The consequences of non-redemption of the pledge

But was the creditor actually allowed to sell the pledge? In early Roman law the pledged property seems to have been forfeited if it was not redeemed in time (by way of payment of the underlying debt, for example).^[1183] In those days one did not yet distinguish between various types of real rights, and the position of the pledgee was conceived in terms of (part) ownership of the property.

¹⁶~ Forfeiture merely meant that the pledgee became fully and solely entitled to the thing. Of course, under these circumstances he was perfectly free to sell it. Once, however, the pledgee's position had begun to be conceptualized as ius in re aliena, the situation was no longer that straightforward. Ownership vested in the pledgor and it did, of course, not pass to the pledgee simply by virtue of the fact that the underlying debt had not been discharged, or that the pledgee/creditor had not otherwise been satisfied. Thus, the somewhat strange and hybrid situation could arise that the pledgee was entitled to keep the pledge indefinitely without, however, being able to use it as a means of obtaining satisfaction.²⁵⁸ In order to avoid this anomaly, the parties had to come to some arrangement regarding the consequences of non-redemption of the pledge as part of their conventio pignoris. Thus, for instance, they could agree on a conditional transfer of ownership on the basis of either sale²⁵⁹ or datio in solutum.²⁶⁰ If the debt remained undischarged, the pledgee was to be taken to have bought the pledge or to have received and accepted it in lieu of fulfilment.²⁶¹ Such clauses represent the contractual variant of the old forfeiture regime, and it is obvious that they are problematic and dangerous. If the pledge was valuable, the creditor would try to insist on their inclusion in the contract, and the debtor, hard pressed for money and overoptimistic as far as his ability to repay was concerned, was usually not in a position to resist these pressures.

The Roman lawyers, therefore, tried in various ways to mitigate the effect of these forfeiture clauses, in order to protect the pledgor;²⁶² in post-classical times, such clauses fell foul of Constantine's prohibition of leges commissoriae²⁶³ and were regarded as invalid.²⁶⁴ Alternatively, the conventio pignoris could contain a pactum de vendendo: the pledgee should be authorized to obtain satisfaction by selling the pledge.²⁶⁵ From the time of the later Republic this was what the parties regularly agreed upon;²⁶⁶ by the days of the Severan Emperors, the sale of pledges had become so common²⁶⁷ that, even

^25H "Bewahrungspfand": Kaser, (1976) 44 TR 253 sq.; idem, RPr I, p. 461, n. 11. A creditor, incidentally, who used the pledged property without the permission of the pledgor, committed theft (Gai. D. 47, 2, 55 pr.). Frequently, however, the parties agreed that the creditor keep the proceeds of the pledged property in lieu of interest; this was known as avjC\pr\aic (Marei. D. 20, 1, 11, 1). For details, sec Alfred Manigk, Gi aubig erb efriedi gütig durch Nutzung (1910); Kaser, (1979)45 SDHI8Q sqq.; Henryk Kupiszewski, "Antichrese und Nutzpfand in den Papyri", in: juris Professio, Festgabe fur Max Kaser (1986), pp. 133 sqq.; Honsell/Mayer-Maly/Selb, pp. 202 sqq.

²³⁵ Cf. e.g. Tryph. D. 20, 5, 12 pr.; Pap. vat. 9; Marei. D. 20, i, 16, 9.

²⁹³ Cf. C. 8, 13, 13; C. 4, 51, 4 (both Diocl. et Max.).

⁶¹ For details, see Frank Peters, "Der Erwerb des Pfandes durch den Pfandglaubiger im klassischen und im nachklassischen Recht", in: Studien im romischen Recht (1973), pp. 137 sqq.

²³² Cf. Ulp. D. 46, 3, 45 pr.; C. 18, 13, 1 (Scv. et Am.); C. 8, 34, 1 (Alex.); cf. Peters, Studien, op. cit., note 261, pp. 145 sqq., 156 sqq.

²³ CT 3, 2, 1; d. also C. 8, 34, 3.

²⁹¹ Peters, Studien, supra note 261, pp.

161 sqq. However, the pledgee could obtain rescission of the clause only if he was prepared to pay off his debt. This considerably impaired the protective effect of Constantine's provision. Cf. Levy, Obligationenrecht, p. 192. As far as modern law is concerned, see 1229 BGB: "An agreement made before the existence of the right to sell, by which the ownership of the thing falls to the pledgee or is transferred to him, in case he does not, or does not in one time, receive satisfaction, is void."

^6S Alberto Burdese, Lex commissoria e ius vendendi nella fiducia e ne! pignus (1949), pp. 131 sqq.; von Lubtow, Symbolae Taubenschlag, vol. Ill, pp. 321 sqq.; Frezza, Garanzie, vol. II, pp. 200 sqq.; Kaser, (1979) 47 TR 210 sqq. As far as the transfer of ownership is concerned, cf. Gai. II, 64; also Ulp. D. 13, 7, 4 and Ulp. D. 41, 1, 46.

²⁹⁹ Apart from that, the pledgor (regularly?) appears to have undertaken not to alienate the object that had been given as a pledge. Cf. Marei. D. 20, 5, 7, 2 and, for details, Schlichting, op. cit., note 257, pp. 9 sqq., 27 sqq.; Kaser, (1976) 44 TR 233 sqq., 282 sqq.; Honsell/Mayer-Maly/Selb, p. 202.

²⁹⁷ Cf. e.g. C. 4, 24, 4 ("pactum vulgare"). without any special agreement to that effect, the authority to sell was taken to be part of the contractual arrangement of the parties.²⁶⁸ If the purchase price exceeded the amount of the secured debt, it was now the pledgor who was generally taken to be entitled to such a surplus.²⁶⁴ The proceeds of the sale had taken the place of the pledge and afforded satisfaction to the extent that the pledgee deserved to be satisfied: up to the amount of the secured debt. Appreciation of the fact that the pledgee was not necessarily entitled to the full value of the pledge entailed another change of perspective: if necessary, the pledgee had to be forced to do what was now no longer only in his own but also in the pledgor's interest, and it could therefore no longer be left to his discretion to decide whether he wanted to sell the property or not.

Our oldest testimony for this change of perspective is contained in D. 13, 7, 6 pr., where Atilicinus is reported to have advocated, albeit only "ex causa" and not as a general rule, that "cogendum creditorem esse ad vendendum...: quid enim si multo minus sit quod debeatur et hodie pluris venire possit pignus quam postea?"²⁷⁰ Once the pledgee/creditor had obtained the purchase price, the debt was regarded as discharged. Complications could, however, arise, if the pledge had not belonged to the pledgor. Here, the pledgee was not able to transfer ownership to the purchaser and was therefore still exposed to liability for eviction. Under these circumstances, as Tryphoninus puts it, "in suspense haberi liberationem".²⁷¹ In order to avoid this, the pledgee usually requested the pledgor to authorize him to sell the pledge subject to a pactum de non praestanda evictione:²⁷² the purchaser of the pledge was then asked to renounce his rights arising from the contract of sale in case of legal defects; this, of course, he did only against a reasonable reduction of the purchase price, which, in turn, reduced the pledgor's chances of receiving a substantial superfluum.

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Source: Zimmermann R.. The Law of Obligations. Roman Foundations of the Civilian Tradition. Juta & Co, Ltd,1992. — 1241 p.. 1992

The consequences of non-redemption of the pledge

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