Suppose the debt is 60,000 while collateral is worth 100,000. The property is lost in ordinary non-wrongful circumstances while pledged.
The 60,000 debt is discharged; the remaining 40,000 of value was held as a trust. It does not follow that the pledgee must reimburse this excess out of pocket for every ordinary loss. Liability may change if wrongful conduct, negligence or misuse is established.
The key distinction is that collateral worth more than the debt does not enlarge the original debt.
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Collateral value exceeds the debt
Kitab al-Rahn: Pledge Formation, Possession, Liability and Eligible Collateral
Suppose the debt is 60,000 while collateral is worth 100,000. The property is lost in ordinary non-wrongful circumstances while pledged.
The 60,000 debt is discharged; the remaining 40,000 of value was held as a trust. It does not follow that the pledgee must reimburse this excess out of pocket for every ordinary loss. Liability may change if wrongful conduct, negligence or misuse is established.
The key distinction is that collateral worth more than the debt does not enlarge the original debt.