Opinion ID: 5563
Heading Depth: 3
Heading Rank: 3

Heading: Partial Payment of the Senior Debt

Text: As a general rule, a person is not entitled to subrogate to the rights of a creditor until the creditor's claim against the debtor has been satisfied or paid in full. Sims, 441 S.W.2d at 519; Ricketts v. Alliance Life Ins. Co., 135 S.W.2d 725, 735 (Tex.Civ.App.—Amarillo 1939, writ dism'd judgmt cor.). Here, Dietrich did not pay the full amount of the debt which AAI owed Broadlands. Broadlands, however, agreed to release its lien in consideration of the partial payment. The government argues that Dietrich's failure to pay the entire debt prevents it from subrogating to the rights of Broadlands. We disagree. This general rule requiring payment of the entire debt protects the senior lienholder whose rights are being subrogated (i.e., Broadlands). Sims, 441 S.W.2d at 519. The rationale behind the rule is that equitable subrogation should not prejudice the senior lienholder's attempt to collect the entire indebtedness secured by the senior lien. See id.; Ricketts, 135 S.W.2d at 735. The fact that Dietrich has not paid the entire indebt edness is not a matter about which the government, as a junior lienholder, can complain. See Hurt v. Read, 108 F.2d 282, 283 (5th Cir.1939). Moreover, Broadlands's rights will not be prejudiced by Dietrich's subrogation because Broadlands agreed to release its entire lien in exchange for partial payment of the debt.