Here’s an intro into a concept many people are investigating and pursuing as a remedy when the SYSTEM lays charges against the ALL CAPS NAME.

– this page is a research in progress –


Here’s ONE definition that if rephrased might make even more sense:

Subrogation occurs in property/casualty insurance when a company pays one of its insured’s for damages, then makes its own claim against others who may have caused the loss, insured the loss, or contributed to it.

that’s one example from insurance…what if we modify the wording a bit (this is theoretical – can you see any other rephrasing that makes sense?):

Subrogation occurs in COURT when a GOV’T OFFICER claims one of its ALL CAPS NAME ORGANIZATIONS has caused damage (offended and Act with attached penalties), then it pursues its claim against whoever answers to the ALL CAPS NAME as that is who may have caused the loss, insured the loss, or contributed to it.

Download PDF – The Equitable Doctrine of Subrogation

Law Class Notes?? – Download PDF – Subrogation

Subrogation Law Thesis – Download PDF – subrogation Law Thesis 2109

Subrogation is the assumption by a third party (such as a second creditor or an insurance company) of another party’s legal right to collect a debt or damages.[1] It is a legal doctrine whereby one person is entitled to enforce the subsisting or revived rights of another for one’s own benefit.[2] A right of subrogation typically arises by operation of law, but can also arise by statute or by agreement. Subrogation is an equitable remedy, having first developed in the English Court of Chancery. It is a familiar feature of common law systems. Analogous doctrines exist in civil law jurisdictions.

Subrogation is a relatively specialised field of law; entire legal textbooks are devoted to the subject.[3][4]


Countries which have inherited the common law system will typically have a doctrine of subrogation, though its doctrinal basis in a particular jurisdiction may vary from that in other jurisdictions, depending upon the extent to which equity remains a distinct body of law in that jurisdiction.

English courts have now accepted that the concept of unjust enrichment has a role to play in subrogation.[5] In contrast, this approach has been stridently rejected by the High Court of Australia, where the doctrinal basis of subrogation is said to lie in the prevention of unconscionable results: for example, the discharge of a debtor or one party getting double recovery.[6]

Types of subrogation

The situations in which subrogation will be available are not closed and vary from jurisdiction to jurisdiction. Subrogation typically arises in three-party situations. Some common examples of subrogation include:

  • Indemnity insurance. An indemnity insurer may be entitled to be subrogated to the rights of insured as against a third party who is responsible for the damage to the insured.
  • Law of guarantees. A surety may be entitled to be subrogated to the rights of the creditor as against the principal debtor.
  • Trust creditors. A creditor of a trustee may be entitled to be subrogated to the trustee’s right of indemnity.
  • Subrogation to outgoing securities. A lender who advances funds for the purpose of discharging a security may be entitled to be subrogated to the third party’s security as against the borrower.
  • Bills of exchange. The indorser of a bill of exchange may be entitled to be subrogated to the holder as against the acceptor (who is liable to indemnify the indorser).

Indemnity insurer’s subrogation rights

“Subrogation” has been used in this context to refer to two distinct situations.

First, after paying out under a policy of indemnity insurance, an insurer may be entitled to stand in the shoes of the insured and enforce the insured’s rights against the third party tortfeasor who is responsible for the loss.[7] This is subrogation in its proper or core sense. Insurance subrogation, and, specifically, the types and amounts of payments that can be recovered, differs from jurisdiction to jurisdiction.

Secondly, after paying out under a policy of indemnity insurance, an insurer may be entitled to sue the insured where the insured has already had his loss made good by the third party tortfeasor. That is, the insurer has a claim against the insured so as to ensure that the insured does not get double recovery.[8] This situation might arise if, for example, an insured claimed in full under the policy, but then started proceedings against the third party tortfeasor, and recovered substantial damages.[9] Strictly speaking, this is not a case of subrogation; it is a case of recoupment.

Travel Insurance subrogation process

In an “excess” or “supplemental” travel insurance policy where there is a ‘first payer’ clause, through the subrogation process an insurer is legally entitled to seek cost-sharing up to a certain percentage from a member’s private group health insurance provider after the insurer pays out a travel insurance claim.[10] These plans are less expensive but if there is a major claim made, Insurance carriers, such as RBC insurance,[11] can offer [11]

Any of our policies are excess insurance and are the last payers. All other sources of recovery, indemnity payments or insurance coverage must be exhausted before any payments will be made under any of our policies.

— RBC Insurance Saltzman CBC 2016

While these supplemental travel insurance policies may be less expensive in the short run, they can have devastating consequences if a serious and costly health crisis occurs while travelling.[10] This means that if a client makes a claim, the insurer will recover that amount from the member’s private group health insurance provider—for example $100,000 of the $200,000 total. This can become problematic if the member later has a serious illness because many private group health insurance providers have a lifetime maximum coverage amount-$500,000 for example-for its extended health plans. If the member purchases travel insurance from their own extended health-care provider, a claim would not have affected their lifetime maximum.[10]

Surety’s subrogation rights

A surety who pays off the debts of another party may be entitled to be subrogated to the creditor’s former claims and remedies against the debtor to recover the sum paid.[12] This would include the endorser on a bill of exchange.[13] The surety will then have the benefit of any security interest in favour of the creditor for the original debt. Conceptually this is an important point, as the subrogee will take the subrogor’s security rights by operation of law, even if the subrogee had been unaware of them.[14]

Subrogation rights against trustees

A trustee of who enters into transactions for the benefit of the beneficiaries of the trust is generally entitled to be indemnified out of the trust assets; this is secured by way of an equitable lien or first charge over the trust assets. This is a proprietary security interest.

Trust creditors (that is, persons who have become creditors of the trustee qua trustee) may be entitled to be subrogated to the trustee’s lien. This is a particularly precarious ‘right’ of trust creditors: a trustee may not have a right of indemnity (for example, because the trustee has committed a breach of trust in incurring the liability to the creditor in question) or it may be limited (for example, where the trustee has committed an unrelated breach of trust and the clear accounts rule operates). In some jurisdictions it is possible for the trustee’s right of indemnity to be excluded altogether. In these cases, subrogation may be rendered worthless or impossible.

Lender’s subrogation rights

Where a lender lends money to a borrower to discharge the borrower’s debt to a third party (or which the lender pays directly to the third party to discharge the debt), the lender may be entitled to be subrogated to the third party’s former rights against the borrower to the extent of the debt discharged.[15]


Where a bank, acting on what it believes erroneously to be the valid mandate of its client, pays money to a third party which discharges the customer’s liability to the third party, the bank is subrogated to the third party’s former remedies against the customer.[16]

Effect of subrogation

Where subrogation is available, the subrogated party is entitled to stand in the shoes of another and enforce that other party’s rights. If the equity is established, the court may effect the subrogation remedy by way of equitable lien, charge, or a constructive trust with a liability to account. Crucially, the claimant’s rights are wholly derivative, hence the claimant has no higher rights than the person to whom he or she is subrogated.

Subrogation in civil law jurisdictions

Analogous doctrines exist in civil law countries.[17]

Reclaiming Lien Priority: The Doctrine of Equitable Subrogation Explained

By Mark Epstein


California being a “race-notice” jurisdiction, the state follows a “first in time, first in right” system of lien priorities, meaning that other things being equal, deeds of trust and other liens that are recorded and indexed first in time generally have priority over subsequently recorded liens. Cal. Civ. Code § 2897; Thaler v. Household Finance Corp. (2000) 80 Cal.App.4th 1093, 1099. However, under appropriate circumstances, courts can declare that the relative priority positions of successively recorded liens are reversed pursuant to a judicial doctrine known as equitable subrogation. The doctrine of equitable subrogation is an exception to the “first in time, first in right” rule and applies in those situations where equity requires a different result. JP Morgan Chase Bank v. Banc of America Practice Solutions, Inc. (2012) 209 Cal.App.4th 855; citing Simon Newman Co. v. Fink (1928) 206 Cal. 143, 147.

The courts have explained equitable subrogation as follows:

One who advances money to pay off an encumbrance on realty at the insistence of either the owner of the property or the holder of the encumbrance, either on the express understanding, or under circumstances from which an understanding will be implied, that the advance made is to be secured by a first position lien on the property, is not a mere volunteer; and in the event the new security is for any reason not a first lien on the property, the holder of such security, if not chargeable with culpable and inexcusable neglect, will be subrogated to the rights of the prior encumbrancer under the security held by him, unless the superior or equal equities of others would be prejudiced thereby.

Smith v. State Savings and Loan Association (1985) 175 Cal.App.3d 1092, 1096; Katsivalis v. Serrano Reconveyance Co. (1970) 70 Cal.App.3d 200, 210.

The doctrine of equitable subrogation can also provide an exception to the general rule that a foreclosure sale extinguishes or “wipes out” all interests in the property over which the foreclosing party’s deed of trust had priority. In certain situations where a junior lienor has paid off or refinanced a debt that was secured by a senior lien which is then discharged or reconveyed, the court will revive the extinguished junior lien to provide the payer with an enforceable lien that has the same priority as the former lien that was paid off. Caito v. United Cal. Bank (1978) 20 Cal.3d 694, 704.

Equitable subrogation may be denied in circumstances where the party seeking to be subrogated to the priority position of a senior lienor (the prospective subrogee) has actual knowledge of the third party claim. However, equitable subrogation will not be denied when the subrogee merely has constructive knowledge of the intervening lien. The mere failure to search the public records does not amount to culpable or inexcusable neglect that would defeat an equitable subrogation claim. Smith v. Savings & Loan Assn., supra, 175 Cal.App.3d at 1099; Katsivalis v. Serrano Reconveyance Co., supra, 70 Cal.App.3d at 210. California Civil Code Section 3524 provides as follows:

“Between those who are equally in the right, or equally in the wrong, the law does not interpose.”

In other words, if two parties find them in the same position of fault (or lack thereof), or of right versus wrong, the law will not interpose a remedy or solution in favor of one against the other. The parties remain equal, and in the same position vis-à-vis one another.

The “superior equities doctrine” element of equitable subrogation is a legal doctrine that first arose in the context of the broader insurance law. Generally stated, “subrogation” is defined as the substitution of another person in place of the creditor or claimant to whose rights he or she succeeds in relation to the debt or claim. State Farm General Ins. Co. v. Wells Fargo Bank, N.A. (2006) 143 Cal.App.4th 1098, 1105. An insurer who pays off an insured’s claim is prevented from recovering against a party whose equities “are equal or superior to those of the insurer.” Fort Bragg Unified School Dist. v. Solano County Roofing, Inc. (2011) 194 Cal.App.4th 891, 915. In order to prevail on a claim of equitable subrogation in any context, the plaintiff has the burden to prove that its possesses not just equal equities to the defendant against whom it seeks subrogation, but that the plaintiff has superior equities. State Farm General Ins. Co. v. Wells Fargo Bank, N.A., supra, 143 Cal.App.4th at 1107; Meyers v. Bank of America Nat. Trust & Savings Ass’n (1938) 11 Cal.2d 92, 98 [“The right of subrogation is an equitable right, and where equities are equal the right does not exist and there can be no relief.”]) In first articulating and applying the “superior equities doctrine,” the California Supreme Court held that an insurer could not seek subrogation against a bank that was an, “innocent third party.” (Id. at 102.)

The courts have long held that in order to achieve equity, the doctrine of equitable subrogation should be applied liberally. However, the doctrine must not prejudice the superior or equal rights of senior intervening lienor(s). Bess v. Wise (1969) 275 Cal.App.2d 158, 165; Meyer Koulish Co. v. Cannon (1963) 213 Cal.App.2d 419, 424. Therefore, the courts must look to the intentions of the parties and determine whether the application of the equitable subrogation doctrine would give the lenders what each intended. Katsivalis v. Serrano Reconveyance Co., supra, 70 Cal.App.3d at 211.

If the first-in-time lender has already knowingly subjected its lien to a senior encumbrance, then the courts are inclined apply the doctrine to a junior lien if the other required elements are satisfied. JP Morgan Chase Bank v. Banc of America Practice Solutions, Inc., supra, 209 Cal.App.4th at 862; Lawyers Title Ins. Corp. v. Feldsher (1996) 42 Cal.App.4th 41, 49;Smith v. State Savings & Loan Assn., supra, 175 1097; Simon Newman Co. v. Fink, supra, 206 Cal. at 146; Katsivalis v. Serrano Reconveyance Co., supra, 70 Cal.App.3d at 211.) In each of the foregoing cases, the courts determined that the application of the equitable subrogation doctrine gave both lenders exactly what each intended at the outset, where the intervening lienors had previously bargained for a junior lien position while the subrogees had bargained for, and reasonably expected to have, a senior lien.



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