Sa’if 7, Mechaber: A person borrowed money from two lenders. One of the lenders forgave the borrower the entire loan. This does not result in forgiveness of half of the loan lent by the other lender.
Rama: The result is the same even if the loans of both the lenders are recorded in one and the same promissory note. If the borrower settled the loan with one of the lenders, the other lender cannot use the settlement against him. He cannot say “you have already admitted that you owe us money so you must settle with me too.” The borrower is entitled to respond that “it is my right to settle with the other lender and litigate with you.”
Ner Eyal: The halacha is that if a person borrowed from two different lenders and the promissory note recorded the names of both lenders, the lenders are considered partners in the transaction. As such, each lender can sue the borrower for the total amount loaned without having to get a power of attorney from the other lender. The lender who sued must hold half of what he collected on trust for the other lender. This automatic authority to sue for the whole amount without requiring a power of attorney from the other partner does not, however, confer the power of one lender to forgive the loan on behalf of the other lender. The result would be the same even if only one of the lenders is recorded in the promissory note. The fact that the other lender is not recorded in the note does not eradicate the fact that he lent half the amount recorded in the note. The lender whose name is recorded in the note does not have the power to forgive the loan on behalf of the other lender.
Even though the borrower settled with the first lender, he can contest the loan in litigation with the second borrower. Unless the borrower outright admitted the existence of the loan in the course of settlement with the first borrower, he can raise any defense he likes with the second borrower including an outright denial of the loan. Once the lender who settled with the borrower received his half of the loan from the borrower, he may testify against the borrower on behalf of the second lender because he is no longer deemed to be an interested party.