From Tangible to Intangible Collateral: Pignus Nominis

The cause of the standard action available to pledge creditors, the actio Serviana, was the pledge agreement (conventio pignoris), so that in principle any admissible form of property defined therein could be made the object of this action.^[877] In classical law (and perhaps already in republican law) it became possible that not only tangible assets were defined as pledged assets but also claims which the debtor had against third parties.

This is not so strange, as Gaius observes that everything which can be the object of a sale can also be pledged (D. 20.1.9.1), and already by the time of the late Republic claims could be sold. The first evidence of pignus nominis is, however, relatively late: an opinion from the second-century jurist Pomponius reported in a text from the third century ad.^[878] After Pomponius, it is not until the third century that in jurists' writings and imperial constitutions we again find texts on pignus nominis, or in classical terms, nomen pignori datum.^[879] The praetor would protect pledge agreements in which the pledged assets were not defined as movable or immovable property but rather as contractual claims owed by third parties to the debtor. It was through the structural coupling of contract that Roman law adapted to the economic reality that claims became valuable assets. The adaptation itself was the work of the jurists, who will have advised litigating parties and the praetor on drafting a form of action which was tailored to the completely different nature of the charged assets.^[880] The Roman sources are scarce and only provide a fragmentary picture of the pledge of claims, so that its reconstruction is inevitably, to a large extent, based on hypotheses.^[881]

Origin

‘In developed economies the bulk of corporate wealth is locked up in debts.’⁹ In a market economy it is advantageous that this wealth can be unlocked, by allowing debts to be made liquid by selling them, or by using them as collateral.

In the Roman empire, wealth was personal rather than corporate and the bulk of wealth was stored in real estate.¹⁰ But even so, in the Roman economy a great deal of wealth was locked up in debts. Scaevola mentions a banker (coactor argentarius) who ‘held nearly his entire fortune in debts’.“ A common attribute of a well-to-do Roman household would be ‘a chest containing written instruments and guarantees from debtors’.“ These debts are most likely to have been contractual debts, arising under loan agreements, stipulations, contracts of sale, and rental agreements?³ Roman law allowed this wealth to be unlocked. The sale of claims is already attested in an opinion of a republican jurist (Ofilius)?⁴ In the late Republic the ‘transfer’ of nomina was a method for paying the purchase price for large properties. In one of his letters to Atticus, Cicero writes that he contemplates selling a debt owed by Faberius in order to be able to purchase real estate from Silins.“ The transferability of debts may even have contributed significantly to Rome’s money supply?⁶ There is some evidence for the existence of a secondary market for debts in the first century Bc.1’ The practice of using claims as collateral may have already arisen during this period?⁸ The object of a pledge of claims was a nomen debitoris.¹⁹ The term nomen was probably influenced by Greek usage and referred to a claim represented by the name of the debtor entered into an account book administered by the creditor of that claim?o

result of choices made by the compilers of the Corpus iuris civilis in the sixth century ad. Also, the recognition of general pledges may have caused pignus nominis to be relatively rare in practice.

9 Oditah 1991: vii. For Rome see Harris 2011: 230-5, 237, 241-4. See also Dernburg 1860: 461.

10 The main exception may have been the societates publicanorum, which were corporations whose (considerable) wealth was stored in (tax) claims.

See Malmendier 2002.

11 Scaev. D. 40.7.40.8. i² Afr. D. 32.64.

13 Kay (2014: 109) notes that by Cicero’s day nomen could refer to an entry in an account book in relation to sales, loans, fines, or debts generally.

14 Ofilius’s opinion is to be found in Ulp. D. 44.4.4.6. This opinion is not on a straightforward purchase of debts, but deals with a special situation in which the debtor of the purchased claim had instructed someone else to purchase the claim from his (the debtor’s) creditor. In D. 18.4.4 Ulpian records the opinion of Celsus, holding that the seller of a claim does not, unless otherwise agreed, warrant the creditworthiness of the debtor of the sold claim, but only that the debt is owed by that person.

15 Cic., Att. 12.31.2. See Ioannatou 2006: 388-90, 409-12; Kay 2014: 239.

16 Harris 2011: 225-32. 1⁷ Kay 2014: 239.

18 Dernburg 1860: 461.

19 Paul. D. 13.7.18 pr.; Marci. D. 20.1.13.2; Alex. C. 8.16.4; and Diocl.-Max. C. 4.39.7.

20 Kaser 1969: 174; Kay 2014: 109.

A constitution by Alexander Severus from 225 ad declares that ‘also the claim against a debtor can be pledged, both generally and specifically, as has already earlier been accepted’.^[882] But when, exactly, this was accepted cannot be established. The earliest text in the Digest is by Pomponius, a contemporary of Julian and counsel to Hadrian and Antonius Pius?^[883] In his commentary on the praetor’s edict Pomponius wrote of someone ‘whose claim has been pledged’?^[884] One does not get the impression that Pomponius was being very innovative when he wrote these words?^[885] They suggest that by his time, pignus nominis was already a well-settled variation of pledge.

Assignment and pledge

In the nineteenth century Dernburg and other German Pandectists held that pignus nominis was a modality of the assignment of claims. According to Dernburg, Roman law never recognized that claims could be the object of real rights.

Based on this assumption Dernburg puts forward that essentially pignus nominis was a species of the assignment of claims. The powers of the creditor as assignee would have been limited in accordance with the purposes of the pledge agreement, so that they would expire upon discharge of the secured debt.^[886] ^{^[887] ^[888] Nowhere in the sources, however, is there any indication that pignus nominis was regarded as a modality of assignment. Moreover, as Kaser has elaborated, the actions granted to an assignee would be unsuitable for enforcing a pledge of claims?⁶ The pledge creditor’s actio utilis consisted of not only elements derived from the action for the pledged debt (e.g., condictio, actio locati) but also conditions taken from the actio Serviana (conventio pignoris, pecuniam debitam, etc.)?⁷ A constitution by Diocletian suggests that the legal practice of granting actiones utiles to purchasers and pledge creditors of claims originated more or less at the same time?⁸ In respect of granting an actio utilis against the debtor of the claim, pignus may even have considerably preceded assignment. The opinion by Pomponius (as reported by Marcianus in D. 20.1.13.2) leaves no doubt that by the first half of the second century ad, the pledge creditor of a claim would have his own action against the debtor of the claim. For assignment, it is only in the imperial rescript practice of the third century ad that a tendency develops to grant an actio utilis to the assignee of a claim.^[889] Origin in possessory pledge of debt instruments?
The debts which were to serve as collateral would often be evidenced by documents: chirographa, cautiones, epistulae.^[890] One cannot exclude the possibility that in an earlier period—late republican or early classical—the pledge of debt instruments evolved from the possessory pledge of tangible property. This is speculative, but perhaps the handing over of chirographs (etc.) to a pledge creditor was treated as analogous to a traditio of movable property in order to grant a possessory pledge.
This is not conclusive, however, as to whether the possessory pledge is the direct ancestor of pignus nominis. Much depends on when it was accepted that the conventio pignoris (rather than a traditio by way of possessory pledge) was the central element of the actio Serviana.³¹ If it was only Julian who achieved this, then pignus nominis may have had its origin in a ‘possessory' pledge of debt instruments. If, however, the praetor was prepared—whether or not in the form of actiones in factum or utiles—to give effect to pledge agreements in an earlier period, then pignus nominis may have had its origin as a purely contractual pledge in this earlier period. In Ulp. D. 20.1.20 a creditor who had lent money for the repair of a rented building and would be repaid out of the rents by way of pledge, was granted adapted actions (actiones utiles) against the tenants, on the analogy of a debt instrument (cautio) which had been pledged.
D. 20.1.20. Ulpianus libro sexagesimo tertio ad edictum. Cum convenit, ut is, qui ad refectionem aedificii credidit, de pensionibus iure pignoris ipse creditum recipiat, etiam actiones utiles adversus inquilinos accipiet cautionis exemplo, quam debitor creditori pignori dedit.
When it has been agreed that the one who has lent money for the repair of a building should be repaid out of the rents by way of pledge, he also acquires adapted actions against the tenants, on the analogy of a debt instrument which the debtor has given to the creditor in pledge.
From D. 20.1.20, Smits derives that, chronologically, the praetor appears to have first granted an actio utilis to the creditor to whom a debt instrument had been pledged.^[891] This presumes, according to Smit, that only later an actio utilis was granted to the creditor whose pignus nominis was granted nuda conventione. This is based on the assumption that the arrangement discussed in Ulp. D. 20.1.20 was a pledge of rentals (pignus nominis).^[892] ^{^[893] ^[894] ^[895] ^[896] ^[897] A more plausible interpretation of this fragment, however, is that it is concerned with an anti- chretic pledge.}
Normally, where claims are pledged one would expect that their proceeds would only be applied in order to discharge the secured debt when the debtor is in default/⁴ In D. 20.1.20, however, the purpose of the pledge is that from the onset of the transaction the rentals are applied in order to repay the secured debt/⁵ This rather points in the direction of an anti- chretic pledge of the building itself. It is actually a typical case of antichresis: the secured debt is paid out of the civil fruits (rentals) of the pledged property/⁶ The purpose of the analogy with the pledge of debt instruments (which may have been the most common case of pignus nominis in practice) was to support the granting of an adapted actio Serviana to the antichretic pledge creditor/⁷ In other words, D. 20.1.20 confirms that also the antichretic pledge creditor would have an adapted actio Serviana at his disposal, with which he could enforce the leases of the pledged building against the tenants/⁸ It is, moreover, rather unlikely that more than a century after Pomponiuss casual reference to pignus nominis, a late classical jurist would still need the analogy of the ‘possessory' pledge of debt instruments in order to reach the conclusion that a pledge of rentals could be enforced against the tenant by the creditor with an adapted action. Pledging debt instruments in late classical law
A constitution by Diocletian and Maximinian confirms that at the time of the classical jurists (‘responsum est’) it was established practice to pledge cautiones debitorum.
Diocl.-Max. C. 4.39.7. Postquam eo decursum est, ut cautiones quoque debitorum pignori darentur, ordinarium visum est, ut post nominis venditionem utiles emptori, sic (ut responsum est) vel ipsi creditori postulanti dandas actiones.
After it has come to the point that even debts instruments were pledged, it has seemed normal that after the sale of a claim analogous actions should be given to the purchaser - as has been provided for in a response - like the ones given to the creditor himself when he demands repayment.
Where the parties had agreed that a chirograph (or cautio or other debt instrument) was pledged, this must be understood as that the debt (nomen) evidenced by this document had been pledged. In D. 32.59 Julian says that ‘it is well-known that we use the word “chirograph” for the action itself, since when a chirograph is sold we understand that the debt has been sold’. D. 32.59 should, however, not be understood as saying that chirographs were negotiable instruments, whose transfer and pledge would be equivalent to the assignment and pledge of the claims they evidenced.^[898] For the transfer of debts evidenced by chirographs one would still need to rely on the ‘palliatives’ (procedural mandate, novatio) that classical Roman law offered as alternatives to assignment.^[899] D. 32.59 is concerned with the interpretation of contracts: where the parties speak of the sale of a ‘chirograph’ they must have intended to sell the debt itself. It’s the same with the pledge of a ‘chirograph’: object of the conventio pignoris is not the chirograph as such, but the debt itself. Accordingly this conventio pignoris would not be enforced with an actio Serviana with which the creditor could recover possession of the chirograph, but (as Diocl.-Max. C. 4.39.7 demonstrates) with an adapted action with which he could demand payment of the claim evidenced by the chirograph.^[900]
When it came to be accepted that a right of pledge could be granted nuda conventione, the practice of pledging chirographs, although not strictly necessary from a legal perspective, continued. One can easily understand why. Possession of the debt instrument will have facilitated proof by the pledge creditor that the claim evidenced by this instrument was pledged. Moreover, the debtor of the pledged claim would often only be prepared to pay to the pledge creditor if the latter either crossed out the chirograph or gave it back to the debtor, as evidence that the pledged debt had been discharged?^[901]
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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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