Complete Works. Lysander Spooner
to retain and use it for a time agreed upon.
3. That this quantum of value, not being designated, or set apart by the contract, from any other value, that the debtor may have in his hands, is, in reality, merged in the value of all the property, that the debtor, or bailee, has in his hands.
4. That this value is finally to be converted into some particular form, (generally that of money,) for delivery to the creditor, or bailor.
5. That the debtor, during the bailment, while bestowing his care and labor upon the whole property in his hands, in which the value bailed to him is merged, is allowed to take his necessary subsistence out of the mass; by reason of which it may sometimes happen, in cases of sickness, misfortune, or accident, that the value bailed may itself be diminished, or consumed.
6. The debtor, or bailee, is allowed to traffic with the whole property in his hands, and of course with the value bailed, which is merged in that property.
In this respect, however, the bailment of debt does not differ, in principle, from bailments to agents, factors, and commission merchants, who are authorized to traffic with, and exchange or sell the property intrusted to them. Where this is done, the same right of property, which the bailor had in the original commodity bailed, attaches to the equivalent which the bailee receives for it. And it is the same in the bailment of debt. The right of property, which the creditor has in the original quantum of value bailed to the debtor, follows that value, and clings to it, through all the forms and changes to which the labor and traffic of the debtor may subject it.
Some of these points will be further discussed and explained in the next chapter.
That a contract of debt is a mere contract of bailment, as has now been described—that is, a mere bailment, by the creditor to the debtor, of a quantum of value sold by the latter to the former, and to be finally delivered in the shape of money, but in the mean time to remain merged in the general property of the debtor—seems to be too nearly self-evident to render a more elaborate argument, at this point, necessary. It will, however, be further discussed in the next chapter.
If debt be but a bailment, the value bailed is at the risk of the owner, (that is, of the creditor,) from the time he buys and pays for it, and leaves it in the hands of the seller, or debtor, until the time agreed on for its delivery to himself. If it be lost during this time, without any fault or culpable neglect on the part of the bailee, or debtor, the loss falls on the owner, or creditor. All the obligations of the owner or debtor are fulfilled, when he has used such care and diligence, in the preservation of the value bailed, as the law requires of other bailees, and has delivered to the creditor, or owner, at the time agreed upon, the value bailed, or such part thereof, if any, as may then be remaining in his hands.
If such be not the natural limit to the obligation of the contract of debt, then there is no natural limit to it in any case, short of the absolute delivery of the amount mentioned; a limit, that requires a debtor to make good any loss that may befall the property of the creditor in his hands, whether the loss be occasioned by his fault, or not; and whether he ever be able to make good the loss, or not; a limit, which, in many cases, condemns the debtor and his family to perpetual poverty, and a liability to perpetual oppression from the creditor, for a misfortune, or accident, to which property is always liable, and for which the debtor is not morally responsible; a limit very nearly allied, both in its legal and moral character, as well as in its practical effects, to that, which, in former times, required the debtor and his family to be sold into slavery for the satisfaction of a debt, which the debtor could not otherwise pay.11
If such be not the natural limit to the legal obligation of debt—that is, if debts be naturally binding beyond the debtor’s means of payment when the debts become due, then all insolvent and bankrupt laws are palpable violations of the true and natural obligation of debts, and, consequently, of the rights of creditors; such violations as no government has the moral right, (however it may have a constitutional authority,) to perpetrate.
On the other hand, if such be the natural limit to the legal obligation of debt, then we have no need of insolvent or bankrupt laws at all, for every contract of debt involves, within itself, the only honest bankrupt law, that the case admits of.
If such be the natural limit to the obligation of debt, then there is, as a general rule, no moral, any more than legal obligation to pay, beyond the means of the debtor at the time the debt becomes due; and any subsequent promise to pay, is gratuitous and void.12
Taking it for granted, for the remainder of this chapter, that it has now been shown that a debtor is a mere bailee of the creditor, let us see some of the consequences, that follow from that proposition.
1. As a contract of debt does not designate the specific value, to which it attaches in the hands of the debtor, it cannot be said to attach to any one part of the value in his hands more than to another. It therefore attaches to all. And if it attaches to all, it necessarily operates as a lien upon all that the debtor has in his hands, at the time the debt is contracted; also upon all that may become indistinguishably mixed with that, prior to its delivery or payment to the creditor.13 This being the fact, each debt of course becomes a lien in the order in which it is contracted relatively to the others.14
2. A second creditor, by selling value to a debtor, and giving him credit for it, would hold a lien for his debt upon the specific value so sold to him, so long as it should be kept separate and clearly distinguishable from the value on which the prior creditor had a lien; because the first creditor could claim a lien only on that value, which was in the debtor’s hands, and to which his contract attached, at the time it was entered into; and on such other value, as, (by labor done on the property, or otherwise,) might become indistinguishably mixed with that, prior to its delivery, or payment to him, (the creditor.)
If B mingle his property, as grain, wine, or money, for instance, indistinguishably with property of the same kind belonging to A, without the knowledge of A, or without any agreement, express or implied, that, in case of a diminution of the mass by accident or otherwise, there shall be a division of the remainder according to their original proportions respectively, the loss of any diminution that may befall the mass, falls upon B. On this principle, if a second creditor should suffer the value, which he should sell to a debtor, and on which he had a lien in the hands of the debtor, to become indistinguishably mixed with value in the same debtor’s hands, on which a prior creditor had a lien, and there were no agreement between the two creditors, for a division in case of loss, the first creditor would be entitled to take his whole debt out of the mass before the second creditor should receive anything; for it could not be presumed, without an express agreement, that a prior creditor would authorize his debtor to give a second creditor an equal lien with himself on the whole property in the debtor’s hands, even though the second creditor should pay an equal amount of value into the mass with that paid by the first creditor; because the first creditor might suppose the debtor incompetent to manage the two loans so advantageously, or so beneficially for his (the creditor’s) security, as he would have managed one only, and might therefore not have consented to the mixture of the two loans on the footing of equal liens. The first creditor might also think it necessary for his security, that the whole labor of the debtor should be bestowed on the first loan; and might therefore have objected to the mixture of another loan with it, to take an equal lien with his own. And especially it could not be supposed, without an express agreement to that effect, that a creditor would have such confidence in the judgment of the debtor, as to be willing that he should take capital from others, at his (the debtor’s) own estimate of its value, mix it with that received from himself, and place these subsequent creditors on the same footing with himself, as to their rights in the mass. The first creditor would wish an opportunity to judge for himself, instead of leaving it wholly with the debtor to judge, whether the value contributed to the mass by the succeeding creditors, was such as that his security would not be weakened by allowing them to share that security equally with himself, in proportion to their debts.