Article I. On the Nature of the Contract of Mutuum

849. The word mutuum, according to the force of the name, signifies that something from mine becomes yours ¹. Sometimes it is taken for the very thing handed over in mutuum; but sometimes, and more often, for the contract by which that thing is handed over to another for use. Here it is accepted in this latter sense.

¹ Donellus observes (De Iur. Civ., book 14, c. 1, n. 6) that mutuum is so called not simply because from mine yours comes to be, as is stated in L. 2, De reb. cred.; otherwise a donation and a condition or exchange made for the sake of permutation would be mutuum; but because, conversely, this also is done, that what was yours, which you had accepted, again becomes mine. For there is in this word a reciprocation of mine and yours, that is, this force: that mine becomes yours, and in turn yours mine.

Mutuum is usually defined as a contract by which a thing consumable by first use is handed over to another, with the obligation of restoring a similar thing at a fixed time, and in the same species and goodness. Things consumable by first use are considered to be all those which by their nature are destroyed and consumed in supplying human needs, such as bread, grain, wine, oil, salt, fruits, etc. According to the laws, moreover, such things are considered to be whatever consist in weight, number, or measure (L. 2 ff. De rebus creditis).

Hence mutuum differs from commodatum, lease, and deposit: 1. because in mutuum the thing must be consumable by first use, otherwise in the others; 2. because the thing is to be returned not in its individuality, but only in the same species; 3. because in mutuum the dominion of the thing is transferred ², and not in the others; 4. wherefore in mutuum the thing perishes for the receiver, but in the others for the giver.

² This transfer of dominion is not to be understood absolutely, but in a certain circumscribed sense. For dominion is not transferred in mutuum in the same way as in donation, but rather as in a thing credited; for mutuum is related to credit as species to genus. Two things are therefore to be reconciled here, namely both that money given in mutuum becomes the receiver's by right (Inst. 2, Quibus modis re contrahitur obligatio, and L. 13, ff. De rebus creditis), so that by no means could money given in mutuum be considered from the side of the borrower truly to be another's debt; and on the other hand that from the side of the lender it is a thing credited, of which he can dispose by right of dominion according to his pleasure, by donating, bequeathing, selling, etc. You have an example of a similar thing in dotal goods. For if these consist in money and are handed over to the husband, he indeed becomes so much the owner of them that he may consume them at will; nevertheless the wife is not therefore judged to lose all dominion of her dowry. For in these cases the dominion of property in the monies is lost, insofar as they are a mass of metal or a sign of value; but by no means over the value itself, the mere use of which is ceded. Hence, as often as some sum is handed over in mutuum, or for use - for from this comes the name of usury - it is by no means necessary that a metallic mass be given to another, as is clear from Law 15, ff. De rebus creditis; but, if such is the case, with the common trust favoring, and deferring to it, the placing of the name on letters of exchange which are handed over to another suffices, just as now the handing over of paper money suffices as a sign of value, for whose use it matters little whether or not it is converted into metallic money.

The reason, moreover, why in strict and proper mutuum the dominion of the thing is said to be transferred is that, since the borrowed thing is consumable by first use, such use would not be lawful without dominion itself. Hence all expenses and dangers of the thing handed over fall to the borrower, as to the true owner.

850. Principles. I. There is a strict precept of lending with respect to the poor who are situated in extreme necessity, and who will have that from which they may restore. The reason is that there is present a strict obligation of charity to help a neighbor placed in that necessity, according to the rules and principles established where charity toward one's neighbor is treated.

More often the precept of mutuum is absent with respect to the poor, because they are not presumed to have that from which they can return an equivalent. But then the precept of giving some alms to them is urgent. I say some; because you are not bound to provide as much in alms as the poor man was asking for by mutuum. For there are also others who can and are bound to help.

II. There is a precept of granting a mutuum even to the rich, who because of by a particular circumstance are in very great need of it; but not to those rich persons who ask the same thing in order to increase their wealth. The first reason is that the precept of charity binds us toward all men, even the rich, and requires that we gladly furnish this which in a like case we would wish to be furnished to ourselves, at least if without inconvenience ³ we can assist them by a mutuum. But the second reason is that rich persons of this kind are constituted in no necessity, and consequently no precept of charity urges toward them.

³ Before the confessor urges this obligation of lending, he certainly must weigh that the precept of charity does not bind with grave inconvenience; but grave inconvenience is very rarely absent from this office of lending, and very grave troubles generally remain for those who wish to recover credit according to their right. "He will defraud him," says the Holy Spirit, Ecclus. 29, "of his money, and he will possess him as an enemy for nothing. And with reproaches and curses he will repay him, and for honor and benefit he will repay him with insult." Hence he concludes: "Many have not lent, not because of wickedness, but because they feared to be defrauded for nothing."

851. Questions. QUESTION 1. What are the obligations of the lender and of the borrower?

I answer to the first. The obligations of the lender are the following:

1. He is bound to warn the borrower concerning a defect of the thing handed over, if there is one; likewise concerning imminent damage, ceasing profit, or danger of the principal, unless he wishes to lend gratis ⁴. Otherwise the borrower does not consent, and sustains an injury, which the lender will be bound to repair.

⁴ That is, unless he wishes to remit that which, under the title of emerging damage, ceasing profit, etc., with the gratuity of the mutuum preserved, he could justly exact. He is considered to have remitted these things, and he would exact them by injury unless he had forewarned, because, unless pacts concerning these things are first established, the borrower will deservedly deny that he would have consented to them; or certainly he can with full right object that liberty of consenting or not consenting had been taken away from him.

2. He is bound not to ask back the thing before some time to be defined by the judgment of prudent men, with the circumstances and the end for which the thing was given in mutuum considered. Yet he is bound to receive the thing, if it is brought before that time, because the time was granted in favor of the borrower ⁵.

⁵ Perhaps you will say better: when the time was granted in the mere favor of the borrower. For it is not repugnant that the loan can also be made in favor of the lender. It can happen besides that a premature restitution of the mutuum yields, at least in part, to the loss of the profit which the lender had given up on account of that loan.

3. He is bound, of itself, not to receive more than the borrowed thing was worth when it was given in mutuum; because mutuum of itself is a gratuitous contract in this sense, that it imposes no other burden on the borrower than that he return in species, at the due time, that which he received ⁶. St. Lig., n. 755.

⁶ This reason presents no difficulty if money is in question; for since the whole consists in value, certainly value is to be considered in restitution. But if the matter of the mutuum consists in other things, difficulties will now meet you, concerning which the Author says some things in the response to Question 2. Meanwhile it helps to have before one's eyes what is provided in Roman law (L. 3 ff. De rebus creditis): "When we have given something in mutuum, even if we have not stipulated that something equally good be returned to us, it is not lawful for the debtor to return a worse thing which is of the same kind: for example, new wine for old; for in contracting, what is being done is to be held as stipulated; but what is understood to be done is that payment be made of the same kind and the same goodness as that which was given."

I answer to the second. Concerning the obligations of the borrower:

1. However the borrowed thing perhaps perishes, the borrower is not freed until the lender has received his own, either by himself or through another designated by him. The reason is that the debt is not concerning the thing in its individuality, but in species, or concerning value, if money was handed over in mutuum.

2. He must return the thing at the established time, and in the same physical species, measure, number, and weight. But concerning money, which is considered to perish only morally, it suffices, unless it has been agreed that the same species of money must be returned, that it be restored according to the same value; because in money attention is paid more to value than to species. Indeed several deny that money is a thing consumable by first use when it is handed over in mutuum to rich persons or merchants for carrying on commerce; hence they also deny that from this there is a mutuum properly so called. It is otherwise, however, in other things.

852. QUESTION 2. Can you receive the borrowed thing in the same measure and quantity, if at the time of the mutuum its price increases? Can you ask for more if it decreases?

I answer 1. If, when the thing is handed over in mutuum, there is equal doubt on each side whether at the time of restitution the thing will be worth more or less, it is lawful to agree that, with the same goodness and measure preserved, it must be returned at its time, even if its price has greatly increased. The reason is that, since there was equal danger on each side, equality is already preserved by that very fact. St. Lig., n. 782.

I answer 2. The aforesaid pact is not lawful of itself, if it is certain, or much more probable, that at the time of payment the value will be increased. The reason is that thus equality is not preserved, but more is exacted than is given at the time of the mutuum. Hence if a measure of wheat is now worth three francs, and will be worth four at the time of restitution, it is not lawful to agree that the same amount be paid. Except, however, unless you had determined to keep the thing until the time of the increased price; because then more is exacted by reason of ceasing profit. Lacroix, n. 910 and following; St. Lig., n. 782, etc.

I answer 3. If you foresee a diminution of value or price, you can ask for, and the borrower must pay, as much as the thing was worth when it was handed over in mutuum; because in reality you do not exact more than you gave. St. Lig., ibid.; Reuter, etc. ⁷.

⁷ Pertinent to the present question is what is found thus in L. 22 ff. De rebus creditis: "Wine which had been given in mutuum was sought through a judge. It was asked at what time the valuation should be made: whether when it had been given, or when issue had been joined, or when the matter was judged. Sabinus answered, if it had been said at what time it should be returned, as much as it was then worth; if not, as much as it was worth when it was sought. I asked what place's price ought to be followed. He answered, if it had been agreed that it should be returned in a certain place, as much as it was worth in that place; if it had not been said, as much as it was worth where it was sought."