Mr. Simon had borrowed $15,000 from Mr. Goldstein, to be repaid in 15 monthly payments of $1,000. They drafted a formal loan document, signed by witnesses.
Mr. Simon usually repaid through a Zelle transfer at the beginning of each month.
A year later, Mr. Goldstein called Mr. Simon. “My records indicate that there were only 11 Zelle transfers,” he said. “You skipped a payment four months ago.”
“Indeed, there was no Zelle payment that month,” Mr. Simon replied, “but I paid you in cash. I brought the money to your house one evening.”
“I never received a cash payment from you!” Mr. Goldstein stated. “Do you have any receipt for that?”
“No,” answered Mr. Simon. “Since I paid regularly every month, as we’d stipulated, I didn’t expect that there would be a problem. It seems that you forgot.”
“Thank G-d my memory is intact!” Mr. Goldstein exclaimed. “Had you paid, I would remember it! Maybe you planned to bring the money over, or perhaps you paid someone else in cash.”
“No, I’m absolutely sure that I paid you,” Mr. Simon insisted. “I couldn’t Zelle you at the beginning of the month, but I received cash a few days later and paid you that evening.”
“It’s basically your word against mine,” Mr. Goldstein said. “I hold the loan document, which indicates that you haven’t repaid the loan yet.”
“That proves nothing!” Mr. Simon argued. “You hold the loan document because there are still another few remaining payments. It indicates nothing, though, about whether I paid the monthly installment four months ago.”
“That may be,” Mr. Goldstein replied. “But bottom line, I hold a loan document and you have no proof of payment.”
“But I’m in possession of the money,” Mr. Simon insisted, “and your document doesn’t indicate anything.”
The two approached Rabbi Dayan and asked:
“Is Mr. Simon to be believed that he paid in cash without proof?”
“When the lender holds a formal loan document signed by witnesses,” Rabbi Dayan insisted, “the borrower is not believed that he repaid without proof. The simple rationale is: If the loan was repaid, why does the lender still hold the uncanceled loan document (B.B. 70a)
“Rashba (Teshuvos 1:1065) addresses a loan that calls for several timely payments, and the borrower claims that he paid some of them. Although the aforementioned rationale seemingly does not apply, since the lender holds the document for the remaining payments, Rashba rules that the borrower is still not believed without proof. He should have requested a receipt or adjusted the loan document (Rema C.M. 82:2).
“Nonetheless, if the borrower claims definitively that he paid, he can demand that the lender take a severe oath (holding a sacred object) before collecting the disputed amount, like any other loan document (unless it stipulated that the lender is believed in the absence of proof – ne’emanus). Beis din, though, will not initiate such an oath (Shach 82:10).
“Moreover, Aruch HaShulchan (82:5) writes that if the lender acknowledges that several payments were made, this case is treated like other cases in which the loan document is partially paid (pogem shtaro), and beis din will require of the lender a severe oath of its own initiative (C.M. 84:1).
“Nowadays, almost all batei din do not impose oaths, but rather rule a compromise in accordance with the severity and likelihood of the oath (C.M. 12:2).
“Thus, Mr. Simon is not believed that he paid, but beis din will likely compromise in lieu of the oath incumbent upon Mr. Goldstein.
“Had the loan document been an informal one, though, like an IOU,” concluded Rabbi Dayan, “the borrower would be believed with a lesser oath (shevuas heses) that he paid, since people often are not concerned to take back an IOU upon payment, unless stipulated that the borrower be believed only with proof (C.M. 69:2).”
Verdict: When the lender holds a formal loan document calling for timely payments, the borrower is not believed without proof that he made some payments, since he should have requested a receipt.
