A Loan or a Gift? – part I

Case: A few years ago, Shimon wanted to buy a home and asked his brother, Levi, for help. Levi gave 60,000 shekels and then later another 100,000. Levi has put Shimon on notice that he wants Shimon to repay him the 100,000 shekels, which was a loan, when he has the ability. Shimon asked beit din to make a declaratory ruling that the money had been a gift. This is evidenced by the fact that there was no loan contract and is in line with the many gifts Levi had given Shimon over the years. Something had just caused Levi to "change his tune." Levi says that originally Shimon had asked him for a loan for the entire cost of the home, but that he had agreed only to a more modest gift plus a loan. Levi described a discussion before the loan in which he had said that he was unable to give the 100,000 as a gift. Shimon says that occurred well after the money was given, and that, in any case, Levi had previously pledged the money as a present, without which Shimon would not have bought the home.

Ruling: Even if Levi originally pledged a gift, he is not legally required to fulfill the pledge (Shulchan Aruch, Choshen Mishpat 204:8), and therefore Shimon cannot rely on it as a determinant that the payment was a gift.
The Shulchan Aruch (CM 75:7) rules that not only can one deny receiving a loan or a pikadon or say he returned it, but he can also say that the money he received was as a present or that the giver was mochel the need to return it. He needs only a simple oath (heset) to be exempt. However, the Shach (75:22) and others say that the latter two claims are weak ones, which one is believed about only if he has a migo (the ability to be believed with another claim). The Sha’ar Mishpat (ad loc.) disagrees with the Shach. The Shulchan Aruch (CM 58:2) says that if Reuven owed money to Yehuda with a document and Reuven was seen giving money to Yehuda in a context that is not clear, Yehuda can say that it was payment for another loan (without a contract) migo of the claim that it was a present. On the other hand, the Rama (ad loc.) rules like the Rishonim that in such a case, Yehuda would not be believed that the money transfer was either a present or for another loan. Acharonim says that, in this regard, the situation of there being a document affects matters.
In this case, Shimon does not have a migo, as regarding such a large sum of money, which is almost never given without involvement of banks (checks or bank transfers) it is not feasible to claim that he did not receive the money or that he returned it. Therefore, whether Shimon is believed that he received it as a present or not depends on the above opinions, and, in any case, he would have to make a shevu’at heset.
Beit din rejects Shimon’s proof that the money was a gift from the fact that there was no document. It is not unusual to trust a close relative with payment without a document.

Next week we will explore the possibility that the assumptions of whether one is likely to give a gift are different when the people involved are close relatives.