THE JERUSALEM INSTITUTE OF JEWISH LAW 
Rabbi Emanuel Quint, Dean 

Lesson # 70 - Collecting from the Debtor's Debtor 

Shimon has loaned $100 to Levi, which loan is still unpaid. Reuven then loaned $100 to Shimon. If Reuven can collect the $100 from Levi, then Shimon is left out of the collection process. Under what circumstances may Reuven collect the $100 from Levi? In halachah this concept of Reuven being able to collect from Levi is known as the “lien of Rabbi Nathan.” 
According to Torah law, when Reuven loans $100 to Shimon and a note of indebtedness is executed with witnesses and delivered to Reuven, Reuven has a lien on all of the assets of Shimon including a lien on the outstanding debt from Levi to Shimon. According to Torah law the lien would not apply if the loan from Shimon to Levi was after the loan from Reuven to Shimon. However, the “lien of Rabbi Nathan” extends also to debts of Levi to Shimon that arose after the debt of Simon to Reuven. Levi stands in a relationship of being a guarantor of the indebtedness from Shimon to Reuven to the extent that Levi owes Shimon money. 

Assuming the above facts, that Levi owes $100 to Shimon and Shimon owes $100 to Reuven. If Shimon’s debt to Reuven is uncollectable, then Reuven may sue Levi and collect the $100 under the laws of the “lien of Rabbi Nathan”. It does not matter which indebtedness arose first. It also does not matter how the indebtednesses arose, whether as results of credit transactions or sales or loans, or wages or torts. It will even apply if one of the debts arose from a Rabbinic imposed liability. It does not apply to proposed gifts or proposed charity Levi has promised to give Shimon. When Shimon receives the gifts or charity from Levi, then Reuven can collect the moneys in the hands of Shimon.

The “lien of Rabbi Nathan” extends beyond just three persons. Thus it would extend if Reuven loaned money to Shimon who had loaned money to Levi and Levi had loaned money to Yehudah. If neither Shimon nor Levi can repay Reuven, he may sue Yehudah. 

Reuven can avail himself of the foregoing rights only if Shimon does not have assets from Reuven to collect from. This is ascertained by Beth Din by administering an oath to Shimon that he has no assets in the community besides the moneys due from Levi. But if Shimon has other assets in the community besides the moneys due from Levi, then Reuven cannot sue Levi. If Shimon has assets in another country, it will not impede the operation of he halachah in this instance. Reuven is not under an obligation to travel to another country to collect his debt when the opportunity presents itself here under the “lien of Rabbi Nathan.” There is also a view that Reuven can avail himself of the right to sue Levi even if Shimon has other assets in the country, unless to do so would prejudice Levi, such as when Levi has a set-off to the claim of Shimon against him or claims that Shimon would have extended his time for payment or compromised the debt. 

The halachah give Reuven the right to sue Levi, and he may avail himself of the law, but Reuven has no right to insist that Shimon sue Levi to collect the $100 and pay Reuven. However, if the agreement between Reuven and Shimon is that Shimon will assist Reuven in helping to sell and liquidate Shimon’s assets, then he must do so by suing Levi. The prevailing view is that Shimon would be considered a wicked person if he did not assist Reuven in collecting moneys from Levi, if he could do so.

If Shimon is found within the jurisdiction of the Beth Din, then Reuven must notify Shimon that Reuven is suing Levi to collect the debt from Levi, the debt that Levi owes to Shimon.

There is authority that if Levi is holding money for Shimon, Beth Din may collect the money on behalf of Reuven. 

Shimon cannot drive the debt from Levi, nor extend the time that Levi has to repay the debt since this affects the rights of Reuven. For Shimon to forgive the debt or extend the time for repayment will deprive Reuven of his vested lien against the debt in the hands of Levi. Similarly Shimon may not plea that the note of indebtedness that he holds against Levi is not a valid note or has been repaid, since these pleas will affect Reuven’s lien against Levi. 
If after Beth Din renders a judgement in favor of Reuven against Levi, Levi pays his debt to Shimon. Reuven can still collect the debt from Levi. Similarly, if Levi fails to appear in Beth Din to answer a summons requested by Reuven, and Reuven obtains a restraining order against Levi not to repay Shimon, and Levi in violation of the order, repays Shimon, and Shimon does not have assets to pay Reuven, Reuven can collect the amount of the debt from Levi. 

Reuven loaned money to Shimon, which loan is evidenced by a note of indebtedness. Shimon has a note of indebtedness against Levi, who happens to be Shimon’s brother. Shimon has no assets and Reuven sues Levi. Levi pleads that the so-called loan from Shimon was really a favor that Shimon did for Levi with the understanding that Levi would not have to repay Shimon. Reuven can collect from Levi even if Beth Din believes Levi unless the note from Levi specifically sets fort the plea of Levi. Beth Din may conclude that Shimon would probably not have compelled Levi to repay the loan, but since he had the right to do so, Reuven may enforce his rights against Levi, if there is no other way Reuven can collect his debt. 
Assume that Reuven’s loan to Shimon was an oral loan, thus Reuven has no lien on the realty of Shimon. That means if Shimon would have had real estate when the loan was made and Shimon sold his real estate to Pinchas, Reuven could not sue Pinchas to retrieve the real estate in payment of the loan from Reuven to Shimon. Shimon then loaned money to Levi which loan was evidenced by a note of indebtedness and thus created a lien in favor of Shimon on the real estate of Levi. Shimon has no assets and Levi sold his real estate to Yehudah and Levi was left without assets. Reuven wants to collect from Yehudah on the strength of the note of indebtedness held by Shimon. If Shimon admits that he still owes the money to Reuven, then Reuven may collect his debt from the real estate Levi sold to Yehudah upon Reuven taking an oath that he was not yet repaid by Shimon.

The subject matter of this lesson is more fully discussed in Volume III, Chapter 86 of A Restatement of Rabbinic Civil Law by E. Quint and on sale at local Judaica bookstores. Questions to quint@inter.net.il