The municipal authorities in Israel, where we live, charge real estate tax (called arnona) based on their measurements of the size of each property. Due to their error, they charged my neighbor and not me tax on part of my property. They recently realized their mistake and started sending correct bills. However, when my neighbor asked them to refund the money that they overcharged him in the past, they refused with the argument that the bylaws of the municipality, which are posted on the municipality’s website, state that any complaints of mistakes in one’s bill must be brought to their attention within ninety days of receipt of the bill. Since this complaint did not satisfy this criterion, they maintain that they do not owe him any money and refuse to refund his money. Am I, the one who benefited from their mistake, liable to my neighbor since essentially, he paid part of my bill? (The municipality is not asking me to pay any back taxes.)
The first issue that requires clarification is whether the government’s refusal to return your neighbor’s overpayment is proper according to Torah law.
In order for the ruling of the municipality to be halachically valid it must either be justifiable according to pure Jewish law or else be justified under the rule that dena demalchusa dena.
Before we can decide this issue, we have to understand the legal meaning of the government’s claim. Since their charge was an error, and by their own admission it would have been returned had your neighbor brought it to their attention within ninety days after receipt of the bill, the municipality is admitting that it had a debt. It is arguing that your neighbor’s failure to bring it to their attention immediately constitutes mechilo, forgiveness of a debt. However, the Torah rule is that mechilo that was made in error does not constitute mechilo since only if one really intends to forgive a debt, is the debt voided. (Tosafos (BM 66B) brings many proofs to support this ruling.)
Since people are unaware of the rule that failure to point out an error in a bill within ninety days constitutes forfeiture of a debt, one cannot claim that your neighbor intended to forgive the municipality of its debt by not submitting a claim within ninety days. This is especially true in light of the fact that your neighbor was not even aware at that time that there was an error and therefore he could not possibly have made a claim. Thus, one certainly cannot say that he was mocheil his right to the return of his overpayment. This is especially true since he was blameless for the mistake because it was the municipality’s mistake and not his.
Therefore, since the fact that your neighbor did not ask for the return of his money immediately does not indicate that he meant to forfeit his right to recover his overpayment, under Torah law the municipality still owes him his overpayment. Thus, their refusal to return his overpayment constitutes theft on their part like anyone else who refuses to return money that he owes.
Furthermore, the municipality cannot claim that their practice is valid under Torah law on the basis of dena demalchusa or minhag-custom, since this is merely a practice of a municipality and not a law of the land and not even a custom of the land.
Having established that the municipality’s refusal to return your neighbor’s overpayment constitutes theft on their part, we must study whether you have to reimburse your neighbor since you benefited from the municipality’s theft from your neighbor.
The Mishna (Kesubos 107B) that discusses the issue of a person who paid another person’s bill writes that if a husband A traveled to a different land leaving his wife, whose support he was responsible for, behind without any means of support and someone else, B, voluntarily supported A’s wife in his absence, A is not obligated to reimburse B. Most Rishonim maintain, and the Shach rules that one must follow their position, that this is a general principle that applies to all debts and is not limited to a wife’s support.
The authoritative explanation (Tosafos BK 58A) for this surprising ruling is that generally, if B spends money to benefit A, A must reimburse B since A gained from B’s loss (ze nehene veze choseir). However here A is free from paying because there is at least some possibility that A would not have had to pay his obligation. Since the benefit he received is not certain, A has no liability to pay B.
This Mishna does not exactly apply in your case since your neighbor did not voluntarily pay your bill. However, there is an extension of the Yerushalmi that applies to your situation. The Yerushalmi (Kesubos 13, 2) on this Mishna, that is cited by the Rif and Rosh and ruled by the Rambam (Chovel 8, 6) and SA (CM 128, 2), records a ruling of an Amora that if a person B was forced by gentiles to pay someone else’s (A’s) bill, the beneficiary (A) is not liable except if the payment was for taxes. Gentiles are discussed only because normally by a Jew the money is recoverable by beis din. However, in your case since beis din is powerless because the municipality cannot be forced to go to beis din, the municipality is like a gentile.
The Magid Mishna explains that the reason they made an exception for taxes is because that was standard government practice in the time of the Gemoro. The government did not want to collect from each individual so they would take the money from one person on behalf of several people, essentially forcing him to be their tax collector. Since this was just a convenient way of collecting taxes, they did not view it as a case where one person paid another’s debt. Since this is not governmental practice nowadays – even though in your situation the municipality did force your neighbor to pay some of your potential tax bill – your situation would seem to be governed by the rule and not the exception.
In order to determine if the rule applies to your situation, it is necessary to understand the rule in light of the principle that if A benefits from B’s loss, A must reimburse B (ze nehene veze choseir chayav). If the benefit is not certain the Sema (128, 6) and Nesivos (128, 5) rule that just like we free A from paying B when B paid A’s debt voluntarily, we also free A when the benefit comes not because B acted voluntarily but because of the actions of a third party. Thus, if there is any possibility that you would not have had to pay the real estate tax e.g., if the municipality would have waived your obligation due to low income, you are free from paying your neighbor.
The Nesivos adds, based on Tosafos (BM 101A), that even if the loss is certain, A does not have to pay B because for one, B did not do anything to benefit A, and also A did not take anything from B. It is only if one of these two situations happened that B is entitled to collect from A. Since in this case it is the municipality that brought about your benefit from B’s loss, according to the Nesivos you would not be obligated to pay your neighbor even if it is certain that you would have to pay if your neighbor had not been charged.
The Beis Shlomo (CM 123) agrees with the ruling of the Nesevos but objects to his justification for his ruling since the principle on which the Nesivos based his ruling is only one opinion of Tosafos and therefore, we should find a reason that is universally accepted. He suggests the Ramban who says the reason A is free from paying B is that since B’s loss was illegal under Torah law, we view it as an act of Hashem to cause B to lose money. If this scenario had not happened, B would have certainly suffered this loss in a different manner since if Hashem determines that someone should suffer a loss, he will certainly suffer that loss. Therefore, A’s benefit was not at the expense of B and there is no reason he should pay B, even if it is certain that A would have had to pay if B had not paid.
We note that the Levush, whose position is adopted by the Aruch Hashulchan (128, 5), disagrees with the Sema, Nesivos and Beis Shlomo. He maintains that the Yerushalmi only freed A from paying B if A was not legally obligated to pay the debt. In that case he did not really benefit from B’s payment since he was never legally liable for the debt and it was just that the gentiles would have stolen from him if they had not stolen from B. However, if A really was obligated to pay the debt to the gentile and the gentile forced B to pay instead of A, A is obligated to reimburse B.
In any case since according to the Sema, Nesevos and Beis Shlomo you do not have to pay, you are not obligated to pay based on the Levush. However, the situation is even better for you since it seems likely that even the Levush and Aruch Hashulchan agree that in your situation you do not have to pay your neighbor. It is not the case that you and your neighbor have an obligation to pay real estate tax and then your neighbor paid your existent obligation. Rather, each individual is assessed separately and independently. In this case the municipality freed you and charged your neighbor in independent actions.
Having established that you are not directly liable to your neighbor, we have to consider a possibility that you are nonetheless liable to your neighbor based on a different principle.
The Gemoro (Pesochim 31A) derives from a pasuk that if A owes money to B and B owes money to C, C can force A to pay him. (The principle is called shebudo deRabbi Nosson.) Therefore, since you owe money to the municipality and the municipality owes money to your neighbor, perhaps your neighbor can force you to pay the municipality’s debt.
However, there are two reasons why you are not liable, even based on this principle. One reason is that the municipality has money to pay its debt and just refuses to pay. The poskim (See Shach (86, 5), Tumim (86, 5) and Nesivos (86, 3)) rule that when B has money to pay C and B would not have otherwise collected from A, A is not obligated to pay C. Since according to their rules, the municipality has no right to charge you, you are not obligated to pay your neighbor, based on this principle, since the municipality would not ask you to pay.
Another reason this rule would not obligate you to pay is that real estate taxes are not an obligation if one is not charged. While the municipality has the right to charge you taxes and you are obligated to pay taxes if charged, you are not obligated to pay taxes that you were never charged (if you didn’t do anything wrong like lie etc.). Since you never were charged, you do not need to pay your neighbor since A only has to pay C if A has an obligation to pay B.
In conclusion: You do not owe any money to your neighbor.