10 Summary

(Chapter 1) The property law definition of money has not kept pace with stormy developments in the world of modern payment transactions. To the present day, this definition is dominated by ancient Roman law doctrines, whereby the transfer of coined money is central. That is remarkable, especially when one considers the importance of a correct definition. As the noncash deposit is qualified under the Netherlands dominant doctrine as a claim to payment of coined money and bank notes, it follows that the diverse legal questions that ensue from noncash giro transfers can only be resolved with the aid of obligatory legal concepts. That is a remarkable deviation from the property law system that in determining how much of a debtor's capital is available for recovery provides for a measured balance of revendicatory claims and receivables. All assets encumbered with a property right of a third party are first removed from the debtor's control, after which the remainder remains available for recovery, whereby the paritas creditorum principle applies. Due to the obligatory nature of noncash giro payment transactions, revendicatory claims are a priori not possible in noncash payment relationships, and the first phase in which the size of the estate is determined is omitted. In practice, this sometimes leads to situations that are experienced as unjust, in particular when a noncash deposit is held by a third party, which third party is subsequently declared bankrupt. The payer, i.e., the ultimate beneficiary of the payment, then in principle only has a binding right against the bankrupt.#$1

Nevertheless, practice (sometimes) supersedes the doctrine. That appears from a number of judgments of the Netherlands Supreme Court in which, based each time on a different complex of facts, the question was answered whether a noncash deposit on, or addressed to, the current account of a bankrupt formed part of its capital as referred to in Article 20 of the Netherlands Bankruptcy Act (Faillissementswet) or that one or more creditors, acting outside the concursus, can exercise a special claim. I am referring to the judgments of Slis-Stroom (NJ 1984, 752, trust account), Ontvanger-Hamm q.q. (NJ 1998, 437, payment following an unmistakable error by a bankrupt), Mendel q.q.-ABN Amro (N/2005, 200, refund during bankruptcy after unjustified collection) and Standaardfilms (NI1976, 249, set-off by the bank within the context of the bankruptcy of the account holder). The outcome of these judgments and the arguments stated therein are not unequivocal. It is by no means an exaggeration to conclude that regulating the recovery of no-cash deposit is — in transitu — problematic.2 In my opinion, the cause of this problem lies in the assumption of the dominant doctrine in Netherlands law that legal relationships in noncash transactions are exclusively governed by the law of obligations. At times, it demands an almost unfathomable inventiveness to formulate a conclusive obligation law argument in judgments that in essence concern the property law question to whom an asset belongs and who has the right to exercise recovery.

In this study, I investigate whether a more property law oriented approach to noncash transactions would lead to suitable solutions. I argue the position that revendicatory claims on noncash deposits are not alien to the nature of noncash transactions, that they are compatible with the property law system and form an indispensable instrument in regulating the recovery of noncash money.3

(Chapter 2) In order to substantiate my position, I must return to the basis of payment transactions, namely the phenomenon of money. I explain this phenomenon from a number of perspectives. Firstly, a distinction is made between money in an abstract sense, which cannot be a property right (namely money as currency and unit of account)4 and money in a concrete sense, which is a property right (namely money as a means of payment).5A number of aspects of money as a means of payment are subsequently explained, such as the development process of money from a (tangible) form into a (intangible) function, the term `value' and the meaning that should be given to the status of legal tender.6Iconclude that while in the past money was inseparably tied to precious metals and its physical appearance, little to no importance can currently be assigned to any tangible or visual characteristics of money. Nevertheless, the property law definition of money still draws from its historic origins. Cash payment transactions are defined as the transfer of replaceable movable property.7 The definition of noncash transactions is based on the idea that cash money was once held in deposit by a bank. A noncash deposit is regarded as a claim to payment of an equal amount in notes and coins.8 The rules that apply to noncash transfers build forth on this notion: according to the dominant doctrine, there is a binding sui generis legal concept that is subject to the provisions of Article 6:140 of the Dutch Civil Code (`DCC', Burgerlijk Wetboek) (the current account).9 In light of my findings earlier in this chapter, I make a number of critical observations.10 The development process of money, from coined to bank notes to noncash, must be interpreted against the background of the social trend towards dematerialisation of assets and the consequences thereof for the application of property rights (eigendom) in the Dutch Civil Code, which rights can only rest upon tangible objects.11

(Chapter 3) After describing the phenomenon of money and the dominant doctrine referred to in the previous chapter, in this chapter I formulate an alter-native perception of noncash money and property transfer. The essence of contemporary money lies in the level of abstract power of disposition that it offers.12I take this abstract power of disposition as the point of departure for further definition, presenting it as the intangible object of a property law claim.13

I further elaborate on this point and discuss why noncash money is not a claim14, the significance of possession and custody15, noncash money and the bankruptcy of the bank16 and the possibility to recognise an intangible object within the context of the Netherlands' (semi-)closed property law system.17 This approach sheds a different light on the legal relationship between the account holder and his bank. I make a distinction between the giro agreement (that relates to the custody of and the debiting and crediting of noncash money)18 and the credit agreement (under the terms of which the bank lends money to the account holder).19 When resolving property law issues, it is recommended to separate these credit and debit relationships from one another. Within the framework of the current doctrine, both relationships are hidden behind the legal concept of the current account.20

No property changes ownership as often as money. For this reason, any study into a property law approach to money cannot be limited to the object of this claim, but must also provide an answer to the question whether, within the continuous movement of payment transactions, any room in fact exists for recognising such a claim. Firstly, I draw attention to the nature of the (legal) relationship between the principal and the beneficiary of a payment.21It is within this relationship that justification for the property transfer of money will generally have to be found. Secondly, I stress the importance of an undisrupted money circulation. In this light, the beneficiary may not be confronted by claims that he should not have to take into account.22 When these two criteria are weighed up against one another, it appears that situations arise in practice whereby justification for the acceptance of a property transfer cannot be found in either the legal relationship between the payer and the beneficiary or the requirements of uninterrupted money circulation. In such cases, there is room for recognising a revendicatory claim on noncash money.23 Embedded in the Dutch Civil Code, a revendicatory effect can, under certain circumstances, be assigned to Article 6:203 Paragraph 2 DCC.24 Exercising that right does not constitute repayment but instead means correcting the administrative situation so that it corresponds with the existing property law situation.25 In the following chapters, I will apply that insight to a number of practical situations.

(Chapter 4) In this chapter, I discuss the possibility of recovery of noncash money held by third parties. In other words, this concerns the trust account. First I discuss the current state of case law (Slis-Stroom NJ 1984, 752; Koren-Tekstra NJ 2002, 371; Procall NJ2004, 196), legislation (Articles 25 of the Notaries Act (Wet op het notarisambt) and 19 of the Bailiff Act (Gerechtsdeurwaarderswet)26 and literature, including that dealing with legislative proposals.27Imake several critical comments on the jurisprudence and literature.28 Recognition of the trust account under general property law may lead to a situation in which the contractual parties involved can create a special recovery position. That explains the caution on the part of the Supreme Court in expanding the application of the trust account.29 The trust account could be explained by means of a revendicatory claim on money. Here, I apply the test that I formulated in the previous chapter. Firstly, I ascertain that the legai relationship between the payer and the intermediary does not have the intention of effecting a property transfer. After all, the payment does not serve to settle a debt with the intermediary, but instead is made under the terms of an agreement concerning the custody and management of noncash money.30 Secondly, the intermediary knows why it is receiving the money and that its task does not extend beyond the management and custody of money in accordance with the deposit conditions. It is for this reason that the importance of an uninterrupted money circulation does not make it necessary to assume a property transfer.31 The payer or the beneficiary has a revendicatory claim on noncash money in case of the intermediary's bankruptcy.32 The party to whom this claim falls depends on the conditions linked to the property transfer. As the parties involved, by means of a trust account, create a future recovery position, it is necessary that (future) legislation provide a number of guarantees. In doing so, it is important that the legislator seek a balance between a system that is sufficiently rigid to counter misuse, while also offering sufficient flexibility to accommodate the broad diversity of legitimate uses of the trust account.33

(Chapter 5) In Ontvanger-Hamm q.q. (NJ 1998, 437) and later judgments (Komdeur q.q.-Nationale Nederlanden, NJ2002, 608; Van der Werff q.q.-BLG, NJ 2007, 419), the Supreme Court ruled that if a bankrupt receive a payment that is the result of an unmistakable error, the receiver is obliged to reverse the payment outside the concursus. After discussing the literature before 199734, attention is given to the aforementioned judgments and the literature that it generated.35Imake a number of critical observations about this case law and literature, and further study the application of the line from Ontvanger-Hamm q.q.36 The legal consequence sought by the Supreme Court can also be achieved by recognising the revendicatory claim on noncash money. After all, this concerns an `unmistakable error'. The fact that it is an error means there is no legal ground to justify the property transfer.37 And as the error is also unmistakable, there is no disruption of general commercial interests. The beneficiary could know that the payment was not intended for him.38 In this case, crediting of the current account does not lead to a property transfer and the (erroneous) payer has a revendicatory claim on the noncash money.39

(Chapter 6) Initiative for noncash payment in the sense of Article 6:114 DCC will generally lie with the debtor of the money debt. If a number of conditions have been met, it is also possible for the creditor to arrange that money be debited from the debtors account and credited to the creditor's account. Direct debit provides this option. I first discuss how direct debit works.40 The most important building blocks are the direct debit mandate41, the right of the collectee (debtor) to refund42 and the crediting of the collector under a resolutive condition.43 Uncertainty has surrounded the legal status of a refund during the bankruptcy of the recipient. Lower case law has qualified it as a repayment (Van Dijk q.q.-ABN Amro, JOR 1999, 41)44 and as solely an accounting debit entry.45 The Supreme Court endorses this latter view (Mendel q.q.-ABN Amro, NJ 2005, 200).46 I comment on this judgment and point out that it is not always possible to sustain the position that solely a debit entry in accounting terms exists.47 Recognising the revendicatory claim on noncash money could offer a solution in such instances. In the first place, the relationship between the collector and the collectee is of importance, in particular as regards the provided mandate. This mandate forms part of the contractual framework of the direct debit and allows for a refund within a set term. When granting the mandate, the debtor assumes that this right is available to him. Settlement of the money debt by means of a noncash payment is thus subject to a condition. Building forth on this idea, the transfer of the noncash money is itself conditional. Within this property law approach, the collector acquires a claim on the money to be received under a resolutive condition, namely that the debit bank of the debtor performs a refund within the set term. The debtor also maintains a claim on the money, but under a suspensive condition. If a refund takes place and the condition has thus been fulfilled, the right of the collector to the collected noncash money ends and it once again falls unconditionally to the assets of the debtor.48 General commercial interests do not make it necessary to accept a property transfer in this case. As the collector itself takes the initiative for the payment, it knows that this payment is made subject to the condition of refund. The collector is explicitly informed of this in the direct debit contract and the accompanying information brochures. General commercial interests lean in favour of the (mistaken) collectee. If the possibility of a refund were to be limited, such would undermine the direct debit system as both banks and debtors would be less willing to participate in the system.49 If a collector offers no recovery, the banks involved can under certain circumstances be obliged to effect the refund from own resources. This is a binding obligation.50

(Chapter 7) In this chapter I discuss the regulation of recovery by the bank of incoming noncash payments to the account holder. In a series of judgments, the Supreme Court has developed a complicated and finely meshed system that limits the authority to set-off payments against overdrafts on the current account. Judgments discussed are Standaardfilms (N.I. 1976, 249)51, Loeffen q.q.-BMH I (N.I. 1988, 104)52, Amro-Curatoren THB (N.I. 1989, 449)53 and Mulder q.q.-CLBN (N.I. 1996, 471).54I make critical observations on this case law. The current account as legal concept was not under discussion in these judgments. I argue that a noncash deposit should no longer be qualified as a claim, but instead as a contemporary manifestation of money, which can be the object of a property law claim. If noncash money is not a claim, the possibility of set-off is no longer available.55 The recovery position of the bank as modelled in the discussed judgments can also be effected by other means. I explain this, taking my opinion on the nature of noncash deposits as point of departure. The questions that arise are: who does the money belong to, who has access to it and does the bank have a right of recovery? The accent comes to lie on the authority of the account holder to use the money to settle his money debt to the bank. An account holder who is bankrupt no longer has this authority.56 This requirement of right of disposition also offers a means of solving practical cases that fall outside the bankruptcy of the account holder. There may be other reasons why the account holder lacks the authority to use the money on his account to settle his money debt to the bank. For these cases, I developed the notion that a third party may under circumstances acquire a revendicatory claim on noncash money. The money, although credited to the account of the beneficiary, continues to form part of the payer's assets. The reverse side of this same coin is that the beneficiary is not authorised to dispose of this money, for example to settle his debt to the bank. This returns me to the cases that I elaborated on in Chapters 4, 5 and 6, but now viewed from the perspective of the beneficiary of the payment.57 Finally, I discuss two judgments that involve settlement by the bank without an impending bankruptcy or suspension of payment on the part of the account holder. In the judgment Standard-ING (N/2002, 118) central prominence was given to the authority of the bank to effect settlement.58 In the judgment Staat-Meijer (NI 1998, 218) no attention was given to this matter due to procedural reasons.59 Nevertheless, the facts of the cases correspond with one another. In both cases, the function of intermediary was applied (without proper authorisation) in the collection of money claims from the account holder.

(Chapter 8) This chapter summarises the conclusions of the previous chapters and answers the research question.