Student Essay Winner Imagines a World without Creditors

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Each year, the Morris L. Cohen Student Essay Competition encourages scholars to explore the areas of legal history, rare law books, and legal archives, and to acquaint themsleves with the American Association of Law Libraries (AALL) and law librarianship.Gale is honored to partner with AALL to facilitate the prizes for the winners of this year competition by providing a cash stipend and travel allowance to AALL’s annual meeting.

This year’s winner comes from SUNY Stonybrook. Check out his summary of his award-winning essay below, and we’ll see you in Philadelphia!

Lay Justices and Local Finance in Early New York

By Sung Yup Kip

Living in the twenty-first century, it is hard to imagine economic life without the existence of credit. How many of us hasn’t had to borrow money at one point in life (unless you belong to that fabled one percent), whether in the form of taking a student loan, taking out a mortgage, or simply letting credit card debt pile up? Credit, perhaps just as much as money itself, is the lifeblood of the modern economy, allowing us to get by when our meager earnings fall short of our daily needs. People of course lent and borrowed money long before the advent of market economies and capitalism, but in pre-modern economies credit was often extended on a personal basis, whereas modern credit markets revolve around formal credit instruments supported by the firm hand of law. Thanks to this legal-financial system, borrowing no longer has to be limited to one’s immediate acquaintances, and creditors feel more secure about lending money to strangers, thus making more credit available in the market.

The transition from informal, personalized credit economies to modern legal-financial systems was not always straightforward, however, as the case of early New York demonstrates. New York, along with other British American colonies, saw a steep rise of private credit transactions throughout most of the eighteenth century. Spurred by rapid economic and demographic growth, and precipitated by the British Empire’s tight monetary policies, many New Yorkers felt the need to borrow money—either to run a business, speculate in land, or simply to pay rent and obtain daily necessities. Historians have shown that the increased demand for credit in the colonies soon led to a greater reliance on formal credit instruments and accompanying court procedures, which in turn gave a major boost to the nascent professional legal system. New York was no exception; in the eighteenth century trained judges and professional lawyers began to dominate the colony’s higher courts, mainly by handling various property- and debt-related cases for wealthy merchants and landowners.

Outside of the higher civil courts, however, the dominance of formal credit instruments and legal procedures was less apparent. It was not that the commoners—small farmers, tenants, artisans, shopkeepers, and urban workers—were less involved in the credit market; they engaged in myriad local credit transactions and were just as prone to sue debtors as were merchants and landlords. But when they needed legal support on debt claims, many ordinary New Yorkers took their cases to lay justices in their neighborhood rather than to the trained judges and professional lawyers of higher courts. This was despite the fact that these local justices—justices of the peace and aldermen—had rarely received any formal training, and were constantly berated by New York’s legal elite for their incompetence, lax proceedings, and ignorance of the law.

Available records indicate that the local justices’ procedure in handling debt cases was indeed very simple, consisting mainly of examining the creditors’ bills or account books, taking oaths regarding the veracity of those evidences, and summoning the debtor if the plaintiff’s claim seemed valid. Lawyers were rarely present at these proceedings, which typically took place at a local tavern or the justice’s home; and sophisticated English common law procedures, which dominated the large value debt cases handled in higher courts, were virtually absent. Local justices instead concluded most cases simply by noting them in their docket (if they kept one) as “this settled,” or “this paid.”

A major reason why commoners took their debt claims to local justices despite the latter’s well-known “ignorance” can be found in the distinct nature of the underlying credit obligations. Not only were the average value of these claims very low, but they were also predominantly based on book debt. These were informal credit transactions in which money-lending was not the main objective; backed only by the creditor’s personal account books or bills, they were credit obligations which simply arose from a string of ongoing daily exchanges of goods and services among neighbors. Their values may have been low, but judging from the types of items and services involved, these simple credit exchanges were probably significant to the common folk—providing them with a means to obtain daily necessities such as food, clothing, and farming tools when money was short.

By bringing such small debt claims to local justices, litigants not only avoided costly and time-consuming jury trials and witnesses’ testimonies, but could also drastically reduce court fees by quickly striking an out-of-court settlement. New York’s justices readily supported such cost-saving efforts, and also provided valuable localized services not written in the law, by collecting, retaining, and delivering sums for litigants. After the justice issued a summons based on a creditor’s complaint, typically only the defendant appeared on the appointed date, either to pay the sum immediately, or to promise payment within a few months. On receiving the sum from the defendant, the justice recorded it on his docket, then relayed the sum later when the plaintiff happened to be in town, or when one of the constables had occasion to go down to the plaintiffs’ neighborhood. It was an informal practice developed, evidently, out of expediency to accommodate the court’s many plaintiffs and defendants who were dispersed in remote towns and villages, and notably, a service made possible due to the justices’ acknowledgment of the personal nature of local credit transactions.

The reliance on lay justices and their informal practices worked because what most creditors with small claims needed from the law was not resolution of actual disputes or forceful debt collection. Most simply desired the law to lend some degree of assurance to their claims, by helping them settle the balance of a string of credit exchanges, and cajole their debtors when necessary. New York’s local justices fulfilled this need with speedy, predictable, and low-cost resolutions. If they were untrained in the fine points of law, they more than made up for it with their personal ties with inhabitants and attentiveness to petty local affairs. The justices’ efficient handling of small debt litigation, in all likelihood, was ultimately beneficial to the debtors too, as it enhanced the creditors’ confidence in their ability to recover debts, hence encouraging them to extend credit more easily. For the debtors it also helped that the overall costs in a lawsuit were much lower than in higher courts, and that the justices frequently granted extensions when the debtor needed more time to raise the sum.

The justices’ enlarged role in debt litigation in early New York, as contemporary lawyers correctly perceived, was an anomaly; the original purpose of the office of justice of the peace, an old English institution transplanted to the colonies, was mainly for local administration and criminal adjudication. But if anomalous from the standpoint of legal tradition, it was nonetheless a development reflecting the people’s needs. While honing formal legal procedures could be one way to buttress a well-functioning credit market, the case of early New York shows that facilitating credit transactions need not always be a matter of “rationalizing” the legal-financial system. People in different circumstances often have distinct financial needs and preferences, sometimes better attended to by localized and personal services.



sungyup - photoAbout the Author

Sung Yup Kip is currently a doctoral candidate and adjunct instructor at Stony Brook University. When he’s not teaching or writing about history, he enjoys listening to jazz, watching movies and basketball games, and cooking with his wife.




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