Ius Offerendi et Succedendi

By exercising the ius offerendi et succedendi a lower-ranking creditor could take the enforcement of the security in his own hands and use the proceeds of the execution sale, not only for the principal and interest owed to him personally but also for the amount paid by him to the first ranking creditor in order to discharge the first pledge.

Successio hypothecaria

Although the sources on the ius offerendi et succedendi are from the late clas­sical period, there are texts from an earlier period which could be regarded as representing a preliminary stage in the evolution of the ius offerendi et succe­dendi.^[836]* As these texts show, the ius offerendi et succedendi has its origin in contractual clauses agreed between debtors and lower-ranking creditors, which provide that the latter shall have the right to offer higher-ranking cred­itors to take over their rank by paying the original secured debt/^[837] An ancestor of the ius offerendi et succedendi is the so-called successio hypothecaria dis­cussed by Aristo and (later) Gaius.^{[838] [839]}

Paul has recorded an opinion by the jurist Titius Aristo, a member of Hadrian's consilium and one of the most prominent jurists of his time/¹

D.

Writing to Neratius Priscus, Aristo said: Although it is a term of the contract that the first (creditor) shall be discharged, the second (creditor) does not succeed to his right of pledge unless it is agreed that the same property is pledged to him. A person who has not agreed on a pledge cannot succeed to the rights of the first creditor; and in that case, the purchaser of the property prevails.

The debtor had granted a right of pledge to C1. With a third party (C2), the debtor agreed that C1 would be repaid, probably (although the text leaves this open) by the debtor using the money received from C2 in order to pay C1.^{[840] [841] [842] [843] [844] [845]} In the case put before Aristo, the debtor had sold and delivered the pledged property, possibly in another attempt to discharge the debt owed to C1 with the proceeds of the sale?³ Aristo holds that C2 shall only succeed to C1 s pledge if the debtor and C2 have also agreed to a separate pledge for C2Th If that has not taken place, C2 shall not be able to recover (with the actio Serviana) the pledged property from the purchaser. The mere fact that the debtor and C2 have agreed that C1 shall be repaid with the money borrowed from C2 is not sufficient for C1s right of pledge to pass to C2, neither is it sufficient that C1 is repaid with funds coming from C2 to achieve this?⁵ There has to be, according to Aristo, a separate conventio pignoris between the debtor and C2. The transaction structure recommended by Aristo fits per­fectly in the second stage of the evolution of the multiple pledge?⁶ The con­ventio pignoris between the debtor and C2 which Aristo requires must have been conditional upon the discharge of C1s pledge.

In D. 20.3.3 we are not yet dealing with the ius offerendi et succedendi of late classical law. The ‘hypothecary succession' by C2 to C1's pledge in D. 20.3.3 is nothing more than the discharge of C1's original pledge combined with the granting of a fresh one to C2. In this type of succession C2 occupies the pos­ition left vacant by the termination of C1's pledge?⁷ This vacancy is created by C2 himself, by providing the debtor with the funds to pay the debt owed to C1. Moreover, the ius offerendi et succedendi would typically be exercised in situations where C2 had granted credit to the debtor independently and there was sufficient surplus value in the pledged property to satisfy the debts owed to C1 and C2. Aristo's opinion in D. 20.3.3 seems to be instead concerned with the refinancing of an existing debt. In order to avoid a threatening execution sale or for other reasons (e.g., C2s interest in the continuance of C1s busi­ness), C2 is prepared to take over the credit granted by C1, but only if it con­tinues to be secured by the property originally pledged to C1.

Another ancestor: Gai. D. 20.4.11.4

From Gaius we also have an opinion reflecting an earlier stage in the evolu­tion to a full-fledged ius offerendi et succedendi.

D. 20.4.11.4. Gaius libro singulari de formula hypothecaria. Si paratus est posterior creditor priori creditori solvere quod ei debetur, videndum est, an competat ei hypothecaria actio nolente priore creditore pecuniam accipere. et dicimus priori creditori inutilem esse actionem, cum per eum fiat, ne ei pecunia solvatur.

If the later creditor is willing to pay the earlier his debt, we must ask whether, supposing the earlier refuses to accept payment, the later can bring the actio hypothecaria. We are clear that the earlier cannot bring the action, since the non-payment is his fault.

In contrast with Aristo's opinion this text may have been dealing with a case in which—at the time the successio hypothecaria was negotiated—C2 had already been granted a right of pledge by the debtor.^{[846] [847] As recommended in Gai. D. 20.1.15.2, such a second pledge would have been granted conditionally on discharge of the first pledge. In order to make his second (conditional) pledge an unconditional one, C2 declared to be prepared to repay C1, but the latter refused to accept this offer?9 The question addressed by Gaius is whether the actio Serviana is then available to C2. Gaius says only that C1 can no longer institute the actio Serviana. The reason behind this is that one of the conditions of its formula was no longer met: the absence of creditor's default (mora creditoris).[848] Although D. 20.4.11.4 does not expressly say so, one would expect that this entails that C1s pledge had ceased to exist and that therefore the actio Serviana must now be granted to C2, with which he could recover the pledged property from C1, the debtor, or any third party in possession.[849] [850] [851]}

Gai. D. 20.4.11.4 is not yet dealing with the full-fledged ius offerendi et suc­cedendi. Like Aristo's opinion it is still within the parameters of the general principles of the law of pledge/² Gai. D. 20.4.11.4 says nothing more than that C2 can achieve that his pledge becomes the first one by offering payment to C1, so that the latter's pledge is discharged. The only point of law which Gaius addresses is whether C1's refusal to accept the payment could compromise C2's position. This question is answered negatively, with reference to one of the standard conditions (a5) of the actio Serviana. However, where Aristo in Paul. D. 20.3.3 was concerned with the refinancing of an existing debt, the contractual arrangement of Gai. D. 20.4.11.4 rather appears to belong to the type of transactions for which the ius offerendi et succedendi came into exist­ence.

Ius offerendi et succedendi

For a creditor, it would normally only make sense to accept a right of pledge over property which had already been pledged to another creditor if the surplus value of that property was sufficient to cover the debts owed to both creditors. However, even where there was sufficient surplus value, the second creditor would often like to take matters (in particular: the execution sale) into his own hands, so as to no longer be dependent upon the first creditor. Where the first creditor would sell the pledged property by way of execution, he may not always have been motivated to realizing its market value in full but rather be content with obtaining sufficient execution proceeds for dis­charging the debt owed to him personally. In late classical law the interest of lower-ranking creditors to take over the execution was recognized.

The final evolutionary step for the ius offerendi et succedendi was taken when it came to be accepted that a second-ranking creditor could unilaterally achieve succeeding in the rights of execution attached to the first ranking pledge, to the effect that he would obtain a first priority right of recourse for both the amount paid and the amount owed to him personally.^[852] In his com­mentary on the actio hypothecaria Marcian sets out how the ius offerendi et succedendi operates.

D. 20.4.12.6. Marcianus libro singulari ad formulam hypothecariam. Sciendum est secundo creditori rem teneri etiam invito debitore tam in suum debitum quam in primi creditoris et in usuras suas et quas primo creditori solvit: sed tamen usurarum, quas creditori primo solvit, usuras non consequetur: non enim negotium alterius gessit, sed magis suum.

The property is pledged to the second creditor, even if the debtor does not agree, both for his own debt and interest and for debt and interest paid to the first creditor. He will not, however, obtain interest on interest paid to the first creditor, because he paid it to benefit himself, not another. Papinian, in the third book of his Replies, so holds, correctly.

Marcian makes clear, in the first place, that the ius offerendi et succedendi is a unilateral right of the second creditor, for which the debtor's consent is not required. More importantly, Marcian holds that the second creditor can enforce his pledge not only for the debt owed to him personally but also for an amount equal to the debt (formerly) owed to the first creditor. It was always clear, in late classical law, that neither the first creditor's secured claim nor the right of pledge itself would actually transfer to the succeeding creditor. The personal nature of claims and the accessory nature of the right of pledge continued to prevent this.^{[853] [854] [855] [856] [857] [858] The relevant right of pledge for the second cred­itor C2 continued to be the pledge granted to him personally, also after the ius offerendi et succedendi had fully evolved. What transferred to C2 was the first priority right to take recourse against the pledged assets which was originally attached to C1s pledge/6}

Where there were several lower-ranking pledge creditors, each of them did have the ius offerendi et succedendi. Thus, where there are three creditors, C3 could exercise the ius offerendi et succedendi by paying C1 and thus acquire the right to sell the pledged property. However, C3 would only have first rank­ing for the amount paid to C1. For his own claim, C3's ranking would stay the same.5⁷ From the surplus of the execution sale organized by C3, which remained after the debt owed to C1 had been deducted, C2 would have to be paid first. Only if there would still be money left would C3 be entitled to the ‘surplus of the surplus/⁸ The only advantage of the ius offerendi et succendendi was that it enabled the lower-ranking creditor to organize the execution sale himself: it would not improve the ranking of the pledge for his own claim against the debtor. Where the first creditor had already sold the pledged prop­erty by way of execution sale, the ius offerendi et succedendi of later creditors ceased to exist and they would at most have a claim for the surplus against the first creditor/⁹

Imperial or jurisprudential innovation?

Can this ius offerendi et succedendi be regarded as a logical doctrinal exten­sion of Aristo's and Gaius's hypothecary succession, or must the right to take recourse also for the amount owed to the first creditor be considered as a more radical innovation by the imperial chancery? The words ‘sciendum est’, with which Marci. D. 20.4.12.6 opens, presuppose that at the time of this jurist this was already settled law/⁰ The immediate origin of the ius offerendi et suc­cedendi may lie in the Severan period. In his Disputationes, which he wrote during the reign of Caracalla (but was published—at the earliest—during the reign of Alexander Severus)/¹ the jurist Tryphoninus takes the position that a creditor who redeemed a ransomed slave who had been pledged to him can take recourse against the proceeds of this slave, not only for the secured debt but also for the amount of the ransom. In D. 49.15.12.12 Tryphoninus advocates an analogous application of an imperial constitution, which grants a lower- ranking creditor a right of recourse for the amount paid to the first ranking creditor ‘for the purpose of confirming his pledge' (‘confirmandi sui pignoris causa’). The imperial constitution to which Tryphoninus refers may very well have been a constitution from ad 197 by Septimius Severus and Caracalla.^[859]

Sev.-Ant. C. 8.17.1. Qui pignus secundo loco accepit, ita ius suum confir­mare potest, si priori creditori debitam pecuniam solverit aut, cum obtulis­set isque accipere noluisset, eam obsignavit et deposuit nec in usus suos convertit.

Someone who has accepted a second-ranking pledge, can strengthen his legal position by paying to the prior in right the amount due to him, or if the amount is offered and not accepted, by sealing and depositing it without turning it to his own use.

On the face of it, C. 8.17.1 only adds to the then existing law (Gai. D. 20.4.11.4) by ruling that in order to ‘strengthen' (‘confirmare’) his right of pledge, the second creditor must set apart the money offered to a refusing creditor. Nevertheless, it could have been this constitution which introduced the full- fledged ius offerendi et succedendi.^{[860] [861] [862] Several late classical sources—including another text by Tryphoninus (D. 49.15.12.12)—use (derivations of) confir­mare (or similar words) in order to express that by exercising his ius offerendi et succedendi the second creditor can gain a ‘strengthened' right of pledge/4 This (con)firmare entails that the lower-ranking creditor can now institute the actio Serviana against anyone (including the first creditor), sell the pledged property, and take recourse against the proceeds, not only for his own secured debt but also for the debt (formerly) owed to the first creditor. Another pos­sibility is that at the time C. 8.17.1 was issued, the ius offerendi et succedendi had already been developed by jurisprudence, in particular in Papinian's writings/5}

Papinian as inventor?

During the reign of Septimius Severus and Caracalla as co-emperors Papinian was procurator a libellis (later: praefectus praetorio).⁶⁶ As such, Papinian may have been responsible for drafting C. 8.17.1. At the end of D. 20.4.12.6, Marcian refers to book 3 of Papinians Responsa. There is a text in this very book in which Papinian gives his opinion on the scope of the ius offerendi et succedendi.

D. 20.5.3 pr. Papinianus libro tertio responsorum. Cum prior creditor pignus iure conventionis vendidit, secundo creditori non superesse ius offerendae pecuniae convenit. 1. Si tamen debitor non interveniente creditore pignus vendiderit eiusque pretium priori creditori solverit, emptori poterit offerri quod ad alium creditorem de nummis eius pervenit et usurae medii temporis: nihil enim interest, debitor pignus datum vendidit an denuo pignori obliget.

When the first creditor has sold the pledged property pursuant to the terms of the agreement, it is accepted that the second no longer has the right to offer the money. 1. If, however, the debtor without objection from the creditor sells the pledged property and pays the price to the first creditor, it is possible to offer the buyer the money which went from him to the first creditor, together with interest for the intervening period. For it makes no difference whether the debtor sold the pledged property or pledged it a second time.

In D. 20.5.3 pr., Papinian puts first and foremost that the ius offerendi et succe­dendi cannot be exercised when the first ranking creditor (C1) has sold the pledged property by way of execution. This is different, however, where the debtor and C1 have agreed that the secured debt shall be repaid out of the pro­ceeds of a sale by the debtor himself. In D. 20.5.3.1 Papinian holds that the second creditor's (C2's) ius offerendi et succedendi can also be exercised against someone who purchased the pledged property from the debtor/⁷ By offering to pay the purchaser the amount of the proceeds (increased with interest) which the debtor paid on to C1, C2 can achieve that he succeeds in the rights of execution attached to C1's first ranking pledge. The end result is that C2 can sell the property by way of execution and the purchaser recovers his money.

In book 11 of his Responsa (D. 20.4.3.1), Papinian first sets out that the creditor who financed the purchase of the pledged property has priority over the creditor with a prior right of pledge. This is one of the few instances in which Roman law does not determine the ranking of pledges in accordance ^[863] with the prior tempore principle.^[864] The original priority must be restored, however, if ‘it happens that the anterior creditor offers to repay him’. Thus, here also the ranking of the pledges can be reversed by the lower-ranking creditor exercising the ius offerendi et succedendi vis-à-vis the higher-ranking creditor. It would perhaps go too far to call Papinian, the most brilliant jurist of the Severan period, the inventor of the ius offerendi et succedendi, but he has certainly made significant contributions to its elaboration/^[865]

⁶⁶ Honore 1994: 190.

Succession in one’s own ranking

In Lenel’s reconstruction of the formula of the actio Serviana a negative con­dition is included: ‘that this money has not been paid nor otherwise satisfac­tion has been given for this claim’. This refers to two categories of events, each of which would effectively terminate the pledge: solutio and satisfactio.^[866] In the course of the classical period the scope of the discharge clause expanded, mostly by the jurists giving an extensive interpretation of the term satisfactio.^{[867] [868] [869]} No longer was the granting of alternative (real or personal) security the only way of providing satisfaction to the creditor/² Satisfactio came to comprise several other legal events that caused the termination of the right of pledge.7³ In D. 13.7.9.3 Ulpian mentions that satisfactio will take place by accepting a new debtor (‘reo dato’). This means that (passive) novatio was regarded by the jurists as a case of satisfactio. The passive side of debts could be ‘transferred’ by the creditor allowing the debtor to novate his debt to another debtor. Novation could also take place without changing creditors or debtors but in order to replace an existing contract between the creditor and debtor (as in Pap. D. 20.4.3 pr. discussed shortly). For secured creditors this was not without risks. Paul. D. 46.2.18 restates the classical law of the second and third century ad: a right of pledge which secures a novated debt termin­ates, but only when the novation was made lawfully.^{[870] [871] [872] [873] Where the novated obligation was secured by a right of pledge, its extinguishment would cause the right of pledge to terminate, and a new pledge granted in order to secure the novated debt could have a lower rank. In this area the jurists applied their creative skills with great mastery, in order to preserve the ranking of pledges securing novated debts. A veritable intellectual tour de force is Papinians extension of the ius offerendi et succedendi to cases of novation where multiple pledges had been granted.}

‘Repeat the pledging¹

Ulpian says in D. 13.7.11.1 that ‘through novation the pledge subsides, unless it is agreed that the pledge shall be repeated’/⁵ What does ‘ut pignus repetatur in Ulp. D. 13.7.11.1 mean? Does the original pledge continue to exist or does the expired original pledge have to be granted again?7⁶ The latter was the case: as the Digest texts reproduced below show, upon nov­ation of the secured debt the creditor would take a new pledge over the same assets. By making his consent to a novation conditional upon an agreement to ‘repeat’ the pledge, the creditor could achieve the continuation of the security of his debt. Although this goes beyond the jurists’ opinions and imperial constitutions that survive, the position may very well have been that rights of pledge would only terminate by novation where there were recognizable indications that the creditor did not want to continue the pledge.77 Economic rationality, in any case, would entail that the creditor’s consent to novation would be given under the condition that the new debt would also be secured by a pledge with the same rank. Papinian’s opinion in D. 20.4.3 pr. illustrates how acute the problem was. What probably hap­pened was that creditor C1 had lent money to the debtor, which was secured by a pledge over certain assets. The same assets were subsequently pledged to another creditor C2. C1 and the debtor then increased the credited amount, by entering into a new stipulation for a higher amount which replaced the original one. Because of his increased exposure, C1 demanded additional security on top of the security already granted. Cl's new pledge would nor­mally rank after C2's pledge over the same assets, even for the amount of the original (novated) debt. In order to avoid this result Papinian applies a legal mechanism that had been developed by the jurists (including Papinian him­self) for multiple pledges: the ius offerendi et succedendi.

D. 20.4.3 pr. Papinianus libro undecimo responsorum. Creditor acceptis pignoribus (quae secunda conventione secundus creditor accepit) novatione postea facta pignora prioribus addidit. superioris temporis ordinem manere primo creditori placuit tamquam in suum locum succedenti.

A creditor had accepted a pledge of assets over which a second creditor pursuant to a subsequent agreement also accepted (a pledge), then after novation added further assets to his security. It was held that the first cred­itor kept his priority in time as if succeeding in his own place.

D. 20.4.12.5. Marcianus libro singulari ad formulam hypothecariam. Papinianus libro undecimo respondit, si prior creditor postea novatione facta eadem pignora cum aliis accepit, in suum locum eum succedere: sed si secundus non offerat pecuniam, posse priorem vendere, ut primam tantum pecuniam expensam ferat, non etiam quam postea credidit, et quod superfluum ex anteriore credito accepit, hoc secundo restituat.

Papinian, in his eleventh book, gave the opinion that if the first creditor makes a novation and takes a pledge of the same assets along with others, he succeeds in his own place. But if the second does not offer to pay off the first, the first can sell the property and keep the amount of the first, not the sec­ond loan, and pay the second any surplus over the amount of the first loan.

Although it appears that in Papinian's view the original pledge is terminated by the novation and a new pledge had to be created, this new pledge has the same ranking as the original one. So, for the purpose of ranking, the situation is the same as if the original pledge continued to exist. These texts show how creative the Roman jurists were in reaching this economically efficient result. In a ‘slightly artificial' (Ankum) or ‘genial' (Wacke) way, Papinian applied the mechanism of the ius offerendi et succedendi to novation. The creditor Cl takes over the (original) ranking of the right of pledge which secured the debt originally owed to C1 himself.^[874] C1 ‘succeeds in his own place’. Marcian adopts Papinians opinion (with express reference to book 11 of the Responsa, from which D. 20.4.3 pr. was taken), but adds that C1’s first rank is confined to the amount of the original loan. The proceeds remaining after this amount has been deducted from the proceeds of the execution sale must be paid to C2.

7.5