Antichresis

Where the creditor was entitled to use the pledged property, gather its fruits, or collect its rents, the question arises whether this would reduce the secured debt or could serve as interest.

In many cases, the debtor and creditor would have provided for this in a pactum antichreticum.⁶* This pactum antichreticum was included in, or later added to, the conventio pignoris. The late classical jurists accepted that a pactum antichreticum could also be implied from the nature of the pledged property. In many antichretic agreements, the creditor's rights to use the pledged property and apply its income by way of principal or interest would be part of the normal settlement of the credit transaction. In the late classical sources, antichretic agreements emerge which were meant as an alternative method of execution. Not only could this ‘default antichresis’ be expressly agreed but it would also sometimes arise by operation of law. The jurists and imperial constitutions even seem to recognize that a pactum anti- chreticum could grant a sui generis real right, which could exist independently from a right of pignus or fiducia cum creditore. The jurists were prepared to adapt the actio Serviana in order to grant the creditor an action for the recovery of possession of tangible property (independent antichresis), or for the payment of civil fruits (e.g., antichresis of rented property). This is yet another example of how the jurists and imperial chancery designed adapted actions in order to uphold agreements with which private parties gave effect to their economic needs. ^[921]

Express, implied, and default antichresis

Origin of antichresis

Although the earliest Digest and Codex texts on antichresis date from the third century ad,^[922] it is difficult to imagine that antichretic arrangements were not made earlier.

In an agricultural economy which was not fully monetized, the use or natural fruits of farms and land or labour (slaves) served as repayment of loans or as compensation for the granting of credit (interest).^[923] ^{^[924] ^[925] ^[926] ^[927] ^[928]} Under the archaic legal institution of nexum the labour of the charged person (nexus) served as repayment of the secured debt/⁷ Arrangements pursuant to which the use and/or yields of property were applied in payment of principal and/or interest of loans can be found in many ancient societies. They are recorded in old Babylonian and old Assyrian cuneiform, and in ancient Jewish, Greek, and Greco-Egyptian legal sources/⁸ From the kingdom of Arrapha (modern-day Kirkuk, Iraq) more than 300 antichretic loans have been preserved. From Ptolemaic Egypt we have Greek papyri from the third century bc and later documenting antichretic loan agreements/⁹ From the early period of Roman Egypt there is papyrological evidence of Romans entering into antichretic loan agreements with local inhabitants/⁰ One would think that also in republican and early classical law, where the parties had agreed that the use or the (natural or civil) fruits of the pledged object would serve as repayment of principal or interest, this would be a valid legal arrangement/¹ It is, however, striking that we do not have any evidence of antichretic pledges for the first two centuries of the Principate. For the first century ad this could still be explained by the scantiness of the sources, as relatively few writings from early classical jurists on pignus have survived. But for all other variants of pignus (pignus nominis, multiple pledge, general pledge) there are many jurists' writings and imperial constitutions from the second century ad, while no opinion from that century on antichresis has been transmitted.

The word άντίχρησις (‘counter-use') appears only twice in the Corpus iuris civilis, in two opinions of the late classical jurist Marcian.⁷² This word is said to have been derived from χρησις άντί τινος (‘use instead of/for something else')/³ The fact that the term antichresis appears in two Digest texts (it is absent from the Codex) is too weak a basis to assume that Roman law has been influenced by Greek-Hellenistic laws.

Marcians use of antichresis may be explained by his connections with the eastern part of the Roman empire. Marcian had studied in Rome, but had a Hellenistic background and wrote and taught in the eastern provinces/⁴ It is by no means inconceivable, however, that the Romans were influenced by Hellenistic transaction practices, which they encountered in Greece or Roman Egypt. In fact, most of the papyri on antichresis are from Roman Egypt and date from the first and second century ad.75 The first texts in the Digest and the Codex date from the beginning of the third century ad, and it may very well be that they were concerned with antichretic pledges which had been agreed in a Hellenistic environment, or which were based on templates (directly or indirectly) derived from Hellenistic originals/⁶

Pactum antichreticum

Antichresis could be agreed upon both in relation to pignus and fiducia.⁷⁷ In relation to pignus, the opinions of the jurists refer to this agreement in terms of pactum.⁷⁸ This pactum antichreticum (not a classical term) would normally be included in the conventio pignoris, but could also be entered into after the pledge had been granted. In D. 13.7.39 Modestinus gives an example of a pactum antichreticum that had been agreed at a later stage: ‘Later a pact was made between them that in recompense for his money the creditor should for a given time have possession of the pledge/⁹ This pledge may originally have been a non-possessory pledge, which was later converted into

7 ² Marci. D. 13.7.33; Marci. D. 20.1.11.1. In contrast with hypotheca, avrixpyats is not latinized by Marcian, but used in Greek. Even in the Greek papyri avrlxpyais is only mentioned rarely. One example is Papyrus Groningen 11 (second century ad). See Kupiszewski 1986: 133-4.

73 It could also have been derived from ri avrl xp^ae^s and could thus be understood as the countervalue for the use of capital (Manigk 1910: 14-15; Kupiszewski 1974: 229).

74 Liebs 1997: 201. 75 Kupiszewski 1986: 133; Bobbink and Mauer 2019.

76 Bobbink and Mauer 2019: 28. It seems that in the fifth and sixth centuries ad Roman law influenced legal practices concerning antichresis in Egypt, albeit not profoundly (Kupiszewski 1986: 146).

77 Fiducia: PS 2.13.2. Manigk 1910: 59; Erbe 1940: 78; Noordraven 1999: 229; Bobbink and Mauer 2019: 11. For an overview of Roman-Egyptian variants of the pactum antichreticum, see Bobbink and Mauer 2019: 14.

78 Mod. D. 13.7.39; Pap. D. 20.1.1.3.

79 'postea pactum inter eos factum est, ut creditor pignus suum in compensationempecuniae suae certo tempore possideret. a possessory antichretic pledge.^{^[929]} The reason for this may have been that the debtor had indicated that he would not be able to pay principal or interest in cash.

In most cases an antichretic pledge would have been a possessory pledge pursuant to which the creditor had direct factual control over the pledged property. The creditor could then use the pledged property himself, for instance by living in the pledged house (Alex. C. 4.32.14) or by employing pledged slaves as servants (Diocl.-Max. C. 8.24.2). The pactum antichreticum cited above from Mod. D. 13.7.39 appears to refer to an arrangement pursuant to which the value of the factual enjoyment of the charged property is to be deducted from the secured debt/^[930] Later in this fragment, however, this agreement is described as ‘a pact allowing the creditor to take the fruits for a fixed term/^[931] As we are dealing with a fundus, these fruits are likely to have been natural fruits (e.g., olives, grapes, grain), so that this pactum antichreti- cum would allow the creditor to harvest the crops of the pledged land.

Implied antichresis and default antichresis

In only a small number of texts in the Corpus iuris civilis is there an express reference to the pactum antichreticum.^[932] ^{^[933] In many other texts we are dealing with antichresis without any mention of the fact that the parties have agreed that the creditor can apply the value of the use of the pledged property or its fruits in (re)payment of principal and/or interest/⁴ This does not mean that these texts are all concerned with implied antichresis.}

The texts in the Digest and Codex are often excerpts or abridged and therefore do not reveal all the facts. For some imperial constitutions it can be determined with more certainty that there was no express pactum antichreticum: the antichretic nature of the pledge is implied and is even mandatory. A constitution from Septimius Severus and Caracalla from 222 ad (C. 4.24.3) states that a creditor must (‘debuit) deduct the fruits of pledged land from the secured debt, not only the fruits which were actually gathered but also those which he should have harvested.^[934] ^{^[935] ^[936] ^[937] ^[938] ^[939] Likewise, a constitution from Diocletian from 293 ad (C. 8.24.2) rules that the possessory pledge of slaves implied a duty to use their services and to deduct the value thereof from principal and interest. Therefore, where the nature of the pledged property entailed that it would be used or yielded fruits (living accommodation, slaves, agricultural land) and the creditor was granted possession of it, it would often be presumed not only that the creditor would be entitled to use it but also that the value of the use or fruits would be deducted from the secured debt/⁶ Where this loan was interest free, the proceeds of the pledged property would be applied in order to discharge the principal. Where the loan was interest bearing, the fruits would be applied first for the interest and the remainder for the principal/⁷ Sometimes, the creditor's right to use the pledged property and/or take its fruits only arose where the debtor defaulted under the secured debt (‘default antichresis’). Pap. D. 20.1.1.3 discusses ‘an agreement that if interest was not paid in time, fruits of the hypothecated properties should be set off against interest up to the statutory limit'Th The text refers to a pactum which was specifically related to the failure to pay interest in time. This contractually agreed right of antichresis did therefore not arise in case of the late (re)payment of principal.
However, where the parties would have agreed so there is no reason why this should not have been legally valid/⁹ The pactum antichreticum of Pap. D. 20.1.1.3 was probably included in the conventio pignoris, because it is framed in a conditional form (if interest is not paid in time) and therefore aimed at a potential event of default in the future. This contractual remedy was an alternative to sale by way of execution/⁰ A default antichresis could also arise by operation of law: the missio Antoniniana, introduced by a constitution of Caracalla.^[940] ^{^[941] ^[942] ^[943] ^[944] ^[945] ^[946] ^[947] The beneficiary of a legacy or fideicommissum, who had been put into possession of land which was part of the inheritance, acquired a right of pledge on the land?² During the continuance of this possession, the beneficiary should permit the heir to work the land and gather the fruits. However, if the heir failed to do so, the beneficiary was allowed to gather the fruits and store them. Where the nature of the fruits entailed that they were best sold as soon as possible, the beneficiary was allowed to sell them.9³ The value of the fruits would then be deducted from the legacy?⁴ Fruits and their allocation
Civil fruits
Fruits taken in kind were regarded as (‘natural') fruits, but so was the rent of leased property (‘civil fruits'). For antichretic pledges we have a constitution by Alexander Severus from ad 222, which says that the amount taken ‘from the payments of a house which you say is held as a pledge' will reduce the amount of the debt.9⁵ The language of this constitution suggests that the house was already rented out by the debtor when the right of antichresis was agreed?⁶ Where the creditor had a right of antichresis on land or buildings rented out by the debtor, he would have an adapted action against the tenant. This adapted action was in personam and will have combined elements of the actio Serviana and the actio locati. It will have been similar to the adapted action with which pignus nominis could be enforced against the debtor of the pledged claim?⁷ The right of antichresis could also grant the creditor the right to enter into lease agreements himself with regard to the charged property. Marci. D. 20.1.11.1 was probably concerned with an independent antichresis but it also reflects the law on the creditor's right to rent out pledged property?⁸ This opinion shows that the right of antichresis could either be exercised by the creditor personally taking physical control of the real estate, living there, and taking its natural fruits, or by the creditor letting the property to tenants. In the latter case, the income of the charged property could be collected by the creditor as landlord, if necessary with the actio locati." The proceeds could then again be applied by him in order to repay principal or (as in Marci. D. 20.1.11.1) serve as interest. Likewise, the use of pledged slaves could not only consist of the creditor himself making use of their labour or services, but also by letting them out to third parties and collecting the income thus generated.^[948] ^{^[949] It appears from Ulp. D. 13.7.24.3 that there were certain limits as to the nature of the services (e.g., prostitution) for which pledged slaves could be let to third parties by the creditor.}
Amortization, payment of interest, surrogate for interest
There were several ways in which the income produced by the charged property could be allocated between creditor and debtor. The parties could agree that the value of the creditor's use of the property and/or its fruits would be deducted from the debtor's indebtedness to repay the principal amount of a loan (‘amortization antichresis’).^[950] More often we find secured interestbearing loans, where the value of the creditor's use of the property and/or its fruits would be deducted from both principal and interest (‘mixed antichresis’).^[951] ^{^[952] It may very well have been that generally the allocation of the benefits of antichresis was determined by the nature of the secured loan. Where an interest-bearing loan was secured by an antichretic pledge, the value of its use and its fruits would be applied for both principal and interest, first for the interest and the remainder for the principal.™³ Where this loan was interest free, one would expect that the economic benefits of the charged property would be applied in order to discharge principal. Paul. D. 20.2.8, however, says that where the loan is interest free, the creditor can retain the fruits of the pledged property up to the statutory interest rate, thus effectively turning an interest-free loan into an interest-bearing one.}
Antichretic pledges were therefore used where interest had been expressed in monetary terms. Here the monetary value of the use or fruits would determine the time (use) or quantity (fruits) to which the creditor was entitled. Alternatively, the creditor's right to use the pledged property and/or to take its fruits was a surrogate for interest payments. The creditor was simply allowed to use the pledged property and/or take its fruits for the term of the loan.^[953] Where this had been agreed the parties habitually did not establish a rate of interest. It was agreed that the use of the property and/or its (civil or natural) fruits were compensation for the lender. The economic benefits of the charged property would serve as a surrogate for interest, as the parties themselves often expressed (e.g., in vicem usurarum).^[954] ^{^[955] ^[956] This means that this form of ‘interest antichresis’ could have a speculative nature."¹⁶ Where the (natural or civil) fruits themselves were the compensation for the granting of credit, the creditor would take the risk that their proceeds were below the market rate of interest, while the debtor ran the risk that they were above market rate."'⁷ A constitution from Alexander Severus from 234 ad illustrates that surrogate interest was regarded as similar to real interest, but not as identical to it. Alex. C. 4.32.14 provides that the fact that the market value of the creditor's right of habitation would exceed the maximum rate of interest, would not render the pact of antichresis illegal. In that case, this constitution says, the rent must be regarded as having been agreed below the going rate for rent, which was permitted. The constitution does, however, give this ruling on the assumption that the creditor did not receive any income by renting out the house. This appears to imply that where the rentals received by the creditor would exceed the maximum interest rate, there might be illegality. In Phil. C. 4.32.17, however, the possibility that the value of the fruits (which served as interest) might exceed the statutory maximum rate of interest did not render the agreement illegal: this was justified with reference to the uncertainty of the harvest.}
Independent antichresis
The right of antichresis not only could be granted in relation to pignus and fiducia but also could be agreed upon independently from these forms of real security.^[957] The Historia Augusta mentions that in order to enable more Romans of small financial means (‘pauperibus’) to purchase farmland, Alexander Severus granted interest-free loans, which were to be repaid from the fruits of the land. This could very well have been non-possessory and independent rights of antichresis.^[958] ^{^[959] One of the two Digest texts in which the word antichresis is used is concerned with such independent antichresis.}
D. 20.1.11.1. Marcianus libro singulari ad formulam hypothecariam. Si avrixpyais facta sit et in fundum aut in aedes aliquis inducatur, eo usque retinet possessionem pignoris loco, donec illi pecunia solvatur, cum in usuras fructus percipiat aut locando aut ipse percipiendo habitandoque: itaque si amiserit possessionem, solet in factum actione uti.
If antichresis has been agreed and someone is put in the land or house, the creditor retains possession by way of pledge until the money is paid to him, since he takes fruits as interest, either by letting the property or by living there and taking them himself: so if he loses possession, he can bring an action on the case.
In Marci. D. 20.1.11.1 we are dealing with an arrangement pursuant to which the creditor (i) has a possessory lien (right of retention) for the principal amount of the loan as well as (ii) a right to have the enjoyment of the real estate and its (civil or natural) fruits for interest.¹"' This could easily have been set up as a possessory pledge with an antichretic right to take the fruits as interest. That this text nevertheless does not concern a right of pignus can be derived from the fact that the creditor is given an actio in factum to recover possession of the property rather than the actio Serviana itself.^[960] ^{^[961] The reference to the creditor's lien ‘by way of pledge' (‘pignoris loco’) is an analogy. The purpose of this analogy was that the creditor would also be granted an action, which was analogous to the actio Serviana, in order to restore his possession. In case of independent antichresis the formula of the actio Serviana needed to be modified, in order to include a reference to the pactum antichreticum instead of the conventio pignoris. With this adapted actio Serviana the creditor could recover possession from any possessor of the land or buildings. Precisely because it could be enforced against third parties in possession, the independent antichresis can—in modern terms—be characterized as a real right. However, it was not a security interest: the creditor could not take recourse against the property itself by way of execution sale and did not have preferential rights on its proceeds.“²}}}

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Source: Verhagen Hendrik L.. Security and Credit in Roman Law: The Historical Evolution of Pignus and Hypotheca. Oxford University Press,2022. — 448 p.. 2022

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