Occult Compensation

Compensation.-Compensation is of two kinds, strict or legal and wide or extra-legal.

(a) In a strict sense, compensation is counterclaim, or the comparison of the debts of two persons to one another with a view to the cancellation of one or of both debts. This method of extinction of debt is allowed by law in order to reduce the amount and expenses of litigation. It is known as recoupment or offset when a defendant brings a cross-action against a plaintiff for non-fulfillment by the latter of some part of the contract in controversy, and as set-off when the defendant introduces the debt owed to him over against the debts sued for by the plaintiff. Counterclaim is just when no injury is done to one party (e.g., it would be unjust to keep the horse of Titus which you had borrowed, simply because Titus owed you a debt equal to the value of the horse, for the horse might be worth more to Titus); it is legal when recognized by the law (cfr. 1797, 1798).

(b) In a wide sense, compensation is the summary recovery by a creditor of the thing or the debt owed him by the debtor. The recovery is summary in the sense that the creditor does not go to law, or proceed according to law, but takes from the debtor either openly (open compensation) or secretly (occult compensation) what is owed.

Lawfulness of Occult Compensation.—(a) Ordinarily, or per se, it is not lawful; for it contains such evils as disregard of due process of law, scandal, infamy, public disturbance, the menace that the common good will be harmed by frequent abuse, the danger that the debtor will suffer loss through a second payment of the same debt, etc. Innocent XI condemned the proposition that domestic servants may practise occult compensation when they decide that their services are worth more than the salary they are receiving (Denzinger, n. 1187). (b) Exceptionally, or per accidens, it is lawful; for under certain conditions it offends neither public nor private welfare and it is necessary for the vindication of a right. Just as the natural law gives authority to occupy the goods of another in case of extreme need, so does it justify occult compensation in the special cases just mentioned.

Unlawful Occult Compensation and Restitution.—Does unlawful occult compensation oblige one to restitution?

(a) If the compensation is not only unlawful but also injurious (e.g., a servant takes what is not due her under the pretext of compensation), it is not rightly called compensation, but is really theft, and restitution is due. (b) If the compensation is unlawful but not injurious (e.g., a servant takes what is really due her, but she could have obtained it by asking for it), there is no theft or duty of restitution, since the property of another was not stolen.

Conditions Required by Commutative Justice for Occult Compensation.—(a) Before the Compensation.—There must be a strict right to the thing taken; for, if there is no such right, one takes what belongs to another against his will, or commits theft. Hence, if an employer has freely promised to make a gift to his servant and then fails to keep the promise, the servant has no right to take what was promised, since it is owed from liberality or fidelity or gratitude, but not from commutative justice. The same applies to a non-necessary heir who has been left nothing in a will, since he had no strict right. It is also unjust to take secret compensation for a debt that has not yet fallen due.

(b) During the Compensation.—No wrong must be done to the debtor (e.g., by taking more than is due, by taking an article which the debtor needs for earning his living) or to third parties (e.g., by taking goods deposited by them with the debtor). If possible, compensation should be made from goods of the same nature and kind as those that were taken or damaged, for the debtor should not be forced to part with things he wishes to retain and which are not necessary for the creditor’s satisfaction.

(c) After the Compensation.—One must avoid injury to the debtor (e.g., the keeping of a payment which is now not owed by him and which one can refuse or return to him) and to third parties (e.g., the casting of suspicion on a servant in order to divert attention from one’s act of occult compensation).

Must the strictness of the right be morally certain, or, in other words, must reasonable doubt of fact and of law be excluded?

(a) As to doubt of fact, it must be excluded; for in such doubt the presumption is with the possessor, or at least it is certainly wrong to perform an act that will probably be injurious to another person (see 713). Moreover, everyone can see that the public good would suffer greatly, if occult compensation were permissible when the existence of a debt is uncertain. Hence, if it is only probable that one sold goods to another person or that another person has not yet paid for services received by him, occult compensation must be avoided.

(b) As to pure doubt of law, the question is controverted. Some think that it also must be excluded, since the possessor should not be deprived of possession unless it is certain that there is a right to do this. Others think that occult compensation may be used in spite of a mere doubt of law, if the doubt concerns only the mode of making the compensation, or if the probability in favor of the creditor is so strong that a judge could conscientiously decide for him against the possessor. Examples of doubts of law here are three cases that are in dispute among authors, namely, whether one may take money as compensation for defamation that will not be repaired by restoration of fame (see 1802, 1803), whether one may deny reparation for defamation when one has been defamed by the other party and has not received restitution, whether one has rights to a legacy of which one is deprived on account of a mere informality in the document. In these cases the right is held by some authorities to be probable, but the decision in a particular instance should be made only on the advice of a learned and conscientious person, since the matter is very complicated and there is great danger of self-deception.

Some Cases in Which There Is a Strict Right to Compensation.—(a) Employees (i.e., servants, workingmen, artisans, officials, etc.) have a strict right when they are injured by the employer’s non-observance of the contract (e.g., the stipulated salary is not paid; unjust subtractions are made from the salary, as by fines for the inadvertent and infrequent breaking of tools, etc., about which there was no agreement in the contract; labors not contracted for are exacted), or when an unjust contract is imposed on them (e.g., they are induced by force or threats to accept less than a living wage; advantage is taken of their grave necessity to wring from them agreement to such a wage).

(b) Merchants have a strict right when a debt which they cannot collect is certainly owed them, or when they sold below the minimum just price, because forced to this unjustly, or because they made a mistake in charging. They may compensate themselves by diminishing weights or measurements.

(c) One has a right to compensation who has been condemned under a sentence manifestly unjust, because the law is certainly unjust or because the judge clearly gave a wrong decision in a matter of fact (e.g., he erroneously presumed that a debt had been contracted, or that it had not been paid).

Some Cases in Which There Is No Right to Compensation.—(a) Employees have no right to compensation for subtractions from their salary, if they culpably injure the property of their employer, or if they agreed to such subtractions; nor for the smallness of their wage, if they freely accepted it (e.g., if they regarded it as a favor to be employed, and the employer did not really need them), or if it is made up for by presents, board or lodging, opportunity for good tips, etc.; nor for unusual labors, if they hired themselves out for general service (unless they are asked to perform work of an entirely unforeseen kind, such as a very perilous mission), or if they undertook these labors freely without the knowledge or wish (express or tacit) of the employer.

(b) Merchants have no right to compensation for goods sold by them below the minimum just price, if they freely agreed to sell at that price.

Children and Employees and Compensation.—Some special questions arise for consideration in case of parents who employ their own children, and of employers who are forced to underpay on account of the dishonesty of their help.

(a) Children who work for their parents and who are entitled to a salary, by agreement or from the law, have the same rights as other employees, but injustice against them would be less frequent. In this country the father has a right to the services and wages of his unemancipated child, but the child becomes independent of the father when it reaches the age of majority or when the father relinquishes his right.

(b) Employees who are underpaid because the employer is cheated by his help have the right to occult compensation, if they are forced to take less than a living wage (1932); otherwise this is not permissible, unless it be certain that the employer is not unwilling that the honest employees receive more than their pay. In practice, on account of the great peril of injustice, it is advisable that such workers seek better pay through their organizations or else look for employment elsewhere.

Conditions Required by Legal Justice for Occult Compensation.—(a) Occult compensation must not be used if payment can easily be obtained through suit at law or agreement; for the order of law and the public welfare require that one should not have recourse to the extraordinary means of occult compensation if ordinary means will suffice and not cause notable difficulties. But as a rule it seems this obliges only under venial sin, since ordinarily the departure from normal procedure in this matter is not seriously detrimental to public morals or order; and it does not impose a duty of restitution, since he who takes only what belongs to him does not offend against commutative justice. Indeed, if it is certain that other means will be futile (e.g., because one has not sufficient evidence to win or because the decision would he biased) or harmful (e.g., because great dissensions will be aroused, or heavy expenses incurred in litigation), occult compensation is not even venially unlawful.

(b) Occult compensation, according to law, should not be used by a bailee, for he has a lien for his services and proper expenditures in caring for the object bailed, but not for any other debt the bailor may owe him (Bolles, Handy Law Book). This is obligatory at least for the external forum.

Some Conditions Required by Charity for Occult Compensation (see 1165, 1236, 1483).—(a) Charity towards the Debtor.—The creditor should see, when possible, that the debtor suffers no loss by occasion of the compensation. Hence, in order to spare the debtor the evils of a bad conscience in reference to the debt or of a second payment of the debt, the creditor should, if possible, inform the debtor that the debt is cancelled or that payment is not expected.

(b) Charity towards Third Parties.-The creditor should, if possible, prevent any trouble or loss to others that might be occasioned by the compensation, such as suspicion of theft that might fall on servants.

The Lawfulness of Open Compensation.—(a) If one’s property is being stolen or carried away, it is lawful to protect or recover it by force; for this is only just defense.

(b) If one’s property has already been carried away but is still in being and in a safe place, legal justice requires that one seek redress from the courts. But it does not seem a serious fault if one recovers goods by using moderate force, since the property is one’s own and the public manner of seizing it enables the law to take cognizance of the case. American law recognizes with certain restrictions the rights of recaption and of entry whereby a person takes possession without legal process of goods unlawfully taken or withheld from him (Robinson, Elementary Law, Sec.239, 240).

(c) If a debt owed to one is denied by the debtor, it is not lawful to take payment from him by force, since this is against the law and productive of scandal and disturbance, and moreover one is not the owner of the goods which one thus takes by force.

Notanda pro Confessariis.—(a) Ante factum, rarissime consulenda est occulta compensatio, tum quia ut plurimum illicita est (1928) utpote periculo injustitiae, scandali, perturbationis plena, tum quia lex civilis non solet eam ut remedium agnoscere sed potius ut furtum habet. Publice de occulta compensatione non expedit loqui, et praestat ut qui privatim de ea interrogentur, etiam datis conditionibus ad liceitatem necessariis, per modum tolerationis tantum annuant.

(b) Post factum, facilius in favorem utentis compensatione judicari potest, in ordine ad restitutionem, sed prudenter, et quasi evasive loquendum, ne praxis ita agendi ut per se et generaliter licita approbari videatur.