Shimon Stein knew better days. He had been a successful real estate developer, but the market crash had brought him to near poverty. He had to sell off asset after asset, including his own home, to cover his mounting debt.
One debt was a $100,000 loan from Reuven Rosen. When the loan became due, Mr. Rosen turned to Mr. Stein for payment.
“I have no way of paying you back in the near future,” said Mr. Stein. “I have no more assets to sell.”
“I know you recently presented in beis din a document that you loaned your brother, Levi, $100,000 some years ago,” said Mr. Rosen. “If you collect that loan, you will be able to pay me.”
“That loan was repaid a while back,” said Mr. Stein. “I didn’t bother returning the loan document to my brother; he trusted me.”
“Do you have any record of payment?” asked Mr. Rosen. “A check or bank statement?”
“No,” said Mr. Stein. “He paid me in cash installments.”
“What about a receipt?” asked Mr. Rosen. “Does your brother have a receipt of payment?”
“No, we didn’t bother writing a receipt,” replied Mr. Stein. “Levi trusted me.”
“Why didn’t you destroy the loan document after your brother repaid?” asked Mr. Stein.
“The document was filed away and I didn’t have a chance to destroy it,” answered Mr. Stein.
“This whole story sounds very fishy,” said Mr. Rosen.
“Regardless, Levi borrowed from me,” said Mr. Stein. “I admit he repaid the loan, so there’s nothing more to do.”
“In the end, though, your ‘admission’ is harming me!” argued Mr. Rosen. “Your statement is very suspect.”
Mr. Rosen sued in Rabbi Dayan’s beis din to make Mr. Stein collect the loan from his brother Levi so that he could pay his debt.
“Is Mr. Stein believed that the loan was repaid?” asked Mr. Rosen.
“The Gemara in Kesubos 19a teaches that a lender who has no other assets is not believed to say that a loan document of his is amana [for show only, invalid], when he owes others,” replied Rabbi Dayan. “This is because of the law espoused by R’ Natan that if Reuven lent Shimon who lent Levi, a direct obligation is formed from Levi to Reuven. Thus, Shimon’s admission that his loan document is invalid is not accepted to negate Reuven’s rights to collect from Levi. The rule: ‘hoda’as ba’al din k’meah eidim dami – a person’s admission is like a hundred witnesses,’ is only to one’s own detriment, not to the detriment of others.” (C.M. 47:1)
“What about an admission that the loan was repaid?” asked Mr. Rosen. “Is that the same as admitting the ‘loan’ was only for show?”
“Some Rishonim differentiate and say Shimon is believed, since a loan is intended for repayment,” replied Rabbi Dayan. “However, Shulchan Aruch rules that it is the same, so that Mr. Stein is not believed.” (Beis Yosef C.M. #47)
“I assume that Shimon’s admission would be valid, though, regarding himself,” said Mr. Rosen. “If he ended up paying Reuven, Shimon would not be able to collect from Levi, after admitting the loan was repaid.”
“Shimon’s admission is disregarded entirely in this case,” said Rabbi Dayan. “Shimon can claim he only admitted the loan was paid to evade his creditors and was not sincere. Since his admission was not accepted regarding Reuven, it is disregarded also toward Levi.”
“However, if Shimon admitted before being sued by his creditors that the loan was repaid (or, according to some, if he admitted in the presence of the borrower), he cannot collect from Levi,” concluded Rabbi Dayan. “He cannot claim then that his admission was insincere. Of course, if Levi knows the loan wasn’t actually paid, though, he can pay.” (Sefer Haterumos, 51:2:2-3; Pischei Choshen, Shtaros 11:27-28[66])