810 ILCS 5/5-117

(810 ILCS 5/5-117) (from Ch. 26, par. 5-117)

Sec. 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.

(Source: P.A. 89-534, eff. 1-1-97.)