Subrogation of RightsByGustavo Gutiérrez

LEVINSONv.

AMERICAN THERMEX, INC

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

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.

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.

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.

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...."

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.