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Al-Majallah al-Ahkam al-‘Adaliyyah
Chapter 4: Fundamental Rules Relating to a Pledge.
Section 1: General.
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It is a fundamental rule that the pledgee has the right of retaining possession
of the pledge until the redemption thereof. In the event of the death of
the pledgor, the pledgee has a prior right over other creditors and may
obtain payment of the debt from the pledge.
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The pledge does not extinguish the right to claim the debt. The pledgee
after taking possession of the pledge preserves intact his right to demand
payment from the pledgor.
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Upon part payment of the debt there is no necessity to return a portion
of the pledge equivalent to such part payment, the pledgee having a right
to retain the entire pledge until the whole debt is repaid. When two things
have been pledged, however, each one in respect to a specified portion
of the debt, and the sum relating to one such specified portion has been
repaid, the pledgor may claim the return of such thing only.
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The owner of borrowed property which has been pledged may call upon the
pledgor to redeem the pledge and return it to him. Should the borrower
of such property be unable to repay his debt by reason of lack of funds,
the person lending such property may himself pay the debt and thus redeem
the property pledged.
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In the event of the death of either the pledgor or the pledgee, the pledge
remains intact.
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Upon the death of the pledgor, his heirs of age stand in his stead. They
must redeem the pledge by payment of the debt from the estate of the deceased
person. If the heirs are minors, however, or if, being of age, they are
absent, that is to say, they are elsewhere in the course of a long journey,
the guardian of such heirs may sell the pledge subject to the permission
of the pledgee, and repay the debt from the sum realised.
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The lender of property which has been given as security for a debt may
not claim such property from the pledgee until the debt in respect to which
it has been given as security has been repaid, and this whether the pledgor
or the borrowed property be alive or has died before the redemption of
the pledge.
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In the event of the death in a state of bankruptcy of a person who has
pledged borrowed property, such borrowed property continues as a pledge
in the possession of the pledgee and cannot be sold without the consent
of the lender. Should the lender of the pledge seek to repay the debt by
means of the sale of the pledge, such pledge shall be sold independently
of the consent of the pledgee, provided the value thereof is sufficient
to meet the debt, however, such pledge may not be sold without the consent
of the pledgee.
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In the event of the death of the lender of a pledge and of his debts being
greater than his estate, the pledgor shall be called upon personally to
pay his debt and to redeem the pledge which he has borrowed. Should he
be unable to do so, however, by reason of lack of means, the borrowed property
continues as a pledge in the possession of the pledgee. The heirs of the
lender of the pledge may redeem such pledge by repaying the debt. In the
event of the creditors of the lender of the pledge claiming the sale of
such pledge, the pledge, if the value thereof is sufficient to repay the
debt, shall be sold regardless of the consent of the pledgee. If it is
insufficient to repay the debt, such pledge may be sold with the consent
of the pledgee.
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Upon the death of the pledgee, the pledge devolves upon his heirs.
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Should a pledgor give a pledge in respect to debts due to two persons,
and repay the debt of one of them, such pledgor may not demand the return
of half of the pledge, having no right to redeem the pledge until he has
repaid in full the debt due to both creditors.
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A person taking a pledge from two debtors may retain such pledge until
the debt of both has been paid in full.
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In the event of a pledgor destroying or damaging the pledge, he must make
good such destruction or damage. Should a pledgee destroy or damage the
pledge, a sum corresponding to the amount of such destruction or damage
shall be deducted from the debt.
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In the event of a third person destroying the pledge, such person shall
make good the value thereof as on the day it was destroyed. The sum in
question shall be held as a pledge by the pledgee.
Section 2: Rights of the Pledgor and Pledgee Over
the Pledge.
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A pledge by either pledgor or pledgee of the original pledge to some third
person is null and void, unless the permission of either the pledgor or
pledgee has been obtained.
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In the event of a pledge of the original pledge being made by the pledgor
to some third person with the permission of the pledgee, the second pledge
stands in the place of the first pledge, which becomes null and void.
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In the event of a pledge of the original pledge being made by the pledgee,
with the permission of the pledgor, the first pledge becomes null and void,
and the second pledge is valid, being in the nature of a pledge made of
a borrowed object.
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In the event of the pledgee selling the pledge without the permission of
the pledgor, the pledgor may either adopt or cancel such sale.
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In the event of the pledgor selling the pledge without the permission of
the pledgee, such sale is invalid and the pledgee may retain possession
of the pledge. If the debt is repaid, however, such sale is valid. Moreover,
if the pledgee adopts such sale it is valid, the sale acting as a release
of the pledge, the debt being unaffected. The price realised by the sale
becomes the pledge of the thing sold. Should the pledgee not agree, however,
the purchaser may either wait until the pledge has been redeemed, or apply
to the Court for an order cancelling the sale.
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Provided permission is mutually given, both the pledgor and the pledgee
may lend the pledge to a third person. Either of them may afterwards restore
it to a state of pledge.
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The pledgee may lend the pledge to the pledgor. If he does so and the pledgor
dies, the pledgee has a right of preference over other creditors of the
pledgor in respect to the pledge.
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The pledgee may not make use of the pledge without the permission of the
pledgor. The pledgee, however, may use the pledge with the permission of
the pledgor and may take the produce thereof, such as fruit and milk. In
such case there is no reduction of the debt is consideration thereof.
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The pledgee, upon removing to another place may take the pledge with him,
provided the road is safe.
Section 3: Deposit of the Pledge with a Bailee.
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Possession by a bailee is equivalent to possession by the pledgee. That
is to say, should the pledgor and pledgee agree to deposit the pledge with
some person in whom they have confidence, and such person agrees to take
possession thereof, the pledge becomes irrevocable. The bailee then stands
in the place of the pledgee.
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In cases where at the time of the conclusion of the contract it has been
agreed that the pledgee shall take possession of the pledge, the pledgor
and the pledgee may buy mutual consent deposit the pledge with a bailee.
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The bailee may not give the pledge to either the pledgor or the pledgee
during the continuance of the debt without the consent of the other. Should
he do so, the return thereof may be demanded. Should the pledge be destroyed
before it is returned, the bailee must make good the value thereof.
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In the event of the death of the bailee, the pledge may, subject to the
consent of the two contracting parties, be deposited with some other bailee,
and in the event of their failing to agree, the pledge shall be deposited
with a bailee appointed by the Court.
Section 4: Sale of the Pledge.
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Neither the pledgor nor the pledgee may sell the pledge without the consent
of the other.
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Should the pledgor refuse to make payment when the debt falls due, he shall
be directed by the Court to sell the pledge and pay the debt. Should he
still persist in his refusal, the pledge shall be sold by the Court and
the debt repaid.
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Should the pledgor be absent and should it be uncertain whether he is alive
or dead, the pledgee may apply to the Court for an order for the sale of
the pledge and the satisfaction of the debt from the proceeds.
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If there is good ground for believing that the pledge is likely to deteriorate,
the pledgee may apply to the Court for an order directing him to sell the
pledge and he thereupon holds the proceeds of the sale as the pledge. Should
the pledgee sell the pledge without having obtained an order from the Court,
he becomes responsible therefor. Thus, if there is good ground for believing
that the ripe fruit and vegetables of an orchard and garden which may have
been pledged are likely to perish, they may be sold by order of the Court.
Should the pledgee, however, sell them on his own initiative, he is liable
to make good any loss which may be incurred thereby.
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The pledgor may validly appoint the pledgee or the bailee, or some third
person his agent for the sale of the pledge when the debt falls due for
payment. Thereafter revoke the power of such agent, nor can he be removed
in the event of the death of either the pledgor or the pledgee.
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An agent for all sale of a pledge shall, when the debt falls due for payment,
sell such such pledge and hand the proceeds to the pledgee. Should he refuse
to do so, the pledgor shall be forced to sell the pledge himself. In the
event of the pledgor likewise refusing to sell, such pledge shall be sold
by the Court. Should either the pledgor or his heirs be absent, the agent
shall be obliged to sell the pledge. Should he refuse to do so, such pledge
shall be sold by the Court.
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