Last Episode
* Showed tradition definition is "exacting profit from a mutuum"
* Three key terms: exacting, profit and mutuum
* Exacting - obligating or requiring in the agreement
* Profit - anything over the principle, increment, addition, superabundance
* Here focus on mutuum
What is the mutuum?
* Great deal of disagreement
* Loan for consumption - Belloc and McCall
* Neither specifies mutuum, but takes this as the sort of loan where usury arises
* Loan of fungibles
* Fungibles as goods that can be returned in kind
* Loan of consumptibles
* Loan of things that are consumed in use
* Sometimes authors will put consumed in "first use"
* Some author equate fungible with consumption, which is obviously wrong
* This seems somewhat reasonable
* Roman Law - Justinian Institutes (Book III, Title XIV https://www.gutenberg.org/files/5983/5983-h/5983-h.htm) "…loan of such things as are estimated by weight, number, or measure, for instance, wine, oil, corn, coined money, copper, silver, or gold: things in which we transfer our property on condition that the receiver shall transfer to us, at a future time, not the same things, but other things of the same kind and quality…"
* Mutuum is often translated as a "loan for consumption"
* Aquinas: focuses on consumption in the Summa Theologica
* Mutuum = Personally Secured Loan
* First Point
* Outside of discussions of usury this is entirely uncontroversial
* However, when I've suggested this to people, I've received "How dare you defined that!"
* Personally vs. Asset secured debts
* Roman Law
* In law of obligations there are two sorts of actions or rights: in rem and in personam
* An action in rem is a right over a thing, which potentially involves everyone, since for example my ownership is a right that I can exercises against everyone else
* An action in persona is a right over a person. This is in every contract because every contract is made with a person. It allows me to pursue the person for a failure of performance in the contract.
* A mutuum gives rise to a condictio which is an action in persona and this is the only action. That is the only right or action the lender has is against the person of the borrower and this for the return of the principal
* St. Ambrose in De Tobia
* Discusses people that have to sell themselves and their families into slavery
* People who are reduced to destitution and commit suicide over usury
* Dr. Reyerson - Medieval practice in Montepellier
* "Mutuum loans were generally guaranteed by the borrower with the obligation of person and goods." https://archive.org/details/businessbankingf0000reye/page/63/mode/1up?view=theater
* Defaulting debtors were sent to debtors prison until the whole was paid off
* Fr. Patrick Cleary
* Mentions that the mutuum involves a "personal claim"
* "In a contract of loan [mutuum] then the lender is not owner of what is bought with the money lent, he has merely a personal claim on the debtor for the amount…" (page 82) https://www.google.com/books/edition/The_Church_and_Usury/WiMtAQAAMAAJ?hl=en&gbpv=1&bsq=personal
* St. Thomas Aquinas
* ST II-II, q. 78, a. 2, ad. 5: "Hence the borrower holds the money at his own risk and is bound to pay it all back…" https://aquinas.cc/la/en/~ST.II-II.Q78.A2.Rep5
* That is whatever happens to the money he is responsible for the return
* Comm on Sent Bk III, Dist 37, a. 6, ad. 4 "However, I ought not try to sell him his own industry, just as neither ought I to have less because of his own foolishness." https://aquinas.cc/la/en/~Sent.III.D37.A6.C.4
* That is even if the borrower loses it all through his foolishness, he is still obligated to make a return in the same amount to the lender.
* ST I-II, q. 105, a. 2, ad. 4: "Fourth, the Law prescribed that debts should cease together after the lapse of seven years. For it was probable that those who could conveniently pay their debts, would do so before the seventh year, and would not defraud the lender without cause. But if they were altogether insolvent, there was the same reason for remitting the debt from love for them, as there was for renewing the loan on account of their need." https://aquinas.cc/la/en/~ST.I-II.Q105.A2.Rep4
* That is if the borrower is wholly insolvent he is still obligated to make a repayment. However, the lender should forgive the debt from charity, not that the obligation is dissolved from the insolvency itself.
* Magisterium
* As noted, usury arises specifically in the mutuum. Hence, wherein usury arises a mutuum is present. Thus if in discussing other contracts as usurious, we are talking about a mutuum present in some manner or other. We can then infer the nature of the mutuum from the way that usurious contracts are talked about
* Regiminis Universalis - Callistus III (1455)
* Discusses census grounded in real estates where the fruits, rents or profits arise from those goods
* Someone was refusing to pay the rents, claiming that they were usurious
* Very likely infallible
* Discussing an issue of faith and morals
* Invokes apostolic authority
* "But the buyers, on the other hand, even though the said goods, houses, lands, fields, possessions, and inheritances might by the passage of time be reduced to utter destruction and desolation, would not be empowered to recover even in respect of the price paid."
* Licit census is full secured by the property, there is no personal guarantee
* Cum Onus - St. Pius V (1568)
* "We by this our constitution decree, that rent or an annuity, can by no means be created, or constituted, unless in an immoveable thing, or a thing that may be considered as immoveable, of its own nature fruitful, and that may be nominally designated by certain limits."
* That is a licit census must be grounded in some real property
* "Let the pacts providing that the remiss debtor of the rent be liable to pay the loss, expenses, or salaries of the creditor, to lose the thing, or any part of the thing, subject to the rent, or to forfeit any right arising to him from that contract, or otherwise, or to incur any penalty, be entirely null and void."
* "But when the income is to be extinguished, by delivering the price, we wish that this be intimated two months beforehand, by the person, to whom the price ought to be delivered; and that, subsequent to the notice, the price can be recovered, however, within a year, from him, even against his will : and when he is not willing to demand the price within the year, we wish, however, that the rent can be extinguished at any time — the notice, however, being given, as said before, and notwithstanding the things that are mentioned above; and we command that the same course be observed, even when the notice had been often and often given, and the effect never produced."
* Confirms what was implied by Callistus, contracts that require the census seller to guarantee the rents are usurious
* Destabalis Avartia - Sixtus V
* "We do in this our perpetual decree, reprobate and condemn all contracts, pacts and conventions whatever, to be celebrated in future, whereby it will be provided on the part of the persons putting into company money, animals, or any other things whatever, that if, even by mere accidence, any injury, loss, or damage, follow, the very principal, or capital be always safe and restored in full by the managing partner ; or that he guarantee to pay yearly, or monthly during the existence of the company a certain sum or quantity."
* "…not even, whether they stipulate for a definite or indefinite profit, to obligate by pact or promise the managing partner, to restore in full and entire the capital or principal, if by casual accidence it be lost or destroyed."
* "If any man do in future rashly presume to contract under the foregoing pacts or conditions ; or under the veil of such conventions, pacts, or contracts formed in the name of a company heretofore existing, do presume to take proceedings for the recovery of the said capital or principal, or the value or price thereof, after it be casually lost or perished, in the whole or in part, or of an annual or monthly specified sum or quantity, We decree that they, and every one of them do, ipso facto, incur the penalties decreed and promulgated by the Sacred Canons and General Councils against notorious usurers, and that they could and ought to be proceeded against as against notorious ururers with the law and with other suitable remedies."
