Aryeh needed a $2,000 short-term loan. “I’m happy to help you,” said Shlomo. “I’ll draft a loan document and have you sign it.”
A few months later, Shlomo asked Aryeh to repay the loan.
“I already paid you,” replied Aryeh.
“Are you sure?” asked Shlomo.
“Yes, absolutely positive,” said Aryeh.
“I’m sure that you didn’t pay,” said Shlomo. “I remember that I considered asking you for the money a few times, but saw that your financial situation was still difficult. The fact that I’m holding the loan document proves that you still didn’t pay.”
“A few days before Pesach I brought you $2,000 cash,” said Aryeh. “You were running out the door to take your child to the doctor, so I didn’t bother taking the loan document back. I was supposed to pick it up later that evening, but wasn’t able to, and then we were away for Pesach and afterward I forgot about it.”
“I remember taking my child to the hospital, but don’t remember at all that you came by to pay,” said Shlomo. “Let me consult with my lawyer.”
Shlomo came back two days later and said: “I spoke with my lawyer, and he said that a loan document signed by the borrower is fully enforceable unless there is proof of payment.”
“That may be the law,” Aryeh argued. “But the question is: What would beis din rule in our case?”
“I don’t know,” replied Shlomo. “But I’m happy to take the case before beis din.”
Shlomo summoned Aryeh to adjudicate before Rabbi Dayan’s beis din. He presented the signed loan document and demanded payment. Aryeh stated his claim that he already repaid the loan but never took the loan document back.
“Who is believed?” they asked.
“This halacha requires clarification,” replied Rabbi Dayan. “The more formal the loan document, the less a claim of repayment would be believed without proof.”
“Can you please explain?” asked Shlomo.
“A person who borrowed without a written loan document, even in the presence of witnesses, is believed with a heses – rabbinic – oath to say that he repaid,” explained Rabbi Dayan. “However, if he borrowed with a loan document signed by witnesses, he is not believed. The lender can ask ‘Why am I holding your document?’ if the loan was repaid.” (C.M. 70:1; 82:2)
“Many Rishonim compare an IOU note signed by the borrower to a loan in the presence of witnesses,” continued Rabbi Dayan. “The borrower can claim that because an IOU note does not have the full legal status of a loan document signed by witnesses, he did not insist that it be returned. However, a small number of Rishonim maintain that the lender’s argument, ‘Why am I holding your document?’ applies also to an IOU note.”
“What does the Shulchan Aruch rule?” asked Aryeh.
“The Shulchan Aruch [C.M. 69:2] rules like the majority of the Rishonim, that the borrower is believed with an oath to say that he repaid, whereas the Rama cites the dissenting opinion and rules that the dayan should do as he sees fit, based on the circumstances of the case,” replied Rabbi Dayan. “However, the Shach [C.M. 69:8/14] sides with the Shulchan Aruch that the borrower is believed, and concludes that this is the accepted practice. Nonetheless, he concedes that in special circumstances – where there is strong basis that the borrower would not leave the paid IOU in the lender’s hand – the dayan should do as he sees fit.”
“Later acharonim write that the borrower is not believed that he paid an official ‘Pay to the bearer’ document,” added Rabbi Dayan. “Since this document is enforceable in civil court and can easily be transferred to others, the borrower would certainly not pay and leave the document in the lender’s hand.” (Pischei Teshuvah 69:4; Nesivos 69:4)