Right of Subrogation. Levinson and Johnson, who had both signed a promissory note, did not pay the note when it was due. Instead, American Thermex, Inc, a corporation in which Johnson had a controlling interest, voluntarily paid the note. American

Question

Thermex later brought suit against Levinson, seeking reimbursement for the payment. American Thermex argued, among other things, that because it had paid the note, it had the legal right of subrogation against the note's co-maker, Levinson. Will the court agree that American Thermex has a legal right of subrogation? Why or why not?

Answer 1

Right of subrogation
No. American Thermex had no legal right of subrogation. The right of subrogation is extended only to sureties, and American Thermex was not a surety on the note. American Thermex's name did not appear on the face of the note, and the court could find no evidence that American Thermex had ever legally obligated itself to pay the note. Rather, its payment was made voluntarily. Therefore, American Thermex had no right of subrogation at law and could not recover the payment from the note's co-maker, Levinson.