Subrogation

Subrogation in United States

Subrogation Definition

The substitution of another person in the place of a claimant, to whose rights he succeeds in relation to the claim. That change which puts another person in the place of the creditor, and which makes the right, the mortgage, or the security which the creditor has, pass to the person who is subrogated to him, that is to say, who enters into his right. Domat, Civ. Law, pt. i. lib. iii. tit. i. § vi. It is a legal fiction by force of which an obligation extinguished by payment made by a third party is considered as continuing to subsist for the benefit of this third person, who makes but one and the same person with the creditor in the view of the law. Subrogation is the act of putting one thing in place of another, or one person in place of another. Guyot, Rep. Univ. Subrogation, § ii. Subrogation gives to the substitute all the rights of the party for whom he is substituted. 4 Md. Ch. 253. Among the earlier civil-law writers, the term seems to have been used sjmonymously with substitution; or, rather, substitution included subrogation, as well as its present more limited signification. See Domat, Civ. Law, passim; Poth. Obi. passim. The term substitution is now almost altogether confined to the law of devises and chancery practice. See Substitution. The word subrogation is originally found only in the civil law, and has been adopted, with the doctrine itself, thence into equity. It is an equitable doctrine (3 Ired. Eq. [N. C] 386), but in the law, as distinguished from equity, it hardly appears as a term, except perhaps in those states where, as in Pennsylvania, equity is administered through the forms of law, and those where the’ distinction between legal and equitable remedies has been abolished. There the term subrogation, adopted from the Roman law, has of late years come into quite general use. 6 Pa. St. 504. The equitable doctrine of marshalling assets is plainly derived from the Roman law of subrogation or substitution; and although the word is, or, rather, has been, used sparingly in the common law, many of the doctrines of subrogation are familiar to the courts of common law. Subrogation differs from cession in this, that while cession only substitutes the one to whom the debt is ceded in place of the ceder, in subrogation the debt would have become extinguished but for the effect of th.e subrogation; and also because, although subrogation supposes a change in the person of the creditor, it does not imply novation; but, through the fiction of the law, the party who is subrogated is considered as making only one and the same person with the creditor, whom he succeeds. Masse, Dr. Comm. Payment in Subrogation. It is one thing to decide that a surety is entitled, on payment, to have an assignment of the debt, and quite another to decide that he is entitled to be subrogated or substituted as to the equities and securities to the place of the creditor, as against the debtor and his cosureties. Story, Eq. Jur. § 493, note; 2 McLean (U. S.) 451; 1 Dev. (N. C.) 137. The legal subrogation of the civilians is generally intended by the term subrogation. Some original interest is essential to entitle one to subrogation. Thus, a surety paying the debt is subrogated to the rights of the creditor against the principal (23 Minn. 74; 28 N. Y. 271), and the holder of a lien who pays a prior lien is subrogated to the rights of the lienholder whom he pays (2 Allen [Mass.] Ill) ; but a mere stranger or volunteer paying a debt has no right to subrogation (93 N. Y. 235; 76 Va. 262). In the Civil Law. Subrogation of persons is of three sorts: First, the canonists understand by subrogation the succession of a priest to the rights of action of the occupant of a benefice who has died during a suit. Guyot, Rep. Univ. Subrogation of Persons, § i. Second, the second sort arose from a local custom of the Bourbonnais, and had for its object the protection of the debtor from the effects of collusion on the part of the attaching creditor. Third, subrogation in’ fact to aliens and pledgees, which is only the change of one creditor for another. See Guyot, ut supra, and, also. Masse Dr. Comm. Nearly all the instances in which the common law has adopted the doctrines of subrogation have arisen under this latter class. Subrogation is either legal or conventional. Legal subrogation is that resulting by operation of law from the satisfying of a claim as to which the person making payment has some original privilege. 14 Cal. 565. Conventional subrogation reetilts as its name indicates, from the agreement of the parties, and can take effect only by agreement. This agreement is, of course, with the party to be subrogated, and may be either by the debtor or creditor. Civ. Code La. 1249. Thus, it may happen when the creditor receiving payment from the third person subrogates the payor to his right against the debtor. This must happen by express agreement; but no formal words are required. This sort of subrogation only takes place where there is a payment of the debt by a third party, not where there is an assignment, in which case, subrogation results from the assignment. This principle is recognized by the common law in cases where, upon payment, the securities are transferred to a party having an interest in the payment. Or, in case the debtor borrows money from a third party to pay a debt, he may subrogate the lender to the rights of the creditor ; for by this change the rights of the other creditors are not injuriously affected. To make this mode of subrogation valid, the borrowing and discharge must take place before a notary. In the borrowing, it must be declared that the money has been borrowed to make payment, and in the discharge, that it has been made with money furnished by the creditor. Masse, Dr. Comm. lib. 5, tit. 1, c. 5, §§ 1, 2.

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Legal Issue for Attorneys

The substitution of another person in the place of a claimant, to whose rights he succeeds in relation to the claim. That change which puts another person in the place of the creditor, and which makes the right, the mortgage, or the security which the creditor has, pass to the person who is subrogated to him, that is to say, who enters into his right. Domat, Civ. Law, pt. i. lib. iii. tit. i. § vi. It is a legal fiction by force of which an obligation extinguished by payment made by a third party is considered as continuing to subsist for the benefit of this third person, who makes but one and the same person with the creditor in the view of the law. Subrogation is the act of putting one thing in place of another, or one person in place of another. Guyot, Rep. Univ. Subrogation, § ii. Subrogation gives to the substitute all the rights of the party for whom he is substituted. 4 Md. Ch. 253. Among the earlier civil-law writers, the term seems to have been used sjmonymously with substitution; or, rather, substitution included subrogation, as well as its present more limited signification. See Domat, Civ. Law, passim; Poth. Obi. passim. The term substitution is now almost altogether confined to the law of devises and chancery practice. See Substitution. The word subrogation is originally found only in the civil law, and has been adopted, with the doctrine itself, thence into equity. It is an equitable doctrine (3 Ired. Eq. [N. C] 386), but in the law, as distinguished from equity, it hardly appears as a term, except perhaps in those states where, as in Pennsylvania, equity is administered through the forms of law, and those where the’ distinction between legal and equitable remedies has been abolished. There the term subrogation, adopted from the Roman law, has of late years come into quite general use. 6 Pa. St. 504. The equitable doctrine of marshalling assets is plainly derived from the Roman law of subrogation or substitution; and although the word is, or, rather, has been, used sparingly in the common law, many of the doctrines of subrogation are familiar to the courts of common law. Subrogation differs from cession in this, that while cession only substitutes the one to whom the debt is ceded in place of the ceder, in subrogation the debt would have become extinguished but for the effect of th.e subrogation; and also because, although subrogation supposes a change in the person of the creditor, it does not imply novation; but, through the fiction of the law, the party who is subrogated is considered as making only one and the same person with the creditor, whom he succeeds. Masse, Dr. Comm. Payment in Subrogation. It is one thing to decide that a surety is entitled, on payment, to have an assignment of the debt, and quite another to decide that he is entitled to be subrogated or substituted as to the equities and securities to the place of the creditor, as against the debtor and his cosureties. Story, Eq. Jur. § 493, note; 2 McLean (U. S.) 451; 1 Dev. (N. C.) 137. The legal subrogation of the civilians is generally intended by the term subrogation. Some original interest is essential to entitle one to subrogation. Thus, a surety paying the debt is subrogated to the rights of the creditor against the principal (23 Minn. 74; 28 N. Y. 271), and the holder of a lien who pays a prior lien is subrogated to the rights of the lienholder whom he pays (2 Allen [Mass.] Ill) ; but a mere stranger or volunteer paying a debt has no right to subrogation (93 N. Y. 235; 76 Va. 262). In the Civil Law. Subrogation of persons is of three sorts: First, the canonists understand by subrogation the succession of a priest to the rights of action of the occupant of a benefice who has died during a suit. Guyot, Rep. Univ. Subrogation of Persons, § i. Second, the second sort arose from a local custom of the Bourbonnais, and had for its object the protection of the debtor from the effects of collusion on the part of the attaching creditor. Third, subrogation in’ fact to aliens and pledgees, which is only the change of one creditor for another. See Guyot, ut supra, and, also. Masse Dr. Comm. Nearly all the instances in which the common law has adopted the doctrines of subrogation have arisen under this latter class. Subrogation is either legal or conventional. Legal subrogation is that resulting by operation of law from the satisfying of a claim as to which the person making payment has some original privilege. 14 Cal. 565. Conventional subrogation reetilts as its name indicates, from the agreement of the parties, and can take effect only by agreement. This agreement is, of course, with the party to be subrogated, and may be either by the debtor or creditor. Civ. Code La. 1249. Thus, it may happen when the creditor receiving payment from the third person subrogates the payor to his right against the debtor. This must happen by express agreement; but no formal words are required. This sort of subrogation only takes place where there is a payment of the debt by a third party, not where there is an assignment, in which case, subrogation results from the assignment. This principle is recognized by the common law in cases where, upon payment, the securities are transferred to a party having an interest in the payment. Or, in case the debtor borrows money from a third party to pay a debt, he may subrogate the lender to the rights of the creditor ; for by this change the rights of the other creditors are not injuriously affected. To make this mode of subrogation valid, the borrowing and discharge must take place before a notary. In the borrowing, it must be declared that the money has been borrowed to make payment, and in the discharge, that it has been made with money furnished by the creditor. Masse, Dr. Comm. lib. 5, tit. 1, c. 5, §§ 1, 2.

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Notice

This definition of Subrogation Is based on the The Cyclopedic Law Dictionary . This definition needs to be proofread..

Practical Information

Note: Some of this information was last updated in 1982

The substitution of one person in another’s place. For example, A’s car is insured by an insurance company against collision. A’s car is negligently damaged by B. The insurance company pays $…. for repairs to A’s car. The insurance company is subrogated to A’s position and may prosecute the claim for damages against B. The insurance company would be the subrogee, the one who by subrogation acquires the legal rights or claims of another. A would be the subrogor, the one whose legal rights are acquired by another through subrogation.

(Revised by Ann De Vries)

What is Subrogation?

For a meaning of it, read Subrogation in the Legal Dictionary here. Browse and search more U.S. and international free legal definitions and legal terms related to Subrogation.

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See Also

  • Legal Topics.
  • Further Reading (Articles)

    Subrogation: Further Perils For A Mortgagee., Mondaq Business Briefing; April 23, 2010; Cheetham, Andrew

    Effective subrogation prevents unnecessary loss., Claims; August 1, 2004; Garcia, Jay

    Subrogation Concerns Come First When Settling Claims.(Brief Article), Claims; October 1, 1999; Gillmeister, Ran

    Contractual Subrogation In Bankruptcy And The Rig
    ht To Vote., Mondaq Business Briefing; October 14, 2011

    Exercising Subrogation Rights against Subcontractors Isn’t Easy, but It’s Not Impossible: Careful Attention to the Issues Presented by Policy Language, Additional Insured Language and Subrogation Clauses Is Important, Defense Counsel Journal; October 1, 2001; Watson, Harold K.

    Is Equitable Subrogation Dead for Lenders and Insurers in Missouri?, Mondaq Business Briefing; November 24, 2010

    Sutton button: subrogation by Landlord’s insurer against tenants.(Coverage Analysis), Claims; October 1, 2004; Fox, David W.

    Workers’ Comp Subrogation: There’s Gold in Thar Hills!, Risk Management; May 1, 1990; Cohen, Stewart L.

    Subrogation and Risk Management, Risk Management; January 1, 2005; Stanovich, Craig F.

    Higher yields: how subrogation managers use the Web to recover claims: a subrogation unit may not only experience an increase in recoveries, but also a jump in the speed with which they can recover claims.(Technology For Subrogation Managers), Risk & Insurance; September 1, 2003; Palmer, Elissa

    More on waiver-of-subrogation endorsements, American Agent & Broker; January 1, 1997; Brooks, Harry F;

    Insurer Beware! – Circumstances In Which the Insurer May Lose His Subrogation Rights in Marine Insurance, Journal of Maritime Law and Commerce; January 1, 2012; Jing, Zhen

    Negligent or not, waiver of subrogation upheld.(Security & the Law), Security Distributing & Marketing; November 1, 2008; Gold, Lessing E.

    Subrogation Waivers in Commercial Leases., Mondaq Business Briefing; October 17, 2002

    NASP: Massachusetts, California and New Jersey Top List of States with Highest Auto Subrogation Recovery Rates, Manufacturing Close-Up; July 18, 2012

    Enforcing Subrogation Rights, Mondaq Business Briefing; April 8, 2014; Sullivan, M. Sean

    The “made-whole” doctrine: Its effect on Tennessee tort litigation and insurance subrogation rights, The University of Memphis Law Review; October 1, 2001; Fulks, Todd L

    Waiver of Subrogation and Allocation of Risk in Construction Contracts, Defense Counsel Journal; January 1, 1995; Snodgrass, Gary E.

    Subrogation Checklist., Mondaq Business Briefing; January 24, 2007; Hanson, John

    ARBITRATION FORMS RELEASE: ELECTRONIC SUBROGATION SYSTEM NOW AVAILABLE COUNTRYWIDE; STREAMLINED SYSTEM WILL TRANSFORM SLOW SUBROGATION PROCESS., States News Service; July 13, 2011

    Subrogation in State Statute Topics

    Introduction to Subrogation (State statute topic)

    The purpose of Subrogation is to provide a broad appreciation of the Subrogation legal topic. Select from the list of U.S. legal topics for information (other than Subrogation).

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