History of Bankruptcy – Part 4

Written by: Robert DeMarco
In the Beginning – The Roman Era
In the early days of the Roman Empire individual creditors were left to pursue their remedies by such means as the law or practice of the community might permit. Such laws were often quite severe in their application. For example, under the Roman law of the Twelve Tables, Table III, Execution of Judgment (c. 450 B.C.), creditors might, as a last resort, cut the debtors body into pieces, each of them taking his proportionate share (de debitore in partes secando). Johnson, Allan Chester, et al., Ancient Roman Statutes, 10 (Clyde Pharr ed., 1961). While Sir William Blackstone, in commenting upon this law, appears to cast some doubt upon its implementation, there can be no doubt that early Roman law offered little solace for the debtor. Blackstone, Commentaries, Bk. II, ch. xxxi, p. 472; see also, Ancient Roman Statutes, 14 n.25. In fact, prior to 326 B.C. the early Romans continued to enslave or kill debtors who defaulted upon their obligations. Brunstad, G. Eric, Jr., Bankruptcy and the Problems of Economic Futility: A theory on the Unique Role of Bankruptcy Law, 55 Bus. Law. 499, 514 n. 49 (2000).
During second century B.C., creditors obtained the right of venditio bonorum. Venditio bonorum permitted the creditor to petition the praetor (elected local magistrate) for an order authorizing the creditor to take possession of the debtor’s property in order to secure it from dissipation (rei servandae causa). Bankruptcy and the Problems of Economic Futility, 55 Bus. Law. 499, 514 n. 52. A public proclamation would then issue advising all of the debtor’s other creditors of the seizure. After adequate notice, a second praetorian order would issue to those creditors responding to the proclamation summoning them to a meeting the purpose of which was to elect a magister bonorum to supervise the estate’s liquidation. Id. The venditio bonorum brought about the infamia (shame or disgrace) of the debtor, did not discharge the debtor from any deficiency still owing after the sale of the estate, and did not prohibit personal execution (personal arrest). Id.
The harshness of the venditio bonorum was addressed by Augustus (ruler of Rome 31 B.C. – 14 A.D.) in the lex Iulia de bonis cedendis of 17 A.D.. The lex Iulia de bonis cedendis established the more forgiving procedure of cessio bonorum (the surrender of goods). Bankruptcy and the Problems of Economic Futility, 55 Bus. Law. 499, 514. Cessio bonorum permitted the insolvent debtor to voluntarily surrender his property to his creditors in satisfaction (in whole or in part) of his debts. Story, Commentaries, section 1108. The creditors sold the goods in satisfaction, pro tanto, of their claims. Bankruptcy and the Problems of Economic Futility, 55 Bus. Law. 499, 514 n. 50. The surrender of the goods did not procure the debtor a discharge, leaving the debtor liable for any deficiency. Id. The debtor was, however, permitted to retain certain necessities and was not subject to personal execution or infamia. Id.
Unfortunately, all good things must come to an end. Rome could not and would not last forever. The fall of the Roman Empire occurred over a period of several hundred years and marks the beginning of the medieval period (approximately 5th through 15th centuries A.D.). As the Roman Empire gradually weakened, the Germanic tribes from the Scandinavian regions began to conquer. These Germanic tribes were uneducated, subject to tribal rule and barbarous in nature. They lived mainly by hunting and some crude farming and their laws were based upon tribal custom and superstition.
The Germanic invasions destroyed most commerce. Money almost went completely out of use. By the ninth century, most of western Europe was carved into large manor estates ruled by landlords and worked by poor peasants. Each manor was autonomous and supported almost entirely by the production of its inhabitants.
DATED: July 4, 2013
1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11