i like that paragraph

any professional surety or any surety which has advice of counsel will acquire express rights to any collateral by agreement at the time of the guarantee -- that can be done under the US Uniform Commercial Code, and I expect in other enlightened countries as well -- and will obviate the need to discuss subrogation

the problem then is shaping a rule for the non-advised and uninformed surety -- a shorn lamb indeed

the other contenders for the asset as to which the subrogation is sought are the unsecured creditors of the debtor -- who have bargained neither for guarantees nor collateral, and who can be assumed to be non-shorn lambs.

your suggestion about marshalling then captures an attractive ground for the subrogation:

it is to prevent unjust enrichment - [of course in the absence of subrogation there would develop a bidding war between surety and unsecured creditors in which surety bids that Creditor take the collateral, and the unsecureds that Creditor goes after surety].

Allan Axelrod
Rutgers Law School
15 Washington St., Newark, NJ 07102
(201) 648-5373