Court Opinion

ID: 9824102
Source: CourtListenerOpinion
Date Created: 2023-09-01 10:25:24.433862+00
Date Added: 2024-06-11T07:39:33.662981
License: Public Domain

Supplemental Opinion on Rehearing.
OSBORN, J.
On rehearing it is urged that the opinion heretofore rendered in this court should be modified by striking therefrom a portion thereof which is hereafter quoted as follows:
“The defendants were permitted in the trial court to file an amended answer, asking that they be subrogated to all of the rights of the city of Vinita under the depository bond in the sum of $50,000, and the trial court rendered its judgment, providing:
“ ‘And it is further ordered, adjudged, and decreed as between the parties to this cause that in the event the defendants or either of them satisfy the judgment rendered herein against them, they shall be subrogated to all of the rights of the city of Vinita under the depository bond in the sum of $50,000, purporting to have been executed by the Farmer State Bank of Vinita, Okla., as principal, and by P. H. Crahan and F. C. Vogel, as sureties, and covering the same funds involved herein, and that said defendants, upon thus satisfying said judgment, shall likewise be entitled to receive from the c:ty of Vinita an assignment of all of the city of Vinita’s rights to receive further dividends from the liquidation of the Farmers State Bank of Vinita, Okla., and of all of the city’s rights under said depository bond and any and all judgments rendered thereon.’
“This action of the trial court was proper and is hereby approved.”
An examination of the authorities discloses that the point is well taken. It is one of the fundamental doctrines of the right of subrogation that, before a person is entitled to claim that right, he must first have paid a debt to a third party before he can be substituted to that party’s rights. *219Johnson v. Gillette, 66 Okla. 308, 168 P. 1031. In the case of Maryland Trust Co. v. Poffenberger (Md.) 144 Atl. 249, 62 A. L. R. 546, the rule is well stated as follows:
“It will be found by an examination of the authorities that it has been generally held, to entitle the surety to subrogation of the creditor’s rights, there must be a payment of the debt by the surety. Until there is a payment of the debt, the surety is not entitled to be substituted to the rights of the creditor.
“ ‘It is not a liability to pay, but an actual payment to the creditor, which raises the equitable right to subrogation,’ 25 R. C. L. 1315.’’
See, also, Heller v. Shapiro, 208 Wis. 310, 242 N. W. 174, 87 A. L. R. 1201; Maryland Casualty Co. v. Grays Harbor County, 159 Wash. 356, 293 P. 441; Schlitz v. Thomas, 61 Cal. App. 635, 216 P. 51.
It does not appear that when defendants died an amended answer in the trial court, in which they claimed the right to be subrogated to the rights of the city of Vinita under the depository bond, the sureties on said bond were made parties. As a general rule, a court of equity will not make an order of subrogation without having before it all the parties whose rights may be affected by the order, as it would be inequitable and unjust to dispose of their rights without an opportunity to1 be heard. Cooper v. Sagert (Ore.) 223 P. 943; Michigan City v. Marwick (Ind. App.) 116 N. E. 434.
We do not deem it proper to pass upon the question of subrogation in this cause at th’s time, since it is not shown that defendants have paid the obligation arising by the affirmance of the judgment of the trial court, and since we are without jurisdiction of the necessary parties. By the great weight of authority, it is held that a surety by payment does not become subrogated to the rights of the creditor, but only acquires a right to such subrogation which must be established by a judicial proceeding. Annotation and authorit’es, 62 A. L. R. 551.
We therefore conclude that the rights of defendants herein to be subrogated to the rights of the city of Vinita on the depository bond must be determined by the trial court in a proper proceeding in which the necessary parties are before the court.
The opinion is therefore modified by striking therefrom all of that portion wli’ch is here'nabove quoted.
RILEY, C. J., CULLISON, V. C. J., and SWINDALL, McNEILL, BAYLESS, and BUSBY, JJ., concur. WELCH, • J., dissents. ANDREWS, J., absent.