Bankruptcy Law

The question of the transmission of the retention of title clause arises when the rights and actions attached to the contract containing it are transferred to a third party. This situation arises in particular when the debtor finances the purchase of the property by a loan. Can the unpaid lender of funds himself invoke the benefit of the clause to claim the property which it encumbers? The answer  …

Action for recovery by the subrogee

The question of the transmission of the retention of title clause arises when the rights and actions attached to the contract containing it are transferred to a third party. This situation arises in particular when the debtor finances the purchase of the property by a loan. Can the unpaid lender of funds himself invoke the benefit of the clause to claim the property which it encumbers? The answer is yes when the conditions of subrogation are met.

In accordance with Article 1346-1 of the Civil Code, "contractual subrogation occurs on the initiative of the creditor when he receives payment from a third person and subrogates that person to his rights against the debtor. Subrogation, which must be express, must be agreed at the same time as payment, unless the subrogator has expressed his intention that his co-contractor should be subrogated to him at the time of payment in an earlier act. The concomitance of subrogation and payment may be proved by any means and may be established, in particular, where the subrogating seller has expressly manifested, even if in an earlier document, his intention to subrogate the lender of funds in the benefit of the retention of title clause at the very moment of payment .

The effect of contractual subrogation is to invest the subrogated third party not only with the original claim, but also with all the advantages and accessories of that claim, such as the retention-of-title clause intended to guarantee payment of it . Thus, the retention of title clause duly agreed between the buyer in insolvency procedure and the seller, which constitutes the guarantee of the latter's claim, may be transmitted as an accessory of that claim to his bank by means of a bill of exchange accepted by the debtor .

The Court of Cassation, which admits that the action for recovery is exercised by the moneylender, subrogated in the rights of the reserved seller , does not subordinate the exercise of the action to the due date of the claim of which the retention of title clause is the accessory, but only to its existence .

The validity of the contractual subrogation of the moneylender in the seller's retention of title clause appeared to be called into question by an opinion of the Court of Cassation, which held that it was deemed unwritten when it falsely led the borrower, who became the owner of the property upon payment of the price to the seller, to believe that the security interest had been validly transferred . Fortunately, this much-criticized solution, rendered under the current Article L. 212-1 of the Consumer Code, does not apply in matters of insolvency procedure, since the Court of Cassation again admitted, a few months later, the subrogation of the moneylender in the rights of the reserved seller, in order to guarantee the repayment of the loan through the recovery of the property, acquired with the borrowed funds, from the buyer subject to the insolvency procedure .

Cass. 1re civ., 28 May 2002, LawLex202100003383JBJ (LJ).

Cass. com., 15 March 1988, LawLex202100003369JBJ (LJ).

Cass. com., 11 July 1988, LawLex202200000166JBJ (LJ). 

Cass. com., 15 March 1988, LawLex202100003377JBJ (RJ).

Cass. avis, 28 November 2016, LawLex202000001689JBJ.

Bankruptcy Law

231. Action for recovery by the subrogee

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231. Action for recovery by the subrogee

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Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

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