Fiduciary Duties in Classical Jewish Law.docx

Saiman, Draft of January 2018 Fiduciary Principles in Classical Jewish Law1 Chaim Saiman Villanova University Forthcoming: Oxford Handbook of Fiduciary Law (2018) I. Introduction The concept of a fiduciary and fiduciary duties that cut across a variety of different roles in an economy does not exist in classical Jewish law. The closest analogue emerges from a discussion in the Mishnah, the earliest stratum of rabbinic text, regarding what modern lawyers understand as pleading standards. The Mishnah discusses the factual allegations that different claimants must aver in order to compel defendants to either pay the claim or deny the charge by submitting to a formal oath. In that context, the Mishnah lists a special class of claimants who can demand an oath from their counter-parties even in the absence of specific factual allegations: The following [actors] can be put to an oath even without an allegation of wrongdoing: a partner, a sharecropper, a guardian of minors (apotropos) a woman conducting business with her husband’s assets and the manager of the household. If the defendant [fiduciary] demanded to know: “What are you claiming against me?” The plaintiff may state: “I want you to swear to me [that you have not abused your office.” In these cases] the defendant is required to take an oath.2 Though the Mishnah does not explain the common elements to this list, from the perspective of modern fiduciary law, the connection is easy to see. The enumerated parties 1 The topic of fiduciary duties has received comparatively little attention from scholars in Jewish law, and the existing work mainly focuses on public law fiduciaries. The primary exception is Yaron Unger, Fiduciary Duties in Jewish and Israeli Law (PhD Diss., Bar Ilan University 2015) (hereinafter “Unger”) which offers a comprehensive account of the field in Hebrew. Due to organization of this volume, as well as the lack of resources in English, this article focuses primarily on “classical Jewish Law,” that is, the law as recorded in the Talmud and presented in the central law codes. Though on occasion I will refer to later developments and the responsa literature, I concentrate on the core texts and doctrines will serve as the starting point for any subsequent analysis of this subject. 2 Mishnah Shevuot 7:8. Though not addressed in the Mishnah, Maimonides held the same rule applies to an agent entrusted with an asset who is instructed to sell it, and an agent given monies to purchase goods on the principal’s account. See Mishneh Torah, The Laws of Agency & Partnership 9:5. 1 Saiman, Draft of January 2018 maintain both control and broad managerial discretion over the assets of another, entrusting, party. This relationship provides the fiduciary with ample access and opportunity for abuse, while making it difficult for the entrustor to obtain meaningful oversight. In sum, the Mishnah has put its finger on the core aspects of the fiduciary relationship.3 Rather than articulate duties of care or loyalty however, the Mishnah speaks in procedural term of when the entrusting party can demand an oath attesting to the fiduciary’s faithfulness. Drawing on Biblical precedents, the Talmud understood that oaths were serious business. The oath-taker was required to hold a Torah scroll and swear under the divine name or an appellation while standing before the court and plaintiff. Further, the judges employed the full strength of their religious and rhetorical powers to instill fear of false oaths, to the point of actively dissuading litigants from swearing.4 Persons of ill-repute or suspected of falsehood were not generally permitted to undertake an oath,5 and rabbinic literature is filled with anecdotes of defendants opting to pay or settle claims rather than undertake an oath; even when they would swear to the truth— much less in cases of falsehood.6 While not structured in terms of fiduciary duties or equitable remedies, a rule requiring a fiduciary to swear to his faithfulness may have a substantially similar impact. For while the Talmud has no illusions that the oath was failsafe, it assume that does think that the obligation to swear may constitute as a serious constraint on behavior. Such is the plain meaning of the Mishnah. However, the Babylonian Talmud, and those writing in its wake, introduced several significant limitations to these rulings. First, the Talmud finds it absurd that the entrustor could simply subject the fiduciary to an oath at any time or for any reason.7 Rather than a right to an “oath on demand” the entrustor must offer evidence of the fiduciary’s breach, (though pleading standards remain lower than in non-fiduciary cases).8 3 See Tamar Frankel, Fiduciary Law 4 (Oxford, 2011) (all fiduciaries share three elements: (1) entrustment of property or power, (2) entrustors’ trust of fiduciaries and (3) risk to the entrustors emanating from the entrustment.). 4 See generally Mishneh Torah, Laws of Oaths, Ch. 11. Tur & SA, HM §87. 5 Tur & SA, HM §92 6 See for example, Tur, OH 166:1. On the general trend of avoiding oaths as a fact- finding tool in civil procedure, see Eliav Shochetman, Civil Procedure in Rabbinic Courts, Vol 2. 738-743 (Jerusalem 2010-11) [Hebrew], and Natan Ḥai, Oaths in Rabbinical Courts: Between Ideal and Reality, 2 Mishpatie Aretz 59-77 (Ofrah, Mishpetei Aretz Inst. 2005) [Hebrew]. 7 Talmud Shevuot 48b 8 As understood by Taz to HM §93:1 2 Saiman, Draft of January 2018 Second, several authorities held the oath is only required when the fiduciary has at least partially admitted to the allegations. If the fiduciary denied all wrongdoing in toto, the entrustor cannot compel the oath.9 Yet a third limitation relates to the precise content of the oath. Though some early authorities held the oath requires an affirmation the fiduciary exercised reasonable care,10 the majority view limits the oath to an attestation that the funds were not embezzled or misappropriated. This makes it harder for entrustors to rely on the oath as a mechanism for monitoring the fiduciary’s loyalty, care, or performance.11 Further, though a plain reading of the Mishnah puts fiduciary concerns at its core, later readers do not seem to maintain this view. The Talmud directly asks what unites these actors into a common category, but its answer, “because [those listed in the Mishnah] permit themselves to appropriate the entrusted assets,” is less than clear.12 Notably, this phrase does not stress either the ease of access or complexities of oversight that typify modern fiduciary regulation. And on this basis, some held the fiduciary’s oath is only applicable to cases where the fiduciary is unpaid, on the theory that embezzlement is more likely when the fiduciary works without compensation.13 Though others held that even paid fiduciaries have ample opportunity and incentive to steal,14 from the perspective of a coherent account fiduciary law, the Talmud seems less interested than a plain reading of the Mishnah suggests. Finally, modern law often treats fiduciaries as a special category, adopting prophylactic rules designed to prevent even the appearance of conflicting interests, backed up by enhanced remedies that ensure a faithless fiduciary will not profit from a breaching of duty. Notably, neither is a prominent feature of Mishnaic nor Talmudic law. 9 See Talmud Shevuot 48b and interpretation of Rashi therein, as well as the views cited in Tur, HM §93:4. Others maintain the second limitation refers only to the minimal amount in controversy, but does not require the fiduciary to admit to partial fault. See authorities cited in Beit Yosef to HM §93:4. Because there is no clear consensus on the matter, Jewish law rules that the “tie” goes to the defendant, (since plaintiff bears the burden of proof). As a result, and the entrustor cannot subject the fiduciary to an oath without a partial admission of fault. See Responsa Maharshdam, (Samuel de Medina; Salonika, 16th c.), HM § 159; Unger pp. 177 and at notes 689-691. 10 See Responsa of Nissim Gaon, (Nissim b. Jacob; Kairouan, Tunisia, 11th c.), cited in Teshuvot ha-Geonim (Harkavey ed. §235). 11 Tur & SA, HM §93:1 12 Talmud Shevuot 48b. 13 See Tosafot Shevuot 48b. 14 See Mishneh Torah, Laws of Agency, 9:1-2 & 5; Beit Yosef to HM §93:3. 3 Saiman, Draft of January 2018 Nevertheless, as we transition from the ancient and medieval periods towards early modernity, Jewish law increasingly turns towards fiduciary concepts. As will be explored below, in a number of significant areas, latter scholars articulated fiduciary duties and remedies reminiscent of developments in modern law. This Mishnah, and its subsequent interpretation, offers an encapsulated history of fiduciary duties in Jewish law. First, where one party has managerial discretion over the assets of another, Jewish law offers the entrustor fiduciary-styled rights and remedies not generally available in other contexts. Second, though the Mishnah could have served as a launch-point for a developed system of fiduciary duties in Jewish private law, the Babylonian Talmud and the tradition developed in its wake, did not proceed down this path. Third, neither the category of “fiduciary” nor the attendant duties of loyalty or care gelled into a coherent conceptual framework in classical Jewish law. The best description is that Jewish law maintains many laws of fiduciaries, but a much weaker recognition of fiduciary law. Nevertheless, as approach modernity, some areas of Jewish law move closer to law common law understandings, This article proceeds in nine parts. Following this introduction, Part II offers a survey of the main sources of Jewish law and some methodological notes about comparative analysis. Part III examines the status of fiduciary law within the larger system of Jewish civil liability. Parts IV-VII look at fiduciary concepts within the laws of bailments, guardianship, trusteeship, and agency and partnerships. Part VIII contrasts the limited duties of private law fiduciaries with the far more robust prophylactic obligations surrounding public law fiduciaries. The final Part concludes with analysis and reflection on the differences between Jewish and common law approaches. II. Sources of Classical Jewish Law The foundational text of Jewish law is known as the Mishnah, code-like document divided into 63 tractates compiled in the land of Israel in the 2nd and 3rd centuries of the common 4 Saiman, Draft of January 2018 era, following the destruction of the Temple in Jerusalem.15 The Tosefta is a cousin-text to the Mishnah which is arranged in roughly the same format. It is more loosely edited and generally held as being of slightly lesser status than the Mishnah.16 The Talmud is the definitive source of Jewish law. It is a massive compendium of both legal and non-legal rabbinic statements formally framed as an exposition of the Mishnah. There are two versions of the Talmud: the Jerusalem (also Palestinian) Talmud, completed around the fifth or sixth century in Israel, and the Babylonian Talmud, completed several generations later in present-day Iraq. The Babylonian Talmud is understood as more authoritative and referred to herein simply as the Talmud.17 As a general rule, all subsequent expressions of Jewish law ultimately trace their authority back to the Talmud. In the post-Talmudic period, three major codifications emerged. In the 12th century, Maimonides summarized the entire Talmud in his Mishneh Torah which presented a conceptual organization of the Talmudic material into 14 books and 90 topical subjects.18 In 14th century Spain, R. Jacob b. Asher’s penned the work known as Arba’ah Turim (lit. “Four Rows,” or divisions; hereinafter known as “Tur.”), which examined only on the practiced sections of law. Tur divides these aspects of Jewish law into four “rows” or central divisions. The section most relevant to this paper appear in the division titled Ḥoshen Mishpat (“HM”) which focuses on civil law and procedure. On occasion, we refer to laws codified in Yoreh De’ah, (ritual law), 15 The Mishnah has been translated into English in several editions, including the 21 volume set, The Mishnah: A New Translation and Commentary by Pinḥas Kehati (Avner Tomasschoff ed., Department of Torah Education and Culture in the Diaspora Jerusalem, various years). The Mishnah is also translated in the editions of the Talmud listed below. Citations are to one of the 63 tractates, and then to chapters and paragraphs within. 16 The best available translation is by Jacob Neusner, The Tosefta: Translated from the Hebrew, (several volumes released by different publishers). Citations follow those of the Mishnah. 17 The two best translations are the Schottenstein edition by Artscroll/ Mesorah publications, and the KorenSteinsaltz English Talmud by Koren Press. Elements of the latter are also available online as the William Davidson Edition at https://www.sefaria.org/texts/Talmud. Citations are to a tractate and then to the pages numbers of the standard editions. 18 The leading academic translation remains the multi-volume series published in the 1970’s by Yale University Press under the title The Code of Maimonides. It is also available in translation online at http://www.chabad.org/library/article_cdo/aid/682956/jewish/Mishneh-Torah.htm Citations are to one of the topical headings and then to chapters and paragraphs within. 5 Saiman, Draft of January 2018 Even ha-Ezer, (family law and martial property), and Orakh Ḥayyim (daily, weekly and yearly practices of Judaism).19 Roughly 200 years following Tur’s publication, Joseph Caro authored an extensive commentary on that work titled Beit Yosef. This later work collects additional opinions and analysis, but does not always declare the authoritative rule between them. Later on, R. Caro compiled a brief summary— headnotes, really— to Beit Yosef titled Shulḥan Arukh (literally a “set” or “ready table”) where all opinions were organized to be easily digestible. The text is sparse and declarative and focuses exclusively on the black-letter rules, generally under the sway of the Sephardic (Spanish, North African and Middle Eastern) rabbis at the expense of the Ashkenazic (European) tradition. Shortly after the Shulḥan Arukh’s (hereafter “SA”) publication, R. Moses Isserles (acronym: Rema) of Cracow, Poland, drafted brief emendations and glosses to the text that put forth Ashkenazic laws and customs where differences had emerged. Since the late 16th century, the two works have been printed together, and the combined text has come to be known as the foundational code of Jewish law.20 Later, numerous commentaries and super-commentaries developed around this work to further explain and specify the legal rules. Most relevant to the discussion below are the works colloquially known as Shakh,21 Taz,22 S’ma,23 Netivot haMishpat,24 and Pitḥei Teshuva.25 All of these are all printed on the margins or bottom of the page of the standard editions of the Shulḥan Arukh. None has been systematically translated. 19 This work has not been translated in its entirety. Citations are to one of the four parts, and then to sequential code sections that follow. 20 SA is built around Tur’s structure and citations are to the same sections. A multivolume treatise written by Emmanuel Quint titled, A Restatement of Rabbinic Civil Law (Gefen Publishing, various years), presents a translation and anthology of the civil law section code and its surrounding commentaries. 21 This is an acronym for the work known as “Siftei Kohen” by Shabtai ha-Kohen of Vilna, (1622–1663). It is printed on the margins of the standard page of the SA. 22 This is an acronym for the work known as “Turei Zahav” by David ha-Levi Segal of Poland (c.1586-1667). It is printed on the margins of the standard page of the SA. 23 This is an acronym for the work known as “Sefer Meirot Einayim” by Joshua Falk Katz, (1555-1614, Poland). It is also printed on the margins of the standard page of the SA. The same author also wrote interlocking commentary and analytical notes known as “Prishah” and “Drishah” to the earlier code, Tur. These works also appear on the margins on the standard editions of Tur. 24 Authored by Jacob Lorberbaum of Lissa (Poland,1760-1832), and printed on the bottom of most editions of the SA. 25 Authored by Avraham Tvzi Hirsch Eisentat (Lithuania, 1813-1868), and found on the bottom of the standard printing of SA. 6 Saiman, Draft of January 2018 In addition to the legal codes, Talmudic commentaries authored by medieval and earlymodern rabbis represent another important source of legal authority. The most influential are the medieval French commentaries known as Rashi26 and Tosfot,27 which are printed on the margins of the standard Talmudic page. Other significant works from the Spanish realm are the commentaries of Ramban,28 and his students, Rashba29 and Ritva.30 These are typically printed as standalone volumes that proceed in order of the Talmudic tractates. Also of note is the code/commentary known as Rosh,31 and the compendium of Ashkenazic law and practice known as Mordekhai.32 All of these medieval works have profound impact on the formulation of the black letter rules recorded in the found legal codes, none have been systematically translated. A final source of post-Talmudic authority are known as responsa—questions asked of and answered by rabbinic personalities. These are often analogized to case law in common law systems since they tend to apply legal principles to novel situations arising from real life. The responsa literature is somewhat less canonized and systematized than the other sources of Jewish law such that the status accorded to a particular writing is a function of the halakhic reputation of its author. Comparing Jewish and Common Law The practice of articulating fiduciary duties in Jewish law is a reconstructive effort that charts new conceptual lanes through established legal terrain. Throughout, I employ modern 26 Acronym for Solomon b. Isaac (France, 1040-1106). Rashi’s commentary offers a “play-by-play” account of the Talmudic dialogue. 27 Literally “additions.” These glosses were composed by Rashi’s grandchildren and their students in France. In general, they seek to resolve contradictions between various Talmudic passages and offer a more analytical account of the passage under review. 28 Acronym for Moses b. Nahman, also known as Nahmanides, (Spain, 1194–1270). This commentary, as well as those of his students, Rashba and Ritva are influenced by the style and methods of Tosafot. 29 Acronym for Solomon b. Aderet, (1235–1310; Barcelona). 30 Acronym for Yom Tov of Seville, (c. 1260–1320). 31 Acronym for Asher b. Yeḥiel (Germany then Spain; c.1260–c. 1328). This work is printed in the back of the standard editions of the Talmud. It is cited by chapters that correspond to the Talmudic tractate, and then to sections within each chapter. 32 This work is credited to Mordekhai b. Hillel (Germany, 1250-1298) but includes content added by his students. This work particularly influential for the rulings of Rema latter codified as part of SA. It is printed in the back of standard editions of the Talmud, and citations follow section numbers for each Talmudic tractate. 7 Saiman, Draft of January 2018 (Western) legal concepts to bring together disparate halakhic rules and conceptualize them in ways that classical sources do not. In light of the geographic and temporal diversity of the Jewish legal sources, however, some cautionary notes are in order. First, Jewish law traditionally governed small and homogenous communities bound together by common ethnicity and religious beliefs. In this context, social, religious and political pressure could be brought to bear on suspicious actors, even if the law formally barred any remedy.33 Second, what I have described as “classical Jewish law” runs from the Mishnah (c. 200) through the 16th century codes and their 17th century commentators. Thus the era considered “modern” or “late” in Jewish law, parallels the period when modern jurisprudential understandings were at their infancy. Finally, as we approach modernity, the development of Jewish commercial law largely stalled, as jurisdiction was taken from rabbinic bodies in favor of state-based systems, and Jews increasingly availed themselves of non-rabbinic legal fora.34 For these reasons, comparative analysis should remain sensitive to the differences between doctrines that evolved against the backdrop of globalized finance and mass society, as contrasted with a textual tradition whose primary periods of commercial law creativity lay in late antiquity, the high middle ages, and early modernity. III. The nature of civil law liability in Jewish law To best understand the structure of fiduciary concepts in Talmudic law, we start with an overview of civil liability more generally. I use the term, civil liability, as the division of private law into familiar categories of property, contract, tort, and restitution does not exist in Jewish law, and in fact, the common law itself did not adopt this conceptualization until the last decades of the nineteenth century.35 33 Chaim Saiman, The Rabbinic Idea of Law (Princeton 2018). Chaim Saiman, “Jewish Law in Modernity,” in the Encyclopedia of the Bible and its Reception (Verlag Walter de Gruyter, 2017). 35 See for example, James Gordley, Foundations of Private Law: Property, Tort, Contract, Unjust Enrichment 4 (Oxford University Press 2006) (“Before the 19th century, English law was organized around writs, with a collage of rules governing when writs could be brought. Order was brought out of chaos in the 19th century when the English, borrowing a huge amount from the civil law, reorganized their thinking around such categories as contract and tort-rather than assumpsit and trespass imported continental learning to understand these categories.”). 34 8 Saiman, Draft of January 2018 As with the common law prior to cases such as MacPherson v. Buick Motor Co. and Donoghue v. Stevenson,36 the Talmud does not recognize a universal duty of care to refrain from negligence or harmful activity. Rather, based on rabbinic interpretation of Exodus 21:28-22:5, the Talmud formulates a duty to prevent several base categories (“fathers of harm”).37 As we move away from these fathers of harm however, both civil duties and potential remedies substantially contract. This is in large part due to a concept known as grama— a term that connotes something along the lines of “cause” or “indirect causation,” and functions in parallel to the idea of “proximate cause” in the common law.38 Grama implies that outside of the denominated “fathers of liability” a defendant will not be liable unless it directly causes physical damage to the plaintiff. Absent these criteria, the Talmud usually assumes injuries are caused indirectly (that is, via grama) and not civilly compensable.39 Nevertheless, causing grama damages may violate a religious prohibition,40 even if when civil remedy are unavailable. Grama in post-Talmudic literature Though the Talmud generally finds cases of grama are exempt,41 post-Talmudic authorities often imposed liability either as a matter of law, as a punitive measure for bad behavior, or a matter of rabbinic enactment, communal legislation or local custom.42 Nevertheless, the impact of grama limitations echos throughout halakhic civil law. This is particularly true when: (i) the damage was caused by non-feasance or inaction rather than active malice; (ii) the loss was not caused through physical contact or other physical change to the victim’s property; and (iii), to the extent the loss can be portrayed as an unrealized gain. As we 36 See MacPherson v. Buick Motor Co., 217 N.Y. 382 (1916); Donoghue v. Stevenson, [1932] A.C. 562 (H.L.) (U.K). 37 See the discussion in Talmud Bava Kamma 2a-7b. 38 See the entry for “Grama” in The Encyclopedia of the Talmud, (hereinafter ET) Vol. 6, 461-463; 485-93 (1979) [Hebrew]. The complexities of grama, its cousin concept, garmei, have occupied rabbis and scholars from Talmudic times to the present. For medieval discussions, see Nachmanides, A Treatise on the Law of Garmei [Hebrew], as well as the sources the sources cited in ET Vol. 6, p. 461 at n. 5, and at 485 n.287. For more contemporary analysis, see Aharon Lichtenstein, R. Aharon Lichtenstein’s Lectures on the Laws of Garmei [Hebrew]; Irwin Haut, Causation in Jewish Tort Law, 3 National Jewish L. Rev. 1 (1988); Steven Friedell, Some Observations on the Talmudic Law of Torts, 15 Rutgers L. J. 897 (1983-84). 39 See, for example Talmud Bava Kamma 60a. 40 Talmud Bava Batra 22a. 41 Talmud Bava Kamma 60a. 42 See for example Rema, HM §381:3. Yam Shel Shlomo, (Shlomo Luria; 16th c. Poland), to Bava Kamma §6:6, Pithei Teshuva to HM §28:8 and sources cited in ET Vol.6 p.485 at nn. 289-92. 9 Saiman, Draft of January 2018 below, in these cases—notably, the settings most likely to emerge in the fiduciary context—the presumption against grama liability remains considerably stronger. Grama in the case of unrealized gains Since Talmudic law does not distinguish between liability in “tort” and “contract,” grama principles also apply to unrealized gains and expectation damages in cases of contractual nonperformance. Thus if A hires B as a day-laborer, and A reneges before B’s commences work, A faces no (or only limited) liability, even though B has earned a justified right of complaint.43 Likewise, if B appoints A as an agent to purchase wheat, and A fails to perform, A faces no liability for B’s lost profits—though here too, B’s complaint is deemed justified.44 More generally, if A inhibits B from accessing his funds and prevents B from pursuing investment opportunities, classical Talmudic law holds that A is exempt on the basis of grama so long as he never took possession of the monies. 45 Finally, if A sells B planting seeds that fail to produce a crops, B can easily recover the purchase price of the seeds, (what Fuller’s termed the restitution interest). However costs B expended in planting the defective seeds (reliance interest), and a fortiori, the value of the unrealized crops (expectation interest), are typically held as grama and not compensable.46 IV. Bailees: Between guardsmen and fiduciaries One of the most significant exceptions to grama-based liability limitations are cases of the guardsman or bailee. Rabbinic exegesis of Exodus 22:6-16 leads the Mishnah to develop a tripartite bailment regime which shares a number of features with traditional common law approaches.47 These are: the unpaid or gratuitous bailee; the paid bailee; and the borrower.48 Significantly, an unpaid bailee is held to a duty of care and is liable for negligence, even in cases of inaction, non-performance, and indirect causation. A paid bailee is subject to a higher duty of 43 Talmud Bava Metzia 76b. Tosefta Bava Metzia 4:11; Jerusalem Talmud Bava Metizia 5:3. 45 Jerusalem Talmud Bava Metizia 5:3. 46 Talmud Bava Batra 93a and commentary of Rashbam found on the margins of the page. 47 See Joseph Story, Commentaries on the Law of Bailments §3 at 27 (9th ed. 1878). 48 Mishnah Bava Metzia 7:8. Mishneh Torah, Laws of Hiring, 1:1-2. 44 10 Saiman, Draft of January 2018 care which includes liability for theft and loss not attributable to the bailee’s fault. A borrower, is held to the highest standard of care which approaches absolute liability.49 Bailees with Discretionary Authority In the prototypical Talmudic case, a bailee is entrusted to protect an object from loss but generally lacks the discretionary authority that typifies fiduciary relationships. In both Talmudic and common law, such “passive” forms of bailment result in minimal fiduciary obligations. By contrast, when the bailee exercises discretionary judgment, the Mishnah calls on fiduciary duties to combat self-dealing. One example is when the entrustor’s deposited fruit or grain begin to rot. Here the Mishnah states: One who deposits fruit with his neighbor: Even if they are destroyed, the bailee must not touch them. Rabban Shimon ben Gamaliel says: The bailee should sell them under supervision of the court, for it is like one who restores a lost object to its owner.50 The parallel Tosefta elaborates:51 He should remedy the situation and sell the rotting produce before a court. And he must sell them to others, and may not sell them to himself. Though the Talmud formally sides with the view that the produce should be sold, the rule is limited to cases where the produce depreciates at a higher rate than expected. Under these circumstances, the bailee conducts a sale to a third party before a court as a prophylactic against self-dealing.52 49 Id. Mishnah Bava Metzia 3:6. 51 Tosefta Bava Metzia 3:3. 52 Mishneh Torah, Laws of Borrowing and Depositing, 7:1; Tur, HM §292; SA, HM §292:15. 50 11 Saiman, Draft of January 2018 The idea that the bailee must act to “restore the lost object to its owners” recalls another setting where Mishnah imposes fiduciary obligations on a bailee. Here, the background is a legal obligation that has no parallel in the common law—the duty to take charge of lost property and seek out the true owner. Whereas the common law allows finder to simply ignore the object, the Talmud requires the finder to expend effort and resources to locate the true owner.53 The Mishnah deals with a case where the lost item is an animal that imposes maintenance costs on the finder.54 If the animal can be hired out to earn its keep, the finder (now a bailee) uses the rental proceeds to pay for the animal’s upkeep. If the animal has no rental value, the finder is to sell it and hold the monies in trust for the owner.55 Though the Mishnah is silent about the procedural safeguards attending to this sale, the Tosefta indicates the sale must be in court.56 This latter rule is adopted by Maimonides and other medieval Sephardic authorities.57 But the rabbis of northern and central Europe disagreed and held the finder can simply assess the market value himself and hold the money in trust for the owner.58 Further, even those mandating a public sale limit this to animals that have no value on the short term rental market (e.g., geese and calves). But when it comes to an animal that can earn its keep, during the first year, the finder rents out the animal and uses the income for the animal’s maintenance, yet is permitted to keep any differential between the rental income and the maintenance expenses. Thereafter, the law shifts context. The finder and owner become jointowners of the animal sharing in the profits earned by hiring it out.59 53 See Exodus 22:3; Mishnah Bava Metzia 2:1-2; Mishneh Torah, Laws of Theft and Loss, 12:1. See also Michael J. Broyde; & Michael Hecht, The Return of Lost Property According to Jewish and Common Law: A Comparison, 12 J. L. & RELIGION 225, 227 (1995). 54 Mishnah Bava Metzia 2:7. 55 Talmud Bava Metzia 28b. 56 Tosefta Bava Metzia 2:8 57 Mishneh Torah, Laws of Theft and Loss, 13:16. 58 Tosafot to Pesaḥim 13a; Tur, HM §267; Rema, HM §267:24. 59 Mishneh Torah, Laws of Theft and Loss, 13:15. 12 Saiman, Draft of January 2018 Subsequent commentators engaged in various attempts to explain the difference between the rotting fruit case (court-sale required) and the found animal case (private sale permitted).60 Details aside, the requirement for an in-court sale (understood as even an ad-hoc panel of three laypersons)61 underscores the prophylactic nature of this rule reminiscent of modern law.62 Yet it is also important to note the elements of modern law absent from the halakhah, chiefly, that the finder is entitled to retain any income generated by the rental fees in excess of maintenance costs.63 This sets up a clear potential conflict between the finder, who may skimp on maintenance cost and aggressively rent out the animal, even at the expense of its long term health, and the owner who desires the opposite. Notwithstanding these potential conflicts, classical sources do not contemplate any fiduciary mechanisms to avoid them. Remedies for bailee’s misappropriation. To counteract fiduciary breaches, the common law offers entrustors powerful equitable remedies of accounting and constructive trust. These not only return the property to its rightful owner, but also enable the victim to disgorge any profits derived from fiduciary breach. Thus, if an embezzling manager simply loses the money or holds a depreciating asset, the thief is personally liable for the value of the object as stolen. But if the asset or its traceable proceeds appreciate in value, or if the embezzler productively invests the funds, the victim can maintain proprietary claim to recover the appreciated asset and other monies derived therefrom.64 Though the Mishnah entertains a view that a faithless bailee is liable for a constructive trust-type remedy,65 the universally accepted view is to the contrary. Hence the Mishnaic mantra: “such is the general rule, all thieves must repay the value of the item as of the time of theft,” 60 Tosfot Pesaḥim 13a suggest the finder is held to a lower standard since anyone undertaking the religious obligation to return lost object (generally uncompensated) is not suspected of self-dealing. See also Beit Yosef to HM §267; Sema to HM §267:36 who explain why Mishneh Torah’s the finder’s obligations change with respect to as different types of animals. 61 See Talmud Bava Metzia 32a and Tosafot therein. 62 See J.C. Shepherd, The Law of Fiduciaries 156-57 (1981) (“[T]he basic rule is a strong prohibition against selfdealing. The idea is that the fiduciary should not be acting as both vendor and purchaser, whether for goods or services.”). See also Restatement (Third) Of Agency § 8.03 (2006). 63 Mishneh Torah, Laws of Theft and Loss, 13:15. 64 See Restatement (Third) of Restitution §§ 51; 53 (2011). 65 Mishnah Bava Metzia 43a (view of Beit Shammai). 13 Saiman, Draft of January 2018 applies to both ordinary thieves and embezzling fiduciaries.66 If one bailed a pregnant cow, and the bailor converted the cow which latter gave birth to a calf, blackletter halakhah states that the bailee is entitled to keep the calf and owes no more than the value of the pregnant cow at the point of misappropriation.67 Nevertheless, some latter rabbinic scholars proposed exceptions to this rule that gesture towards a constructive trust. The background is as follows: The Mishnah maintains that monies deposited with an ordinary person are pure bailments, such that the bailee has no right to use them. Monies deposited with a moneychanger (banker) however, are deemed loans, and the funds become available for the banker’s use. In exchange for the usage rights, the banker assumes a higher duty of care, even before the monies are lent out or invested.68 German halakhists of the high middle ages held that since the primary Jewish occupation at the time was money lending (with interest to non-Jews), all persons were deemed bankers, and every depositor was to assume that deposited funds would be lent out for profit by the bailee.69 In the typical case, a depositor would have no claim to profits earned by the banker, even if the monies were let out without the depositor’s permission. (This traces to the prohibition against interest bearing contracts between Jews. Since the banker bears the sole risk of loss, allowing the depositor a return transforms this into a prohibited interest-bearing contract). However, if the depositor demanded the monies back, and the banker/bailee delays or refuses to return them, the depositor is entitled to more aggressive remedies. Hai Gaon, a Babylonian authority of the 10th century, ruled that the banker must split the profits with the depositor. Three centuries later, central European authorities argued that the banker must deliver all the profits to the depositor.70 Others, disagreed, arguing that the faithless banker is no different than an ordinary thief, and that the lost profits are a classic case of non-recoverable grama.71 66 Mishnah Bava Kamma 9:1; Mishneh Torah, Laws of Theft and Loss, 3:11. Mishnah Bava Kamma 9:1; Tur, HM §292; SA, HM §292:5. 68 Mishnah Bava Metzia 3:11; See also Dean Witter Reynolds Inc. v. Variable Annuity Life Ins. Co., 373 F.3d 1100, 1107 n.1 (2004). 69 Commentary of Mordekhai to Bava Metzia §295; Tur, HM §292. 70 Mordekhai BM §295. 71 See, Yam shel Shlomo to Bava Kamma §9:30; Shakh to HM §292:15. 67 14 Saiman, Draft of January 2018 Nevertheless, the prevailing weight of halakhic authority tips in favor of more aggressive remedies that requires fiduciaries to do more than simply return the ex-ante value of embezzeled assets.72 Even so, the symmetry between Jewish and American law remains partial as even these remedies are limited to profits accrued by the banker/bailee after the depositor demanded his misappropriated funds. The depositor however, has no claim to income earned between the misappropriation and the demand for the funds. Under the common law by contrast, the goal is to deprive the fiduciary of any benefit arising from the breach, such that all funds are recoverable.73 Part V The Apotropos The halakhic institution closest to a common law trustee is known in the Mishnah as the “apotropos shel yetomin,” which means the guardian of the orphans. Readers sensitive to Hebrew will note the term apotropos is loaned from the Greek,74 suggesting it entered the rabbinic lexicon via Hellenistic influences. As below, the apotropos was generally confined to the unique circumstances of caring for orphans and never fully absorbed into the broader stream of Jewish law. However, because the apotropos bears many similarities to the common law trustee, it has become the source of some of the strongest fiduciary-like duties in Jewish private law.75 Appointment & Powers Ideally, a dying father is to designate an apotropos to manage the assets and affairs of any minor children after his death.76 In the absence of a paternally appointed guardian, the court has an affirmative religious obligation to act as the “father of the orphans” and to appoint a See Rema, HM §292:7. See also, Responsa Tashbetz, (Simeon b. Tzemaḥ Duran; North Africa, 14th c.), Vol. 2 §229; Responsa Mahari ben Lev (Joseph b David ibn Lev; Salonica, 16th c.), Vol. 3 § 111; Responsa Mabit, (Moses b. Joseph deTrani; Safed, 16th c.), Vol. 1 §83; Responsa Hatam Sofer, (Moses Sofer; Hungary,1762-1839), HM §178. 73 See Restatement (Third) of Restitution §§ 51; 53 (2011). 74 The term appears in two New Testament contexts. In Matthew 20:8 and Luke 8:3 in the sense of an administrator or steward, and in Galatians 4:2, as the guardian of minors. The term has substantially the same meaning in rabbinic Hebrew. See in general, Jacob Koppel Reinitz, Apotropos for Orphans in Jewish Law, (PhD Diss., Hebrew University of Jerusalem, (1984)) [Hebrew]. 75 Modern Israeli law has adopted this as the general term for a trustee. 76 Mishneh Torah, The Laws of Inheritance, 10:5. 72 15 Saiman, Draft of January 2018 trustee.77 Maimonides writes the appointee must be deemed “trustworthy, a man of great deeds who knows to advocate on behalf of the orphans, and has experience in business and the ways of the world to protect and increase their assets.”78 The apotropos should not be a relative who stands in the line of succession to the minor, for fear that he may exploit the ambiguities of succession law to arrogate trust assets for himself.79 In the middle ages, halakhists ruled that the court is to take inventory of the property and record its findings in two sets of documents, one handed to the trustee, and the second, held in court to ensure all assets are accounted for when the minors attain majority.80 Though early Talmudic halakhah established several restrictions on the latitude afforded the apotropos to manage and invest the funds,81 latter commentators did away with these limitations. By the end the middle ages, the apotropos had plenary discretion over trust assets.82 The Talmudic assumption is that the apotropos works unpaid out of a sense of religious duty towards the orphans and for the reputational capital of being recognized as trustworthy member of the community. 83 The Talmud, in fact, finds it inconceivable that the fixed pool of orphan’s assets would be dissipated to pay a trustee. 84 Nevertheless, even per Talmudic law, an apotropos is permitted to use trust monies to purchase nice clothing for himself so that he is taken seriously when conducting trust business.85 Obligations 77 Mishneh Torah, The Laws of Inheritance, 10:5. Jewish law tends to distinguish between an apotropos appointed by the father and one appointed by the court, with the former having fewer fiduciary obligations and restrictions than the latter. Unless otherwise indicated, my treatment relates to court-appointed guardians who are held to more exacting standards. 78 Mishneh Torah, The Laws of Inheritance, 10:6, based on Talmud Ketubot 109b. 79 Tur, HM §285. 80 SA, HM §290:3 81 Talmud Gittin 52a-b. 82 See for example, Mishneh Torah, The Laws of Inheritance, 11:4; Tur, HM §290; Rema, HM §290. 83 Talmud Gittin 52b. 84 Talmud Gittin 52b. Later sources conceded that the position may not be filled unless payment is offered and tended to permit such arrangements. See Taz to HM §290:2. Nineteenth century halakhists expressly permitted the court to allocate trust assets for payment to the apotropos. See Arukh ha-Shulhan, (Yeḥiel M. Esptein; 1829-1908, Lithuania) to HM §290:8. 85 Talmud Gittin 52a. SA, HM §290:4. 16 Saiman, Draft of January 2018 The Talmud understands that the vast discretion afforded to the apotropos requires strong fiduciary duties to monitor performance and ward off self-dealing and misappropriation. Since this volunteer position is undertaken gratis, however, placing too many burdens on the apotropos will dissuade suitable candidates from serving.86 The Mishnah therefore debates whether the apotropos is required to undertake a biblically-mandated oath declaring that he has not retained any assets at the dissolution of the trust. The Talmud records a similar dispute is regarding whether apotropos must provide the beneficiaries with an accounting.87 Not surprisingly, these ancient disputes foreshadow contemporary debates regarding the duties and level of care incumbent on various fiduciaries. In general, the matter was resolved as follows: Upon dissolution, the apotropos must either must swear he has not retained any trust property or offer the beneficiaries a full accounting of his actions.88 If an apotropos is unable to account for any property, he is subjected to more searching oaths and must swear he was not negligent.89 Finally, halakhic codifiers went out of their way to state that if the apotropos was appointed under state/secular law, he must provide an accounting as per that law.90 Latter on however, halakhic authorities ruled that if no other candidates can be recruited, the court may appoint an apotropos on the assumption that he not be required submit to an oath. 91 Over the past few centuries, the practice of oath taking in rabbinical courts has waned, such that these oaths no longer serve as an significant tool for monitoring performance.92 The Talmud found it hard to fathom that an apotropos would be paid from trust funds. Nevertheless, medieval commentators debated whether an apotropos can enter into a service partnership with the trust and retain a percentage of the returns generated via investment. Though 86 Mishnah & Talmud Gittin 52a. Talmud Gittin 52a. 88 See SA, HM §290:16 & Rema therein. Rema suggests that in place of an oath, the trustee should provide an accounting to the beneficiaries backed up by an oath of lesser religious severity than instituted by post-talmudic authorities. See Rema, HM §290:16. 89 SA, HM §290:16. 90 Rema, HM §290:17; Responsa Rivash (Isaac b. Sheshet Perfet; Spain, 1326–1408) §324. 91 SA, HM §290:18. 92 See glosses of Ra’avad to Mishneh Torah, The Laws of Oaths, 11:13. See also the communal legislation of Pozen in the 17th century which ended the process of oath taking. See discussion and sources cited in Amichai Cohen, The Audit in Hebrew Law, 21 Jewish Political Studies Review 151, 160 and n.40 (2009) [Hebrew] (hereinafter Cohen). See also sources cited above at note 6. 87 17 Saiman, Draft of January 2018 technically permitted, many opposed this arrangement due to the appearance of impropriety.93 Others, were more relenting, and permitted so long as the arrangement was disclosed to the court, and accepted practice seems to follow this latter view.94 Further, over time, in exchange for enhanced fiduciary duties, it became accepted to pay the apotropos from trust assets.95 An apotropos who earned money from his work was usually required to provide an accounting or submit to more searching oaths, even in the absence of strong evidentiary basis for claims of infidelity.96 This comes closer to modern understandings of trust law. Standard of Care & Personal Liability While the standard of care was debated by medieval French authorities,97 the accepted view is that an unpaid apotropos is akin to an unpaid bailee. He is therefore liable for negligence, but exempt in from “theft and loss” that are not attributable to negligence.98 Others disagreed, holding that due to the reputational capital earned by an apotropos, even an unpaid manager owes the higher standard imposed on a paid bailee.99 Either way, when the apotropos is paid, a higher duty of care is assumed. Though we speak in terms “negligence” it is worth recalling that rabbinic understandings of that term may be considerably narrower than contemporary view. For example, a 13thcentury authority discussed a case of the apotropos litigating on behalf of the trust. If the best argument would have allowed the apotropos to take an oath and recover money, but the apotropos’s poor case management resulted in the defendant taking an oath and absolving himself of liability, the apotropos is not negligent for malpractice, since the defendant could have opted to settle rather than submit to the oath. This scenario is contrasted to where the best argument would have allowed the apotropos to collect without requiring an oath, but negligent 93 Tur, HM §290. Rema, HM §290:8. 95 See note 84 above. 96 SA, HM §290:16; Arukh ha-Shulhan, HM§ 290:35-36. 97 Tur, HM §290. 98 Some authorities held that an apotropos who claims assets were lost through no fault of his own must submit to an oath that he was not negligent. See S’ma to HM §290:5. 99 Shakh to HM §290:24. 94 18 Saiman, Draft of January 2018 case management enabled the defendant resist the claim without submitting to an oath. Here, but only here, the apotropos is deemed liable for the loss.100 Other examples reveal a view of negligence closer to modern law. Early modern authorities ruled that if an apotropos failed to conduct diligence and lent money to an uncreditworthy borrower, the court may rescind the transaction and return the monies to the orphan’s account.101 If the monies were no longer recoverable however, the apotropos is personally liable for negligent management.102 Finally, if there are rumors that an apotropos is living beyond his means or other indicia of misappropriation, he can be removed from office and subjected to searching oaths.103 The apotropos as a modern fiduciary The laws of apotropos reveal both the similarities and differences with modern fiduciary law. On the one hand, Jewish law is clearly cognizant of the potential for the trustree’s abuse, and employs a system of oaths coupled with potential substantive liabilities. Moreover, the course of halakhic development reveals that discretion and oversight go hand in hand: because the apotropos’ discretion over the another’s property is unique in the realm of Jewish law, the law imposes unique responsibilities on the office. Finally, Jewish law also holds that disclosure may remedy potential conflicts of interest: while an apotropos may not ordinarily enter into a partnership with the trust, such an arrangement may be validated upon disclosure to the court. And yet, neither the Talmud nor law codes, restrict an apotropos for self-dealing with family members104 or impose liability for usurpation of business opportunities. Further, while the apotropos mat be removed for cause, and faces likely liability for negligently wasting trust assets, the limitations of grama make it difficult for a plaintiff-beneficiary to prevail against an 100 See Rema, HM §290:20 citing commentary of Mordekhai. Rema, HM §290:5. 102 S’ma to HM §290:13; Shakh to HM §290:6. 103 Tur, HM §290. 104 Beginning in the 16th century, the issue began to arise in the context of those who administer public charities and funds. See Responsa Maharit, Vol. 2 HM §1. See also the discussion and sources cited in Unger at pp. 121-30 and below at text surrounding note 167. 101 19 Saiman, Draft of January 2018 apotropos for earning below market returns due to managerial negligence.105 Further, unlike modern law, halakhah contains few prophylactic rules. Nothing prevents an apotropos from investing funds with his family or from hiring family members to work in the fields owned by the trust.106 In order rescind a transaction, the beneficiaries must show both negligence and loss, in contrast to the common law’s “no further inquiry rule,” which finds the mere fact of breach as reason enough to undo the transaction. 107 Finally, as above, classical sources do not envision equitable remedies designed to disgorge any gains generated by fiduciary breach. Notwithstanding the limitations of civil recourse, rabbinic sources employ strong religious language to inspire apotropos to live up to what Justice Cardozo termed the “punctilio of honor the most sensitive.”108 Maimonides concluded his discussion of apotropos by stating that “though the apotropos may not have to undertake a formal accounting to the orphans, he must account to himself and be very meticulous and careful before the Father of Orphans who bestrides the heavens.”109 This language is augmented in subsequent codes, which stress the eternal punishments due to those who act in bad faith with the property of orphans.110 Part VI: Trustees beyond the case of guardianship: “we do not appoint an apotropos for an adult”111 One of the central questions regarding the apotropos in Jewish law is whether this institution is limited to the caretaker of orphans, or whether it reflects a more wide-ranging fiduciary paradigm. The Talmud generally limits apotropos to cases of orphans and similar situations, suggesting that the apotropos is one of the special privileges/dispensations afforded to orphans.112 Moreover, a number of rabbinic sources are skeptical of granting an outsider free range over the life and finances of the household. The Talmud notes that, as recounted in Genesis 105 See for example Netivot ha-Mishpat to HM §290:11, explaining the limited nature of negligence in terms of grama. 106 Contrast with Restatement (Third) of Trusts § 78 (e)(1) (prohibiting the trustee from hiring family members). 107 Restatement (Third) of Trusts § 78. 108 Meinhard v. Salmon, 164 N.E. 545 (N.Y. 1928). 109 Mishneh Torah, The Laws of Inheritance, 11:12 (referencing Psalms 68:4-5). 110 See e.g., Tur, HM §290; Arukh ha-Shulhan, HM §290:34. 111 Talmud Bava Metzia 39a. 112 Talmud Gittin 52a. 20 Saiman, Draft of January 2018 chapter 39, Potiphar’s wife thought she could entice Joseph because as an apotropos he faced minimal oversight.113 Subsequent law codes thus prohibited appointing an apotropos over the household for fear of any sexual impropriety that may result.114 The question is raised most explicitly, however, in the context of Talmudic regime for administering property belonging to persons taken captive or otherwise absent from the realm.115 In many ways, an imprisoned landowner is analogous to an orphaned minor—neither has the capacity to attend to the affairs of his estate. Despite these similarities, the Talmud envisions a substantially different regime for absentee landlords. In addressing this question the Talmud records the following dispute: can a relative be appointed to manage and exercise control over land owned by someone who has been taken captive. The sage known as Rav says no, for fear that the relative will devalue the land by seeking out short term yields over the long term health of the land. His counterpart Samuel permits this arrangement, since the relative will take the wages of a sharecropper. 116 As is common in matters of commercial law, the accepted view follows Samuel. Note, however, that the entire debate is about whether a relative standing in the line of succession to the property may take possession. The Talmud does not even consider appointing a disinterested outsider to serve as an apotropos/trustee. In other words, even when the potential heir has a longterm interest in the asset, Rav is still concerned about the conflict of interest and thus prefers the land remain fallow rather than risk its long-term degradation.117 Seen from the other direction, even Samuel’s pro-trusteeship position assumes the trustee maintains a personal interest in the long-term value of the asset. But should the trustee lacks this interest, even Samuel opposes installing an outsider to manage the property.118 113 Talmud Berakhot 63a. Mishneh Torah, Laws of Prohibited Cohabitations, 22:15, SA, EH §22:16. 115 Talmud Bava Metzia 38a-40. 116 Talmud Bava Metzia 38b. The assumption is that the relative whose appointment is being discussed is also the anticipated heir of the property, which obviously has an impact on the incentives facing such an agent and his expected behavior. 117 See Rashi and Ritva to Bava Metzia 38b and Rosh at Bava Metzia §3:12 who all agree that a stranger should be named the trustee. See opinion of Ra’avad cited in in the commentary of Ramban to Bava Metzia 38b. 118 See Tur, HM §285:1 114 21 Saiman, Draft of January 2018 This reading is confirmed when the Talmud wonders why not simply appoint an apotropos for an absentee landlord. The answer is revealing: “We do not appoint an apotropos for an adult,”119 a phrase that has sustained different interpretations over time. One view is that ideally an apotropos offers the best solution for absentee ownership. However, since it is difficult to find someone willing to undertake this effort for free, and since potential administrators must remain available to advocate for orphans, the court should not expend efforts seeking out suitable trustees for adults.120 Though this view is accepted by the latter codifiers, others followed the plainer sense of Talmud, holding the aversion is based on fears of misappropriation. In other words, in the absence of strong fiduciary duties that can mitigate potential conflicts of interest, Jewish law hesitates to grant third-parties plenary discretion over another’s property.121 Either way, the Talmud articulates a different regime for an absentee owner than for orphans, where at most, the relative/manager obtains the operational discretion afforded to a sharecropper, but has no power to make strategic decisions. Correlatively, it would seem that the absent owner cannot subject the manager/relative to the oaths incumbent upon the apotropos, even though the owner did not consent to the transaction nor was in a position to provide any oversight. 119 Talmud Bava Metzia 39a. Commentary of Rashba to Bava Metzia 38b. Tur, HM §285; SA, HM §285:2. 121 The debate over whether to allow a relative to assume control of an absentee owner’s assets applies only to of arable land. As to cash and other personal property, however, the Talmud holds these funds are transferred to a bailee charged with passively guarding against their theft, but are not to be actively invested. See Mishneh Torah, Laws of Inheritance, 7:6; Tur, HM §285; SA, HM §285:5. The same rules apply to profits generated by the sharecropping arrangement. Rather than actively (re)invest these funds at the discretion of a third-party manager, they are merely transferred to a passive receiver for safekeeping. See SA, HM §285:3. A number of theories were offered to account for the difference between real and personal property. Maimonides (Mishneh Torah, Laws of Inheritance 7:6), suggests that since land requires significant efforts to produce returns, it makes sense to pay hired labor with a percentage of gross profits (sharecropping). However, since cash and other assets can earn returns via less arduous means, there is less economic justification in appointing a paid agent rather than a passive receiver. Others held that while the Jewish law permits appointing a relative/trustee to mitigate losses, (since a field that will not produce if not cultivated), it will not undertake the risks associated with installing a third-party manager merely to obtain higher returns. See Maggid Mishneh (Vidal of Toulouse; 14th c.) to Mishneh Torah, Laws of Inheritance, 7:6. See also commentary of Perisha to Tur, HM §285:6. 120 22 Saiman, Draft of January 2018 The case of the absentee landlord underscores a difference in the intuitions of Jewish and common law. Because (aside from the case of orphans), halakhic private law is offers weaker fiduciary protections, it must content itself with a conservative investment approach that favors assets preservation over maximizing potential growth. By contrast, the stronger fiduciary rules found in the common law, enable it to grant the trustree broad discretion with the aim maximizing the trust’s value. Starting in the 16th century, halakhic authorities permitted appointing an apotropos in favor of absentee adult landlords,122 so the job was undertaken pursuant to heightened standards incumbent the apotropos serving the orphans. This shift is consistent with the broader trend, whereby latter authorities, particularly from Ashkenazic areas, permitted trustees to operate with greater discretion in exchange for higher disclosure requirements and the threat of personal liability upon showings of negligence and mismanagement. Part VII. Fiduciary Duties in Agency and Partnership Law Some of the most significant divergences between Jewish and common law views on fiduciary law arise in the context of agency and partnerships. At common law, when a principal (P) supplies capital to an agent (A) to buy goods with an understanding the profits will be divided, if A fail to fulfill his duty of performance, he is liable for P’s expected profits.123 On these same facts, however, the Tosefta rules that though P earns a “right of complaint” against A, no other civil liability attaches. 124 This result is often explained noting that unrealized gains are grama damages that are not compensable via civil process.125 The Tosefta, further distinguishes 122 Responsa Maharam Padua, (Meir Katzenellenbogen of Padua, Northern Italy, 16th c.), § 57l; Rema, HM §285:5. See for example, Restatement (Third) Of Agency §8.07 (2006) (“A promise to perform a service may have serious consequences for the promisee if it causes the promisee to refrain from taking other measures to achieve the same end.”), and id. at § 8.08: (“In particular, an agent is subject to liability to the principal for all harm, whether past, present, or prospective, caused the principal by the agent’s breach of the duties stated in this section.”). 124 Tosefta Bava Metzia 4:11; Jerusalem Talmud Bava Metzia 5:3; Mishneh Torah, Agency and Partnership 1:5; and 7:6 Tur & SA, HM §183:1. See also Talmud Bava Metzia 73b-74a. While the Tosefta and earlier talmudic material assume the right of complaint does not include any actionable social or civil liability, later sources began to develop a jurisprudence of religious, civil and social enforcement mechanisms in favor of those who earned a formal right of complaint. See the discussion cited in Unger at 252-53 and note 982. 125 See for example, Rosh to Bava Metzia §5:69. The consensus is that a standard case these would be grama damages. However, if the agent specifically contracted that he would be obligated for the lost profits, the agreement would not be grama but may be unenforceable due to another halakhic rule known as asmakhta, which limits a 123 23 Saiman, Draft of January 2018 between cases where A failed to perform in toto, and when he purchased the goods and kept them for himself. In the latter case, there are scenarios under which P can assert property rights to those goods and extract them from A’s possession. 126 In the agency and partnership context, Talmudic law also exhibits comparatively weak forms of the duty of loyalty. The Tosefta and Talmud discuss a case where A is tasked by P to betroth a woman to P, yet A disloyally betroths the woman to himself. Though A receives moral condemnation for “acting dishonestly,” the betrothal to A is legally valid.127 Similar rules apply in the commercial context: if P appointed A to purchase Blackacre on P’s behalf, and A purchased Blackacre for himself, the sale to A is valid notwithstanding moral condemnation of A’s behavior.128 Later authorities limited this rule only to cases where A used his own funds (rather than monies provided by P) and expressly stated the sale was for his own account.129 But notwithstanding these qualifications, Jewish law does not reverse this transaction, even tough an Anglo-American lawyer would find the most basic elements of the duty of loyalty breached.130 This stands in contrast to the common law rule, which unequivocally rules that A holds Blackacre as a constructive trustee for P, such that P may recover the property (including any proceeds derived from it) by paying the lesser of his purchase price or the price at which P could have otherwise obtained the parcel.131 Another divergence from modern law relates to the agent’s ability to acquire material benefit from his position. Both the Tosefta and Talmud record a dispute where P instructs A to buy a given quantity of produce on his account, yet T, the third-party seller, gives A an additional measure of produce. If the additional produce was intended as a gift, the Talmud holds party’s ability to contract for enhanced damages. This doctrines draws on some of the same ideas as the penalty default rule in the common law of contracts. 126 Tosefta Bava Metzia 4:11 and Jerusalem Talmud Bava Metzia 5:3 See also Tur and SA, HM §183:1. Interestingly, this rule is not cited by Maimonides. See Mishneh Torah, Agency and Partnership 1:5 and commentary of Kessef Mishneh, (Joseph Caro, 16th c. Safed), cited therein. 127 Tosefta Yevamot 4:3; Talmud Kiddushin 59a; Mishneh Torah, Laws of Marriage 9:17; Tur and SA, Even haEzer §35:9 128 Mishneh Torah, Laws of Sales 7:10, Tur and SA, HM §183:2 129 SA, HM §183:2 . 130 Here too, some latter authorities sought to give some to give some civil or social expression to the Tosefta’s ruling that the act was dishonest. See for example, Commentary of Ramban to Bava Batra 54b. Unger, p. 140 at nn. 562-63. 131 See Restatement Third Agency §8.02 (e). 24 Saiman, Draft of January 2018 that P and A are to divide it.132 Subsequent authorities debated what happens if it is clear that T granted the gift to A exclusively, 133 and the accepted position holds that A may keep it.134 This view lies in sharp contrast to the common law’s “material benefit rule” which requires A to transfer the entire additional sum to P, out of a concern that A and T may establish a relationship (in essence a kickback) inducing the agent to favor the third-party seller’s interests over those of the principal.135 Notably, in American law, this rule applies even when T’s gifts perfectly align the agent’s interests with the principal, and a fortiori, where a deeper conflicts of interest may lurk in the background.136 Halakhic thinking is closer to modern law where an agent or partner uses partnership funds to transact beyond the scope of the agreement. When P gives A money with instructions to buy wheat, and A buys barley instead, P may elect his remedy. If the barley transaction proves more profitable, P can ratify the transaction and reap the profit. If the barley deal turns out less profitable, A is liable to P for the difference between the value of the proposed wheat deal and consummated barely deal.137 Likewise partners are prohibited from using joint assets to enter into partnerships with third parties, to deal in stock or merchandise outside the understandings of the partners, or to offer credit to buyers without the approval of the other partner. Breach of these duties means that all losses accrue to the breaching partner, whereas gains are credited to the partnership jointly.138 132 See Tosefta D’mai 8:2; Talmud Ketubot 98b; MT, Laws of Agency and Partnership1:5, Tur & SA, HM §183:6 See Beit Yosef to Tur, HM §183:6. Shakh to HM §186:12. 134 See Darkhei Moshe (written by author of Rema, Moses Isserles, 16th c. Cracow), to Tur, HM §183:4, and Rema, HM §183:6. See also secondary sources cited by Unger at 137 n. 549. 135 See Restatement Third Agency §8.02, and particularly illustrations 3-5. 136 See for example, Restatement Third Agency § 8.02, Illustration 1. (“P, who owns a racehorse, Grace, engages A, a jockey, to ride Grace in an upcoming race. P agrees to pay A a fee of $500. T, who has made a large bet that Grace will win the race, promises to pay A $5,000 if Grace wins the race. T asks A not to tell P about T's promise. Neither A nor T tells P about T's promise. Grace, ridden by A, wins the race. T pays A $5000. A and T are subject to liability to P. A's receipt of $5000 from T breached A's duty to P. T knowingly provided substantial assistance and encouragement to A in A's breach of duty to P.”). 137 See Talmud Bava Kamma 102; Mishneh Torah, Laws of Agency and Partnership 1:5; Tur & SA, HM §183:5. The case is not considered grama because A purchased the wrong products with P’s funds. It is less clear however whether A would be liable if the anticipated sale was on credit, or if the funds had not otherwise been remitted to A. 138 Mishneh Torah, Laws of Agency and Partnership 5:1-2; Tur & SA, HM §176:10 133 25 Saiman, Draft of January 2018 These remedies, however, are only available if partnership assets are used. When a partner uses private funds, the restrictions are considerably narrower. Maimonides ruled that where L, a limited partner, fronts G a general partner, money to invest on the assumption that the profits will be split, G, is permitted to trade in the same product on his own account, so long as G purchases the same quality of goods for both accounts, and partnership and personal goods are sold separately.139 Though this last rule puts G’s personal business in direct competition with the partnership, it is often explained as a method of protecting the partnership, by forcing G to purchase the same type and quality of goods for himself as for the joint effort.140 Though a plain reading of the law codes reveals few restrictions on a partner’s ability compete with the partnership business,141 the seventeenth century commentators, tended to introduce limitations. Some argued that partner can only enter another partnership as a limited partner (passive investor) but may not take an active hand in running a competing business.142 Others held competing ventures were prohibited as a matter of religious law, even in the absence of civil remedies.143 These rulings are in line with the overall trend whereby latter sources of Jewish law gravitate towards increased fiduciary duties. Part VIII. Contrast: Fiduciaries over Public Funds 139 Mishneh Torah, Laws of Agency and Partnership 5:3. Ra’avad, cited in the margin, disagrees. See Kessef Mishneh to Mishneh Torah, Laws of Agency and Partnership 5:3 who maintains this to be Maimonides’ view, but notes reservations with this approach. See also Beit Yosef to Yoreh De’ah §177:39 noting that a competing partner may even sell the same goods, and certainly other goods. Surprisingly, these rules were not classified in Hoshen Mishpat, the civil law code dealing with the laws of partnerships, but in Yoreh De’ah the religious law code dealing with the prohibitions against interest bearing transactions. See Tur and SA, YD §177:37 and 39 and to HM §176:10. In Yoreh De’ah the context is the laws of iska, a transaction formally denominated as a partnership between a capital and service partner who agree to divide the profits. In economic terms however, an iska mimics an interest bearing loan where the “borrower” (service partner) bears the risk of loss while the “lender” (capital partner) is entitled to a stipulated rate of return. Some commentators suggests these rules relate to the complexities of the prohibition against charging interest rather than the ordinary commercial law of partnerships. See for example, comments of Bayit Hadash (§25) and Drishah (§46) to Tur, YD §177, as well as comments of Taz (§42) and Shakh (§65) to SA, YD § 177. See also footnote 172 in the Shirat Devora edition to Tur, YD §177. Nevertheless, these same authorities also imply these rules relate to partnership law more generally. See Taz (§ 44-45) and Shakh (§67) to YD §177. 141 Mishneh Torah, Laws of Agency and Partnership 5:2; Tur & SA, HM §176:10 142 S’ma to HM §176:32. 143 Shakh to HM §176:22. 140 26 Saiman, Draft of January 2018 As compared to modern law, our survey of Jewish private law reveals somewhat weaker fiduciary duties and obligations.144 Nevertheless, the lack of a thick fiduciary regulation does not stem from the rabbis’ inability to conceive of such duties. To the contrary, as we shift focus from private to public law, even the that earliest sources of Jewish law impose considerable fiduciary duties on and prophylactic constrains on public officers and trustees.145 Beginning with the Bible, the Book of Numbers recounts the story of a rebel named Korach who instigated the populace against Moses during the desert sojourn. The crux of Korach’s complaint was the charge that Moses arrogated too much power to himself and his family. Moses responded by proclaiming, “I have not taken one donkey from them,”146 which both signals the norms leaders were held to, and offers a pretty good sense of what the dispute was about. Later in the Bible, the prophet Samuel used his farewell address asks the assembled nation to bring forward any claims against him:147 Testify against me in the presence of the Lord and His anointed. Whose ox have I taken? Whose donkey have I taken? Whom have I cheated? Whom have I oppressed? From whose hand have I accepted a bribe to make me shut my eyes? If I have done any of these things, I will make it right.” Though the people acquitted Samuel of all suspicion and wrongdoing, the incident is resonant in light of Samuel’s own life. In the beginning of the biblical book bearing his name, Samuel emerges as a devoted and faithful leader in contrast to the corrupt clerisy of Eli’s sons— 144 The most significant exception is the apotropos who oversees the trust for minors. But as both common law and the Talmud maintain, this office is inevitably “affected with the public interest,” and raises different considerations than classical private law fiduciaries. 145 Interestingly, there has been considerably more scholarly interest on the public law of fiduciaries than on the private side. See for example Nahum Rackover, The Rule of Law in the State of Israel: The Heritage of Law in Israel, 77-101 (Jerusalem, 1989) [Hebrew]; Aviad HaCohen, The Prohibition Against Conflicts of Interest in Jewish Law, 114 in Conflicts of Interest in the Public Sphere: Law. Culture, Ethics and Politics, D. Barak-Erez et.al eds. (2009) [Hebrew]. Ron Kleinman, From the Halls of Justice to the Realm of Public Officials: Three Models to Solving the Problem of Conflict of Interests, in Studies in Jewish Law: Judges and Judging, Y. Haba and A. Radzyner eds. (Bar-Ilan 2007), 159-187 [Hebrew]. In English, see Ron Kleinman, Conflicts of Interest of Public Officials in Jewish Law: Prohibitions, Scope and Limitations, 10 Jewish Law Ass’n Studies, 93-116 (2010), (hereinafter “Kleinman”), and Amichai Cohen, The Audit in Hebrew Law, 21 Jewish Political Studies Review151 (2009). 146 Numbers 16:15. 147 1 Samuel 12:3-5 27 Saiman, Draft of January 2018 the priests who presided over the temple at Shiloh. These sons are described as adulterous gluttons who abused the power of their offices to, (in modern terms), shake-down the worshipping public.148 Because Samuel neither approved nor participated in their evil schemes, has was chosen by God to lead the people in their place.149 Notably, this pattern was repeated at the end of Samuel’s life. Like his predecessor Eli, Samuel also sought to install his sons as judges over Israel, but they, “turned aside after dishonest gain and accepted bribes and perverted justice.150 Elsewhere, the Bible records repetitive verses that describe Moses’ detailed account of the gold and valuables donated for the desert tabernacle. 151 Similarly, both the Book of Kings and Chronicles belabor the punctilious precision of financial accounting conducted by the officials who refurbished the Temple in Jerusalem during the reign of various kings of Judea.152 Sensitive to the over-the-top precision described in the biblical text, the Talmudic rabbis understood that Scripture as not only reporting historical facts, but teaching proper conduct. Midrashic sources explain if Moses— of whom God attested was faithful in all My house—153 had to ensure his actions were beyond reproach, how much more so was true of an ordinary official entrusted with the public fisc.154 The themes that developed in midrashic /homiletic teachings also find expression in the more prescriptive canon of legal materials. To remove even a whiff suspicion, the Mishnah regulates the clothing worn by officials in the Temple who entered the vault to were to withdraw funds for sacral use:155 The official tasked to withdraw the funds [from the Temple vault] should not enter the chamber wearing a bordered cloak, 148 1 Samuel 2:12-36 Id. Chapter 3. 150 1 Samuel Ch. 12: 151 Exodus 38: 21-31. 152 See 2 Kings 12:6-16 and 22:3-7 respectively. See also 1 Chron. 9:26. 153 Numbers 12:7 154 See Midrash Tanhuma, (Buber edition), Pekudei § 4. See also Talmud Berakhot 5a. 155 Mishnah Shekalim 3:2. 149 28 Saiman, Draft of January 2018 nor shoes, nor sandals, nor tefillin, or an amulet. [Places where money could be hidden]. For should he become poor, people will say it is on account of the sin of embezzling funds from the vault. And should he become rich, people will say this was because he embezzled funds from the vault. For one must be free of suspicion before others as he must be free of blame before God. As Scripture states: (Numbers 32:22) And you shall be free from suspicion in eyes of God and Israel And as Scripture further states: (Proverbs 3:4). “And you will find favor and good understanding in the eyes of God and man.” The parallel Tosefta goes even further, noting the official was subjected to a bodily search upon entry and exit from the vault. And while inside, other officials were instructed to engage him in conversation, to ensure that no coins were hidden in his mouth.156 Even from the perspective of modern law, these regulations seem extreme. And in truth, scholars have noted that Mishnaic descriptions of Temple rituals may serve hortatory and educational purposes of the rabbis, rather than offer descriptions of how the institutions functioned historically.157 But whether historical account or idealized prescription, these sources emphasize that public officers must do more than simply avoid a breach of trust, (be free from blame before God). Rather, they must adopt prophylactic measures to assure the community that its officials operate under the highest standards of integrity, (free of suspicion before others). In time, the midrashic rendering of the verse, you shall be free from suspicion in the eyes of God and Israel,158 became the source of prophylactic duties incumbent on a number of public officials.159 Above, we examined the Tosefta in connection with the bailee called upon to sell the 156 Tosefta Shekalim 2:2. See also Mishneh Torah, Laws of Shekalim 2:10. See for example, Naftali Cohn, The Memory of the Temple and the Making of the Rabbis (U. Penn. Press, 2013) 158 Numbers 32:22. 159 In general, the word naki, (release), is a technical term indicating that a vow has been fulfilled. In its native context, the verse means that the two and a half tribes who took their inheritance in the Transjordan would be 157 29 Saiman, Draft of January 2018 depositor’s rotting fruit. The text then transitions to articulate the rules governing officers who exercising authority over charitable funds: And so in the case of those who administer charitable funds: If there are no poor people for whom to distribute the funds, they are to make change of the monies with others, but not with themselves. Likewise the administrator of the donated food plate: When there is no poor person is in need, he should sell the donated food to others, but not to himself.160 Other sources note that those who collect funds for charitable purposes under color of law are required to work in pairs, to prevent even the appearance of self-dealing and other impropriety.161 Similarly, trustees of charitable funds may not take possession if monies found in the street (that they are otherwise entitled to keep) or collect a personal debts in public, due to the suspicion that may arise from seeing public officers take money into their own accounts.162 These trustees must also count coins set aside for public welfare one at a time, (rather than twoby-two), lest anyone think they are miscounting the money and pocketing the difference.163 Finally, though the Talmud maintains that charity administrators are trusted in the conduct of released (naki) from the vow made before God to aid their brethren in the conquest of the land of Canaan. The midrash however, is piqued by the fact that the Bible goes out of its way to suggest that the release will be “before the eyes of God and Israel.” The midrashic reading adopts an alternative translation of the term naki which can also mean “clean.” In this construction, when one undertakes an obligation, it is not enough to fulfill it in the eyes of God, but one must discharge the obligation in a way that removes any suspicion in the eyes of man as well. 160 Talmud Bava Metiza 38. Cited with some variation in Tosefta Bava Metiza Ch 3. See also Talmud Bava Batra 8b. 161 See Talmud and Rashi to Bava Batra 8b, Beit Yosef to SA, YD §257:1. The Talmud also offers another reason for this rule: since these funds are a form of public tax that can be expropriated by force if necessary, at least two officials must be involved in the collection process. TalmudBava Batra 8b. See also Tur, YD §266:3. Nevertheless, many authorities maintain that because ordinarily two officials are required to collect these funds, a single official will be presumed to act for personal gain. See Shakh and Taz to YD §257:1. 162 Tosefta D’mai 4:16. Talmud Bava Batra 8b cites a more lenient version of this teaching that permits the adminitrators to take the funds but requires them to place the monies in the public purse and only transfer it to their private accounts when out of public view. The version recorded in the Talmud is eventually adopted as normative halakhah. 163 Mishneh Torah, Gifts of the Poor 9:9-11; Tur & SA, YD §257. In contrast to the rules recorded about the Temple in Mishnah Shekalim, Talmud Bava Batra 8-9 presents less extreme rules that seem closer to contemplating real-world applications. 30 Saiman, Draft of January 2018 their office,164 later authorities recommended they issue an accounting to the community. In subsequent periods, Jewish communities adopted an elaborate system of communal controls.165 Finally, while classical sources do not mention prohibitions against dealing with close family members,166 starting in the 16th century, rabbis being to prohibit an apotropos and other public officials from using trust properties to conduct business with their own families, all in an effort to be free from suspicion in the eyes of God and man. 167 Notwithstanding these enhanced duties for public officials, Jewish law does not articulate many actionable remedies for breach. By way of contrast, pursuant to the “no further inquiry rule,” modern law holds that transactions failing to comply with precautionary measures are either void or voidable. No Talmudic sources make this claim. Enforcement would seem to lie in declaration of a religious prohibition and possible removal from office, but does not include voiding the transactions or personal liability. 168 Part IX. Analysis & Conclusion The gap between modern and Jewish perspectives of fiduciary private law, especially in light of the elaborate duties found in the public arena, has led a number of contemporary scholars to speculate why the rabbinic regulation in this arena is relatively lax. Some have looked to agency principles of Jewish law, noting since the principal can disaffirm any acts of the agent that harms the former’s interests, strong fiduciary obligations are not necessary.169 Another approach suggests that since Jewish agency law does not create a binding obligation on the agent 164 Talmud Bava Batra 9a; Mishneh Torah, Gifts of the Poor 9:11 Tur, YD §257:2. See Cohen at 162-168. Upon reasonable grounds for suspicion, or in cases where administrator strong-armed his way into the position, the community is entitled to demand an accounting and remove the officer even in the absence of formalized process. See Rema, YD § 257:2. 166 See Unger at 122 and n. 487; See also Kleinman at 102. There is some debate as to whether two brothers may be appointed charity administrators. Jerusalem Talmud, Pe’ah 8:7, indicates that this would be prohibited, whereas the Babylonian Talmud, Bava Batra 8b, suggests to the contrary. While the standard codes follow the Babylonian Talmud. See SA, YD §256:3, some latter authorities held that best practice was to act stringently and follow the views of the Jerusalem Talmud. See Kleinman at 106-107. 167 Respona Maharit (Joseph di Trani, Greece, 16th c.) HM Vol. 2 §1. See also comments of R. Akiva Eiger to HM §292:19. 168 See Tosfot to Pesahim 13a; Taz to HM §175:15. See also Unger at 124 and nn. 499-500. 169 See Michael Wygoda, Agency (Jerusalem: The Heritage of Law in Israel, 2014), 447-48 [Hebrew]. 165 31 Saiman, Draft of January 2018 to fulfill its tasks, thick fiduciary duties are not appropriate.170 A more philosophical account stresses that modern law assumes humans are utilitarian wealth maximizers and therefore the law must grant entrustors/beneficiaries significant protection from predacious fiduciaries. Jewish law by law maintains a more aspirational view of human nature, and its laws are designed encourage the fiduciary to live up to the faith the law puts in him. On this reading, the fiduciary obligations and restrictions found in the earlier strata of Jewish law are oriented towards facilitating the fiduciary’s faithful execution of the office and removing the taint of suspicion. It is only later on that the law turns towards protecting the financial interests of entrustors for fear of abuse by the administering parties.171 While this last view in particular carries merit, I think a simpler answer lies in recalling the nature of civil liability in Jewish law. In Part III, we saw how grama and related principles limit tort liability to cases where the tortfeasor directly caused the physical harm to the defendant or his property. Likewise in contractual settings, damages are typically limited to what Fuller termed “the restitution interest,” whereas reliance, and certainly expectation, are damages difficult to come by. Further in both scenarios, lost profits, unrealized gains, and what common lawyers call “pure economic losses” are generally not compensable. In light of these background rules, it is not surprising that fiduciary breaches, which often reflect unrealized gains and rarely result in physical damage to the trust res tend to go uncompensated. Nevertheless it is worth noting that as a religious system, halakhah does not rely on civil remedies alone. The Talmud maintains that a party who reneges on an executory contract is subjected to a justified, though non-actionable right of complaint,172 and above we noted that an agent who takes the deal for himself rather than for the principal is deemed dishonest.173 Likewise, though many cases of grama-based damage remain “exempt in the courts of man,” one is nevertheless “liable before the heavenly tribunal.”174 Finally, there are cases where a party who reneges on partially executed contractual agreement is not civilly liable but is nevertheless 170 Shmuel Shilo, Unexpected gains in the Agency Context, 3-4 The Jewish Law Annual 1976-77, pp 1. Ungar at 144-45. 172 See supra at notes 43 and 124. 173 See above at the text surrounding notes 127-29. 174 Talmud Bava Kamma 60a. 171 32 Saiman, Draft of January 2018 subject to a public reprimand by means of a formal curse stating that God will seek justice from those who breach contractual commitments.175 Moreover, the consensus view is that, notwithstanding the lack of civil enforcement, many of these misdeeds and breaches are prohibited as a matter of religious law. In a community that structures itself around religious observance and belief in divine justice, declaring something prohibited can have a considerable, moral, social and even legal impact—even short of a judicial declaration of civil liability. Traditionally, much of Jewish law was enforced by social and communal means rather than by the formal procedures of Talmudic law,176 and, as stated above, latter authorities relied on these ideas to institute communal and religious sanctions against those who breached commercial norms. 177 The distinction between religious prohibitions and civil remedies may also explain some of the divergence between public and private fiduciaries. Note that the discussions of public trustees do not address civil liability, but focus primarily whether the conduct was religiously permitted.178 Since the central question is not whether the public fiduciary must repay the public fisc, but whether he has acted properly in discharging his religious duties, the standards may very well be different. In a similar vein, it is worth recalling that Jewish law maintains a universal religious duty that prohibits giving bad or self-interested advice. The mishnaic-era rabbis understood the verse, And you shall not place a stumbling block before a blind person, and you shall fear your God; I am the Lord,179 to prohibit misleading (“stumbling”) a person who is “blind,” that is, ignorant, of a given matter. Midrash Sifra thus reads:180 If one seeks advice from you: Do not advise in a way that is not in his best interest. 175 Mishnah Bava Metzia 4:1; Talmud Bava Metzia 48a. See Chaim Saiman, The Rabbinic Idea of Law (Princeton, 2018). 177 See supra at notes 124 and 130. 178 Ethan Leib and Stephen Galoob make a similar argument with respect to public law fiduciaries in American law. See their chapter, Fiduciary Duties and Public Officers, in this volume. 179 Leviticus 19:14, 180 Midrash Sifra to Leviticus 19:14. 176 33 Saiman, Draft of January 2018 Do not say, “leave for a journey in the morning,” knowing that bandits will accost him. And do not say, "leave in the afternoon," knowing the sun will be very powerful then. Do not say, “sell your field and buy a donkey.” And then compel him to sell the field to you and take it for yourself. Lest you say, “[I meant no harm,] I gave good advice, and no one can ever know the intentions I had in my heart.” On this account, the verse teaches: And you shall fear your God, I am the Lord, [God knows whether the advice was given in good faith or not]. Though not actionable in courts, Jewish law places a religious duty to take the best, or in modern terms, fiduciary, interests of advice-seekers in mind. This applies not only to the fairly limited class of fact-based “special relationships” the common law considers fiduciaries, but to any interaction where one party seeks counsel from another. Moreover, the Midrash makes clear what white-collar plaintiffs and prosecutors know quite well: the tools of civil litigation are not well tailored to uncovering the difference between honest mistakes, negligence and outright malice. The Midrash stresses the point— already hinted to in the Bible itself— that ultimately, the Jewish legal system is premised on belief in a divine judge and divine justice. The result is a duality not uncommon in comparisons between modern and Jewish law. From the strictly legal perspective, Jewish law maintains considerably lower standards of care and liability. But from a religious and aspirational perspective, the system posits duties far in excess of what the common law could ever deem reasonable. 34