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“THE NECKLACE”

By: Rabbi Max Sutton

Sandy was preparing for her daughter’s wedding in less than a week, and she could not find a matching necklace for her custom-made gown. She reached out to her neighbor, Rita, who offered to lend Sandy her diamond necklace for the big day. Sandy gratefully borrowed the necklace and wore it on the night of the wedding. Upon her arrival home after the wedding, Sandy discovered that the necklace was no longer around her neck. She was beside herself and returned to the wedding hall to conduct an extensive search of the premises and interrogate the workers as well. She returned home to no avail; the necklace had not been found.

The following morning, Sandy notified Rita of the misfortune. Nearly two weeks later, Sandy reluctantly paid Rita nineteen thousand dollars for the lost necklace. The cost of the necklace was determined by proof of the original purchase receipt. Still, it was a sum of money she and her husband clearly could not afford.

Only two days later, Sandy noticed something glittering from the crack in the console between the two front seats of her car. The necklace was found and Sandy eagerly called Rita to return the valuable to her. However, Rita was unwilling to refund the nineteen thousand dollars paid to her just two days ago, claiming she was already interested in another piece of jewelry.

Sandy and her husband brought their claim to Bet Din, declaring that since the necklace was never stolen or lost, their payment should be considered null and void. Furthermore, since Rita had not used the funds they forwarded to her yet, they claimed to have the legal right to return the necklace and get their money back. Rita held firm to her position; however, insisting that Sandy offered to pay for the necklace of her own volition and that, once paid for, the cash should not be returnable.

How should the Bet Din rule and why?

TORAH LAW

If a creditor stipulates by contract that his collection of a debtor’s property is final, he need not return the property for payment at a later date. In all other cases, according to the Shulhan Aruch, when a Bet Din enables a creditor to foreclose on a debtor’s property, the debtor reserves the right to redeem his property if he can generate the funds to pay his creditor. While numerous laws and regulations need to apply before property collected by a creditor can be repossessed, if all legal requirements are met, a creditor is obligated to exchange the property for the money owed. This legal courtesy is based on the Torah verse: “And you shall do that which is right and good.”

While the above ruling is applicable to a debtor’s real estate, it does not apply in instances in which tangible items are collected. When an item like a car or an electrical appliance is collected by a creditor, the debtor does not maintain the legal right to exchange it for a cash payment. Interestingly, if the debt is originally on account of a person’s misplacing an item he borrowed and he finds it again later, the borrower is entitled to redeem even this tangible item collected. Since the item was, in essence, never lost and the collection proceedings were mistakenly executed, the borrower may return the lost item in exchange for his personal property.

The above ruling applies only if the debtor’s property was forcibly collected by a legal system via foreclosure. If, however, the debtor willingly offered his real estate to the creditor to satisfy his outstanding debt, he is not entitled to later redeem his property. This is true even in the instance mentioned above, in which a borrower thought he misplaced the item he borrowed and willingly payed cash for the item. Although the item was later found in the borrower’s home, since he willingly offered payment, he is not entitled to a refund.

Furthermore, according to a number of halachic authorities a borrower may only redeem property collected by a lender. If cash was collected, the borrower is not entitled to a refund.

In the event that a borrower willingly paid for the mistakenly lost item and is therefore not entitled to a refund, he is viewed as the rightful owner of the found object. Hence, should the lost item appreciate in value in the interim, the increase is to his benefit.

VERDICTNon-Refundable

Our Bet Din ruled that Rita was not required by law to refund Sandy the $19,000 paid for the necklace, even though it was clearly a mistake since the necklace was in her possession all along. Since Sandy and her husband willingly offered to pay for the necklace, theirs was a valid purchase. As mentioned in Torah law, only when payment is forcibly collected by a Bet Din is the cash arguably refundable. With no other alternative, Sandy proceeded to contact the original jeweler, whose contact information was on the receipt. The jeweler was confident that he could sell the necklace at a profit. If he did so, the appreciated value would be credited to Sandy, who assumed rightful ownership of the necklace when she willingly paid for it.