Property Rights in Debt and Contract

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Joshua King Ingalls

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Twentieth Century, April 12, 1894.

This subject is being discussed in the TWENTIETH CENTURY. A few general reflections on enforcing collection of debt are here submitted. Each organized society, government, commonwealth or association will doubtless in the future continue to protect contract and rights of property in things; but necessarily with increased and more fully defined limitations. These will be prescribed in proportion as principles of equity, equal freedom and the great law of utility (the greater good, or lesser evil), become understood and applied.

It is not longer possible in enlightened or in really civilized nations to enforce the claim of property in the person other than oneself. The barbaric fiction of contract under which negro slavery was maintained in this country for two centuries, despite our Declaration of Independence and national Constitution, that negroes were persons from whom “service was due” exists no longer. Under the ancient Greek and Roman law the creditor had power of life and death over the defaulting debtor, and over his family and descendants. However desirable the enforcement of such laws may now seem in the opinion of some who think “a contract is a contract,” notwithstanding the unequal relation of the contracting parties, such practice has been relegated to pre medieval history by our social and industrial evolution, and so is “past praying for.’ The tendency in all civilized society is to the abolition of “imprisonment for debt,” Yet it is difficult to see how the forcible collection of debt can be made effectual without endangering the personal liberty and even life of the debtor, and loss of home to family and children.

Now if government, society or comradeship is bound to enforce contracts, it must in justice be confined to such contracts as are proved to be equitable and consistent with the common good. Gambling debts are no longer legally enforced, save in a few countries, like Turkey or Mexico, where the aim is to make slaves or peons. Contracts, where the animus as well as ‘operation, is to enslave the social unit, or disrupt the social stricture, of whatever kind, can have no valid claim for defendment under any national rule.

I should have a poor opinion of philosophical An. arch indeed, if it should propose to enforce such barbarities under the pretense of protecting property rights in debts or other things. If a man were held up by highwaymen, and to save his life or some esteemed treasure, should give them his promissory note, and when out of duress should voluntarily pay it, comrades might not deem it necessary to interfere. But in case he refused to pay it, would they aid the highwaymen to collect it by force, simply because the note was proper in form, and the circumstances in making not to be inquired into? Yet are not existing contracts often made under conditions just as incompatible with equal freedom? We need not instance these contracts, which are made to capture, wreck and destroy corporate property by trade conspiracies.

Would I justify theft? By no means. There is no necessary relation between theft and the repudiation of a debt. And by no legal casuistry can a failure to pay one be converted into a tort, much less a larceny, since failure is not inconsistent with the strictest honesty, as our periodic panics often demonstrate. Contract values often shrink one-half or more in single season. Neither debtor nor government can make good the loss.

But really what has society, governments or juries to do with maintaining the valves of property once exchanged? A buys a horse of B and pays him a hundred dollars in a promissory note. B has the same opportunity to ascertain the value of the note that A has to ascertain the value of the horse. Where no ‘fraud or misrepresentation has been employed, why should A or B call on C, D and the rest of the societary alphabet to keep good the value of the note or of the horse? The one may depreciate as well as the other, or become worthless altogether.

Is not the question one of utility, rather? Under what rule will the incurring of profitless debts and their unavoidable or purposed repudiation, the evils requiring correction, be reduced to a minimum? That is really the only practical question which affects the general weal. Undoubtedly by leaving the individual free to fix the value of his own credit, keeping it at par by prompt payment, or reducing it to zero by neglect, unwise and uncollectible debts would vastly diminish, and that would prove the best security possible for the straight business creditor, and the best protection for the necessitous debtor. Legal enforcement tends to increase both the formation and repudiation of speculative indebtedness, as all business experience shows. The public good requires that all civil interference in the matter should be withdrawn. Equity or equal freedom cannot be invoked, where the relations of contracting parties are unequal, or where the purpose of either has been to obtain an unequal advantage, or defeat the social aim.

Even while our laws for collecting debts continue, we may rightly object to having them enforced under usurious contracts. Neither equity nor utility have the least consideration if the value rendered by the creditor is returned to him in installments every ten or twelve years, and still the original claim remains undiminished to the end of time. Laws are not the cause of usury or of other trade vices; they provide only the legal power by which these vices are made promotive of ruin and impoverishment to the unwary and helpless victims of covetous, shrewd and unscrupulous Shylocks. Repeal might not eradicate wholly the vice of contracting debts impossible of equitable discharge, but it would take from such transactions the social authority and encouragement they now thrive under, and greatly reduce the extent of their mischievous operation in creating individual dependence, involuntary idleness and social demoralization.

  • Joshua King Ingalls, “Property Rights in Debt and Contract,” The Twentieth Century 12, no. 15 (April 12, 1894): 8-9.