==============================  CFJ 1323  ==============================

    If each of two entities owes the other some amount of the same
    fungible property, then by agreement of the Prime Executors for the
    two entities and without either entity forgiving the other's debt:
    (a) if the debts are of equal amounts, both may be satisfied; and
    (b) if the amount of one debt is less than that of the other, then
    the amount of the latter debt may be reduced by that of the former,
    and the former debt may be satisfied.

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Caller:                                 Maud
Motion:                                 1323.300
Decision:                               DENY


Judge:                                  Murphy
Judgement:                              


Judge:                                  G.
Judgement:                              FALSE

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History:

Called by Maud:                         30 Sep 2001 07:47:41 GMT
Motion 1323.300 by Maud:                30 Sep 2001 07:47:41 GMT
Assigned to Murphy:                     30 Sep 2001 09:11:05 GMT
Assigned to G.:                         10 Oct 2001 10:01:37 GMT
Murphy recused:                         10 Oct 2001 14:59:30 GMT
Judged FALSE by G.:                     16 Oct 2001 17:46:26 GMT
Motion 1323.300 DENIED by Maud:         16 Oct 2001 17:46:26 GMT

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Caller's Arguments:

According to Rule 1596 (c), a debt may be satisfied when the debtor is
deemed to have transferred the owed properties to the creditor.  If
the two debts are of equal amounts, the results of one entity
transferring property to the other and the latter returning it are to
leave each entity with the amount of that property e had previously,
and to satisfy both debts.  If the amount of one debt is less than
that of the other, then the results of the entity that is debtor of
the larger debt transferring property to the other and the latter
returning it are to leave each entity with the amount of that property
e had previously, to reduce the amount of the first debtor's debt by
the amount of the transfer, and to satisfy the other debt.  In other
words, the only differences are the satisfaction or reduction of debts
and transfers that, taken together, don't change the amounts of
property held by the two entities.

Deemings of transfer are not regulated by the Rules, and so they are
permitted except where that would not be in the best interests of the
game.  It is in the best interests of the game for the deemings of
transfer resulting in the satisfaction of the debts mentioned in the
CFJ to be permitted, because doing so reduces unnecessary work on the
part of the Recordkeepor of the property involved.

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Motion 1323.300 by Maud:

I submit a Motion pursuant to this CFJ that the Judge order the
Rulekeepor to annotate Rule 1596 (Debt) with the text "Two entities that
owe each other the same amount of a fungible property may cause both
debts to be satisfied without forgiving the debts.".

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Motion 1323.300 by Maud:

The judgement is based on a mistaken interpretation of "voted upon".

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Judge G.'s Arguments:

The Court chooses to rephrase the question slightly to highlight its
implications.  Take the case where a Player incurs an auction debt e
wishes to satisfy with an upcoming salary, but the Bank runs out of Stems
to pay the salary.  [As pointed out by Blaise, even one unit of currency
would be sufficient to satisfy both debts through repeated transfers, for
it could be passed back and forth "N times." But since this "N times"
would (possibly) require 2N sequential ping-pong messages, it imposes
significant recordkeeping overhead.]

If the Caller's Statement were judged True, not only would no transfers be
required, but no 'cash in hand' would be required in the possession of
either entity.  So the question can be rephrased as: "If neither entity
has *any* Units of the 'cash in hand' to make eir part of the transfer,
can the mutual debts be satisfied or deemed satisfied without resorting to
forgiveness?" (The CFJ specifically forbids forgiveness).

The Court can find two possible mechanisms through which the Rules might
allow this mutual satisfaction to take place.  The first one is suggested
by the Caller:

> According to Rule 1596 (c), a debt may be satisfied when the debtor is
> deemed to have transferred the owed properties to the creditor.

Clearly, the currency cannot be transferred if it does not exist in the
possession of either entity.  Can it be legally "deemed" to have been
transferred, as 1596(c) allows, merely by mutual agreement between the two
parties?

Transfers themselves are strongly and specifically regulated by Rule 1598,
and results in a change in Property possession, which is, in the words of
1942 "the legal status of possessing a Property."  And in the words of
Rule 1942 this legal status of ownership may not be changed "except in
accordance with the Rules."  A "deemed transfer," while mentioned in
1596(c), is not elsewhere defined, and thus not in accordance with the
Rules.

It could be argued that debts are a legal status independent of the
Properties themselves; however, the only method given in 1596(c) for
resolving the legal status of debts defers to the change in legal status
of ownership governed by transfers, so the Court rejects this argument.

It also could be argued that no *net* change in a fungible property is
equivalent to no change in the legal status of possession overall and thus
is not governed by Rule 1942 (As written in the CFJ Statement, we are
considering fungible property).  As described in Rule 1467, "it is not
necessary for the Recordkeepor of a Currency to track the individual
ownership of each unit; rather, it is sufficient to maintain a record of
the total number of units possessed by each entity which possesses any
number of units of that Currency."  Further, the recordkeepor for a
Currency is *not* a recordkeepor for debts of that Currency.

However, the Court rejects this argument as well by virtue of Rule
1598(e): "The Recordkeepor of a Property shall maintain a record of all
transfers of that Property. E shall retain a record of each Notice of
Transfer which e receives (whether valid or not) involving that Property."
There is no reason to suppose that a "deemed" transfer would require a
lesser standard of recordkeeping.  Since a recordkeepor is required to
track both halves of a mutual deemed transfer even with no net change, a
mutual deemed exchange *would* constitute a change in the legal status of
ownership in creating a legal requirement for retaining the record.

The second possible mechanism for mutual debt satisfaction may be
consolidation.  Rule 1596(a) defines a debt as "an obligation arising
under the Rules for one entity (the "debtor") to make a transfer of one or
more Properties to some other entity (the "creditor")."  If an debtor has
more than one obligation to the same creditor, can they be combined and
treated as a single obligation (at the agreement of both parties)?  If so,
can mutual obligations be combined into a resulting net obligation?

The Court rejects this possibility as well.  The distinct nature of
individual debts is strongly supported by game custom as well as by Rules
implications; for example, in the satisfaction of multiple auction debts,
or in the punishment for indebtedness which may be applied multiply for
individually incurred debts.

The Caller later (unofficially) clarified the issue of eir CFJ:

> The claim is that the (mutual) creditors and debtors may agree to
> construe the debts as being partially or fully satisfied (dependent on
> the conditions outlined in the statement) and that this agreement is
> sufficient for this change in debts to be approved by the rules.

It is still possible that if two parties Agree that mutual, cancelling
debts, are satisfied, that they would be considered satisfied.  For it is
not the responsibility of anyone but the Creditor, the Debtor, and the
Court (if involved in a dispute) to keep records of any debt.  However, by
definition, it is possible that such an agreement constitutes forgiveness
even if "forgiveness" is not mentioned in the agreement.

  1596(d) A debt is forgiven when the creditor of a debt sends a
          notice to the debtor that e is forgiving the debt.
          Forgiveness may be for the entire debt or for any part
          thereof.  The effect forgiving a debt is as if the debtor
          had made a payment on the debt for the portion forgiven,
          except that no transfer of property takes place thereby.

Such an agreement could be made conditional upon the other's forgiveness
of a mutual debt: since such a mutual agreement is not a transfer itself,
it is not goverened by the precedent of forbidding conditional transfers.
If it were allowed that such an agreement somehow did not constitute
forgiveness but rather a "deemed transfer", it would leave an
uncomfortable difficulty of determining into which category each agreement
falls.

It is better to assume, a priori, that such a mutual agreement constitutes
forgiveness, even if the words "forgiveness" do not exist in the agreement
text.  This is also the best simplification of recordkeeping, for only the
debtor and creditor need be informed unless a dispute arises.  Since the
mechanism of forgiveness is specifically forbidden from the Court's
consideration, for the reasons outlined above the Court delivers JUDGEMENT
of FALSE.

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