Mr. Miller had lent the significant sum of $100,000 to a business associate, Mr. Rubin. Unfortunately, Mr. Rubin was only able to repay half the sum. “I have no available cash,” he claimed, “nor assets that I can liquidate now.”

“I’m willing to give you additional time, if you need it,” replied Mr. Miller.

“B’ezras Hashem, when business picks up,” said Mr. Rubin, “I will pay immediately every penny that I owe you.”

Some time later, Mr. Miller saw Mr. Rubin walk into a jewelry store. Mr. Rubin handed the storeowner a thick wad of bills and received a diamond ring. Mr. Miller waited until he came out.

“How’s business going?” Mr. Miller asked.

“Still not well,” Mr. Rubin sighed.

“Sorry to hear…” said Mr. Miller. “I’m just wondering … you still owe me $50,000. You also promised that if business picks up you will pay immediately every penny that you owe.”

“Of course,” replied Mr. Rubin. “Unfortunately, business hasn’t picked up yet.”

“Then how did you buy that diamond ring with a wad of bills?” asked Mr. Miller.

“That’s what you’re wondering?” laughed Mr. Rubin. “That ring is not mine. A relative gave me money to buy it for him.”

“Who is that relative?” asked Mr. Miller.

“He asked that I not reveal his name,” said Mr. Rubin.

“That sounds very fishy,” said Mr. Miller. “You owe me money, and you’re holding expensive property, bought with cash! It seems my right to demand payment unless you can verify whose it is! I’d like to go with you right now to discuss the matter with Rabbi Dayan!”

“Why should I have to tell you?” responded Mr. Rubin. “The ring is not mine, and that’s it! But I’m willing to speak with Rabbi Dayan.”

The two came to Rabbi Dayan. “Mr. Rubin owes me $50,000 and is holding a diamond ring, bought with cash, which he claims is not his,” said Mr. Miller. “Is he to be believed?”

“A borrower who is unable to pay, but is known to hold property, is not believed without evidence that the property belongs to another,” replied Rabbi Dayan. “This is based on the presumption that whatever is in a person’s hand is his (chazakah kol mah shetachas yado shel adam shelo hu). The borrower may be trying to evade repaying the lender” (C.M. 99:1; Maggid Mishneh, Malveh V’loveh 1:4).

“Similarly,” continued Rabbi Dayan, “the Gemara (Kesubos 19a) teaches that if a borrower who is unable to pay admits that a loan document he possesses from a third party is void, the borrower’s admission is not accepted to exempt the third party at the expense of the lender.”

“Are there cases where this rule does not apply?” asked Mr. Rubin.

“In cases where the borrower holds property that beis din is not aware of,” replied Rabbi Dayan, “the question arises whether he is believed when he says it belongs to others on account of the principle of migo (lit. “since”), since he could hide the money or give it away. The Ramban maintains that the chazakah overpowers the migo and he is not believed, while others disagree. The Rema cites both opinions.”

“What else?” asked Mr. Rubin.

“In situations where the borrower is likely to possess property of others, he is believed,” explained Rabbi Dayan. “For example, if he manages investments, serves as a salesman, or holds items that are typically rented, there is a reasonable likelihood that, in fact, the property belongs to others” (C.M. 99:3).

“Is money the same as other property?” asked Mr. Miller.

“Money is even more problematic for the borrower!” answered Rabbi Dayan. “Even if the money was given by another, if the borrower was expected to use it for himself and substitute other money, it is considered his. Moreover, the Shach (C.M. 99:2) maintains that whenever the borrower has the right to use the money, even if he didn’t, it is considered his; others disagree” (See Pischei Choshen, vol. X, 12:30-36).