Shabbat Parashat Teruma 5784

P'ninat Mishpat: How to Take Payment from A Guarantor – part I

Case: The plaintiff (=pl) lent 110,000 NIS to the borrower (=brw) for his business. Brw was to return it after a month with 10% interest. The defendant (=def) signed as an arev (guarantor). Many months have gone by without payment, and brw has filed for bankruptcy. Pl demands that def pay, but def says he did not understand the loan agreement and that, anyway, he does not have enough money to pay and can only make small monthly payments. Pl wants def to borrow money to pay at one time, as def assured pl, before the loan, he could do.

Ruling: We reject def’s claim that he did not understand the agreement (see Shulchan Aruch, Choshen Mishpat 61:13). We do not believe such claims. Also, commerce can work only when people are held to contracts (see Beit Yosef, Even Ha’ezer 66). Also, since the one who signed relied on those who asked to sign, it is considered as accepting whatever is written there (see S’ma 61:23). Finally, communications between the sides indicate that def admitted knowing in what he was obligating himself.

One cannot extract payment from an arev before exhausting efforts to receive payment from the borrower (Shulchan Aruch, OC 129:8). In this case, pl tried several times to receive payment from brw. The Ge’onim instituted an obligation for a borrower to swear he does not have property from which payment can be taken, and the K’tzot Hachoshen (129:4) says that if he does not swear, the arev is exempt. However, in this case, brw has documented his bankruptcy filing, and more importantly, def acknowledges that brw is incapable of paying. Therefore, def must pay.

The main question is about the time frame of payment. On the one hand, def is in his last year of professional studies, and his wife recently started working. There is a process for extracting payment from those with limited resources called mesadrin l’ba’al chov (see Shulchan Aruch, CM 97:23). One who owes money is allowed to hold on to a bare minimum of his own property (it might be even stricter for an arev – ibid. 29), and these halachot are generally stricter on the obligated than the practices of Hotza’a Lapoal.

On the other hand, if the obligated does not have property to seize, we do not force him to work in order to have from what to take or incarcerate him until he makes payment available (ibid. 15). Beit din, though, which has limited capabilities in determining the debtor’s capabilities, can recommend that the creditor use Hotza’a Lapoal to make such determinations.

Pl presented a recording of a phone conversation between pl and def before the loan. Pl was concerned that def was not a viable arev, and def tried to placate him with the assurance that if need be, he could take a 120,000 NIS loan. Was that assurance binding? Kovetz Hayashar V’hatov (XVII, p. 123) claims that nowadays, it is common for people who owe money to borrow large sums from gemachim, and if a borrower did not expect to have money to pay back when due, we treat it as a binding promise to borrow from another gemach to pay. In this case, def actually did promise to borrow money. A promise to borrow is equivalent to a promise to work.

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