Subrogation of Rights

1
Subrogation of Rights

• By
• Gustavo Gutiérrez

2
LEVINSONv.AMERICAN THERMEX, INC

• Levinson v. American Thermex, Inc., 396 SE 2d
  252, 196 Ga. App. 291 (1990)

3
Does American Thermex have the right of
subrogation?

• No. American Thermex does not have the right of
  subrogation because there is no evidence of a
  written assignment of the note to American
  Thermex by the holder.

4
Why or why not?

• Although Johnson signed the note ostensibly as a
  co-maker, he may be proved to be a surety by
  parol evidence. However, the name of American
  Thermex appears nowhere on the face of the note
  and there was no evidence that American Thermex
  had ever legally obligated itself to pay the
  note. Moreover, it is undisputed that the debt
  was paid by American Thermex to protect Johnson's
  credit and not to protect any interest or right
  of American Thermex itself. It follows that
  American Thermex is not a surety on the note and
  otherwise has no right of subrogation at law.

5
State what page in your text you found the answer
and explain.

• The Right of Subrogation The surety or guarantor
  has the legal right of subrogation. Simply
  stated, this means that any right that the
  creditor had against the debtor now becomes the
  right of the surety or guarantor. Included are
  creditor rights in bankruptcy, rights to
  collateral possessed by the creditor, and rights
  to judgments obtained by the creditor. In short,
  the surety or guarantor now stands in the shoes
  of the creditor and may pursue any remedies that
  were available to the creditor against the
  debtor, page 553, Business Law Twelfth Edition.

6
Define the term subrogation

• "The legal right of subrogation arising out of
  the payment of the debt of another extends only
  in favor of a surety for the payment of the debt
  or in favor of one who is compelled to pay the
  debt to protect his own right or interest...."

7
Analyze the legal Rules of Law which answer why
or why not American Thermex has a legal right of
subrogation.

• Under the law of this state, "where the type of
  agreement on which the action is brought is
  alleged to be an assignment of a chose in action,
  and it is no more than an assignment, a mere
  purchase of another's cause of action, it must be
  in writing if the assignee is to sue thereon in
  his own name in a purely legal action." The
  promissory note is a chose in action. Therefore,
  American Thermex cannot recover in this legal
  action based upon an entirely unwritten
  assignment of the note.
• It follows that, under the evidence, American
  Thermex acted as a mere volunteer when it paid
  the note, and it cannot recover its voluntary
  payment, OCGA 13-1-13.