Shabbat Parashat Tzav 5776

Ask the Rabbi: Returning a Loan Complicated by Currency Changes

Question: Two years ago Reuven, an American, sent $4,500 to Shimon, who lives in Israel, so that he could convert the money into shekels (then, 15,400 shekels) and lend it to Levi, a needy Israeli. Levi returned a quarter of the shekel sum every six months and believes he has finished repayment. Shimon now wants to return the money to Reuven, but the amount he received is worth only $3,990. Should Shimon give Reuven $4,500, or the dollar equivalent of what he received?

Answer: We cannot respond to the question’s “Choshen Mishpat” element without hearing both sides. We will focus on the Yoreh Deah question of ribbit on the loan, which depends on the possibilities of what the arrangements between the parties were (we will relate to the major ones).

It sounds like Levi accepted the responsibility to repay a 15,400 shekel loan. If Shimon was but an agent who followed expectations, he returns only the dollar equivalent of what Levi paid. If Shimon accepted responsibility for payment, he was either an arev (guarantor) or there were two separate loans (Reuven-Shimon, enabling Shimon-Levi).

If there were two loans, Shimon must return his $4,500 loan from Reuven. Is this permitted when the value went up? The rule is that it is Rabbinically forbidden to lend an object so that it be replaced by an object of the same type, due to the chance that its value will rise over the course of the loan (i.e., he will return more value than he borrowed). However, since we halachically view currency as a constant (even if its value, as compared to commodities and other currencies, changes), $4,500 can be returned even if its shekel equivalent increased. Admittedly, currencies are considered commodities outside their country, and the leniency that dollars have a special status in Israel no longer applies (see Igrot Moshe, Yoreh Deah III:37). However, when an American in America transfers dollars and wants dollars returned, one cannot say that this is not currency (see ibid.). Thus, under these circumstances, Shimon can return $4,500 to Reuven.

If there is one loan and Shimon is an arev, we should consider the three types of arev. 1) Simple arev – he pays only if the borrower defaults; 2) Arev kablan – the lender can choose to take payment either from the borrower or the arev; 3) Arev shlof dotz – the lender receives payment specifically from the arev.

The gemara (Bava Metzia 71b) says that if a non-Jew lends to a Jew and takes payment with interest from the Jewish arev, the borrower may not reimburse the arev for the interest. The gemara explains that since the non-Jewish practice is to go directly to the arev, it is considered as if the arev borrowed from the non-Jew and then lent the principal to the borrower. Therefore, the arev must not take back more money from the borrower than he gave him. There is a machloket among Rishonim and two opinions in the Shulchan Aruch (YD 170:1) if this prohibition and analysis of the loans is true only for an arev shlof dotz or even for an arev kablan. In our case, if Shimon is a simple arev or probably even an arev kablan, it is considered a loan between Reuven and Levi, and one that obligated Levi in terms of shekels. If so, neither Levi nor Shimon can give $4,500, unless one of the leniencies of this Rabbinic form of ribbit apply (see Shulchan Aruch, YD 162:2 and see whether the most common one applies). If Reuven indicated he was giving a dollar loan, he deserves to receive $4,500. If Shimon wants to take responsibility, especially if he failed to relay this fact to Levi, this is appropriate.

If Shimon is an arev shlof dotz, it is likely the loan was in dollars, in which case, Shimon may and should pay $4,500 (see Netivot Shalom, p. 349). He can decide, based on his discussions with Levi, whether to ask for reimbursement from him.

Fine nuances can affect the way to view these matters. It is laudable (not required) for Reuven to waive the possible right to full payment, for halachic safety but especially for higher moral ground. (His dollar loss counts as tzedaka).

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