Section reaffirms equitable doctrine of subrogation.

- Subrogation is not founded upon contract, express or implied, but upon principles of equity and justice. The doctrine was not limited or abrogated by this section, but positively reaffirmed. Argonaut Ins. Co. v. C & S Bank, 140 Ga. App. 807, 232 S.E.2d 135 (1976).

Effect of UCC.

- Uniform Commercial Code does not abrogate, modify, affect, or abridge the equitable doctrine of subrogation. Argonaut Ins. Co. v. C & S Bank, 140 Ga. App. 807, 232 S.E.2d 135 (1976); Pembroke State Bank v. Balboa Ins. Co., 144 Ga. App. 609, 241 S.E.2d 483 (1978).

Subrogation defined.

- "Subrogation" is the substitution of another person in the place of the creditor whose obligation is paid so that the person in whose favor it is exercised succeeds to all the rights of the creditor; it is of equitable origin, being founded upon the dictates of refined justice, its basis is the doing of complete, essential, and perfect justice between the parties, and its object is the prevention of injustice. First Nat'l Bank v. American Sur. Co., 71 Ga. App. 112, 30 S.E.2d 402 (1944).

Subrogation is legal as well as equitable right.

- Former Code 1882, §§ 2176 and 2177 made subrogation a legal as well as equitable right. Hull v. Myers, 90 Ga. 674, 16 S.E. 653 (1893).

What former Code 1882, §§ 2176 and 2177 did was to break down the exclusiveness of equity and carry the right of subrogation into law, so as to make equity and law concurrent and coequal with respect to this subject matter. Hull v. Myers, 90 Ga. 674, 16 S.E. 653 (1893).

Regardless of its origin in equity, subrogation under former Code 1933, §§ 103-501 and 103-502 was now a legal as well as an equitable right. First Nat'l Bank v. American Sur. Co., 71 Ga. App. 112, 30 S.E.2d 402 (1944).

Subrogation rights inchoate until principal unable to pay.

- Contractor's surety has subrogation rights with respect to any funds earned and paid to the contractor and still in the contractor's hands. Until the surety is called upon to perform the surety's obligation under a payment or performance bond, however, the right of subrogation is an inchoate one, which becomes choate only upon the maturing and performance of the obligation to pay, which occurs only when the principal finds itself unable to pay and calls upon the surety to pay in accordance with the terms of the bond. Cotton States Mut. Ins. Co. v. Citizens & S. Nat'l Bank, 168 Ga. App. 83, 308 S.E.2d 199 (1983).

Construction by courts.

- Courts incline to extend rather than restrict the principle of subrogation. First Nat'l Bank v. American Sur. Co., 71 Ga. App. 112, 30 S.E.2d 402 (1944).

Contract of suretyship alone does not give surety interest in security.

- Surety has not, by virtue of the contract of suretyship alone, any right, title, or interest in property which the surety's principal has pledged to a creditor as security for a debt. Conley v. Kelley, 43 Ga. App. 822, 160 S.E. 532 (1931).

Subrogation of surety.

- As soon as a debt is paid, the surety paying the debt is subrogated to the creditor's rights and to any and all remedies for the enforcement thereof for the surety's own reimbursement and is substituted in place of the creditor to all securities held by the latter for the payment of the debt. Hull v. Myers, 90 Ga. 674, 16 S.E. 653 (1893).

Payment of debt is necessary.

- Since the note maker brought action to cancel security deed after the creditor assigned the note and security deed to the cosigner's estate when the note was paid from the cosigner's life insurance policy, the trial judge correctly refused to cancel the security deed which the creditor transferred to the cosigner's estate. Aultman v. United Bank, 259 Ga. 237, 378 S.E.2d 302 (1989).

Subrogation requires full payment.

- Pro tanto assignment or subrogation will not be made upon payment of part of the debt. All of the debt must be paid before there is any subrogation. Erwin v. Brooke, 159 Ga. 683, 126 S.E. 777 (1925).

When less than the total amount of the debt is tendered, subrogation is not permitted. Jessee v. First Nat'l Bank, 154 Ga. App. 209, 267 S.E.2d 803 (1980).

Party paying is surety.

- To be substituted under this section for the creditor, it is necessary only that the payment of the debt should be made by a surety, it matters not whether the surety is a maker, endorser, drawer, acceptor, or what not. Hull v. Myers, 90 Ga. 674, 16 S.E. 653 (1893).

Right extends to original security on which surety is bound.

- "All securities" as used in this section will include the identical security, the judgment, promissory note, bill, bond, or other contractual instrument, upon which the surety and the cosureties are bound with and for the principal debtor. Though there was a conflict on the question, the better opinion was that the primary and original security, as well as all others, was embraced in the equitable right of subrogation as it existed prior to the Code, irrespective of any statute. Hull v. Myers, 90 Ga. 674, 16 S.E. 653 (1893).

Co-debtor was not a surety of a debtor within the meaning of O.C.G.A. §§ 10-7-1,10-7-45, and10-7-57 as: (1) the note was executed so that both parties could buy a tract of land; (2) both parties received an equal benefit; (3) the debtor was solely liable for that portion of the loan that represented the payout of the previous mortgage on the debtor's property, and both parties were required to put up property in addition to the land they bought with the borrowed money; and (4) there was nothing in the agreement showing any intent by the parties that one was signing as the principal debtor and the other was signing as a surety. Johnson v. AgSouth Farm Credit, 267 Ga. App. 567, 600 S.E.2d 664 (2004).

Surety acquires state's security, not remedies.

- Right of subrogation does not apply to the remedies which the state has against a citizen, but as to the security which the state has. That security passes to the surety who pays off a debt to the state. Irby v. Livingston, 81 Ga. 281, 6 S.E. 591 (1888).

Section does not allow surety to escape part of deficiency if cosurety is insolvent.

- Former Code 1933, §§ 103-501 and 103-502 have never been construed to allow a cosurety to escape paying part of the deficiency in the share of an insolvent cosurety. Todd v. Windsor, 118 Ga. App. 805, 165 S.E.2d 438 (1968).

Filing under UCC not necessary to preserve surety's priority.

- Surety is "secured" by the surety's right of subrogation, which relates back to the issuance of the bond, to defeat intervening creditors. The Uniform Commercial Code does not abrogate, modify, affect, or abridge the equitable doctrine of subrogation, and a surety is not required to file under the UCC to preserve the surety's priority under the equitable right of subrogation. Pembroke State Bank v. Balboa Ins. Co., 144 Ga. App. 609, 241 S.E.2d 483 (1978).

Sureties are discharged if creditor takes mortgaged property.

- When a creditor on a promissory note signed by three persons, two of whom were sureties, having as further security for the debt a mortgage upon personal property, takes charge of such personalty, such property being sufficient in value to discharge the debt, and fails to appropriate it to a payment of the note, the sureties will be discharged from liability thereon. Barrett v. Bass Bros. & Co., 105 Ga. 421, 31 S.E. 435 (1898).

Cited in Flannagan v. Forrest, 94 Ga. 685, 21 S.E. 712 (1894); Jones v. Norton, 9 Ga. App. 333, 71 S.E. 687 (1911); Fender v. Fender, 30 Ga. App. 319, 117 S.E. 676 (1923); Hinson v. Farmers' Bank, 41 Ga. App. 715, 154 S.E. 468 (1930); Kennedy v. Farmers' & Merchants' Bank, 47 Ga. App. 104, 169 S.E. 769 (1933); Betts v. Brown, 219 Ga. 782, 136 S.E.2d 365 (1964).

Am. Jur. 2d.

- 74 Am. Jur. 2d, Suretyship, § 119.

23 Am. Jur. Pleading and Practice Forms, Subrogation, § 2.

C.J.S.

- 72 C.J.S., Principal and Surety, § 181 et seq.

ALR.

- Payment of entire claim of third person as condition of subrogation, 9 A.L.R. 1596; 32 A.L.R. 568; 46 A.L.R. 857; 53 A.L.R. 304; 91 A.L.R. 855.

Adjudication as essential to right of surety or endorser to be subrogated to payee's rights in collateral, 62 A.L.R. 551.

Right as between surety on contractor's bond and assignee of money to become due on contract, 76 A.L.R. 917.

Right of subrogation of fiduciary's surety to claim of the estate against third person who knew or was chargeable with notice that fiduciary's transaction with him involved breach of fiduciary's obligation, 134 A.L.R. 997.

Surety's right to be subrogated to obligee's right against third person as affected by equities in favor of latter which are insufficient to prevent his liability to obligee, 137 A.L.R. 700.

Right of surety who has not paid debt to judicial protection of right of subrogation to creditor's securities, 160 A.L.R. 421.