Ranking of Fiscal Privileges
The ranking of general pledges arising in favour of the treasury would be determined by the prior tempore principle. The priority of both conventional and fiscal general pledges was generally determined with reference to the time at which they came into existence.
Nevertheless, if the priority of fiscal pledges would be determined by the first time a person became taxable for the tax concerned—by entry in a census register—fiscal pledges would already arise at an early stage and outrank subsequent pledges granted to private creditors. This is particularly relevant for so-called direct taxes (tributa). However, there is good evidence supporting the hypothesis that not only for so-called indirect taxes (vectigalia) but also for direct taxes the priority would be determined with reference to the time at which the specific tax debt for which the fiscal pledge was enforced actually fell due.[1174] [1175] [1176] To this it can be added that tributa would only be levied in the provinces, so that fiscal pledges securing these taxes could not have adversely affected secured finance transactions in important commercial and financial places such as Rome, Puteoli, and Ostia. Most importantly, if Keith Hopkins is right in that even in the late Empire tax pressure was low/1 fiscal general pledges may not have been seriously disruptive at all. In particular where the fiscal debt was relatively small and there was much surplus value in the charged property, even a second-ranking conventional pledge would have been an attractive option for private creditors. In the late classical period however, the secured position of a private creditor could sometimes have been adversely affected by fiscal pledges arising after the private pledge had been granted.Fiscal privileges subject to prior tempore principle
From a constitution by Caracalla it appears that where a private creditor accepted a pledge of a piece of land which was already pledged to the imperial treasury, the earlier fiscal pledge prevailed over the later conventional pledge.72 There is, therefore, no doubt that fiscal general pledges could also be invoked against private pledge creditors.
The ranking of the fiscal pledge would be determined by the priority principle, which equally applied to fiscal pledges and conventional pledges/3 There is an (undated) constitution by Caracalla which has been interpreted in modern literature as granting priority to fiscal claims over any claim by (secured and unsecured) private creditors, even claims secured by older rights of pledge/4Ant. C. 4.46.1. Venditionem ob tributorum cessationem factam revocari non oportet neque priore domino pretium offerente neque creditore eius iure hypothecae sive pignoris. potior est enim causa tributorum, quibus priore loco omnia cessantis obligata sunt.
A sale made on account of a failure to pay taxes must not be revoked, either when the previous owner offers the price or when his creditor does so using the right of a hypothec or a pledge. For the claim for the tributes, for which all the property of the person in default has been charged with priority, takes precedence.
The creditor to whom the owner had granted a right of pledge could not recover the property from the purchaser, who had purchased it at an execution sale organized by the treasury.[1177] [1178] [1179] [1180] [1181] The fiscal privilege prevailed over the conventional pledge, so that also the purchaser's position was stronger/6 But would this always have been the case? C. 4.46.1 does not say, as a general rule, that fiscal privileges always prevail over private security interests. If that had been the intention, the constitution could have sufficed with ‘potior est enim causa tributorum. The preference of the fiscal privilege is justified by the constitution's subordinate clause: ‘quibus priore loco omnia cessantis obligata sunt'.77 This indicates that a fiscal pledge only took preference over a conventional pledge of private creditors if the debtor's patrimony was already charged in favour of the treasury when the conventional pledge was granted. In other words, in accordance with the prior tempore principle, fiscal pledges were only preferred if they were older than conventional pledges/8 In Moschis's case (D. 49.14.47 pr.) it was held that the treasury did have a general right of pledge (or similar right of recourse) against a tax farmer, which was enforceable against subsequent purchasers of that debtor's property/9 The interests of third parties in possession (which would also include creditors with a possessory pledge) were taken into account, however, in the sense that the treasury should first proceed against the (heirs of the) debtor. Only when the fiscal debt could not be recovered from the debtor's inheritance could the treasury recover assets from third parties. Another example of a mitigation of the consequences of fiscal pledges for creditors with a right of pledge is recorded in Paul. D. 49.14.21. A creditor had to repay a sum of money to the treasury, which had been paid by a debtor of the treasury in order to discharge a debt secured by a right of pledge. Paul agrees with an opinion by Marcellus that if the treasury recovers what has been paid to a secured creditor, the right of pledge is not extinguished. The secured creditor is not directly safeguarded against the fiscal privilege but is protected in the sense that a vitiated payment of the secured debt does not extinguish his right of pledge.[1182] [1183] [1184] [1185] Prior tempore and fiscal debts But how did one apply the priority principle to fiscal pledges securing tax debts? Ant. C. 7.73.4 implies that a fiscal pledge will only come into existence if and when the debtor actually ‘owes something to the treasury' (‘ quam fisco aliquid debuit’). One possibility would be that the ranking of these fiscal pledges would be determined with reference to the time at which the tax debt actually fell due. This would certainly be the case for so-called indirect taxes (vectigalia), such as inheritance tax, manumission tax, and custom duties (portoria), which were raised on occasion/1 In particular in the case of so- called direct taxes (tributa), such as land tax (tributum soli) and poll tax (tributum capitis), this could have been different. In Scaev. D. 20.4.21 pr. the treasury's pledge was still regarded as being subject to the prior tempore principle, but this text concerns two ordinary conventional pledges on all the debtor's assets, the first one granted by him for his obligations as tutor vis-à-vis his pupil and the second one in order to secure a loan received by him from the treasury. In Scaev. D. 20.4.21.1 the lender's right of pledge even prevailed over the treasury's privilege (which may have been a tenant's pledge for the letting of the warehouse), although the fiscal privilege seems to have originated earlier. The priority of the lender may here be explained by the fact that he financed the purchase of the pledged marble slabs. In classical law ‘purchase money lenders' had priority over other secured creditors, irrespective of the time at which their security came into existence.[1186] In other respects too, fiscal pledges were treated in accordance with the same principles and rules governing conventional pledges. The tide changes In Marci. D. 42.5.34 the tide appears to have changed. The late classical jurist Marcianus holds that the treasury's preference prevails over the privilegium of someone who financed the construction, purchase or equipment of a ship. It is not exactly clear whether the treasury's privilege antedated the financier's privilege, but this may very well have been the case/[1189] For purchase money lenders an exception to the prior tempore principle would no longer be made: the treasury's privilege would rank ahead of the preferential right of someone who had financed the ship. In addition, in some other cases fiscal pledges prevailed over earlier rights of pledge.[1190] Where Scaev. D. 20.4.21 pr. still holds that the (conventional) general pledge which first came into existence prevailed over a more recent fiscal pledge, in Ulp. (Pap.) D. 49.14.28 the imperial treasury's preferential right of recourse over an after-acquired asset was granted preference over an anterior general pledge created by the debtor in favour of a private individual.[1191] [1192] [1193] Another exception to the applicability of the prior tempore principle to fiscal pledges was the statutory general pledge against the assets of a primipilus. This official had the duty of conveying goods received by way of tax in his province to the treasury for the benefit of the army. In a constitution from 287 ad Diocletian rules that ‘the public welfare must take precedence over private contracts'. Therefore, a woman can only claim property pledged to her for her dowry by a primipilus if it is determined that the treasury has been satisfied?0 The potential threat of fiscal privileges to the effectiveness of conventional rights of pledge is illustrated by texts witnessing agreements between debtors and creditors concerning the payment of taxes.91 The creditor who was liable to pay taxes, or who was confronted with an action for recovery of the pledged land instituted by the treasury, could not invoke the agreement with the debtor as a defence?2 10.5
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- Introduction
- Contents
- Introduction
- Terminology