74. On Mutuum

1. Ascanius gives money as a loan for consumption with interest of eight, nine, ten per cent, according as the borrowers flourish less or more in resources and industry.

2. Gaspar gives money as a loan for consumption, requiring by a prior agreement, for interest, ten per cent. For he says that the law permits even conventional interest besides legal interest, and leaves it to be defined by the free consent of the contracting parties.

3. Ernestus gives money as a loan for consumption, constantly requiring for interest ten per cent; because, he says, this is the practice of the place, almost commonly observed even by honest men.

4. Iovianus, having an occasion of gaining from trading twenty per cent, asks a large sum of money from Iovinus, spontaneously offering to him ten per cent, that he may obtain it more easily. Iovinus accepts, saying: to one knowing and willing, no injury is done.

5. Cornelius, altogether inculpably, lost an immense sum of money received as a loan for consumption. Hence he wishes neither to restore the capital nor to pay the legal interest owed by agreement; saying, as to the capital, that the thing perishing without any theological fault of his perished for its owner; but as to the interest, that since the thing brought no fruits, he owes nothing to the owner of the capital; for a thing fructifies for its owner.

6. "Whether it is lawful for a Religious Community, which receives a loan for consumption with an increment of four or five per cent, to lend those same monies received as a loan for consumption to some other person with an increment of ten per cent?"

Q. What as to the cases?

R. Ascanius acts illicitly and unjustly. For from the fact that the borrower flourishes more or less in resources and industry, since this thing is altogether the borrower's and depends only on him, it does not furnish a title to the lender for receiving a greater increment. Hence Benedict XIV, Encycl. Letter Vix pervenit, says: "Nor indeed, to purge the stain of usury, can any aid be summoned either from the fact that that profit is not excessive and too much, but moderate; not great, but small; or from the fact that he from whom that profit is demanded on account of the loan alone exists not poor but rich; nor that he is not going to leave idle the sum given to him as a loan, but is going to spend it most usefully for enlarging his fortunes, or buying new estates, or carrying on profitable business." Wherefore Ascanius is held to restitution. Benedict XIV ib.

Gaspar, by title of a mere agreement completed, cannot require ten per cent, an interest exceeding by double the legal interest. The reason is that the law indeed permits conventional interest which exceeds legal interest, but that agreement, in order to be able to have force, must be otherwise honest and just. Such it certainly will not be when there would be no other title for that excess except the agreement itself made, as in the case; for then that agreement would in reality be without a just title, and therefore unjust. On the contrary, an agreement of a greater increment to be paid would be lawful, if the lender truly suffered extraordinary detriment, the compensation of which he can legitimately require. Wherefore Gaspar, suffering no special damage and nevertheless requiring by pact a greater increment, is held to restitution. I. M. 1109; Scav. l. 2. n. 443, 569.

Ernestus does not seem to be disturbed, if that is truly the custom of the place. For the legal tax can be determined by written law and by custom. Just as written law, constituting a tax, defines the compensation commonly to be made, with attention to the common conditions of emergent damage, of ceasing profit, of risk of capital, and of the common good to be promoted by easy trading and commerce, so also common practice and custom can define and determine this same thing. Enchir. Moral. 1095; I. M. 1095, 1103, 1109; G. 893 seqq.

If Iovinus required that greater interest for the greater profit of Iovianus in his trading, he would act altogether illicitly and unjustly, and would be held to restitution, as was said in the first case. But since Iovianus himself, altogether spontaneously and not asked, offers that greater increment, it does not appear why it cannot be accepted. For in the case there is truly a free and full donation of the borrower. G. 905; Scav. l. 2. n. 571; Kenrick.

Cornelius is altogether held to the restitution of the capital, and to paying legal interest, according to the agreement made, as is supposed. For the money lent by force of the mutuum passed into his ownership, and did not remain in the ownership of the lender. Hence consequently the thing perished for him, and for him also ceased every emolument to be received on the occasion of the money lent and by his personal industry. Hence there remains entire, by force of the previous contract of mutuum, the obligation of restoring the capital, and, by force of the previous agreement, the obligation of paying legal interest. G. 891, 892; I. M. 1080, 1095.

"It is not lawful for Communities of Regulars to give to others, at a greater agreed usury, money received with the burden of paying four or five on each hundred." S. O. 4 and 18 March 1784; Collectan. S. C. de P. F. n. 2121. ad 7; M. E. v. 7. p. 2. p. 258.

7. Fridericus in France received as a loan for consumption one hundred gold scutata, to be restored in the same species. Since the extrinsic value of gold has increased, so that one hundred gold lire are worth one hundred twenty lire of paper money, Fridericus indeed wishes to restore to the one seeking them one hundred gold scutata, in the same species of money, but only eighty, not one hundred.

Q. Does Fridericus act rightly?

R. Affirmatively. For, apart from a special agreement, when money has been given as a loan for consumption, it suffices that the same extrinsic value be restored, and indeed in the same species of coin, as in the case, even if the coin which was handed over has meanwhile increased or decreased. For, where the question concerns counted money, its extrinsic value is attended to under the aspect of money, not its intrinsic value under the aspect of gold or silver. For the object of the contract in money is not gold and silver, but its value insofar as it is money.

Except, unless it has been agreed that restitution ought to be made in the same species and quantity, if the question concerns silver and gold money, namely that as many silver or gold coins in number, and of the same species, be restored as were lent, whether their value has increased or decreased. - But if the monies, at the time of restitution, cannot be found, or are no longer in commerce, then there is paid, in current money, what corresponds to the value which they obtained at the time when they were lent. - I. M. 1082, 1084; C. G. 1895; Gousset in h. a.

8. Titius, when the Italian Government had not yet prescribed the compulsory use of paper money, gave to Sempronius as a loan for consumption one hundred gold coins, under the condition that as many be restored in their species, every other bronze coin and every other representative of money being excluded.

This the borrower promised, now for then renouncing the benefit of the law, if anything should have been established concerning this matter. But if the law does not admit renunciation, the borrower obligates himself to compensate every damage, either by paying gold money, or by adding over and above the paper money as much as is required at the time of restitution, that they may be equated with the gold according to the difference. Moreover the law of 1 May 1866 appeared, by which it is established: National banknotes shall be given and received as sounding money according to their nominal value, in paying within the State ... notwithstanding any contrary disposition of law or conventional pact.

Q. 1. Does the simple condition added in the chirograph, concerning restitution to be made in no other way than in sounding money, lose its force even in the forum of conscience through that subsequent civil law invalidating it? - 2. And insofar as affirmatively, can Sempronius in this case, that is, on account of the special conditions stipulated as above, safely conform himself even in the internal forum to this civil law so useful to himself, when this law, even in these circumstances, would have supported him in the external forum?

R. "To the 1st. Regularly, affirmatively, unless peculiar circumstances stand in the way, concerning which recourse will have to be made in particular cases, with the same diligently set forth. - To the 2nd. Attention being paid to the quality of the pacts, and also attention being paid to the tenor of the law of which there is question in the case, negatively." S. Poenit. 21 Jan. 1873, Acta S. Sed. v. 7. p. 209 seqq. Namely, just as the law abrogates any contrary preceding law, not a future one, so also it abrogates preceding pacts, not future ones. But it by no means abrogates preceding pacts also by which it had been explicitly agreed that the debtor would not use the benefit of the law, if some future law should abrogate pacts of this sort concerning money to be returned in its proper species. Therefore the law abrogates only pacts made simply before that law concerning restitution to be made in real coins.

9. Rufus in Italy gave to Rufinus as a loan for consumption the sum of 10,000 lire, by a legitimate agreement, that the loan would last for ten years, and that throughout this whole time interest would be paid to him of twelve per cent, whether because that sum was being given in gold money, or because all others more or less commonly require the same interest. But when the decade was completed, the same sum of 10,000 lire was altogether to be restored according to the same species and quantity of money, express renunciation having been made of any benefit of law concerning a mode of restitution of this sort. Rufinus indeed hoped that he would gain thirty and more per cent. But after six months Rufus, knowing that the commerce of Rufinus was not succeeding well, wishing to secure for himself the sum of money lent and unwilling meanwhile altogether to lose hope of that rich interest, urgently simulates a business of commerce and asks from Rufinus as a loan for consumption the sum of 10,000 lire, to be restored as soon as possible, in turn meanwhile promising him legal interest of five per cent. Thus Rufus, recovering his capital, still continued to receive a profit of seven per cent. But Rufinus, using the good occasion, by a written agreement, gave the aforesaid sum as a loan for consumption to Rufus. But Rufinus, considering the matter, afterward refused to pay the constituted interest, saying that a legal compensation had been made between both loans for consumption. And since a year had not yet passed from the loan received, he adds that he owes no interest. But since the intrinsic value of that gold money had meanwhile been diminished by ten per cent, new coins of that species having been struck, Rufinus gains one thousand lire by the mere change of monies; and he is sufficiently content with this notable and easy profit.

Q. 1. Could Rufus lawfully have made the first agreement concerning interest of twelve per cent on account of the reasons alleged? - 2. Could Rufus lawfully have made the other agreement by which he himself would still receive interest of seven per cent? - 3. Can Rufinus lawfully exempt himself from every obligation of the loan received, and receive the profit of one thousand lire?

R. To the 1st. That the aforesaid sum was given in gold money certainly is not a reason for requiring more than double the legal interest. If the value of the gold money is greater, that excess can indeed be computed in the very sum given as a loan, and the legal interest which is required can be increased proportionately. Hence, if the excess of the gold money had been 15 or 20 per 100, then Rufus in reality would not have required twelve, but ten per cent in reality by reason of the loan. But the better reason for requiring the aforesaid interest is the common practice and custom in that place, which, since it is common to all, certainly is a practice observed also by men of timorous conscience. S. Poenit. 18 Apr. 1889. Hence, such a legitimate custom of the place being supposed, Rufus could lawfully make the first agreement.

To the 2nd. Since Rufinus, from the case, altogether spontaneously consented to less interest to be received from the money lent, and another contract of mutuum truly intervened, as is elicited from the very objection made by Rufinus to Rufus, it does not appear why, the prior agreement legitimately made persevering, Rufus cannot still receive seven per cent.

To the 3rd. Rufinus illicitly exempts himself from every obligation of the loan. For legal compensation has no place in the case. For each debt is not equal on both sides as to the interest to be paid, nor can it be immediately exacted and restored as to the capital, since in the first agreement the contract must last for a decade; in the other agreement the money lent is to be restored as soon as possible. If he does not wish to lack the advantage of his money, let him indeed seek its restitution as soon as possible. Yet he cannot exact it before at least one year has elapsed, since meanwhile he consented that legal interest be paid before its restitution, which is owed only after a year. But only after five years can he himself, from the Italian Code, restore the capital, since its interest exceeds legal interest. But as to the one thousand lire which Rufinus thinks he gains from the diminished intrinsic value of the gold coin, the profit first would still be uncertain; for the matter depends on the value which the aforesaid coin will have then, when Rufinus restores the money lent to Rufus after the decade has elapsed, or at least after the five-year period, unless Rufus should beforehand consent to the rescission of the contract. Then Rufinus will be able to receive no profit from it. For it is established by the law itself that, if gold or silver monies have been given as a loan, an agreement having been made of restitution in the same species and quantity, if their intrinsic value is altered, an equivalent to the intrinsic value of the same coins at the time of the loan must be restored. - C. I. 1286, 1287, 1822, 1826, 1832.

But the condition of Rufinus is better from the French Code. For first, Rufinus, from art. 3 of the law of 3 Sept. 1807, cannot be obligated to pay conventional interest exceeding legal interest. Likewise nothing special is determined from this Code as to a loan for consumption of gold or silver coin. The borrower is held only for the numerical sum designated in the contract, and in the species current at the time of payment. C. G. 1290, 1291, 1895, 1907.

The condition of Rufinus is also better from the Spanish Code. For from this Code also nothing is determined as to a loan for consumption of gold or silver coin, except that restitution is to be made in the agreed current species. C. H. 1170, 1195, 1196, 1754, 1755.

From the Austrian Code, conventional interest cannot exceed the limits constituted by the law itself. Yet by the law of 14 June 1868, the limits predefined in a mutuum for conventional interest of this sort were abrogated. But as to the change of monies it is established that changes of coins, by force of law, without alteration of their intrinsic value, are for the advantage or damage of the lender. For he receives the same coins in species, and the same number of them which he gave. But if the intrinsic value is altered, payment is to be made according to the intrinsic value which the coin had at the time of the money lent. C. A. 988, 989, 994, 1438, 1439; I. M. 1082, 1104, 1471.

10. Augustus, a son under paternal power, more than once received money as a loan for consumption with immense usury from a Jewish man, yet with faith first given to him that he would never use the privilege of age, and would restore all things after the death of his father. Augustus spent the aforesaid money in games and a freer life. Meanwhile the father of Augustus dies, and Augustus, having returned to good fruit and having become more prudent, refuses to restore anything to the Jew, opposing in judgment the privilege of the age in which he had received the loan.

Q. What as to the case?

R. Augustus uses his right: for he can use the favor of the law. Nor can the faith given be opposed; otherwise the aforesaid law would in practice be altogether frustrated, since all would require such a promise. This law is consigned in Roman Law, lib. 14, Cod. tit. 6, de Senatus Consulto Macedoniano: "It pleases that no action and petition be given to anyone who had given money as a loan to a son under paternal power, even after the death of his parent in whose power he had been." Where it must be noted that "although by the words of this Senate decree only the civil obligation seems to be removed ... nevertheless more probably the natural obligation also is removed; so that in the forum of conscience he is never held to restore such a loan, if he wishes to use this privilege ... And this the law established, both as a punishment of those who would lend to such persons, and so that every occasion of wicked machination against parents by sons would be cut off. Whence also the son cannot renounce this privilege, because it is more in favor of the parents than of himself ... Yet notice that there are many cases in which the son is held: 1. If he has military goods, or quasi-military goods. 2. If he was publicly thought to be of his own right. 3. If he received as a loan not money, but another thing, such as wheat, wine, and the like; for the law speaks only of a monetary loan, unless he did this in fraud of the law, so that from it he might collect money. 4. If the money was turned to the utility of the father. 5. If the father ought to have supplied it according to right reason, as if the son, absent for the sake of studies, receives a necessary loan so that he may live, so that he may buy necessary books, so that he may pay the teaching fees ... 6. If the son swore that he would pay ... because an oath made in favor of another must always be observed, when it can be observed without sin ... Yet relaxation of this oath can be sought from the prelate, because it was opposed in fraud of the law, and otherwise the law would easily be rendered useless; and it being obtained, he will be able not to pay." Lessius l. 2. c. 20. d. 2.

The same in the case is established from the Italian Code 1307: "No one can claim the restitution of what he paid to a minor, interdicted person, or incapacitated person, or to a married woman, by force of an obligation which has remained void, unless he proves that what was paid was turned to their advantage." The same is had in Cod. Gall. 1312; Cod. Hisp. 1304; Cod. Austr. 152. Wherefore Augustus does not seem to be disturbed, if, using the benefit of the law, he invokes the sentence of the judge, that the obligation contracted may be rescinded. I. M. 565, 953, 970, 1085; S. Alph. 757. Cf. G. 771, 772.

11. Celina, a woman bound to a husband, received money as a loan for consumption, offering a mortgage over part of her dowry, entirely without the knowledge of her husband, to extinguish debts contracted by a freer life. But the children, when both parents were dead, obtain from the judge a sentence by which they are exempted from every payment.

12. Sophia, having paraphernal goods, sought money as a loan for consumption to pay debts common to herself and her husband. This payment having been made, her husband and children were able to continue commerce to the great advantage of the whole family.

13. Generosa, having a husband gravely ill and oppressed by debt, without the consent of her husband sought money as a loan for consumption, to pay his debts, that she might provide for the honor of the family. But she did not obtain it except with a special obligation undertaken, and this only on the condition that she herself would restore it, either from the goods of her husband himself, if they sufficed, or also from her own, even from dotal goods, even after the death of her husband, if the husband should die of that illness, as in fact happened after a few months.

Q. What as to the cases?

R. The children of Celina can legitimately use the benefit of the law, lest they pay; since they suffer no advantage, but truly damage, from the aforesaid loan. I. M. 953; G. 774.

Neither Sophia, nor her husband, nor her children can invoke rescission of the obligation contracted. For the loan truly turned to their advantage. I. M. 678, 679, 953; G. 873.

Generosa is altogether held to restore the money received as a loan. The reason is that she herself truly perceived emolument from the loan, and because she obligated herself to restitution by a special contract. I. M. 953; G. 755. - C. I. 134; C. G. 217; I. M. 677, 678, 679; G. 1009.

14. Marius the usurer dies, who acquired many riches by illicit and unjust usuries. Two of his sons, Marinus and Marianus, succeed as heirs; one of whom indeed consents that restitution of the usuries be made, but according to the proportional part of the inheritance which he received; the other, however, wishes to restore nothing. Must Marinus himself alone restore the whole, when Marianus is unwilling to restore?

Q. What as to the case?

R. The heirs of the usurer are indeed held to restore the usuries according to the resources of the inheritance, if the usurer himself does not restore. The reason is that the heirs, taken collectively, represent the deceased in the goods received by him. But are the heirs of the usurer, and the heirs of any other debtor, held in solidum, so that, one failing, the other must pay the whole debt? Many affirm, because individuals represent the person of the testator and succeed to his rights and burdens. Many also, on the contrary, deny with sufficient probability, because individuals represent the person of the deceased only partially, and therefore are held only partially. But except: 1. Unless all the heirs cooperated in the delict of the deceased. 2. Unless the usurious thing itself, or whatever must be restored, exists with one. For then the heir who has it must return it whole to its owner. Yet he has recourse against the other co-heirs, that he may have equal compensation, lest he alone sustain the burdens of the inheritance. 3. Unless the goods of the inheritance were mortgaged. For a mortgage is not divided, but is in any part of the mortgaged goods. Wherefore it confers on the creditor the faculty of prosecuting his right wherever he can; and consequently, one heir failing, the other is held for the whole. But this one again has the right of demanding equal compensation from the co-heirs. Scav. l. 2. n. 437.

But sons, heirs of usurers, are held to restore things illicitly acquired by their fathers from usuries to the certain owners, if they are certain; but if they are uncertain, restitution must be made to pious causes or to the poor. Collectan. S. C. de P. F. n. 2111.