Id. at 23, 202 A.2d 326. Maryland Title v. Kosisky, 245 Md. 13, 225 A.2d 47 (1966), is another case involving legal subrogation. The plaintiff did not raise the issue of subrogation but this Court, citing Schnader, held that the application of the doctrine was appropriate if the pleadings alleged the necessary elements and these elements were supported by the facts.

See Bachmann v. Glazer Glazer, Inc., 316 Md. 405, 412, 559 A.2d 365, 368 (1989) ("We are here presented with another situation where a plaintiff has not specifically invoked the doctrine of subrogation, but, as in Schnader and Maryland Title, all of the elements of this doctrine have been pleaded and proved. [The plaintiff] is thus entitled to recover under the doctrine of subrogation." (citing George L. Schnader, Inc. v. Cole Bldg. Co., 236 Md. 17, 202 A.2d 326 (1964); Md. Title Escrow Corp. v. Kosisky, 245 Md. 13, 225 A.2d 47 (1966))). Maryland recognizes three distinct categories of subrogation: legal subrogation, conventional subrogation, and statutory subrogation.

Between a vendor and vendee of real property the vendor must bear the loss when the escrow holder absconds after the vendor has become legally entitled to the proceeds of the transaction. Maryland Title Escrow Corp. v. Kosisky, 245 Md. 13, 225 A.2d 47 (1966). Consequently, had this been a suit between Edmar (vendor) and the Falcks (vendees), the loss caused by Gordon's defalcation would have fallen upon Edmar as it had become the legal titleholder of the proceeds of the sale.

"Legal subrogation (as distinguished from conventional and statutory subrogation) arises by operation of law when there is a debt or obligation owed by one person which another person, who is neither a volunteer nor an intermeddler, pays or discharges under such circumstances as in equity entitled him to reimbursement to prevent unjust enrichment." [Citing cases and texts.] Maryland Title v. Kosisky, 245 Md. 13, 20, 225 A.2d 47 (1966). "Although it is difficult to lay down a general rule applicable to all cases in which subrogation is sought, the essential elements necessary for legal subrogation (as distinguished from conventional and statutory subrogation) are: (1) the existence of a debt or obligation for which a party, other than the subrogee, is primarily liable, which (2) the subrogee, who is neither a volunteer nor an intermeddler, pays or discharges in order to protect his own rights and interests.

(Emphasis in original)See also Western Casualty Surety Co. v. Brooks, 362 F.2d 486, 491 (4th Cir. 1966); Security Ins. Co. of New Haven-The Connecticut Indemnity Co. v. Mangan, 250 Md. 241, 245-246, 242 A.2d 482 (1968); Maryland Title Escrow Corp. v. Kosisky, 245 Md. 13, 225 A.2d 47 (1966); 11 Appleman, Insurance Law Practice § 6505 (1944); 13 Maryland Law Encyclopedia, Insurance § 274 (1961), at 60. In analyzing the rights and obligations of the parties here, this Court must then in the first instance consider them insofar as General Cigar, the owner of the destroyed tobacco, is concerned. Any conditions or limitations to General Cigar's rights against the defendants, resulting from agreements to which General Cigar was a party or otherwise, must necessarily attach to the claims being asserted here by the insurance company plaintiffs.

Legal subrogation (as distinguished from conventional and statutory subrogation) arises by operation of law when there is a debt or obligation owed by one person which another person, who is neither a volunteer nor an intermeddler, pays or discharges under such circumstances as in equity entitles him to reimbursement. Maryland Title Co. v. Kosisky, 245 Md. 13, 225 A.2d 47 (1966). The general rule with respect to the right of the surety of a building or construction contractor, who completes the contract upon the contractor's default, to monies in the hands of the contractee-obligee, earned by the contractor before default, is that upon completion of the contract the surety is entitled to be subrogated to the rights which the contractee-obligee had to, or could assert against, such funds upon the contractor's default, to the extent necessary to reimburse himself for the outlay made to complete the contract.

See Mullen, The Equitable Doctrine of Subrogation, 3 Md. L. Rev. 201 (1938-39) and the cases referred to therein. Legal subrogation was clearly defined by this Court in Maryland Title v. Kosisky, 245 Md. 13, 225 A.2d 47 (1966), where we stated that: "Legal subrogation (as distinguished from conventional and statutory subrogation) arises by operation of law when there is a debt or obligation owed by one person which another person, who is neither a volunteer nor an intermeddler, pays or discharges under such circumstances as in equity entitled him to reimbursement to prevent unjust enrichment."

"A brief resume shows the parties considered a final settlement to have been made on August 15." See also Corbin Contracts (1964 Ed.), Vol. 5, § 1079, Vol. 1A, § 249, and compare Maryland Title Escrow Corp. v. Kosisky, 245 Md. 13, and 30A C.J.S. Escrows § 9. We think and hold that the purchasers bindingly opted on April 6 to perform and will not be heard to say that they, under the particularized allegations of the sellers' declaration, did not contract to consummate the purchase according to the terms of the original agreement as supplemented or modified or both by the second agreement, subject to the reserved right to make the verifications mentioned.

Also see Schnader, Inc. v. Cole Building Co., 236 Md. 17, 202 A.2d 326 (1964). Cf. Maryland Title Escrow Corp. v. Kosisky, 245 Md. 13, 225 A.2d 47 (1966). In the case at bar, where a part of the land was transferred subject to the mortgage, where the entire tract — that owned by the Hellers as well as that owned by Banks — was primarily liable for the mortgage debt, and where the Hellers made the mortgage payments due by Banks, it is clear that the second mortgagee was in no worse position than it would have been had the Hellers made none of the payments due by Banks.

We also acknowledge that the right of subrogation may bar recovery when the party asserting the right was inexcusably negligent. See Maryland Title & Escrow Corp. v. Kosisky, 245 Md. 13, 22 (1966) (stating that "[t]he fact that the loss of one who seeks to be made whole by subrogation arose from his own negligence may be fatal to his claim[]"). However, appellants' argument under the doctrine of subrogation is unpersuasive.