Shabbat Parashat Balak | 5768

Returning a Security Deposit With a Different Currency

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Question: Three years ago, I rented out an apartment in Beit Shemesh. I received a security deposit of $1,000 to ensure my rights. The contract designated all payments in US dollars but for the payer’s convenience, I accepted payment of the deposit in shekalim. The rental period is over. I want to return the $1,000 deposit but he wants to receive the amount of shekalim that he gave, which is now worth much more than $1,000 written in the contract. How much do I owe him?

Request for Clarification: Usually a security deposit is given as an undated check, and no monies are transferred if all goes smoothly. Apparently you actually cashed it. When and why did you do so? Was it part of the agreement? If so, please forward the relevant part of the contract.

Clarification: The payment was in cash, although not stipulated in the contract, because the renter did not have an Israeli bank account and I didn’t mind.

Answer: A security deposit is usually a deposit (pikadon) that ensures that funds are available to either party, depending on how things work out. The mishna (Bava Metzia 43a) says that if Reuven gives cash to Shimon to watch, Shimon can take it for himself only if he is a money changer and, even then, not if Reuven demonstrates that he wants the money to remain intact. The explanation is that one who gives funds for the purpose of safekeeping probably wants its maximum availability (a money changer has constant cash flow). Thus, it might have been expected for you to have kept and returned the same bills you received and it may have been improper to have used the deposit. In such a case, one has to pay at least the value of what he took at the time he took it (Bava Kama 65a) according to the local currency, which, in Israel, is the shekel. Thus, you would pay the amount of shekalim you received and used, irrespective of the value of $1,000.

However, it is possible that in modern times, we treat the standard person like a money changer in this regard (S’ma 292:18; see Shulchan Aruch, CM 292:7, Pitchei Choshen, Pikadon 5:15). When one uses pikadon money with permission, he becomes fully responsible for it. The Shach (292:9) views such use as a loan, not as free use of an object. Consequently, if the currency goes out of circulation, he cannot return the currency he received. You might make a similar argument. You borrowed $1,000, as described in the contract, even though it was given in shekalim, and this is what you should return. Although one usually may borrow a set sum of money only in the local legal tender, Rav M. Feinstein’s p’sak (Igrot Moshe, YD III 37) that the dollar’s special status in Israel makes it equivalent to the shekel has been accepted for decades. (It is questionable whether this is still true in the present financial situation in Israel, but when you made the agreement it was.)

However, unless your contract is unusual, the above is not relevant. Generally, the designation of US dollars is only to determine the amount of shekalim one gives when payment is due or paid. However, the payment is still, in Israel, in and of shekalim. Therefore, even if look at the deposit as a loan (which is unclear), it is a shekel loan to be returned in shekalim or their equivalent unless specified otherwise, which does not seem to be the case here. The assumption that the deposit be viewed in shekalim is even stronger since you received shekalim. Presumably you could have hid the money and returned it three years later. Had the dollar gone up (as it did for years), would he have been able to demand that you return more than you received? Now that it went down, you may not return fewer shekalim than you received. Using the money doesn’t change it from shekalim to dollars, even if you tend to view your finances in dollars. Thus, your counterpart is correct.

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