When a mortgage is taken upon land with the understanding that it shall be a first lien thereon, and that the money lent is to be applied by the mortgagee . to the paymei4 of a prior lien, and it is so applied, the mortgagee is subrogated to the rights of the prior incumbrancer when it is equita ble to do so, although there was an ante cedent second mortgage of which the subse quent mortgagee had no actual knowledge or notice ; Traders' Bk. v. Myers, 3 Kan. App. 636, 44 Pac. 292.
Most of the cases of subrogation so called in the common law arise from transactions of principals and sureties. Courts of equity have held sureties entitled, upon payment of the debt due by their principal to the creditor, to have the full benefit of all the collateral securities, both of a legal and equi table nature, which the creditor has taken as an additional pledge for his debt ; Story, Eq. Jur. § 499.
"A surety who completes a contract with the United States on the contractor's de fault is subrogated to the rights which the United States might assert against a fund created by the ,retention of 10 per cent. of the sums estimated from time to time as the value of the work done, in order to in sure its completion; and this right relates back to the making of the contract, and is superior to any equitable lien asserted by a bank for moneys advanced to the contrac tor without the surety's knowledge before he began to complete the work." Moses v. U. S., 166 II. S. 571, 17 Sup. Ct. 682, 41 Ed. 1119.
Where the creditor's right to subrogatiou depends on the existence in the surety of the rights to which subrogation is sought, after the surety has parted with the thing given him for his protection, the creditor can have no subrogation; Cunningham v. R. Co., 156 U. S. 400, 15 Sup. Ct. 361, 39 L. Ed. 471..
It is a settled rule that in all cases where a party only secondarily liable on an obli gation is compelled to discharge it, he has a right in a court of equity to stand in the place of the creditor, and be subrogated to all his rights against the party previously liable ; Hays v. Ward, 4 Johns. Ch. (N. Y.) 123, 8 Am. Dec. 554 ; Barker v. Parker, 4 Pick. (Mass.) 505 ; Union Bank of Md. v. Edwards, 1 Gill & J. (Md.) 346. This is clearly the case where the surety takes an assignment of the security; Norton v. Soule,
2 Me. (2 Greenl.) 341.
If a surety on a debt secured by mort gage pays the debt, he is entitled to the mortgage as security ; 2 Sim. 155. In all cases, the payment must have been made by a party liable, and not by a mere volunteer ; Sandford v. McLean, 3 Paige Ch. (N. Y.) 117, 23 Am. Dec. 773; /Etna Life Ins. Co. v. Middleport, 124 U. S. 534, 8 Sup. Ct. 625, 31 L. Ed. 537 ; but it will be applied whenever the person claiming its benefits has paid a debt for which another was primarily an swerable, and which he was compelled to pay in order to protect his own rights or save his own property ; McNeil v. Miller, 29 W. Va. 480, 2 S. E. 335 ; /Etna Life Ins. Co. v. Middleport, 124 U. S. 534, 8 Sup. Ct. 625, 31 L. Ed. 537. The creditor must have had his claim fully satisfied; Union Bank of Md. v. Edwards, 1 Gill & J. (Md.) 347 ; and the surety claiming subrogation must have paid it ; Kyner v. Kyner, 6 Watts (Pa.) 221; La Grange v. Merrill, 3 Barb. Ch. (N: Y.) 625; Bonham v. Galloway, 13 Ill. 68 ; and is sub rogated, where he has paid to redeem a se curity, only to the amount he has paid, what ever be the value of the security ; Hill v. Manser, 11 Gratt. (Va.) 522. But giving a note is payment within this rule; Burke v. Cruger, 8 Tex. 66, 58 Am. Dec. 102. One who advances money to the mortgage creditor of his debtor, in the payment of interest ac cumulations on the mortgage debt, becomes legally subrogated, pro tanto to the mort gage creditor's right; Hobgood v. Schuler, 44 La. Ann. 537, 10 South. 812. When a mortgagor fails to protect junior incum brancers against a prior lien when it is his duty to do so, they may pay it and be sub rogated to the rights of the holder thereto ; Memphis & L. R. R. v. Dow, 120 U. S. 287, 7 Sup. Ct. 482, 30 L. Ed. 595. The surety after paying the debt is entitled to enforce every security which the creditor has against the principal ; Penn v. Ingles, 82 Va. 65.
When a surety pays the money to the cred itor, to preserve the security for the benefit of the surety so paying, it must be assigned to a trustee, and in no other way can it be kept alive ; Tiddy v. Harris, 101 N. C. 589, 8 S. E. 227.