S 92 OF TRANSFER OF PROPERTY ACT -SUBROGATION

Subrogation is a Roman term meaning “substitution”.It is the right of person to stand in the
place of a creditor. When a mortgagee transfers his mortgage debt, his assignee becomes
vested with all his rights that is his assignee is substituted or subrogated in the place of
mortgagee. In order to be entitled to subrogation, a person must pay off the entire amount of a
prior mortgage, because subrogation takes place by redemption,and unless there is
redemption, there can be no subrogation.Partial payment of mortgage-debt can not give rise
to a claim for a partial subrogation.

The first English case to adopt the word ‘subrogation’ was Stringer V. The English and
Scotch Marine Insurance Co. In this case, the plaintiffs insured a ship cargo with the
defendants for ‘taking at sea, arrests, restraints, and detainment of all Kings, princes and
people.’ The ship was subsequently captured by a United States cruiser and taken into New
Orleans, where a suit for its condemnation was instituted. The plaintiffs contested the action
successfully and the captors appealed. The court ordered the plaintiffs to furnish security
against costs, which they could not afford. As a result, the ship was condemned; the plaintiffs
gave formal notice of abandonment of the cargo, and requested the insurers pay for their total
loss. The court, in holding for the plaintiff, noted that the plaintiff as the assured was free to
choose between defending the appeal before the American court or claiming a loss under the
policy. Because the assured chose the latter, the insurers were obligated to pay. Having paid,
the insurers were entitled ‘to be subrogated to them. They would get what they can out of the
hands of the Americans for their own benefit.’

There are two types of subrogation:

A.Legal:Legal subrogation takes place by operation of law,when the mortgage debt is paid
off by some person who has some interest to protect ,e.g.,where subsequent mortgagee pays
off a prior one.

Legal subrogation may occur in four ways:

1.A subsequent morgagee may redeem a prior mortgage.
2.A co-mortgagor may redeem a mortgage.
3.The mortgagor's suety may redeem the mortgage.
4 The purchaser of equity of redemption may redeem the mortgage.
B.Conventional subrogation : It is sometimes called subrogation by agreement. It takes
place where the person paying off the mortgage-debt is a stranger and has no interest to
protect, but he advances the money under an agreement ,express or implied, that he would be
subrogated to rights and remedies of the mortgagee who is paid off.It requires that agreement
of subrogation to be in writing and registered.

 The essence of this doctrine is that party who pays off a mortgage gets clothed with all the
rights of mortgagee. This doctrine is based on principles of justice, equity, and good
conscience.