Article II: On the Order of Those to Whom Restitution Must Be Made

324. Principles. - 1. If the debtor can certainly satisfy all debts, no order is to be observed, provided that payment is made to each at the due time.

2. If he cannot pay all, but some must be without payment totally or partially, and therefore he makes a cession of goods, the order prescribed by law is to be observed, at least from the moment at which the cession is juridically declared:

a) Real debts are to be preferred to personal debts. Whence another's things: stolen, deposited, leased, lent, found, etc., if they still exist in themselves, must be restored whole to the owner, because the thing cries out for its owner, who has in it an absolute right in the thing; on the contrary, if the thing exists only in an equivalent.

b) Among personal debts, before all come privileged debts which from a special reason are to be preferred to the rest, for example, judicial and funeral expenses according to the condition of the deceased; the stipends of physicians and all expenses made in the last illness and the wages of servants (for a year); debts for food (for six months), and many others according to the order established by law.¹

¹ A thing sold, the price not having been paid, can be reclaimed within 8 days from delivery, and if it is not reclaimed, the price will be privileged (a. 2102; a. 20 § 5, Belgian law of 16 Dec. 1851).

c) Then come hypothecary debts, to which also there is given a right in the thing, but conditioned; they are to be paid according to the order of inscription, so that those come first which were inscribed first, which in our law is understood according to the day, in accordance with what is to be said in n. 609.

d) Afterward all merely chirographary and common debts, which are equal by law: in these, however, debts from an onerous title are to be paid before debts from a gratuitous title, if this can be done conveniently and without injury to a third party; likewise certain debts are to be preferred to uncertain debts; but not debts to the poor.

These things are to be understood thus: to those who come in the first place satisfaction must be made integrally before creditors of the following order receive anything; but to those who come in the same order, payment is to be made to each for a proportional part proportioned to the debt. Whence if payment is made in another order with notable damage to other creditors, restitution is owed to these who have been damaged.

3. Before a cession of goods has been made, another's things which cry out for their owner always excepted, per se no order is to be observed among creditors; nevertheless, privileged creditors, those prior in time, or those asking first, if they ask legitimately, can be preferred.

325. What things must be observed in conscience concerning the order of debts?

R. 1) After a cession of goods: the prescriptions of civil law, as determinative of the right of property, obligate in conscience even before the sentence of a judge.

2. Before cession, in many regions it is established by civil law that a payment made is invalid not only after the juridical declaration of cession, but also within a few days before this declaration, lest, namely, the debtor unjustly favor certain creditors before others. This also holds in conscience, at least after the sentence of a judge.

Thus according to the French and Belgian Code, payments made within ten days.

3. Outside the cases determined by law, a creditor who knows the debtor to be unequal to paying all can exact by legitimate means that which is owed to him: for laws profit the vigilant. Nor is the debtor prohibited from satisfying the creditor asking first, even if he foresees that others will suffer damage therefrom, provided that the fixed time at which the debt is to be paid is already present: for then the creditor has a strict right to the thing owed.

4. A debtor who, knowing himself to be unequal to paying all, without a just legal or moral cause offers to one an integral payment or a greater payment than that which the others equal in law will have, sins against charity, and more probably against justice, because he injures the right of the others that satisfaction be made to them at least for a proportional part. Besides, here there is not parity with the preceding case: a) because the creditor asking does not have to watch over the goods of the rest, but the debtor must watch that all his creditors receive the proportional part; b) if the matter is now public, the law ought not to favor some, because vigilance is now lacking.