Licence to Sell and Forfeiture

67 and 68 are concerned with the final settlement of the loans recorded in TPSulp 51 and 52 merely on the basis that these documents were part of the same archive/⁹ Other loans may have been concluded in the period between 2 July 37 ad (TPSulp 52) and 29 August 38 ad (TPSulp 67). In fact, in TPSulp

68 C. Novius Eunus promises to pay the net amount (1,250 sesterces) remain­ing after all the credits and debits had been balanced (‘nummos reliquos ratione omni putata’) upon termination of the entire credit relationship/⁰ This may be boilerplate, but it may also reflect that the final settlement of TPSulp 67 and 68 concerned more transactions than TPSulp 51 and 52.^{[591] [592] [593] [594] [595]}

For the first century ad Chevreaus conclusion that a licence to sell was deemed to be agreed in every pledge agreement is too bold. It is true that, although few early classical texts on pignus have come down to us, the enforcement of pignus by way of sale is well attested in jurists' writings from this period.

Power of sale and forfeiture

In a sense, however, an implied power of sale did exist in the first century ad. The datio pignoris, which in TPSulp 45 was effected by the creditor renting the storage units where the goods pledged in TPSulp 52 were stored77 and in TPSulp 55 by handing over the silver to the creditor, was aimed at a conditional transfer. If there would be an event of default under the loan agreement, the pledged goods would be forfeited to the creditor, enabling him to sell and transfer the pledged goods at auction. In this sense a datio pignoris did imply a power of sale. In late republican and early classical Roman law, as in Greek- Hellenistic law, the power of sale resulted from the right of ownership that the creditor had acquired after forfeiture of the charged object.^{[596] [597] [598] [599] [600] [601] [602] [603] [604] [605] Once the cred­itor had become the owner of the pledged property, he could decide either to keep it, or to sell it in order to settle the secured debt. The ‘categorical separa­tion' (Manigk) of the Verkaufspfand from the Verfallpfand, which later took place in Roman law (as witnessed by Gai. Inst. 2.64 and Scaev. D. 44.3.14.5), is specifically Roman/9 In Hellenistic laws the licence to sell would always remain an ancillary agreement to the forfeiture pledge/0 We can see this in the maritime loan from Muziris from mid-second century ad?1 The parties have agreed that upon the debtor's failure to pay, ownership of the pledged property shall pass to the creditor. It is expressly provided that thereupon the creditor is absolutely free to do with it as a he pleases: rehypothecate it, or sell it at the then prevailing market price/2 The coupling of forfeiture and sale would also have been a feature of a Roman pledge in the first century ad.}

The hypothesis that the creditor's power of sale is based on forfeiture of the pledged object is supported by the fact that the auction announcements in the Sulpicii archive always provide a precise definition of the legal status of the slaves, land or other goods to be auctioned/³ It looks very much as if the auction announcements showed the core contents of the documents through which real security (pignus or fiducia) was established/⁴ The description of a fiducia cum creditore in the auction announcement of TPSulp 87 contains all the essential elements of a mancipatio fiduciae causa.*⁵ The reference to the pledge in TPSulp 83 is brief,*⁶ but so are the pledging clauses from the Sulpicii archive, such as TPSulp 55Th None of these auction announcements mentions a licence to sell, which one would have expected if the creditor were authorized to sell only if he were granted such a licence. Apparently, an explicit licence to sell was not regarded as necessary in the relevant trade circles.^[606] Fiscal pledges and other charges arising by operation of law in favour of public bodies may also have evolved from forfeiture charges to rights of recourse enforceable by sale.8⁹

Forfeiture and over-collateralization

In TPSulp 51 and 52 the Puteolean mercator frumentarius Gaius Novius Eunus acts as debtor of a loan and as grantor of a pledge with regard to a stock of agricultural products which were stored for him in the ‘Bassian Public Warehouses of Puteoli’. In modern literature it is inferred from TPSulp 51 and 52 that a forfeiture pledge could not have existed in the first century ad?⁰ A decisive argument against the existence of a forfeiture pledge lies, in this view, in the particularly high value of the pledged goods. The debt for which the pledge was granted concerned a total amount of 13,000 sesterces, whilst the value of the pledged goods is estimated to be at least 30,000 sesterces?¹ It is deemed implausible that a merchant like C. Novius Eunus, who is said to have had a high degree of creditworthiness (he was, after all, the owner of a stock of wheat and legumes with a value of 30,000 sesterces), would accept that in such a situation the pledged goods would be forfeited to his creditor?² I am not convinced at all by this line of reasoning. The value of a person’s assets says nothing in itself about a person’s creditworthiness; his or her liabilities may be such that his or her creditworthiness is low. The conversion of a non- possessory pledge into a possessory one, which took place after an additional loan of 3,000 sesterces was granted (TPSulp 52),9³ rather suggests that creditor Evenus Primianus (or his slave-manager Hesychus) did not rely in blind faith on the creditworthiness of his debtor C. Novius Eunus. After all, when this borrower requested for additional credit of 3,000 sesterces, the lender wished to strengthen his position by this conversion. Also, the other documents contained in the file suggest that this grain merchant, C. Novius Eunus, was anything but creditworthy?⁴

There is a much better explanation for the surplus value of the pledged objects in TPSulp 51 and 52.^{[607] [608] [609] In modern finance transactions a large debt to collateral ratio is often negotiated. In doing so, the lender seeks to ensure that in case of default, the debt can be fully satisfied out of the collateral. A sub­stantial surplus value creates a buffer for situations where the value of the col­lateral is reduced (e.g., falling prices, damage) or part thereof is sold by the debtor to third parties. The surplus value furthermore leaves room for add­itional credit on the basis of the existing collateral. There is no reason to doubt that the same motives also played a role in classical Rome or Puteoli?6 The pledge of TSulp 51 was first granted for a loan of 10,000 sesterces, while the surplus value made it possible that the same collateral could also serve as security for an additional loan of 3,000 sesterces shortly thereafter?7 The high value of the goods pledged in TPSulp 51 and 52 therefore does not provide conclusive evidence against forfeiture at all.}

Pledge-lien as a viable alternative?

A hypothetical alternative to the forfeiture pledge would be a pledge that gives the creditor a mere right of retention. In TPSulp 51 and 52 there was a consid­erable surplus value, so that in the insolvency of the debtor there would have been a strong incentive for the bonorum emptor to repay the secured debt. Such a pledge-lien would not, however, have enabled a secured creditor to take recourse outside (often long-winded) collective execution proceedings?⁸ Time is of the essence, as TPSulp 79 illustrates, in particular in the case of pledged goods with volatile prices (such as grain)?9 Creditors would like to take matters into their own hands in taking recourse against pledged assets by selling them at their earliest convenience. It is not for nothing that we find so many auction announcements in respect of charged property in the archive of the Sulpicii. A ‘pledge-lien' could conceivably in some cases have worked in practice, if the creditor would be entitled to use the pledged objects (e.g., slaves, livestock, land, houses) or apply their fruits by way of amortization or interest. However, such ‘antichretic' pledges are attested in Roman legal sources not earlier than the third century ad and may not yet have existed in the Western Roman empire of the first century ad.^{[610] [611] [612] Moreover, an antichretic pledge would also not have benefited the creditor in TPSulp 51 and 52, where the pledged goods (grain, chickpeas, lentils, etc.) could not be used without consuming them, nor did they produce fruits which could reduce the amount due under the loan or serve as interest. On the contrary, in TPSulp 51 and 52 they were perishable goods, whose value would gradually dissipate. In case of well-stored wheat this could take years, but retaining the goods for a lengthy period of time could lead to considerable storage costs for the creditor. These were minimal in TPSulp 45 (HS 1 per month), but in another rental agreement (TPSulp 46) a monthly rent of HS 100 had to be paid for storing the pledged goods, which was equivalent to 0.5 per cent per month over the amount of the loan. The creditor and the debtor will possibly have agreed in relation to TPSulp 45 that the actual storage costs were to be borne by the debtor.1111 If, however, the debtor is no longer able to pay off his debts due to insolvency, the creditor will have to bear the actual storage costs in order to maintain his right of retention.}

In conclusion, a pledge-lien would not have been a viable alternative for the secured credit transactions documented in the Sulpicii archive.

5.4