§ II. On the Order of Restitution as to Creditors

787. • Here it is to be treated only of the case in which the debtor is unable to satisfy all his creditors; otherwise no order in paying debts must necessarily be observed.

But creditors are 1° some privileged, who from a privilege of positive law have the right of seeking their debt before others; 2° others hypothecary, who from the title of mortgage or of security founded in the goods of debtors have the right of obtaining payment immediately after privileged creditors; 3° others common, who enjoy no benefit of privilege or mortgage.

788. Principles. - I. Before all things, privileged debts must be paid. But privileged debts are known from the laws of each State. Of this kind among the rest are taxes to be paid to the State, County, Municipality.

II. In the second place satisfaction must be made to hypothecary creditors, the order of time being observed, according to Rule 54 of Law in the Sixth: He who is prior in time is stronger in right.

III. Finally, in the third place common debts must be paid, as having no right of preference.

Another's thing existing with the debtor, for example in deposit, lease, loan for use, or to be sold, must before all debts, however privileged, be restored to its owner; for that thing existing in species cries out for its owner. Likewise (by Roman law) a thing bought on credit, the price not having been paid, nor pledge of the price given.¹

789. Questions. - Query 1° Are debts from delict to be paid before debts from contract?

Resp. More probably negatively, but all are equally to be paid according to proportion, because by no right is it established that the former are to be preferred to the latter.²

Query 2° Must debts from an onerous title be paid before debts from a gratuitous title?

Resp. Affirmatively, because one who promises gratuitously always places the tacit condition: if I am able to furnish it conveniently; nor can he expend goods gratis with prejudice to a creditor from delict or from contract. - S. Alph.³

Query 3° Must poor creditors necessarily be preferred to rich creditors?

Resp. Negatively, unless they are in extreme or grave necessity, in which case the rich creditor is bound from charity to come to their aid. The reason is that the poor have no right of preference; and the right of the rich man is as strict as that of the poor man, since commutative justice does not attend to persons.⁴ Yet it is probable that they can be preferred.⁵

Query 4° Are creditors prior in time to be preferred to later ones?

Resp. It is controverted. The first opinion denies it, because the law assigns no preference among these debts; but from natural right all creditors are equal, since individuals have right only in the person of the debtor, which alone is obligated equally to individuals, but not in his goods. For if the goods of the debtor were obligated, the creditors would already have dominion of them, nor could the debtor sell them, which is false.

The second affirms, because one prior in time ought to be stronger also in right. - Thus Lugo, Salmant.; and S. Alph.¹ says this is more probable, although he holds the former opinion as probable.

790. • Query 5° Are certain creditors to be preferred by the debtor to uncertain or unknown ones?

Resp. It is probably disputed on each side. Those who affirm say that certain things are owed to the owners by natural right, uncertain things to the poor by positive right only; which the patrons of the other opinion deny, who contend that restitution must also be made to the poor according to proportion, since this is presumed to be the will of the creditors, that what cannot be restored to themselves be restored to the poor.²

Query 6° Is it licit to pay one who asks first, although he is later in time?

Resp. 1° Affirmatively, if he asks juridically, because the legitimate sentence of the judge confers the force of privilege upon the creditor. - Thus all. - S. Alph.³

Resp. 2° More probably affirmatively also if he asks outside judgment, because he has a personal action against the debtor, and by asking for the whole debt he pursues his own right; but the other creditors ought to bear the cost of their own negligence.⁴ - Since the law which moderated cession of goods in the whole Federation⁵ has now been abrogated, let each one now consult the Statutes of his own State concerning the time within which payment accepted by a creditor is invalidated, who could have known the unstable state of his debtor.

Query 7° Whether can a debtor, knowing his own state to be unstable, satisfy integrally even one not asking?

Resp. Negatively, because, since all creditors are equal in right, and none among them pursues his right, and therefore no one becomes stronger in asking through diligence, natural equity demands that integral restitution not be made to someone with prejudice to the others. - S. Alph.,⁶ Lessius, and others commonly. - And also this restitution, if it is made by a debtor who knows his own state to be unstable,

unstable, within which time before a requested cession of goods it may be invalidated, the general law having now been abrogated,¹ let each one learn from the Statutes of his own State.

Query 8° Is a creditor who in this case accepted payment bound to restitution toward the other creditors?

Resp. The opinion more serious to S. Alph.² affirms, because he has no right that he be paid integrally with detriment to the others; hence he is bound to satisfy them according to proportion.