PLEDGE, RIGHT OF. —
I. CONCEPT
It is the right in a thing by virtue of which a creditor has a special security over a movable asset and constitutes one of the legitimate causes of preference. The debtor must answer for the fulfilment of obligations contracted with all his present and future assets; in general, creditors have an equal right to be satisfied from the debtor’s assets. This principle of equal participation of creditors (general security) against the common debtor is, however, subject to limitation when legitimate causes of preference arise. In such a case not all creditors participate equally in the satisfaction of their claims, but some of them may be satisfied from a specific asset of the debtor with priority, thereby excluding the participation of the other creditors (specific security).Pledge is one of the ways in which this specific security is effected; it consists in a real right over another’s movable things, the possession of which is transferred to the creditor to secure his credit and with the power to satisfy himself from the value of the thing with priority over every other creditor.
II. IN ITALIAN LAW
Pledge is usually constituted by contract, of which the parties are the creditor and the pledgor, called the *opinogranate*. The *opinogranate*, besides the debtor, may also be a third party (the giver of the pledge). In this case the parties to the pledge contract (subsidiary) are different from those to the principal contract to be secured.For the contract to be perfected and for the real right of pledge to arise, it is essential that possession of the asset subject to the pledge be transferred to the creditor or to a third party agreed upon by the parties (art. 2786, 1st and 2nd paras.); this transfer has in fact the particular function of constituting a special form of publicity parallel to the publicity arising from registration in the case of a mortgage (v.). It is for these reasons that actual possession of the thing in the hands of the creditor or of the third party is required for the purpose of preference (art. 2787, 2nd para.). Moreover, for the constitution of the pledge, it is necessary that the contract be evidenced in writing with a certain date, which must also contain a sufficient indication of the credit and of the pledged asset.
Only movable assets (not subject to registration) of any kind may be subject to pledge: thus movable things, claims (*pignus nominis*, art. 2800), and also shares, copyright, negotiable instruments, rights of movable usufruct (art. 2806), and universality of movables, i.e. *pino-cotche*, libraries, collections, etc. (art. 2784). It is disputed whether pledge of a business (*azienda*) may also be admitted.
The characteristic effect of pledge is the attribution to the pledge creditor of the right of preference. In exercising this right the creditor cannot act directly, but has the power to initiate proceedings to have the encumbered asset sold; in case of default he may sell the thing received in pledge (ius distrahendi) according to prescribed forms (art. 2796 and 1769). Likewise the creditor may request the sale of the pledged thing if it deteriorates and may become insufficient to secure the credit. The same power is granted to the pledgor in case of deterioration and when a favourable opportunity presents itself (art. 2795, 3rd and 4th paras.).
Sale is therefore envisaged by the Code for two different purposes: as an executive act for the benefit of the creditor (art. 2796) and as a conservatory act to protect the interests of both the creditor and the pledgor (art. 2795).
Pledge is extinguished when the obligation has been fully satisfied or otherwise extinguished for reasons other than performance. It is also extinguished when the possession of the pledged asset is lost; in such a case every effect of security is lost, but the law (art. 2789) grants the creditor the power to recover possession of the thing; once this is done, the pledge revives.
When the pledge is extinguished, the creditor must return the pledged asset, unless there exists another debt contracted subsequently to the pledge and due before the prior debt is paid. In such a case the creditor has the right of retention and security for the new credit (art. 2794, 2nd para.).