9.3 Theories overcoming the law of assignment

158 G E R M A N A N D A U S T R I A N L A W

creditor and that there existed legal rules protecting the bona fide purchaser against adverse claims could be explained by the unique nature of the instruments. Nikolaus Theodore Go¨ nner, at the time a leading German scholar in the field, wrote that securities were a legal institution of their own. They were created with a view to allowing a certain kind of debt to circulate freely between market participants. Because of their unique legal nature, the name of the creditor did not appear on the paper document evidencing securities. According to Go¨ nner, the unique nature of the instruments also explained why there existed special rules protecting the good faith purchaser against adverse claims. He wrote that a purchaser was protected against adverse claims irrespective of whether there existed an explicit statutory rule to that effect.30

Go¨ nner did not classify securities as tangibles. He explained that securities were not subject to the rules on assignment by classifying them as a new and independent legal category which was subject to special rules. These special rules were designed for these instruments and had as their objective to facilitate their circulation.31

Go¨ nner’s view had significant influence on the legal writing of his time and his work was cited with approval by a number of important scholars.32 Among the scholars following Go¨ nner’s approach, the writings of C. Schumm are of particular interest, since he specifically rejected the view that securities were tangibles. Schumm pointed out that the fact that paper documents were used to transfer securities did not serve as an explanation justifying the special rules governing their transfer.33

30 Go¨ nner, Von Staatsschulden 193, 236. 31 Go¨ nner, Von Staatsschulden 194.

32Johann Adam Seuffert, Praktisches Pandektenrecht, 2nd edn. (Wu¨ rzburg: Verlag der Stahel’schen Buchhandlung, 1848) 128–129; Christian Friedrich Glu¨ ck, Ausfu¨hrliche Erla¨uterung der Pandekten, vol. XVI, 2nd edn. (Erlangen: Palmsche Verlagsbuchhandlung, 1844) 441–442; C. F. Mu¨ hlenbruch, Die Lehre von der Zession der Forderungsrechte, 3rd edn. (Greifswald: Ernst Mauritius 1836) 457–459; C. J. A. Mittermaier, Grundsa¨tze des gemeinen deutschen Privatrechts, vol. II, 7th edn. (Regensburg: Manz, 1847) 7–9; Heinrich Gottlieb Philipp Gengler, Lehrbuch des deutschen Privatrechts, vol. I (Erlangen: Verlag von Theodor Bla¨ snig, 1854) 170–172; Josef Unger, Die rechtliche Natur der Inhaberpapiere (Leipzig: Breitkopf und Ha¨ rtel, 1857) 24–25.

33C. Schumm, Die Amortisation verlorener oder sonst abhanden gekommener Schuldurkunden nach gemeiner deutscher Praxis mit Beru¨cksichtigung deutscher Partikulargesetze, besonders im Betreff der auf Inhaber (au porteur) gestellten Staatsund o¨ffentlichen Kreditpapiere (Heidelberg: Mohr, 1830) 49.

9.3.2 Contract

Later in the nineteenth century, some scholars propounded the view that the law of contract explained the special rules that govern securities. The theory claimed that securities were issued under special contractual terms, the aim being to contract out of those rules on assignment that were perceived to be a hindrance to the circulation of securities among market participants. As a result of these terms, the creditor did not have to be named on the security, and it was therefore possible to issue securities for the benefit of the bearer. The terms also provided protection against adverse claim by contracting out of the nemo dat rule: a good faith buyer of securities acquired title upon delivery of the documents to her even if the seller was not entitled to transfer the securities.34

The major disadvantage of the theory was that it could not claim that the special terms which were said to govern securities were explicitly agreed upon by the parties; there was no written documentation to that effect. The proponents of the theory therefore claimed that the terms were contained in an implicit agreement between the issuer and the first buyer of a particular security. Buyers who purchased securities from another investor rather than from the issuer were deemed to have, by purchasing the instruments, agreed to these implied special terms.

9.3.3 Transfer by novation

Another popular mid-nineteenth-century theory was based on the hypothesis that securities were a modern equivalent of a type of contract that had existed in Roman law.35 This type of contract was not explicitly referred to in the civil codes of the time but existed nevertheless because the modern law never abolished it and thus made it possible for an obligation to be owed to an unidentified creditor such as the bearer of the paper document.

Transfers of obligations arising out of this special type of contract were said not to be effected by way of assignment, but rather by way of

Carl Einert, Uber das Wesen und die Form des Literalcontracts wie dieser zur Zeit der Justinianischen Gesetzgebung ausgebildet gewesen und Vergleichung desselben mit dem Wechsel

(Leipzig: Tauchnitz, 1852) 77–87.