N.Y. Uniform Commercial Code Law § 5-117: Subrogation of issuer, applicant, and nominated person

Section 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) of this

section.

(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) of this section do not

arise until the issuer honors the letter of credit or otherwise pays and

the rights in subsection (c) of this section 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.