47-5117

47-5117. Subrogation of issuer, applicant and
nominated person

A. An issuer that honors a beneficiary's presentation is subrogated to the rights
of the beneficiary to the same extent as if the issuer were a secondary obligor of the
underlying obligation owed to the beneficiary and of the applicant to the same extent as
if the issuer were the secondary obligor of the underlying obligation owed to the
applicant.

B. An applicant that reimburses an issuer is subrogated to the rights of the issuer
against any beneficiary, presenter or nominated person to the same extent as if the
applicant were the secondary obligor of the obligations owed to the issuer and has the
rights of subrogation of the issuer to the rights of the beneficiary stated in subsection
A.

C. A nominated person who pays or gives value against a draft or demand presented
under a letter of credit is subrogated to the rights of:

1. The issuer against the applicant to the same extent as if the nominated person
were a secondary obligor of the obligation owed to the issuer by the applicant;

2. The beneficiary to the same extent as if the nominated person were a secondary
obligor of the underlying obligation owed to the beneficiary; and

3. The applicant to same extent as if the nominated person were a secondary obligor
of the underlying obligation owed to the applicant.

D. Notwithstanding any agreement or term to the contrary, the rights of subrogation
stated in subsections A and B do not arise until the issuer honors the letter of credit
or otherwise pays and the rights in subsection C do not arise until the nominated person
pays or otherwise gives value. Until then, the issuer, nominated person and applicant do
not derive under this section present or prospective rights forming the basis of a claim,
defense or excuse.