Appellee-plaintiff Farmers Elevator Mutual Insurance Company paid the Commodity Credit Corporation, an agency of the United States, for a loss sustained by the failure of appellant-defendant Jorski Mill & Elevator Co., Inc., to perform obligations assumed by it under a Uniform Grain Storage Agreement whieh it had made with CCC. Farmers sued Jorski and its surety, appellant-defendant Millers Mutual Insurance Association of Illinois, to recover the amount paid. The appeal is from the judgment in favor of Farmers.1
The storage agreement with Jorski was made under the applicable federal statutes 2 and became effective on June 30, 1960. As required by the statute, Jorski furnished CCC with a warehouseman s bond, dated May 23, 1963, in the penal sum of $100,000, later increased to $105,000, with Millers as surety. On April 8, 1964, Jorski, when demand was made, failed by about 19,000 bushels to load out the wheat stored with it by CCC. The Shortage Review Committee of CCC determined that the shortage was nonoperational and did not result from normal and prudent warehousing practices. In such a situation CCC is entitled to recover the storage charges theretofore paid by it on the undelivered grain as well as the value of the grain.
In 1963, after an extensive study, CCC determined that it needed greater bond coverage for its stored grain than that provided by the standard warehouse-men’s bonds. On June 19,1963, CCC and Farmers entered into a contract styled “CCC Blanket Insurance Policy,” the penal sum of which was $50,000,000. By an amendment effective the same day, Jorski agreed with CCC to an amendment to the storage agreement providing for the blanket coverage. Of such coverage, $947,000 was allotted to Jorski and it paid the premium thereon.
After the shortage and ensuing demand, Farmers paid the CCC claim. It then sued Jorski and Millers and reeov-ered a joint and several judgment against them in the sum of $49,835.25 with interest.
0n the appeal of Jorski little need be said. Its only explanation of the shortage wag fhe speculation that it was due f0 theft, and the trial court correctly re-jeeted this defense. Jorski says that the blanket coverage by Farmers was for its benefit because it paid part of the premium. The answer is that the amendment to the storage agreement provides that the additional coverage does not re-Heve a warehouseman of any of his obligations or inure to his benefit.
Jorski argues that ccc may not recover the storage charges on the undelivered wheat on the ground that the finding of the Shortage Review Committee that the shortage was not due to normaj and Prudent warehousing practices violates the Administrative Procedure Act3 because it was not afforded a hearjng_ The Administrative Procedure Act “applies only to agency action which the agency statute provides must be preceded hy a hearing.” 4 No statute has been called to our attention which requires a hearing before a determination by the Shortage Review Committee. Moverover, § 17(d) of the storage agreement provides that CCC may determine whether disposition of grain contrary to the agreement “resulted from normal and prudent warehousing practices.”
The argument that Farmers may not be subrogated to the rights of CCC against Jorski borders on frivolity, Farmers did not pay as a volunteer but *146because it was contractually bound to pay upon the default of Jorski.
The real controversy is between the two insurance carriers. The insuring contract issued by Farmers to CCC is unique. It is designated a “blanket insurance policy.” The expression “blanket policy” is a term of art in the insurance field and “contemplates that the risk is shifting, fluctuating or varying, and is applied to a class of property rather than to any particular risk or thing.” 5 A blanket policy is ordinarily regarded as excess insurance over and above specific insurance6 and does not apply until the specific insurance has been exhausted.7 The Farmers policy is different in that it has a specific provision for prompt payment to CCC. The only requirement on CCC is that it “make reasonable efforts, * * * short of litigation” to collect. The Farmers policy applies immediately and does not await the exhaustion of the specific insurance.
In the case at bar Farmers paid promptly. Its insured has been satisfied and does not appear in this litigation. The question is the right of Farmers to recoup from Millers and the amount of recoupment.
Millers makes two contentions. First, it says that Farmers paid a claim which was not within the coverage of its contract and that a volunteer is not entitled to subrogation. The point is without merit. The trial court found a “failure of Jorski to load about the approximately 19,000 bushels of CCC wheat.” 8 This failure was a violation of the warehouse agreement and within the liability provisions of the Farmers policy.
The second contention is that if Farmers was liable under its policy, it covered the same loss by the same entity as was covered by the Millers policy with the result that Farmers and Millers were cosureties and must bear the loss proportionately. The Farmers policy generally, and the Millers policy specifically, covered the same risk, violation of a warehouse agreement, and protected the same obligee, the CCC. The Millers policy covers the default of a named principal, Jorski, and the Farmers policy covers the failure of “any warehouseman” to perform the obligations imposed by the storage agreements. ■ The elements of co-suretyship, same obligee, principal, and risk, are present, but the presence of these elements must be considered in connection with other facts.
The Farmers policy expressly permits other coverage and provides:
“10. Subrogation. In the event of any payment under this policy the insurer shall, to the full extent permitted by law, be subrogated to all of CCC’s rights of recovery therefor against the warehouseman and any other person or other legal entity to the extent of such payment.”
Upon the payment by Farmers, CCC agreed that:
“ * * * Farmers Elevator Mutual Insurance Company is subrogated to the full extent permitted by law, as provided in such Blanket Insurance Policy, to all of CCC’s rights of recovery against Millers Mutual Insurance Association, and any other person or other legal entity to the extent of such payment.”
By the terms of its policy Farmers had the right of subrogation and that right was confirmed by the action of CCC. It is urged that subrogation is an equitable doctrine and may *147not be created by contract. Recognition of the principle that subrogation may arise, independently of contract, because of legal or equitable considerations does not mean that subrogation may not arise out of contract. Indeed, there are two kinds of subrogation, (1) legal or equitable, and (2) conventional. Conventional subrogation arises only by reason of an express or ^ implied agreement.9 The statements in Hartford Accident & Indemnity Co. v. First Nat. Bank & Trust Co., 10 Cir., 287 F.2d 69, 71; Pearlman v. Reliance Ins. Co., 371 U.S. 132, 137, 83 S.Ct. 232, 9 L.Ed.2d 190 and Memphis & Little Rock R. R. Co. v. Dow, 120 U.S. 287, 301-302, 7 S.Ct. 482, 30 L.Ed. 595, all refer to legal or equitable subrogation and do not deny that conventional subrogation exists by contract. Subrogation is the substitution of one person in the place of another with reference to a lawful claim, demand or right.10 The substitution may occur through the invocation of the doctrine of subrogation or it may be confirmed and acquiesced in by contract. Neither method is exclusive.
The lack of assent by Millers to the „ .... , . , T ., Farmers policy is immaterial. In its , . , ,. . policy Millers expressly waived notice of .... /,, , modifications of the warehouse agree- .. ml. _ ,. . , ment. The Farmers policy was issued , . . after amendment to that agreement m ... .... „ . , . ,, which specific reference is made to the • -J T. f, «, i , x • aequisition by CCC of a blanket msur- ,, . , , , „ anee policy or blanket bond.
The intent of CCC and Farmers was that Farmers should make prompt payment of losses incurred by defaults of warehousemen and should be subrogated to the rights of CCC to recover from others. They had the right to, and did, contract for subrogation. The contention is that even though the parties did so contract Farmers and Millers were cosureties and between cosureties there may be only contribution in proportion to the penalties of the policies.11 The difficulty with this position is that it fails to distinguish between a cosurety and a supplemental or subsurety,
A surety may stipulate to be a suppiemental or subsurety provided that it is under no duty to assume a greater liability and that its stipulation win not inequitably increase the obligation of another surety.12 Here Millers was ajready bound to CCC and Farmers ba(j no existing duty to Millers. The isSUance of the Farmers policy did not increase the obligation of Millers. In such circumstances the subsequent surety can conclusiveiy stipulate as to the relationsbip by an appropriate manifestation of intent.13 Farmers made its intent clear by its policy provision for subrogation, The intent of ccc is clear because after the payment by Farmers, CCC expressly agreecj that Farmers was subrogated to the ccc rights ága¡nst MillerS-+
This situation “ not changed +tha statement in the Farmers policy that it shall be subrogated to the full extent permitted by law. The law recognizes both cosuretyship and subsuretyship, Farmers contracted to be a subsurety As such its right against Millers is for full recoupment, not proportionate contribution.
AfflVTYlPil
. See opinion of trial court, Farmers Elevator Mut. Ins. Co. v. Jorski Mill & Elevator Co., W.D.Okl., 259 F.Supp. 755.
. See United States Warehouse Act, 7 U.S.C. §§ 241-273.
. U.S.C. § 1001 et seq.
. LaRue v. Udall, 116 U.S.App.D.C. 396, 324 F.2d 428, 432.
. National Bank of Burlington v. Fidelity & Casualty Co. of New York, 4 Cir., 125 F.2d 920, 924, 140 A.L.R. 694. See also Reliance Ins. Co. v. Orleans Parish School Board, 5 Cir., 322 F.2d 803, 805-806, cert. denied 377 U.S. 916, 84 S.Ct, 1180, 12 L.Ed.2d 186, and 6 Appleman, Insurance Law and Practice, § 3912, p. 297.
. 6 Appleman, Insurance Law and Practice, § 3912, p. 300.
. Wilson & Co. v. Hartford Fire Ins. Co., 300 Mo. 1, 254 S.W. 266, 282.
. Farmers Elevator Mut. Ins. Co. v. Jor-ski Mill & Elevator Co., W.D.Okl., 259 F.Supp. 755, 758.
. Commercial Standard Ins. Co. v. American Employers Ins. Co., 6 Cir., 209 F.2d 60, 64; Hardware Mut. Ins. Co. v. Dunwoody, 9 Cir., 194 F.2d 666, 668; In re Rogers Palace Laundry Co., 7 Cir., 2/5 F. 829, 830; United States Fidelity & Guaranty Co. v. Slifkin, N.D.Ala., 200 F.Supp. 563, 568-569; In re Lauer, D.N.J., 38 F.Supp. 691, 696; Evans’ Adm’r v. Evans, 304 Ky. 28, 199 S.W.2d 734, 737; Gore v. Brian, N.J.Ch., 35 A. 897, 898; 11 Appleman, Insurance Law and Practice, § 6501, p. 292.
Black's Law Dictionary) 4th ed. p. 1595.
. See 11 Appleman, Insurance Law and Practice, § 6771, pp. 664-667.
. Restatement, Security, § 146(c), p. 405.
. Id. at 409 and 412.