Subrogation
Author | Jeffrey Lehman, Shirelle Phelps |
Page 384
The substitution of one person in the place of another with reference to a lawful claim, demand, or right, so that he or she who is substituted succeeds to the rights of the other in relation to the debt or claim, and its rights, remedies, or SECURITIES.
There are two types of subrogation: legal and conventional. Legal subrogation arises by operation of law, whereas conventional subrogation is a result of a contract.
The purpose of subrogation is to compel the ultimate payment of a debt by the party who, in EQUITY and good conscience, should pay it. This subrogation is an equitable device used to avoid injustice.
Legal subrogation takes place as a matter of equity, with or without an agreement. The right of legal subrogation can be either modified or extinguished through a contractual agreement. It cannot be used to displace a contract agreed upon by the parties.
Page 385
Conventional subrogation arises when one individual satisfies the debt of another as a result of a contractual agreement that provides that any claims or liens that exist as security for the debt be kept alive for the benefit of the party who pays the debt. It is necessary that the agreement be supported by consideration; however, it does not have to be in writing and can be either express or implied.
The facts of each case determine the issue of whether or not subrogation is applicable. In general, the remedy is broad enough to include every instance in which one party, who is not a mere volunteer, pays a debt for which a second party is primarily liable and which, in equity and good conscience, should have been discharged by the second party. Subrogation is a highly favored remedy that the...
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