The first forty-four lessons dealt with what lawyers call procedural or adjective law, and are found in the first 28 chapters of Shulhan Aruch Hoshen haMishpat. Those laws deal with procedure in commencing a law suit, the court system and procedure followed at the trial, as were described in the first 44 lessons of this series. After the first 28 chapters of Shulhan Aruch Hoshen haMishpat, Rabbi Yosef Karo, following the order of Yaakov ben Asher (the author of the Arba Turim) commences to discuss the substantive laws. These laws continue for the remaining 389 chapters of Hoshen haMishpat.

The first substantive topic discussed is credit, referred to by Rabbi Yosef Karo as "Laws of loans". It should be remembered that it is a Torah commandment and the responsibility of every Jew to lend money to those who are in need, even if the needy person is wealthy. In the phrase "If you lend money to any of My people" (Exodus 22:24), the word "if" is not fully permissive. It permits the lender the right to refuse only if he is not in a position to lend. If he can lend, however, he must surely do so. Rambam enumerates this as positive commandment 197, one of the 613 commandments.

Such loans may be intended for personal or household needs, business needs, or any other legal purpose. The Midrash in discussing the verse states: "Woe unto them that join house to house" (Isaiah 5:8) cites a statement of Rabbi Yochanan who said that the verse refers to those who make a loan on a man's house and field with the intention of taking them from him.

Indeed, it is considered base and ignoble to refuse to lend money to someone in need. See Deuteronomy 15:9 "Beware that there be not a base thought in your heart, saying: 'The seventh year, the year of release, is at hand, and your eye be evil against your needy brother, and you give him naught.'" Rabbeinu Yonah adds: If we have been exhorted not to desist from lending at the approach of the seventh year for fear of the institution of release, how great must be the sin of one who refuses to lend when there is no danger of his suffering such a loss."

A great deal of what is said about loans will also apply to other forms of credit, such as those used in sales, contracts for construction or labor, and the like.

While there is an obligation to lend money to those in need, this obligation is not enforceable in Beth Din. This is true even if the proposed lender promised the borrower the loan and even if a kinyan was made to lend money. (IYH, next week's lesson shall discuss kinyan.) If the borrower incurred expenses, such as those to have the note of indebtedness drawn and the lender reneges, then the lender must reimburse him.

If the lender instructed the borrower to furnish a pledge, then the moment the lender takes hold of the pledge, he is obligated to complete the loan. The picking up of the pledge acts as a barter exchange, since objects are acquired when they are picked up. The moment the creditor acquires a security interest in the pledge, the borrower acquires an interest in the money to be loaned to him. The barter exchange would not have taken place if the borrower had picked up the money first, since money cannot be acquired by kinyan. Picking up the money first would not have given the lender any security interest in the pledged item. Although this was the intent of the parties, their intention would be frustrated until the creditor picked up the pledge.

According to halachah, all loans and extensions of credit are to be interest free. Rabbi Samson Raphael Hirsch, in his commentary on Exodus 22:24 states: "So the duty of lending money without interest is one of the rocks of that granite base on which Jewish social life rests. Carrying out this duty is at the same time one of these great acts of acknowledgement by which Hashem wants our allegiance to Him to be sealed by acts of sacrifice in our daily life."

Business investments are discussed in Shulhan Aruch Yoreh De'ah and not in Hoshen haMishpat, since laws regarding permissible business investments and the prohibition of taking of interest are there discussed.

The Sages have advised all lenders and extenders of credit to refrain from lending or extending credit unless there are witnesses present; better yet, the loan or extension of credit should be evidenced by a formal note of indebtedness, The note should be drawn by a competent attorney, who should see to its drafting, execution and delivery. A properly drafted, executed and delivered note of indebtedness creates a lien on the real estate owned by the borrower on the date of the loan.

In Volume 2 chapter 39 of A Restatement of Rabbinic Civil Law, I advocate that the Beth Din in each community have an index of all such notes of indebtedness that can be examined by prospective purchasers of real estate as well as mortgage lenders. This will remove any temptation on the part of the borrower to deny the loan, whether honestly or not. The lien of the note of indebtedness does not extend to personal property; such an extension would have the effect of preventing ordinary trade.

When a loan is made, the borrower must pay the expenses of the borrowing, such as fees of the scribe, lawyer and witnesses, if any. If the lender loses the note of indebtedness, he must pay to have a duplicate drawn. When the loan is repaid and the lender does not have the note of indebtedness to return to the borrower, the lender must pay for having a receipt drawn.

The creditor may refuse to make the loan or extend credit unless the debtor instructs the writing, signing and delivery of the note of indebtedness to the creditor.

A note of indebtedness may not be drawn until the debtor instructs the person writing the note of indebtedness to do so and the subscribing witnesses to sign and deliver the note to the creditor. There is an opinion that even if the debtor gave the instructions to write the note of indebtedness and to sign it, he must once again give the instruction to deliver the note of indebtedness to the credit, otherwise it may not be done.

The subject matter of this lesson is more fully discussed in Volume 2, Chapters 39 of A Restatement of Rabbinic Civil Law by E. Quint and on sale at local Judaica bookstores.

Address comments to quint@inter.net.il

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