It was stated in last week's lesson (TT 430): "The kethubah, as does any note of indebtedness, creates a lien, like a mortgage on the real estate of the groom. The lien arises when the kinyan has been performed by the groom." Assume that Reuven borrowed $1000 from Shimon on January 1, or he got married on that date and the kethubah which mentioned the sum of $1000, was then written. On January 1, Reuven owned no real estate. Assume that the note of indebtedness, such as the kethubah mentioned that the document is a lien on after-acquired real estate, but the debtor/former-husband never acquired real estate thereafter. Assume that the debt is due on a loan or there is a divorce and in both cases the debtor/former-husband does not have assets to pay the debt. There seems to be no assets from which to collect the debt/kethubah.

The creditor/divorced wife, who would enforce her rights under a written instrument such as a kethubah must first enforce collection from the property owned by the debtor/former-husband at the time the debt is collected. It is the same whether real estate or personal property (anything not included as real estate is designated as personal property) owned by the debtor at the time the debt is collected. If the debtor's assets are insufficient to pay the debt, then the creditor may trace the real estate owned by the debtor at the time the debt was incurred. In the case of marriage it is from real estate owned by the husband at the time the kethubah was written. The real estate may be traced regardless of whether the debtor had sold it or had given it away as a gift. If the instrument mentions that it applies to after acquired real estate they can also be traced if they were sold or given away prior to when the debt must be paid.

What if the debtor/former-husband did not at any time own real estate, neither at the time of the marriage nor subsequent thereto? Can the wife collect from personal property that the husband owned at the time of marriage or acquired thereafter while they aware still married? The husband at the time of marriage or thereafter bought a Rolls Royce automobile. He sold it a few years prior to the divorce. He now has no assets, having spent the money that he received from the sale of the car. Can the wife demand from the purchaser of the car that he pay the kethubah? Should he refuse, can she obtain an order from Beth Din to have the car sold at a public auction and the proceeds be used to pay the kethubah, and the balance to be given to the purchaser?

According to Talmudic law, if the instrument of indebtedness states that the prsonal property of the debtor is liened "along with real estate", then the lien olso attaches to the personal property owned by the debtor at the time of the making of the loan, and may be traced. If the instrument also states that it is a lien on after-acquired personal property, "along with" the lien on the real estate, then it would also attach to such after-acquired personal property. These laws no longer apply.

The current state of the law is that the personal property that the debtor sells prior to the time when the creditor comes to collect the debt is not traceable by the creditor. Thus the wife could not go to the purchaser of the Rolls Royce and make her demands for payment. Why this result? Assume that you went down to the grocery store and bought a loaf of bread and some cheese and you made yourself a cheese sandwich that you are eating while reading Torah Tidbits. Suddenly there is a knock on your door. Holding the sandwich in your hand, you open the door and a sheriff grabs the sandwich from you hand. When you ask the reason for his seemingly odd conduct, he tells you the folowing. The grocery store owner borrowed $1,000 from The Lenders Bank. The grocery onwer did not pay the $1,000 on its due date and the bank obtained a judgment for $1,000. All the merchandise in the grocery that the bank seized was worth only $600. The bank was still owed $400. The bank obtained an order from Beth Din to trace the assets of the grocery owner. To trace means that they can find out to whom the grocery owner sold merchandise and insist that these people pay the balance of $400 or give up the merchandise that they purchased from the grocery store owner. Thus the bread and the cheese were subject to the lien of the bank and the bank could request that the sheriff seize such assets. Thus the sheriff seized the sandwich. You now have to read Torah Tidbits while munching on an apple that you purchased from the fruit store owner, hoping that he did not owe a bank money.

With such possible results in mind, the Rabbis of the Talmud decreed that personal property, even if owned by the debtor when the loan was made, is not traceable by the creditor. This rule applies even if the instrument of indebtedness states that the personal property of the debtor is subject to the lien "along with" the lien of the real estate.

This is done to protect innocent purchasers of personal property. All commerce would suffer if customers had to examine the source of all merchandise in the stores and hands of vendors. However, this policy intended to protect commerce does not preclude tracing instruments of indebtedness. If the seller sells an instrument of indebtedness from some other debtor, then his creditor may trace the instrument to the hands of the purchaser. For example, Naftali sells automobiles that he purchases from Subaru. Naftali does not pay for the automobiles in cash; part is paid in cash and part is to be paid on certain terms and Nafali gives a note of indebtedness to Subaru for the balance. Issacher buys an automobile from Naftali. Issacher does not have the full purchase price and gives a note of indebtedness to Naftali in the sum of $2,000. Naftali needs cash and sells the note of indebtedness to Yosef for $1,500. If Naftali does not pay Subaru, Subaru can trace the note to Yosef, who may then pay the amount of indebtedness due to Subaru from Naftali or he must give the note of indebtedness made by Issacher to Subaru. The reason is that the sale of instruments of indebtedness is not so common, and thus commerce will not be thwarted by the fact that a creditor can trace the instrument in the hands of a purchaser.

If a debtor transfers all of his assets and retains nothing for himself, then it is assumed that this was done with the intention of defrauding his creditors and all of the assets may be traced, since the enactment to protect commerce does not apply to this situation. It will be for Beth Din to decide the merits of the disposal of the assets, with the presumption being, that it was done to defraud creditors.

The subject matter of this lesson is more fully discussed in Volume 2, Chapter 60 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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