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Although the division between these two titles was very indefinite, they did not meet recognition with equal readiness; the title damnum emergens was universally admitted by all authorities; while that of lucrum cessans was but gradually admitted, and hedged round with many limitations.
The montes, although their aim was exclusively philanthropic, found themselves obliged to make a small charge to defray their working expenses, and, although one would think that this could be amply justified by the title of damnum emergens, it provoked a violent attack by the Dominicans.
The first thing to be noted on passing from the poena conventionalis to interest proper is that the latter ground of compensation was generally divided into two kinds, damnum emergens and lucrum cessans.
The question, however, was still hotly disputed at the end of the fifteenth century, and was finally settled in favour of the admission of the title as late as 1645. Other Cases in which more than the Loan could be repaid. We have now discussed the extrinsic titles poena conventionalis, damnum emergens, lucrum cessans, and periculum sortis.
The title damnum emergens never presented any serious difficulty. It was recognised by Albertus Magnus, and laid down so clearly by Aquinas that it was not afterwards questioned: 'A lender may without sin enter an agreement with the borrower for compensation for the loss he incurs of something he ought to have, for this is not to sell the use of money, but to avoid a loss.
It may also happen that the borrower avoids a greater loss than the lender incurs, wherefore the borrower may repay the lender with what he has gained. The usual example given to illustrate how damnum emergens might arise, was the case of the lender being obliged, on account of the failure of the borrower, to borrow money himself at usury.
Closely allied to the title of damnum emergens was that of lucrum cessans. According to some writers, the latter was the only true interest. Dr. Cleary quotes some thirteenth-century documents in which a clear distinction is made between damnum and interesse; and it seems to have been the common custom in Germany at a later date to distinguish between interesse and schaden.
The justice of the poena conventionalis was recognised by Alexander of Hales, and by Duns Scotus, who gives a typical form of the stipulation as follows: 'I have need of my money for commerce, but shall lend it to you till a certain day on the condition that, if you do not repay it on that day, you shall pay me afterwards a certain sum in addition, since I shall suffer much injury through your delay. The poena conventionalis must not be confused with either of the titles damnum emergens or lucrum cessans, which we are about to discuss; it was distinguished from the former by being based upon a presumed injury, whereas the injury in damnum emergens must be proved; and for the latter because the damage must be presumed to have occurred after the expiration of the loan period, whereas in lucrum cessans the damage was presumed to have occurred during the currency of the loan period.