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Sa’if 3, Mechaber: Two people guarantee the loan of one borrower. The lender can proceed against either of the guarantors for payment of the entire loan. If one of the two guarantors does not have sufficient assets to repay the entire loan, the lender may proceed against the other guarantor for the balance. In Siman 132:3, however, it says that some halachic authorities disagree with this.

A person guarantees the loans that two different people borrowed from one lender. The guarantor then honors the guarantee and pays the lender one of the loans he guaranteed. When the lender accepts the repayment from the guarantor, the lender must identify for the guarantor the borrower whose loan has been discharged by this payment. This way, the guarantor will know from which borrower to reclaim the money he repaid on his behalf.

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Ner Eyal: The Sma points out that the halacha in the case discussed in the first paragraph of this Siman 77:3, is different from the case discussed in Siman 77:1. In that case, there were two borrowers. Each of them was party to the underlying transaction. The primary obligation of each was to repay half the loan he received. In addition, each is deemed to have guaranteed the half the other borrower owed. Accordingly, the lender must first try to enforce the primary obligation against each borrower before he may sue the other borrower in his capacity as guarantor.

In the case discussed in the first paragraph of this Siman 77:3, there is only one borrower. His obligation to repay the loan is guaranteed by two guarantors. The halacha is that the lender may proceed to collect the entire amount of the loan from one of the guarantors. That is because the guarantors discussed in this Siman77: 3 were not parties to the underlying loan transaction. They never borrowed any money from the lender. Accordingly, the lender cannot view each as primarily responsible for half of the loan. Rather, each guarantor discussed in this Siman77: 3 independently undertook upon himself, as a favor to the borrower, to pay the entire loan in the event that the borrower would default. It is as if each guarantor gave a pledge to the lender for the entire amount owed by the borrower.

A pledge, by definition, is security for the entire loan. There is no pledge for half a loan. Furthermore, unlike the case discussed in Siman 77:1 in which there were two borrowers, in the case discussed here there was only one borrower. The underlying obligation was not split equally between two borrowers. The lender may, therefore, proceed against one of the guarantors for the entire amount, unless each guarantor explicitly guaranteed only half the loan. After honoring the guarantee and repaying the entire loan, the guarantor who did so may recover half of the loan from the other guarantor.

There is a view expressed in Siman 132:3, however, that the lender may not initially proceed to collect the entire amount of the loan from one of the guarantors. Rather, he must act as if the two guarantors were primary obligors. He must initially attempt to collect half the loan from each guarantor. Only if he fails in that endeavor is he permitted to proceed against the other guarantor for the entire amount of the loan. The reasoning behind this opinion is that since there are two guarantors, their liability under the guarantee is split in half, just like the co-borrowers discussed in Siman 76:1.

The case discussed in the second paragraph of this Siman 77:3 is that of the person who guarantees the loans two different people borrowed from one lender. Following the default of one of the borrowers, he honors the guarantee and repays the loan of one of them. It is the prerogative of the lender to decide which of the two loans the guarantor has discharged with this payment. In making this decision, the lender may decide the guarantor discharged the loan of the borrower he would find it more difficult to collect from, leaving the lender to collect from the borrower he would find it easier to collect from.

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Raphael Grunfeld received semicha in Yoreh Yoreh from Mesivtha Tifereth Jerusalem of America and in Yadin Yadin from Maran Hagaon Harav Dovid Feinstein, Shlitah. A partner at the Wall Street law firm of Carter Ledyard & Milburn LLP, where he specializes in cross-border mergers and acquisitions, Raphael is the author of “Ner Eyal, a Guide to Seder Nashim, Nezikin, Kodashim, Taharot and Zerayim” (2016) and “Ner Eyal, a Guide to the Laws of Shabbat and Festivals in Seder Moed” (2001), both of which are available for purchase at https://www.amazon.com/dp/057816731X Questions for the author can be sent to rafegrunfeld@gmail.com