CCAR RESPONSA
American Reform Responsa
169. How Should a Loan in Foreign (Russian) Currency, Exchanged in Another Country (United States) Be Repaid?
(Vol. XXX, 1920, pp. 113-119) From the Scriptural injunction: “Hear the causes between your brethren, and judge righteously,” Talmudic judicial procedure derives a rule forbidding the court to hear one party to a litigation in the absence of the other party; and from another Scriptural dictum is derived that the one party should not unfold to the judge his side of the controversy in the absence of his adversary (Sanh. 7b; cf. Shev. 31a). Accordingly, the greatest rabbinic authorities have always refrained from expressing opinions, even in an academic way, on questions involving money, unless both parties to the cause had clearly set forth their respective allegations (Solomon Luria, Responsa, Fuerth, 5528.24). In view of those just and wise regulations it may be deemed presumptuous on the part of even a recognized judicial authority (Mumcheh lerabim)–and much more on the part of one who, like myself, is not vested with such authority–to venture a ruling in a case the parties to which are separated by land and sea, and, consequently, on the one-sided statement of facts affecting money matters. However, it should be considered that, in the present case, the novelty of having before me a debtor who is anxious to be adjudged indebted to a greater amount than his creditor is likely to consider his due, proved an irresistible temptation to examine the matter and to clarify his status according to Rabbinic law. Moreover, it should be remembered that just because I am not vested with judicial authority, I am not bound by those restrictive regulations. Shortly before the outbreak of the World War, Ephraim determined to emigrate from his native Russia to America. Before his departure from home, his chum, Manasseh, presented him with 300 rubles in Russian currency, saying, “Here are three hundred rubles. Please accept them from me, and carry them to the United States; and may He ‘Who maketh poor and maketh rich’ prosper your way. Providence permitting, in the course of the next year or two, I too shall come thither, and then if you are able and your heart prompts you (I shall never appear as your creditor, neither shall I ever press you), you may repay me the loan, but without interest.” Ephraim accepted the proffered bills, pocketed them, and departed. Arrived in America, he exchanged the Russian bills for $145 in American money, and God blessed him in all his undertakings. In the meantime the terrible war broke out, and prevented Manasseh from crossing the ocean. He is still in Russia, while Ephraim has for some time been anxious to repay his indebtedness, but does not know how to cancel his debt, for if he sent his friend an exchange for 300 rubles, which would cost now about $15, that would represent only about one-tenth of the amount he realized for the Russian money he had taken from Manasseh; and, on the other hand, if he should repay him the sum of $145, this would be equal to about 3,000 rubles–ten times as much as the original sum. I have intently listened to Ephraim’s recital and pleas, and carefully pondered his sincere utterances and his earnest mien. I became convinced that he was anxious to repay the kindness of his friend who stuck to him closer than a brother. At least he was desirous of repaying his actual debt, at once and in cash if he only knew what that debt was. He reasoned thus: “If I should send Manasseh 300 rubles, which, at the present rate of exchange, would amount to only $15, I should consider myself as robbing my friend and benefactor of 90 percent of the sum he lent me (i.e., of the sum I received in exchange for his 300 rubles); and if I sent the value of $145 in Russian money, which would be about 3,000 rubles, I feel sure that Manasseh would be grievously offended. He would think that his close friend, who knows that he had never lent his money on interest, now presumes to suspect that he would take usury from his life-long friend. I know that he would never forgive me such an offense, while I am anxious to perpetuate and to strengthen the bond of friendship between us.” Therefore, he importuned me to advise him how to proceed in this case, so that he might discharge his obligation as he feels it, without offending his friend or the Rabbinic law. Bearing in mind the circumstances and details of the transaction as portrayed by Ephraim, I find some analogy in the following precedent. A ruling was asked of Simeon ben Zemah Duran in this case (see Tashbaz II, 288): Reuben had borrowed from Simeon 20 pounds of purple yarn, with the distinct understanding that 20 pounds of purple yarn should eventually be returned. Subsequently the price of purple yarn rose, and now Reuben argues that he owes him no more than an amount equal to the value of the borrowed yarn at the time of the borrowing, while Simeon claims that this is not so, but that purple yarn was the loan and purple yarn must be returned. However, he hesitates to press this claim lest it savor of usury; he therefore seeks the sanction of the learned in the law.This was the answer: From the phraseology of the question it appears that no time for the return of the loan was stipulated; and since the price of purple yarn is known among the dealers so long as their storehouses contain yarn, the case is analogous to borrowing a Se-a of wheat to be repaid with a Se-a of wheat, which, when the price is once standardized, may be done without setting a time for the return of the loan, and may be returned at any time. For while it is taught (B.M. 75a), “A woman must not lend to her neighbor a loaf, unless she sets on it a price, else, should wheat rise in value, the transaction might eventuate in usury”–that is not confirmed law. The Gemara cites the comment of Samuel, reported by R. Judah: “That is Hillel’s doctrine; but the [majority of] sages have decided that one may lend without stipulations and repay without stipulations.” Hence it appears that he [Simeon] is likewise within his rights in demanding the present price of the yarn; for, according to the universally approved ruling of R. Yannai (ibid., 65b): “There is no difference in the law between the goods and the value of the goods.” Agreeable to the principles underlying this decision, had our clients–Ephraim and Manasseh–appeared before a rabbinical court in Russia, which apparently is the place where the loan was consummated, they could be viewed as standing in the same relation towards one another as did Reuben and Simeon in their case, and the Russian currency notes could be considered as the purple yarn; and hence it would appear that Manasseh could legally claim no more than 300 rubles in Russian currency. For, if at the time of the transaction, the notes were considered as commodities (they themselves having no intrinsic value, except as certificates of trusts, which pass as money because the government promises to redeem them at their face value with silver, but have as yet not been redeemed and therefore have a fluctuating market value), I should consider their status analogous to that of the wheat in the following baraita (B.M. 75a), where it is decided: “One may borrow a Kor of wheat [without setting a price]; if wheat becomes cheaper, the borrower may return wheat;1 if it becomes dearer, he repays its value as it was at the time of the loan.” And if, on the contrary, we consider the ruble notes as money–since in contradistinction to commodities they certainly are money–their status is like that of the coin in Asheri’s responsum which concludes with the decision: “Where one borrows money without specifying how it is to be repaid, he may repay in the kind of coin borrowed, even if it is nowhere current; a fortiori, in this country where no coin is invalidated, but all are current, only one more so than another. Therefore he is obliged to repay in the coin which he borrowed.”2 Nor can Manasseh claim that, because the notes have fallen in value, silver has gone up, and should he now wish to exchange the notes for silver he would incur a loss in the weight of bullion. Should he so argue, Ephraim could rejoin in the words of Rabbi Yom Tov Lipmann Heller (Pilpula Charifta, B.K. 98a): “You did not lend me bullion, but coined money, and coined money I return; hence you lose nothing.” Again, should Manasseh plead: Because the value of the notes has come down, the price of goods has correspondingly risen, hence I should not now get as many goods as I formerly could have for the same amount in currency notes, Ephraim could counter with the statement that the price of goods has really gone up only because the government of the country has fallen, and, consequently, the people have lost confidence in the treasury notes, although the notes themselves have been reduced neither in size nor in weight. Therefore, since Manasseh lent him Russian notes, he must accept Russian notes in return. And were Manasseh to sue Ephraim before a rabbinical tribunal in this country–where no place for repayment is specified, because “a loan may be reclaimed anywhere” (“Milva nitena litava bechol makom,” B.K. 118a)–in that case Ephraim could not discharge the debt with Russian currency. For a baraita provides: “When one produces a bond of indebtedness against another…no place for repayment being designated therein, if the bond is produced in Babylon, the creditor collects in Babylonian money; if it is produced in Eretz Yisrael, payment may be demanded in the money of Eretz Yisrael” (Ket. 110b). Elsewhere it is taught (B.K. 97a): “Where one lends his neighbor money on condition that repayment be made in coin, Rav decides that payment must be made in the coin current at this time, while Samuel rules, the debtor may say to the creditor, Go to Meshan and spend it there.” Thereupon Rav Nahman remarks: “Samuel’s ruling is reasonable if the creditor is likely to go to Meshan; but if he is not likely to go to Meshan, the debtor may not pay him with coins not current here.” And since Manasseh’s intention is to establish himself permanently in this country, he must be considered as not likely to go to Russia. This being so, Ephraim must pay him with the money current at the place of payment, which is America; but even so, Manasseh is not entitled to more than the value, in American money, of 300 rubles at the time of repayment. From what has been said it follows that, although there is some difference as to the kind of money with which payment can be made (this depending on the place where the claim is made), there is no difference as to the amount Manasseh may claim according to Rabbinic law; to wit: 300 rubles–in Russia of Russian currency notes; or in America, of American money to the value of 300 rubles in America the established rule applicable to this case being, as enunciated by R. Yannai: “Ma li hen, ma li demeihen” (“There is no difference between goods and their value in money”). Such, it seems to me, would be the judgment of a rabbinic tribunal, if we view Russia as mekom hashiabud, the place where the obligation was consummated. After careful consideration, however, that view is impossible. The Rabbis of the Mishna (B.K. X.6) prescribe: “If one robs another, or borrows anything from him, or accepts from him a deposit for safe-keeping, if the deed is done at an inhabited [i.e., safe] place, he cannot legally make restitution in the desert; but when the deed is conditioned on going out to the desert, he may make restitution in the desert.” Hereunto the Gemara (ibid., 18a) remarks: “‘On condition of going out to the desert’–Why, this is self-evident! Well, it would really not have been necessary to state it, were it not intended to intimate that when the owner said, ‘Let this thing stay with you, for I intend to go out to the desert,’ whereupon the other said: ‘I too intend going out to the desert; if I should desire to restore it to you there I might do so.”‘ This is variously explained. According to Rashi (ibid., l.c., s.v. “I ba-ina”), it means: “Although there is no real condition, since he says, ‘If I should desire,’ nevertheless, because he too goes out to the desert, he is obliged to accept it there even against his will.” Bertenura interprets it thus: “It means not that one says, ‘On condition that you come out into the desert and restore it to me’–that would be self-evident; but even if the one says to his friend, ‘Let this remain in your custody for I am going out into the desert’; whereupon the friend says, I too intend going out into the desert’–even so, if he so desires he may restore it to him in the desert.” The difference between these two expositors is that Rashi makes the borrower the first to say: “Ana lamidbar ba-ina lemeifak”; while, according to Bertenura, it is the lender who says it first. There is, however, no difference as to the legal effects whether the one or the other expresses his intention first, since both share that intention. Now, in our case there was an express condition; for according to Ephraim’s statement, the lender had said to the borrower: “Providence permitting, in the course of the next year or two it too shall come thither, and then…you may repay me the loan.” Surely there need be no more express condition thnt this! If “even when a loan is made at an inhabited place, and the borrower says to the lender: ‘I intend going out to the desert,’ whereupon the lender expresses a like intention, it is legally considered as if the loan was made in the desert” (Tur, H.M. LXXIV), although neither loan nor repayment was mentioned by either party; a fortiori when, in our case, the lender plainly says: “I too shall come to the United States, and then you may repay me,” it should be taken as if the loan was made in the United States. And if the loan was consummated in the United States, the United States must be considered mekom hashi-abud, the place where the obligation was incurred. Therefore, Ephraim must pay to Manasseh the value of the loan in United States money. This, I think, is perfectly clear. But in view of this, the question comes back: What does Ephraim owe to Manasseh? What are we to understand by “the value of the loan”–300 rubles at the present rate of exchange or the value of 300 rubles as the rate stood at the time of the first transaction? The answer may be deduced from the following ruling (B.M. 72b): “A merchant carrying goods from market place to market place is approached by another who proposes to take the goods off his hands at the price which they are expected to bring at a certain place,” where goods are rated higher (Rashi, ad. loc.). In this case it is ruled that, “if the risk of conveyance to that place is carried by the original vendor, the bargain is permissible; but not so if the buyer assumes that risk,” for the surcharge might be construed as interest for deferring payment until after the sale of the goods at that other place (cf. Maimonides, Yad, Malveh IX.9). Now, if we carefully ponder Manasseh’s words which accompanied the loan, as repeated by Ephraim, it appears that not only did Manasseh entrust the Russian currency notes to Ephraim with the stipulation that they should be taken to the United States and exchanged for United States money, but also that Manasseh assumed the risk for the time being and for the future (i.e., the risk of transportation and until Ephraim should have accomplished the exchange and begin to profit by the use of the proceeds thereof as a business capital). For thus Manasseh said to Ephraim at the time of the loan: “Here are 300 rubles. Please accept them from me and carry them to the United States; and may He Who ‘maketh poor and maketh rich’ prosper your way. Providence permitting, in the course of the next year or two, I too shall come thither; and then, if you are able and your heart prompts you (I shall never appear as your creditor, neither shall I ever press you), you may repay me the loan, but without interest.” By this Manasseh surely did not mean to intimate that Ephraim should take the Russian notes overseas and lock them up in a safe or “bury them (according to the Talmudic advice, B.M. 42a) in a wall within a handbreadth from the ground”; but that he should exchange them for American money and use that money in business. Hence, Ephraim was Manasseh’s agent to convey Manasseh’s goods to America, there to dispose of them at the market price. Only after thus disposing of the goods and beginning to employ the proceeds in his own business did Ephraim become the borrower of Manasseh’s capital. Accordingly, we must apply to our case Rashi’s construction of the baraita just quoted: “There could be no loan until the goods have been sold; hence no matter how high a price the goods brought, all the proceeds belong to the original owner” (Rashi, B.M. 73a, s.v. “Mutar”). And since Ephraim received in exchange for the Russian notes entrusted to him by Manasseh one hundred and forty-five dollars, he owes Manasseh one hundred and forty-five dollars ($145.00), or the value of this sum in Russian currency notes, in accordance with the accepted principle enunciated by Rabbi Yannai: “There is no difference between the goods and their value in money.” Under the prevailing circumstances, Manasseh being in Russia (where United States money is not current), Ephraim is obliged to avail himself of the latter alternative, even though in following that course he will repay in rubles ten times the original sum entrusted to him. The increase can be considered neither as a “belated bonus” (“Ribit Me-ucheret”) for the use of the money, nor as any other shade of interest (“Avak Ribit”). It was practically a number of dollars that Ephraim borrowed from Manasseh; and if today the dollar buys more rubles than it could buy six years ago, it is the value of Manasseh’s dollars that pays for the greater sum of rubles. This, it appears to me, is the correct judgment, according to Talmudic and later Rabbinic law and regulation; and so I advised Ephraim, this the seventh day of Chanuka 5680, December 23, 1919.Samuel MendelsohnNOTES:1. Cf. Tosafot, B.K. 97a, s.v. “Hamalveh.”2. Asheri, Responsa, CIII.l.
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