of the payment made.
Carmen personally paid the $180,000 trade debt that Zenith Surety owed to its vendor. After satisfying the creditor in full, Carmen asserted a claim against the partnership assets for the amount she had advanced. The court recognized her right to recover directly from the partnership as the party that had stepped into the vendor's position.
FMC's self-funded health plan paid medical expenses for an injured employee after a car accident. The plan then pursued the third-party tortfeasor to recoup those payments. The court upheld the plan's ability to enforce the employee's original claim against the tortfeasor once the plan had satisfied the medical providers.
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A promisee acquires the claim once the beneficiary's obligation has been satisfied from the promisee's own assets. The claim allows the promisee to step into the beneficiary's position and recover from the promisor.
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No. An unsatisfied judgment against one party does not prevent suit against the other. Only actual payment in whole or part reduces the remaining obligation.
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Reimbursement allows direct recovery from the primary obligor. Subrogation permits enforcement of the original creditor's claim and any security. Both mechanisms prevent the primary obligor from retaining an unjust enrichment after payment by the secondary party.
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It depends on the underlying transaction. When the transferee assumes the debt, subrogation may reach both the land and the transferee personally. When no assumption occurs, the right is typically limited to the land itself.
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