Chapter IV. On Subsidiary Contracts

Subsidiary contracts are said to be those which are employed for the security of another contract, of which they are as it were the confirmation or seal. - Three are chiefly numbered, namely, suretyship, pledge, and mortgage. Something will be said briefly concerning each one.

Suretyship (bond, bail-bond, security) is a contract by which someone takes upon himself another's obligation, if the principal debtor does not pay. It is in the manner of suretyship when someone writes his own name on bills of exchange or on another's promissory note, so that he may receive money, legitimate interest having been deducted, as is done among our public banks. - Cf. Kenrick, tract. 11, n. 141, and the authors cited there.

Concerning suretyship these few things must be noted:

I. No one can be surety unless he has free administration of his goods.

II. The surety is bound toward the creditors concerning all obligations of the debtor, but only in his default or inability, and indeed when juridically proved.

III. The surety who pays for the debtor is subrogated to all the rights of the creditor, and therefore has recourse against the same debtor, so that from him he may reclaim whatever he was compelled to pay in his place.

IV. The obligation of the surety is transmitted to his heirs, because it is a real obligation, not a personal one.

Pledge (pawn, pledge) is a contract by which the debtor gives a movable thing to the creditor for the insurance of the credit. But sometimes by the name of pledge comes the very thing pledged.

Concerning pledge these things must be noted:

I. The debtor handing over a pledge ought 1st. to hand over to the creditor a suitable pledge; 2nd. to refund to the creditor the necessary expenses which were made for the preservation of the thing; 3rd. not to reclaim the pledge before he has paid the entire debt, unless the creditor abuses it.

II. The creditor receiving a pledge ought 1st. not to use the thing entrusted to him, unless by the consent of the debtor; 2nd. diligently to guard the pledge; otherwise he is bound for damage; 3rd. to compute the fruits received from the pledge toward the diminution of the debt, namely for preserving equality; 4th. not to sell the pledge by his own authority for obtaining payment, unless the debtor is in culpable delay and has first been warned. - Cf. St. Alphonsus, nn. 913 et seq. - Kent, Comment., vol. 2, part 5, lect. 40, nn. 577 et seq.

To pledge is joined the contract which is called antichresis. But antichresis is a species of pledge by which the debtor hands over an immovable thing for the use of the creditor until the debt is paid. - Cf. St. Alphonsus, n. 916.

To pledge is also joined that which among us is called a lien, which consists in this, that the legal possessor of some goods can detain them until satisfaction is made for the right which he has against their true owner. Cf. Kent, Comment., vol. 2, lect. 41, nn. 634 et seq.

Mortgage is a contract by which the debtor obliges some immovable thing to the creditor for the security of the debt: houses and estates are everywhere handed over thus. Wherefore mortgage differs from pledge and from antichresis; from pledge indeed, because the thing which is handed over in mortgage is immovable; but from antichresis, because the use is not handed over. Cf. St. Alphonsus, n. 913. - Kenrick, n. 140.

Concerning mortgage only these things must be said:

I. The contract of mortgage, the dispositions of positive law being observed, is wholly licit, as is established both because there is nothing in it which is repugnant to natural law, and because the practice and positive laws of almost all peoples admit it.

II. So great is the force of mortgage that, if the debtor has neglected to pay each year the legitimate increase and the principal at the appointed time, the creditor will be able in the forum of conscience to claim for himself possession of the mortgaged thing or to offer it for sale, yet with the order of judgment observed. - Cf. Kenrick, ibid.

Very akin to mortgage is the contract which among us is called bottomry, and which consists in this, that a ship is obligated for the money received: but it is called by such a name because a part of the ship, namely the bottom, is taken for the whole ship. - Cf. Kenrick, tract. 11, n. 140, with notes (1) and (2).