Responsa for Bava Metzia 143:3

Q. Several Jews lent twenty-one pounds to the dean (Dechant), the overlord of the Jews of the city, on condition that he repay them thirty pounds. The dean asked the Jewish community to go surety from him and pay his creditors the thirty pounds, when the next payment of the taxes would be due. The community leaders agreed and gave a writ of indebtedness, bearing their signatures, for thirty pounds to A and B. The dean was deposed before the next payment of the taxes became due and the community was faced with the loss of this money. The community, therefore, refuses to pay the nine pounds interest to the creditors, claiming that since the community became responsible for the original debt contracted by the dean, the payment of the nine pounds, in addition to the twenty-one pounds borrowed by the dean, would constitute usury.
A. Since the creditors settled the interest on the dean as a loan, the dean became obligated to pay his creditors the full thirty pounds, which obligation was governed by the law of the country. The community leaders took over the dean's obligations in the presence of the three parties involved in the transaction, and became obligated to pay thirty pounds to the creditors. Moreover, the community is responsible for the full amount because its leaders went surety for the dean. The suretyship is binding in this case for two reasons: a) Although the suretyship was established after the debt was contracted (and should be invalid unless accompanied by a kinyan) the creditors did not free the dean from his obligations until the community leaders went surety for him; b) suretyship established by community leaders is comparable to one made before a Jewish court and is binding even without a kinyan.
SOURCES: Cr. 188; Pr. 38; Mord. B. M. 334. Weil, Responsa 30; ibid. 80; Moses Minz, Responsa 66d; Terumat Hadeshen 303; Ibid. 342.