In 2007, the American financial crisis precipitated the worst global economic disaster since the Great Depression. The predatory practice of extending mortgages to people who were unlikely to be able to repay them was partly to blame, as was the creation of complex mortgage-backed securities — financial instruments that aggregated mortgages (many of them high risk) and then sold shares of the combined debts to investors. These securities themselves were often repackaged and sold again, many times over. When the housing bubble burst and people began defaulting on mortgages at high rates, it became nearly impossible to figure out to whom the debt was even owed. Chaos ensued.
Mortgage-backed securities may be a relatively modern invention, but the practice of selling debt is old. And even in antiquity, the rabbis understood how quickly the question of who had a right to collect a transferred debt might arise.
Rav Pappa says: One who sells a promissory note to another must write to him: Acquire it and all liens on property that are contained within it.
Rav Ashi said: I stated this halakhah before Rav Kahana, and I said to him: The reason the buyer acquires it is that the seller wrote this for him. This indicates that if he did not write this for him, the buyer does not acquire the monetary rights recorded in the promissory note. But does he require it to tie around the mouth of his flask? Rav Pappa said to me: Yes, it is possible that he purchased the promissory note in order to tie it around his flask.
Let’s suppose Sarah is in possession of an IOU that says she has a right to collect $10 from Rebecca. If Sarah isn’t sure whether Rebecca will pay, or if she knows Rebecca can’t pay soon and urgently needs money, Sarah might sell that promissory note to Leah for $8. Once in possession of the IOU, Leah has the right to use it to go collect the $10 from Rebecca.
Rav Pappa explains that in order for this to be legal, Sarah needs to write an additional contract that clearly states the promissory note belongs to Leah now. As Rav Ashi clarifies, just handing over the original promissory note, which has Sarah’s name but not Leah’s written into it, is inadequate. After all, we might assume that Leah purchased the IOU not to collect the debt but merely to use the parchment as a stopper. In Leah’s hands, therefore, the original promissory note is essentially worthless without the additional note from Sarah officially transferring the debt to Leah.
But something about this feels unnecessary to other rabbis:
Ameimar says: The halakhah is that letters are acquired by merely transferring the document to the buyer, in accordance with the opinion of Rabbi Yehuda HaNasi.
Rav Ashi said to Ameimar: Is your ruling based on a tradition or on your own logical reasoning?
Ameimar said to him: It is based on a tradition.
Ameimar, citing a tradition from Rabbi Yehuda HaNasi, argues that the second written contract transferring the debt from Sarah to Leah is unnecessary. If Leah is in possession of an IOU that once belonged to Sarah and it hasn’t been canceled, we can and should assume Leah has a right to collect that debt. Interestingly enough, the Gemara doesn’t say this is a logical position — merely a traditional one.
This debate, which starts at the very bottom of today’s daf, spills over onto tomorrow’s page. It seems unlikely the rabbis could have predicted the subprime mortgage crisis of the early 21st century, but they did obviously understand the importance of being absolutely sure who owns a debt and inclined, especially when asked to lean on logic, to err on the side of additional contracts so that there could be no misunderstanding.
Read all of Bava Batra 76 on Sefaria.
This piece originally appeared in a My Jewish Learning Daf Yomi email newsletter sent on September 9, 2024. If you are interested in receiving the newsletter, sign up here.
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