§490:5-117  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 the 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 the
applicant do not derive under this section present or prospective rights
forming the basis of a claim, defense, or excuse. [L 1996, c 39, pt of §1]