Lesson # 47 - LOANS part 2

In lesson 45 (TT427) there was discussed the writing of a note of indebtedness when a loan or other credit transaction is entered into. This lesson, has some additional halachot regarding such notes of indebtedness, and then discusses a note of admission. For convenience, I have divided the note of admission into two categories: (1) the note of admission; and (2) the note of admission-of-assumption-of-debt.

A debtor may request that a note of indebtedness be draw up even if the creditor is not present. Neither the witnesses nor the Beth Din need be concerned that a debtor may be putting himself into a vulnerable position because the note of indebtedness may fall into the creditor’s hands without the loan having been made. The debtor made the decision and it should be followed. A debtor may want to have a note of indebtedness ready in case a lender is in a hurry and will not have time to obtain the services of a lawyer or scribe.

However, a creditor may not request that a note of indebtedness be written if the debtor is not present. His statement that he will destroy the note if the loan is not made is not replied upon. The note may not be written even if the creditor agrees to leave the note with the scribe until the loan is actually made.

Witnesses may not sign a blank note of indebtedness or even a completed note of indebtedness with instructions that it be held in escrow until the loan is actually made.

In our kollel, as I walk around the room I occasionally stop at a student’s desk and ask to borrow a shekel. By now, unless he is a new student, the lender will refuse to lend me the shekel unless I consent that two other students act as witnesses to the transaction and that I authorize them to write, and sign as witnesses, a note of indebtedness regarding the loan.

It is stated in lesson 9 (TT387), “The first matters that the nonordained judges took jurisdiction over were commercial matters. Or as the Talmud calls them, matters of “loans” and “admissions”. The difference between a loan and an admission is that the loan refers to the actual transaction of a person borrowing money, from a bank or from a private individual. The term “admission” refers to a statement made by the debtor in the presence of witnesses who heard him admit that he owes the money to the creditor.” In the latter situation the witnesses did not witness the credit transaction or the loan. They were told about it later by the debtor.”

A note of admission has the same legal effect as a note of indebtedness with regard to effecting a lien on the real property owned by the debtor when the loan was made.

A note of admission regarding money or personal property may not be drawn up without instructions of the debtor. The reason for this is that the debtor may have returned the deposit or the personal property, and the note of admission would subject him to liability again. With regard to real property, however, the same claim cannot be made again since it is easy to see who is in possession of the real property. Therefore the witnesses to the admission even without the debtor’s instructions can write a note of admission regarding real property. An example of an admission regarding real property is a case in which an individual admits that the house in which he resides belongs to another person.

The note may be written without the debtor’s instructions if the debtor made the admission in the presence of three persons who he brought together to act as a Beth Din. If an appointed Beth Din, at the behest of the creditor, summoned the debtor to Beth Din, and the debtor appeared and admitted the indebtedness, then the Beth Din may write the note of admission, execute it and deliver it to the creditor. Of course the Beth Din may not write the note of indebtedness unless it recognizes both parties.

If the debtor instructed that the noted off admission should not be given to the creditor, it may not be given to the creditor.

If the admission was that the debtor owed money to two persons or that he borrowed from two persons, then the note of admission names them both as creditors. Even if the note is given to only one of the parties, the other has the same rights as against third parties.

A person may obligate himself to pay money to someone even when he is not legally obligated to him. He does this by having written and signed by witnesses, what I have designated as a note of admission-of-assumption-of-debt. This is somewhat different than the usual note of admission because in the latter situation there was a preexisting debt. In this case of admission-of-assumption-of-debt, the creditor, the debtor and the witnesses know that there is no “real debt”. But a person can create a debt to someone where none existed before.

Although there are not too many situations where a note of admission-of assumption- of-debt would be drawn, this type of note has in recent times become a useful tool in making halachik wills. Ever since Rav Adin Stinsaltz and I had a forum devoted to a discussion of halachik wills, at which time I volunteered to act as a consultant to see if wills were halahikly correct, I have read scores of wills. I have usually made a few suggestions to make the will comply with halachah. In almost every situation, a will that conforms with the law of the state, conforms with halachah. A few words often have to be added, which added words do not change any of the meaning of the gifts and bequests made in the will. Often, however, to make the will comply with halachah, one note of admission-of assumption-of-debt and sometimes two notes of admission-of-assumption-of-debt must be used.

Thus in the case of writing a will a person may admit that he owes certain relatives money to enable them to inherit under his will although under halachah they might not inherit. The note of admission-of- assumption-of-debt does not give rise to a lien on the debtor’s property.

Both the note of indebtedness and the note of admission (including the note of admission-of-assumption-of-debt) have a presumption of regularity. That is, the Beth Din will assume that it complies with all the rules required to be followed when it was written. If the note fails to state that it was drawn up at the behest of the debtor, it is presumed that he gave such instructions. When questioned by Beth Din the witnesses are believed to state that the debtor gave such instructions.

The subject matter of this lesson is more fully discussed in Volume VI, Chapters 39 and 40 of A Restatement of Rabbinic Civil Law by E. Quint and on sale at local Judaica bookstores.

Address inquiries to quint@inter.net.il

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