Pignus (Pledge)

In the centre of the picture you can safely put the transaction with the pawnbroker. The rise of the High Street banks, which give relatively easy access to credit, has pushed pawnbroking into a smaller and ever seedier segment ofthe money-lending market.

There is one danger in starting from this point. So far as we create a gulf between pawning a watch and mortgaging a house or an aero­plane, that division is foreign to pignus. Gaius would secure a loan or other credit by pledging his silver cutlery or his farm. Pignus would serve equally for both.

In connexion with stipulatio we met the distinction between per­sonal and real security. There is personal security where a creditor before granting credit or giving more time insists on having a recourse against a person other than the principal debtor. There is real security when the creditor insists on a recourse against a res. �Recourse’ is deliberately vague. It has to comprehend a number of different possi­bilities. Before going further into pignus itself it will help first to take a grip on the basic structure of real security.

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Above, 62.

There are two separate legal relations involved: (i) between the debtor and the creditor, and (ii) between the creditor and the res. To this for completeness should be added (iii) between the creditors themselves if and when there are more than one with recourse against the same res. But this third set can be ignored as factually not always present and legally not possible until a certain degree of sophistication is achieved.

The relationship between debtor and creditor is contractual, no dif­ferent from the relationship between depositor and depositee, lender and borrower. There are reciprocal rights and duties founded on actual agreement or on the law’s interpretation of the natura contractus, the nature of the contract. This is the part with which pignus is concerned. That is, the actions based on pignus (actiones pigneraticiae) deal with the contractual duties of the parties inter se. The direct action on pignus lies against the pledge-creditor; the counter-action lies to the pledge-creditor against the debtor. The symmetry with depositum and commodatum is evident.

The relationship between the creditor and the res has two aspects, practical (or, factual) and analytical (or, legal). These terms are not technical but just labels adopted for the purpose of exposition. It is often said that there are and can be many different kinds of real security. Even in Roman law itself there existed concurrently two kinds, pignus itself and fiducia (of which some mention will be made at the end of this chapter). The kinds of real security are differentiated chiefly in the nature of the legal aspect of the relationship between the creditor and the res. Differences in the legal aspect carry over into the practical aspect of the relationship.

The practical aspect is concerned with the physical whereabouts of the res during the period in which it is the creditor’s security. Who is to keep the ring or occupy the farm? The simple case is that the debtor gives it up and does not see it again until he discharges his debt. More sophisticated and involving more faith in the force of law is the arrangement whereby the debtor is allowed to retain the res at least until the repayment becomes overdue. Most of us live in mortgaged houses. The practical aspect of the relationship between the creditor­mortgagee and the res (the house) is the sophisticated version: the creditor looks on while the debtor remains in occupation.

The legal or analytical aspect of the relationship between creditor and res is concerned with the question whether the creditor has any right in rem. That is, whether he has a right in the res such as allows him to demand it from anyone else who has it. And if he has such a right, how should it be described? In short, if it comes to litigation, is his only claim the contractual one in personam debitoris, against the person of the debtor? Or has he also an exigible right against the res? If so, what right?

There is a spectrum of possibilities. At the heavy end, it may be that the creditor becomes owner of the res. In that case the debtor's only claim to get it back will rest on the contract: the creditor's obligation to re-convey if paid off. The early common-law mortgage was like this. I convey my land to my creditor. He promises to convey it back if I pay my debt on time. Meanwhile the legal relationship between him and the land is that he owns it. Fiducia cum creditore has the same structure.

At the other end of the spectrum, it is possible to suppose a species of real security in which the creditor has no exigible interest in the res at all. Necessarily this would mean that from the practical standpoint he would have to hold the thing, because if he had no legally exigible right and no physical control he would have nothing at all. But the simplest form of real security is precisely this, that the creditor merely holds some res as a sort of hostage against payment and has no interest in it. Meaning that if the res falls into other hands he can do nothing. He loses his security. He can of course fall back on his personal claim against his debtor. But that is what he wanted not to have to do. He took the res for extra protection. The trouble with this crude version of real security is that it is not very secure. It will not encourage much lending. Creditors want an exigible right, something more than mere factual detention.

So there are intermediate points on the spectrum, between the creditor owning and the creditor having no right in rem at all. A system which has a list of rights in rem less than ownership can accord the creditor one of those already in wider use. So the creditor can be given a lease. Or a special right can be developed having its own tailor- made characteristics: a pledge-interest, a �charge by way of legal mort­gage'. There is no need to enter into further detail. Pignus belongs in this middle range. The creditor has exigible rights in rem, as we shall see.

He is not owner of the res. Nor, at the other end of the spectrum, does he have mere physical detention.

In the relationship between creditor and res there is one more element which needs to be mentioned because often a surprise. It is not a necessary part of any scheme of real security that the creditor’s right, whatever it is, must ultimately allow him to sell the thing. That commonly is what the law permits, but it need not. Where the creditor becomes owner he may be restrained from sale, either by the general law directly intervening in an owner’s rights or by his contract with the debtor. Where he does not become owner, prima facie he has no right to sell, unless the law or the contract confers the power on him.

i. The contract of pignus: the relationship between pledgor and pledgee

There were formulae in ius and in factum conceptae, though there is in this case a doubt because they are not either preserved verbatim or easily reconstructed. The formula in ius will have conformed exactly to the pattern already familiar in the other bonae fidei contracts. I shall not set it out. Lenel’s reconstruction of the formula in factum concepta is:

If it appears that Aulus Agerius gave the res which is the subject of this action to Numerius Negidius as a pledge for money owed,

and that that money has been paid or some other satisfaction has been accepted on its account,

or in the alternative that it was through Numerius Negidius that the money was not paid,

and that that res has not been returned to Aulus Agerius, for as much as it shall be worth, for so much let the judge condemn Numerius Negidius to Aulus Agerius; if it does not appear, let him absolve.¹¹

The res would of course be named, and there could be a variation from ob pecuniam debitam (for money owed).

A. The demonstratio Little more needs to be said about the definition of pledge because the special nature of the transaction means that there are no fine lines to draw between pignus and other contracts. Typically pignus involved a delivery of the res to the creditor with the intention that it should be a pledge. And the action was only concerned with what happened after that, as in all contracts re. But developments towards the more sophisticated practical arrangement which allows the debtor to retain the enjoyment ultimately blurred this requirement, so that D.13.7 now opens with Ulpian apparently asserting that pledge is a consensual contract: �Pledge is contracted not only by delivery' (D.13.7.1 pr. = Ulpian, 40 On Sabinus). These developments will be looked at in the next section, on the relationship between creditor and res.^[40] It is safe to take it that in classical law the plaintiff had to show that the res had been handed over.

Another case which does not fit the picture of a res actually handed over, but for which special praetorian protection was made available, was the pledging of a debt. I say that my claim against my debtor shall be a pignus for you. �This agreement is to be protected by the praetor' says Paul (D.13.7.18 pr.).^[41]

Suppose I hand over land to you and then you allow me back in. And then I build a ship from the wood growing there. Is the ship bound by the pledge? Land added to the pledged estate by alluvio is added to the pledge, but the ship is not. For the ship and the timber are different things. Paul observes that the answer is different if the pledge of woodland is made on the term that it shall include �quaeque ex silva facta natave sint: whatever may have been made from the wood or may have originated in it'.^[42]

B. The intentio The direct action lies against the pledge-creditor.

In addition to the obligation to return the res the creditor must exercise care during the keeping of it. D.13.7.24.3 (Ulpian, 30 On the Edict):

The trial on pignus makes the creditor liable for any bad treatment of the res, as for instance if he weakens slaves. Obviously it must be said that he is not liable in the action if it is for their wrongdoing that he punishes them, puts them in fetters or hands them over to the prefect or governor. A pledge of a slave-girl is instantly terminated if the creditor prostitutes her or makes her do some other disgusting thing.

This shows the creditor liable for dolus and culpa. And there is some evidence that he may have had at some stage to meet that security liability (custodia) discussed under commodatum (cf. D.13.7.13.1).^[43] But that is unlikely.

Where the creditor had and exercised a power of sale, this action lay to make him pay over the amount he received over and above what was due to him from the debtor. Security was not to be an oppressive source of profit. D.13.7.24.2 (Ulpian, 30 On the Edict):

Suppose the creditor sells the pledge for more than he is owed but has not yet exacted the price from the buyer. Can he be sued by action on the pledge for recovery of the excess? Or must the debtor wait till the buyer pays? Or must he, the debtor, take on the actions against the buyer? I do not think the creditor is to be pressed to pay. The debtor ought to be patient. And if he is not, the actions against the buyer should be mandated to him. But in that case the risk will be on the seller. However, once the creditor has received the money he has to hand over the excess.

The creditor could bring the actio contraria to recover expenses neces­sarily incurred in keeping the pignus and also to be compensated for losses brought on him by the debtor's culpa in relation to the pledge. If the pignus turned out to belong to a third party who would not ratify the pledge the debtor was liable whether he knew or not that the res was not his (D.13.7.16 = Paul, 9 On the Edict).

ii. The relationship between pledgee and res

Earlier we distinguished between the practical and the legal aspects of this relationship. The main question here is about the legal aspect. What claims, if any, did the law give the creditor vis-à-vis the res? The

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practical aspect—where would the res actually be?—is the day-to-day background behind the analysis.

The praetor protected possession by means of interdicts. Anyone who was in possession even without title could, under conditions spelled out in the interdicts themselves, obtain one of these remedies if he lost control to someone else. The only real weakness of interdict protection was that you had to ask for them quickly. They remained available only for a short time, marked out in different ways. This, for example, is the interdict most commonly available for res mobiles. It is called utrubi, from its opening word:

Utrubi vestrum hic homo, quo de agitur, nec vi nec clam nec precario ab alterofuit, apud quem maiore parte huiusce annifuit, quo minus is eum ducat vim fieri veto. With whichever of you this slave, the subject matter of this claim, has been for the greater part of this past year (discounting time obtained from the other by violence, through secrecy or on sufferance), with his taking the slave I forbid all forceful interference.¹⁶

The interdict is complex. But you can see that it is only any use to someone who can tot up more non-excepted time than his opponent. So he would have to move fairly fast.

The interdictal protection of possession has nothing peculiarly to do with pignus. But once the pledge creditor had received delivery of the res he had this protection. Because the pledge-creditor was understood to be more than a mere ministerial holder (with unprotected detentio). He was a possessor. So suppose he was given a cow by way of pignus. If the cow wandered off to X, then he could still use the interdict so long as he had more months than X in the calculation. Moreover, he could (having once received possessio by delivery) suffer the pledger to take back the cow to hold precario because that excepted holding would not cancel or endanger his own ability to turn to the interdict. Not only was the �precarious’ holding excepted: the possessor, and here therefore the pledgee, was considered to continue to possess through his tenant at will. So, if the cow went off to a third party, the pledgee would still have the interdict.

So the ordinary interdicts not peculiar to pignus allowed two things. First, they gave the pledgee at least short-term protection against all comers. Second, they allowed the beginning of a more sophisticated practical arrangement under which if the pledgee only once received possessio he could then put the pledgor back into day-to-day control of the res.

The next step was to enable the creditor to be secure without the need to take possession at all until the debtor defaulted. This could not be done within the scope of the ordinary interdicts. During the Republic a special interdict was introduced, the interdictum Salvianum allowing a landlord to take possession of his farm tenant's equipment and other property. This was backed by an actio Serviana introduced to reach beyond the tenant to anyone else in possession of the tenant's movable property. These remedies were based on agreement that the movables should be security for rent, without more. That is, without any transfer of possession.

This development specifically between landlords and agricultural ten­ants was generalised in the Principate by the introduction of a modified actio Serviana, called actio quasi-Serviana. This could reach any res agreed to be pledged. It was an actio in rem available against anyone into whose hands the res which had been charged came. The action is no more than the manifestation in pleading of a substantive propos­ition which says that a base agreement to charge a res as security for some debt itself creates between the creditor and the res a special right in rem, a pledge-interest. It is not ownership. Analytically it aligns with other iura in re aliena, rights in rem owned by others. The wording of this claim went like this:

If it appears that Aulus Agerius agreed with Lucius Titius that the res in dispute should be a pledge for Aulus Agerius for money due,

and if that res was at the time of that agreement a belonging of Lucius Titius, and if the money due has not been paid and no other satisfaction for it has been accepted and it is not through Aulus Agerius that the money has not been paid,

then, unless under the discretion of the judge the res is restored to Aulus Agerius,

for as much as the res shall be worth, for so much money let the judge condemn Numerius Negidius [note that this is the first mention of the defendant] to Aulus Agerius; if it does not appear let him absolve.¹⁷

This action is still about something called �pignus' but its availability creates a phase before the specialised bailment which we looked at in the contractual relation between debtor and creditor. The duties of care, redelivery, repayment of superfluum and so on are relevant only to the phase after the creditor has obtained possession. The picture might have been kept clearer if the vocabulary had remained unified. But in fact the executory version without immediate delivery of possession came to be called �hypothec’ rather than pignus.

The creditor-res relationship can be recapitulated in this way. At first he had to have delivery in order to have any protected relationship at all. That would give him interdictal possessio. Then a special interdict (Salvianum) and the actio Serviana as extended protected him against all comers on the basis of agreement to charge the res in question. This allows us to say that in the Empire the creditor had a security interest in rem which allowed him to stay out of possession until default. Agreements conferring that interest were known as hypothecs.

The final aspect of this relationship is the power of sale. Up to the late Principate the basis of the power to sell was agreement between the parties. Without a term for such a power the pledgee could only hold the thing. By the end of the classical period the power to sell had begun to be implied. It was there unless expressly excluded. Justinian imposed more detailed regulations.

A Note on fiducia

Fiducia resembles a trust. Where property is conveyed by mancipatio or by in iure cessio the alienor can come to an agreement with the alienee that the transfer of ownership shall be for some limited purpose and that the alienee shall be under a duty to re-convey when that purpose is fulfilled. Gaius, in his discussion of usucapio, distinguishes between fiducia cum amico and fiducia cum creditore (G.2.60). �Trust with a friend’ is really a heavyweight form of deposit for safe-keeping, with the �depositee’ becoming owner of the thing. Similarly �trust with a cred­itor’ is a heavyweight real security, the creditor becoming owner with a promise to re-convey on payment of the debt. Both versions drive the alienor back to rights in personam enforced by a bonae fidei iudicium. Fiducia is not, but might easily have been, treated as a contract. One

CONTRACTS RE I55 explanation for that would have been that it became obsolete. But despite being attached to ancient formal conveyances it survived into the classical period, alongside the contracts re. The reason for its not being counted as a contract is probably that it presents itself as a secondary incident of mancipatio and in iure cessio. They are not con­templated as generating obligations; and fiducia, which does generate obligations, cannot conveniently be separated from them.