§ 1. ORDER OF CREDITORS FROM POSITIVE LAW

1001. The order of creditors varies according to the various kingdoms.

Before all, another's thing existing in the individual with the debtor must be returned to the owner. Cf. n. 995, 1.

As regards creditors, from modern Law the first place is obtained by privileged creditors, according to the order established by law; in the second place come the other hypothecary creditors; finally, in the third place, chirographary or common creditors, who enjoy no prerogative of right (cf. H. Ap., X, 109).

1002. I. Privileged creditors. By privilege here is understood the right which the quality of the credit so grants to a creditor, that this creditor is placed before the other creditors, even hypothecary ones. Privileges of this sort can be over movables, or over immovables, or over each at the same time, according as the creditor has precedence so that payment may first be made to him from the debtor's movable goods only, or from immovable goods, or at the same time from each. - Besides, privileges are general or special, according as they extend to all movables or immovables, or only to certain special ones.

Among privileged credits generally come judicial expenses, funeral expenses, medical expenses for the last illness, stipends of servants, debts for maintenance, wages of architects and workers for constructed buildings, etc. Let the particular law of each place be seen.⁰²

Note. The order among the privileged themselves is established not from priority of time, but from the quality of each credit, to which the law itself assigns its own place or degree of precedence.

1003. II. Hypothecary creditors. A hypothec is a real right which a creditor has in some immovable good, so that from it he can obtain payment if the debtor does not otherwise pay. A hypothec is either legal, or judicial, or conventional, according as it is constituted by law, by judgment, or by pact. But in Germany, only the conventional one has force.⁰³

A legal hypothec is held: 1. by a wife in the goods of the husband, for recovering the dowry; 2. by a minor or one interdicted in the goods of his guardian; 3. by the government, municipalities, and public institutes in the goods of their administrators, who are subject to rendering an account.

A judicial hypothec, from the decree of a judge, is established in favor of those who have obtained the case; if, for example, a judge condemns someone to repair certain damage, then by force of that sentence all the immovable goods of the condemned person are burdened by hypothec for repairing the damage.

A conventional hypothec is a solemn contract by which, the determined formalities being observed, a person habilitated for contracting obligates specially designated goods to the creditor, in assurance and payment of a determined debt. The goods of minors, interdicted persons, and absentees cannot be burdened by hypothec without the consent of the Council of the family or the sentence of a judge (cf. n. 1174).

From the new laws: 1. Hypothecary privilege has no force except from the day of inscription before the conservator of hypothecs. 2. No order is observed among those who are inscribed on the same day or under the same number; but each has a right for the pro rata part of the debt. But for others, who are inscribed on different days or numbers, the rule has force: "He who is prior in time is stronger in right."⁰⁴