Guarantor Liability

Mr. Samuel had retired years ago with minimal savings. Unfortunately, he had no family to help support him, and sustained himself meagerly from tzedakah that he collected.

When collecting was slow, Mr. Samuel would ask his neighbor, Mr. Judah, for small loans, which he usually repaid several months later when collecting picked up. One of Mr. Samuel’s friends, Mr. Weiss, graciously agreed to serve as guarantor for these loans.

One loan of $750 was already long overdue. “I’m aware of the $750 debt,” Mr. Samuel acknowledged in a message to Mr. Judah. “I’m trying to raise money for it.”

A few months later, Mr. Samuel passed away, leaving minimal assets that were quickly claimed by the bank and other creditors.

Mr. Judah turned to Mr. Weiss to pay the $750 loan, and a more recent, but overdue, $250 loan.

“Maybe Mr. Samuel repaid you?” asked Mr. Weiss. “Do you have proof that he didn’t repay?”

“Since the sums were small, we didn’t draft loan documents,” replied Mr. Judah. “We relied on text messages when I lent him, and when he repaid I would write a confirmation message. I’m sure, though, that Mr. Samuel didn’t repay. I can show you that there is no confirmation of paying.”

“That doesn’t prove much,” replied Mr. Weiss. “Maybe you simply forgot or neglected to send him a message.”

“Very unlikely,” replied Mr. Judah. “Anyway, regarding the $750 loan, I even have a message from three months ago that the loan is overdue and outstanding.”

“He could have paid in the meantime,” said Mr. Weiss.

“He didn’t,” replied Mr. Judah.

The two came before Rabbi Dayan. Mr. Judah asked, “Is Mr. Weiss liable to pay the two loans?”

“Regarding a loan without official documentation, i.e., before witnesses or with an informal IOU, the borrower is believed (with a light, heses, oath) that he repaid,” replied Rabbi Dayan. “However, if he is unsure whether he repaid – aini yodea im prasicha – he is liable” (C.M. 75:9).

“However, if the guarantor is unsure whether the borrower repaid – he is not liable. Only if the borrower admitted that he did not repay, but is unable to pay or no longer present, is the guarantor liable (C.M. 129:12).

The Acharonim discuss why the guarantor is liable on account of the borrower’s admission. After all, we do not rely on his admission to collect from property that the borrower sold to others.

Ketzos (39:5) explains that since the guarantor accepted a clear liability, when he does not know whether the loan was repaid he remains liable, as aini yodea im prasicha, even if we are suspect of the borrower’s admission (C.M. 75:9).

According to this approach, we need to explain that the guarantor is not liable when the borrower does not admit because then we claim (ta’aninan) on behalf of the borrower, who is not present, that perhaps he repaid and is exempt. Hence, the guarantor is also exempt, even though he does not know whether the obligation was settled (Gra 129:39).

Bach (129:15), however, maintains that a regular guarantor (as opposed to a kablan guarantor) does not have a clear liability, and is considered aini yodea im nischayavti, since he is liable only if borrower didn’t pay.

Furthermore, Kovetz Shiurim (B.B. #654) maintains that we claim on behalf of the guarantor, as we do on behalf on behalf of a buyer. If so, the question returns, why do we hold the guarantor liable when the borrower admits?

Nesivos (39:10) and Kovetz Shiurim explain, instead, that the guarantor initially commits and accepts liability whenever the borrower is liable, even based on his own admission, even if in truth the borrower could have exempted himself or was exempt.

Responsa Veshav HaKohen (#42) adds that even if some time passed after the borrower admitted, and perhaps he paid in the interim, the guarantor remains liable. Since the borrower is already held liable, based on his admission, the guarantor is also liable (Pischei Teshuva 129:9).

“Thus,” concluded Rabbi Dayan, “Mr. Weiss is halachically liable to pay the $750 loan that Mr. Judah admitted, but not the $250 loan, unless he trusts Mr. Judah.”

Verdict: For an undocumented loan, the guarantor is liable when the borrower admits that the loan is unpaid, but not liable if there is no such admission and the borrower is not present.