Money and Means of Payment in Halakha (4)

IV. KINYAN

 

A. MONEY OR MERCHANDISE?

 

1. TORAH LAW

 

            At the de-oraita level, there is an important difference between money and merchandise.  Barter, i.e. a trade of merchandise for merchandise can be effected by symbolic demonstration of possession - such as raising or "hagbaha" - by one side, whom we will call the buyer; immediately the other object becomes the property of the seller.  But in a sale, i.e., a trade of merchandise for money, only the acquisition of money by the seller effects the exchange; even if the buyer takes hold of the merchandise, it remains the property of the seller and the money that of the buyer.

 

            This distinction seems logical.  When money is given, the relationship between the parties is completely through - the seller owns the purchase money, and the buyer owns the purchased merchandise.  But when merchandise is given, no specific coins become the property of the seller, rather if the sale is final he acquires a kind of debt - the buyer must pay him.  It makes sense that the Torah would validate a transfer only when this validation brings us to our desired destination - the final closing of the deal.

 

            The basis for this distinction, in turn, is that money is valued as an abstract measure of value, not as a specific good.  There is no reason that giving merchandise should transmit ownership of specific coins since no one cares about which specific coins he owns.  In fact, specific coins and bills cannot be transferred in a barter-like transaction.  (BM 45b)  Money is valued as a symbolic embodiment of value, as opposed to an actual object of exchange.

 

            Since a medium of exchange does not require an absolute standard, it is logical that many different kinds of money could simultaneously have money status with regard to the laws of kinyan (as opposed to the laws of ribit, which we learned in a previous shiur require an absolute standard).  This is exactly what the mishna at the beginning of Ha-zahav (Bava Metzia 44a) tells us - merchandise always effects an exchange with respect to a variety of forms of currency and near-currency enumerated in the mishna.  Gold, silver, and copper coins as well as non-circulating ones are all considered money; the determining factor is that the acceptor sees them as symbolic and not inherent value.

 

            It also makes sense that "money-ness" should be a relative concept - items can be "money" in one instance, "merchandise" in another.  This also is what the mishna tells us: copper coins are considered merchandise with respect to the more definitive silver money, but as money with respect to non-circulating coins.

 

2. RABBINIC LAW

 

            The situation is more complicated on the de-rabanan level.  According to Rabbi Yochanan, Scriptural law determines that money effects an acquisition, but regarding movable property, the sages legislated the opposite: that the transaction is valid only when merchandise changes hands.  The reason for this rule is that when only money changes hands, the merchandise becomes the property of the buyer but remains in the domain of the seller, and we are concerned with the problem of moral hazard: "lest the seller should say, your wheat was burned up in the silo," that is, after the money changes hands, the seller may exercise inadequate care in protecting the goods from loss and damage since they no longer belong to him.  The solution to the problem is to enable the buyer to retract until the goods reach him.

 

            But when merchandise is delivered, the problem of moral hazard does not arise - we are not worried that the buyer must now supervise the money he owes to the seller.  Acquisition of merchandise does not transfer ownership of specific money, but rather creates a debt of a particular amount of money.  A debt does not need any protection from loss or damage.

 

            It may seem that by conditioning the sale on the transfer of merchandise, we have traded one moral hazard for another.  The seller will take good care of sold merchandise because the buyer can retract.  But he may not take good care of the money he receives, knowing that if it is damaged he too can retract - why aren’t we worried "lest the seller say your coins were burned up in the silo?"  But this worry is unjustified - in general the coins are his and whatever happens to them, if the sale is reversed he has to return the full sum.  (See Sema CM 198:7 who seems to think this worry requires an explanation, but see the Shakh there who explains that this worrisome scenario does not arise.)  Again, when the seller receives the money his obligation to the buyer - if one should arise due to retraction - is in the form of a debt, not a deposit.

 

            In all these cases the relevant property of money is that it is "le-hotza'a nitna" - it is given to be spent, and there is no importance to the particular coins.  Money is symbolic value - only its quantity is important for the value it represents.

 

            We mentioned in a previous shiur three defining properties of money -  standard of value, means of exchange, and store of value.  We then discussed the possibility that different areas of halakha which distinguish between money and other claims might depend on different properties.  This would be significant in circumstances where the three properties were not shared by a single asset - for instance in hyperinflation, where the standard of value might be foreign currency, means of exchange local currency, and store of value uniform durable goods.  For some halakhot foreign currency could be considered money, for others local money.

 

            Let us examine the rules of kinyan in the light of this distinction.  Suppose in a hyperinflationary South American republic the standard price of an apple is five cents, but the payment is made in pesos according to the exchange rate at the moment of payment.  We have explained that the key property of money for the rules of kinyan kesef is that it is not an object of exchange but rather is a valuation of exchange.  If the relevant property of money for kinyan kesef is "means of exchange," then pesos are money, because even in hyperinflation the local currency typically remains the main means of exchange. Then paying in pesos is a kinyan kesef, which is not final.

 

            But if we suppose that the underlying debt when a purchase is made in these circumstances is for dollars, the pesos being merely a way of repaying the dollar debt, perhaps pesos should be considered goods - barter - and not money.  Perhaps, then, paying pesos should be a valid way of making a purchase?

 

            A similar case is discussed in the gemara in Bava Metzia 46b, which refers to "damim she-hen ke-chalipin" - "money which is like barter."  The case is of one who accepts merchandise in lieu of payment, only because its money valuation is the same as the money he is supposed to receive.  Like our case, the payment is not actually in the unit which constitutes the standard of value, only in an object which is worth the right amount.  The gemara accepts that according to the reason for the regulation, the kinyan should not be finalized since the merchandise is considered like money.  However, the halakha is that there is a kinyan, since unusual cases were not included in the regulation.

 

            It follows that even if pesos are to be considered merchandise, paying the pesos should be considered like a kinyan kesef since the merchandise itself is only an embodiment of an abstract standard of value.  So such a kinyan should be revocable, unless this itself is considered an unusual transaction and exempt from the general rule that money doesn’t finalize a kinyan.

 

B. KINYAN KESEF

 

            We need to know when payment has actually been made both for the purposes of kinyan de-oraita, and also for those cases where money effects an acquisition even de-rabanan - for instance, kiddushin, real estate (which is not subject to the regulation since it does not need supervision), or purchase from a non-Jew.  (See Bava Metzia 48a.)

 

            Payment in currency certainly works - we have seen that even Rav Shlomo Kluger, who considers paper money only a note, admits that it is money for dinei mamonot.

 

            A bank transfer also presents no problem.  A transfer of a third party debt in a way that leaves no room for the seller to cancel the debt is considered kinyan kesef in every respect, as we will explain.

 

            The case of a check, though, needs to be examined according to the four ways of looking at the status of a check mentioned in the previous shiurim:

 

            1. The first possibility, that a check is merely an order for the bank to pay, seems very simple - the giving of a check does not transfer a debt at all, so no kinyan takes place; when the money is actually given or transferred then payment is valid according to all opinions.

 

            All the other possibilities are complicated by the fact that a check can be canceled.  The gemara, in Kiddushin 47b, brings two disputes regarding kiddushin with a debt: according to the explanation of the gemara, the dispute regards the extent of the transfer's validity, but everyone agrees that if the debt is irrevocably transferred there is a valid kinyan, and that if the "buyer" (mekadesh) can cancel the debt, there is no kiddushin.  (This rule is identical for any other kinyan kesef - see Bet Yosef, Even Ha-Ezer 28:13; and see Shakh CM 190:1 who explicitly states that a "mamrani" - a check-like instrument which is irrevocable - effects a kinyan kesef.)

 

            With this preface, we will examine the details.

 

            2. If the check is considered the note of the buyer, Rav Zalman Nechemia Goldberg (loc. cit.) claims that the ability to effect a kinyan kesef is dependent upon a dispute of the Rishonim.  The gemara in Kiddushin 8a asserts that it is impossible to "mekadesh" by delivering a pledge on a loan.  Tosafot and the Rosh claim that this is because there is no valid lien on the pledge in the circumstances described; the Ramban and Ritva claim that even if there is a lien, the kinyan is no good since the pledge technically belongs to the "buyer" (the mekadesh).

 

            It follows that according to Tosafot and the Rosh it is possible to effect a kinyan kesef with a check (a claim to a debt) since in this case there is a binding obligation (according to this assumption); but according to the other opinion, there is no possibility of purchasing with a check since the money still belongs to the buyer.

 

            3. A check transfers a debt to the payee. We have seen that the Gemara specifically conditions the validity of such a purchase on its irrevocability. The extent to which a check is considered revocable due to the technical possibility of stopping it, or irrevocable due to the criminal penalties for passing a bad check, are an important part of the discussion of the status of a check - a discussion which is beyond the scope of this article.

 

            Rav Ben Yaakov and Rav Blau, who view a check as an obligation of the bank to the recipient, seem to view the debt as fundamentally irrevocable (see note in Brit Yehuda loc.cit.). It follows that a kinyan kesef could be made with a check. This is indeed the ruling of Rav Blau in Pitchei Choshen on Acquisitions (3:13, and note 21).

 

            It may be that even if a check is revocable, its status in acquisitions is stronger than that of a note, which cannot effect a kinyan since the original lender can cancel it. Forgiving a note actually erases the debt, whereas canceling a check leaves the debt by the payer but does not cancel it

 

            We have asked the question if a check is like money - and therefore can effect a kinyan kesef - or if its status is worse than that of money because it can be canceled. Of course, even if a check does act like a kinyan kesef, it shouldn’t finalize a sale of moveable property, because as we explained de-rabanan such a sale is retractable if only money changes hands. But surprisingly, there is a basis for ruling that a check is superior to money, and can effect even an acquisition of chattels!

 

            Tosafot (Bava Metzia 46a) rules that a kinyan sudar in which one side obligates himself to give money, and the other to give goods, is not subject to the aforementioned gezera of "shema yomar nisrafu chiteikha be-aliya," because if the seller claims that the sold goods were damaged, the buyer can refuse to pay up. On this basis, the Machaneh Efraim (Kinyan Maot 5) postulates that a promissory note can effect an irrevocable purchase of chattels, since the promissor can refuse to make good on his note if the merchandise is damaged due to the seller’s carelessness. However, other Acharonim dispute this ruling (see Netivot Ha-mishpat 204:1, and Ketzot Ha-choshen 39:8).

V. MA'ASER SHENI

 

            The relevant property of money for interest was the highest level of abstraction - the standard of value in commerce; the important factor for acquisitions one level lower - the actual object used in exchange. With ma'aser sheni we descend one more level to the property of the object which makes it useful as money - the "tzura" or stamp of the mint.

 

            If we return to the example mentioned in the introduction of cigarettes - which were used in POW camps as money - we would have no difficulty establishing their money status such that it would be impermissible to lend eight packs in return for nine, or that giving over a case of cigarettes would not effect the acquisition of a blanket. However, it is obvious that ma'aser sheni could not be redeemed on a pack of cigarettes; the same would presumably be true of wampum.

 

            Indeed, the question could be asked even with respect to paper money - not because of its symbolic status, which is identical with base-metal coins in circulation today, but because it is not "stamped" in the same way as coins. But the Chatam Sofer, in the responsum cited above, takes it for granted that banknotes are valid for redeeming ma'aser sheni; the Chazon Ish (Demai 3:12) likewise determines that fundamentally there is no difference between metal and paper money, and hence no technical obstacle to redeeming ma'aser on paper money, though he mentions that it has always been customary to redeem on coins only.

 

            At any rate, the potential for money provided by the stamp does not preempt the need for the coin to circulate, and a non-circulating coin is unfit for redeeming maa'ser sheni (Bava Kamma 97b). This is obvious, insofar as the purpose of the redemption is in order to spend the coins on food in Jerusalem (see Shakh, YD 331:138).

 

            There is clearly no possibility of using a personal check. Likewise, there is a fundamental technical obstacle to redeeming on electronic money, where there is no object at all.

VI. OTHER DISTINCTIONS

 

            There are many other areas of halakha which distinguish between money and merchandise, but these are mostly a function of convention and not of the inherent distinctions between the two.

 

            For instance, some opinions in the Mishna (Bava Metzia 51b) state that the standard of overcharging is stricter for money than for other merchandise, but this seems to be just an application of the rule which makes a very exacting rule for merchandise which is measured out - the customer is more demanding with money than with goods, and even more so with weights and measures (Bava Metzia 56b).

 

            Another example is that while most debts can be discharged in merchandise, loans can be paid back only in money. This is merely because there is a presumed implicit agreement to this effect between lender and borrower; if there were a different agreement, we would rule according to whatever was accepted.

 

            The rule of "modeh be-mikzat" states that admitting part of a claim obligates an oath; but this is only if one admits that one owes part of the same debt that is claimed. If one sued for wheat admits that he owes rye, there is no oath. But Choshen Mishpat (88:9) rules that if a sum of money is sued for, then admission of merchandise is considered modeh be-mikzat; this is because it is customary to think of a merchandise debt in terms of its monetary value.

 

            Much of the discussion of the status of checks regards the shemitta year. The end of the sabbatical year cancels out all debts which are still extant. If a note is given prior to the end of the shemitta year, we have to examine if the note has the force of a debt; if so, it is forbidden to collect on it in the following year (unless a prosbol was made).

 

            What about a current check given at the end of shemitta - can it be cashed afterwards? This depends on the three approaches mentioned to the status of a check. According to the second understanding, it is a debt and was cancelled by the end of shemitta; but according to the first and third understandings, it is still permissible to cash the check: because the first explanation states that there was never any debt, and the third considers the debt to already be paid (although the debt from the bank, if it is Jewish-owned, may have been wiped out).

 

            What about the understanding of Rav Blau that a check represents an obligation both of the payer and the bank? Presumably the obligation of the payer is erased, but not that of the bank, except in cases where bank debts in general are eliminated.

VII. CONCLUSION

 

            We have limited our analysis to the purely technical questions of the halakhic status of different means of payments. However, the Torah demands that we constantly elevate our perspective. Whether or not electronic money is equivalent to "ma'amad shloshtan" is an appropriate way to start to think about this technological advance, but it should not be the end of our thoughts. We should evaluate its impact in the framework of a general Torah perspective.

 

            For instance, if the "cashless economy" actually eliminates tokens of payment, as opposed to merely marginalizing them, there would be a very worrisome repercussion for one of the most important commandments - charity. The average citizen may be perfectly happy dispensing with bills and coins and going around with nothing but his debit card, but will the beggar on the corner really be armed with a card reader? Consideration of this question, and others like it, emphasize the need for sensitivity and thoroughness in evaluating the halakhic impact of economic progress.