Also known as: subrogation actions · subrogation
Written by attorneys · grounded in primary & secondary sources — see below
An action by which a party who has satisfied another's obligation enforces the creditor's remedies against the primary obligor. The action prevents unjust enrichment and is available when the performing party acted to protect its own secondary liability or to fulfill a duty owed the creditor.
Serena Soto promised to pay a supplier on behalf of her business partner. When the partner defaulted, Serena satisfied the supplier's full claim from her own funds. Serena then brought a subrogation action to enforce the supplier's original rights against the partner and any collateral securing the debt.
Seth Shapiro's company paid a workers' compensation award to an injured employee after a third-party tortfeasor caused the harm. The company then filed a subrogation action against the tortfeasor to recover the amounts paid, stepping into the employee's shoes to enforce the underlying tort claim.
Stella Shapiro's auto insurer paid her medical bills after a negligent driver caused her injuries. The insurer then initiated a subrogation action against the driver to recover the payments, asserting the same negligence claim the victim could have pursued.
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Sylvia Santos paid off a senior mortgage on property after the new owner defaulted. Santos then brought a subrogation action to foreclose the mortgage against the property in the new owner's hands, claiming the original lien by operation of law to avoid an unearned windfall.
A promisee who satisfies an intended beneficiary's claim from its own assets acquires a right of reimbursement from the promisor. That right may be enforced directly or, once the beneficiary's claim is fully satisfied, by subrogation to the beneficiary's claim against the promisor and any related judgment or security.
When mortgaged real estate is transferred with assumption of liability, the transferor is a secondary obligor and the transferee a principal obligor. The transferor may obtain relief against the transferee and the mortgaged property by subrogation if the transferee defaults or impairs the transferor's expectation of performance.
An applicant's right of subrogation against a beneficiary or nominated person does not arise until the issuer honors the letter of credit or otherwise pays. Rights of a nominated person likewise arise only after payment or value is given.
Payments from a plaintiff's own insurance are ignored when calculating the defendant's tort liability under the collateral source rule. Any reimbursement occurs afterward through the insurer's contractual or equitable subrogation rights against the recovery, not by reducing the judgment against the tortfeasor.
…injury to a servant in the belief that this statutory cause of action was necessary in order to preserve an employer's right of subrogation under the workers' compensation law. (See Governor's Recommendation to Assem. and Sen. that Assem. Bill No. 1699 be amended (May 12, 1939) 1 Assem.J. (1939 Reg. Sess.) p. 2086. Compare…