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1988 (O) 1570

1990.09.27
1988 (O) 1570
Minshu Vol. 44, No. 6
Judgment concerning the case where the court determined that it is reasonable to presumptively recognize a person who endorsed a negotiable instrument for guarantee purposes as having provided guarantee for the underlying obligation
Case of loan
Judgment of the First Petty Bench, partially quashed and remanded and partially dismissed
Osaka High Court, Judgment of July 13, 1988
Where X borrowed money from Y three times, if there are the circumstances as held in the judgment, such as where Z had known Y and also served as an intermediate for the aforementioned borrowings, and directly met Y in the company of X at the time of each of the borrowings, and, upon Y's request, endorsed a promissory note drawn by X for guarantee purposes and issued it to Y on site, and, after X refused to make the repayment, Z took actions in complying with Y's strong demand for the repayment of the aforementioned third loan, it is reasonable to presumptively recognize Z as having provided guarantee for the aforementioned third loan obligation unless there are other special circumstances.
Article 446 of the Civil Code, Articles 15 and 77 of the Negotiable Instrument Act, and Article 185 of the Code of Civil Procedure

Civil Code
Article 446 A guarantor shall have the responsibility to perform the obligation of the principal obligor when the latter fails to perform such obligation.

Negotiable Instrument Act
Article 15 (1) An endorser is to secure assumption and payment unless otherwise stated.
(2) An endorser may prohibit a new endorsement, and in this case, the endorser is not to be liable for securing the subsequent endorsee of the negotiable instrument.

Article 77 (1) The provisions on bills of exchange regarding the following matters apply mutatis mutandis to promissory notes unless they are contrary to the nature thereof:
(i) endorsement (Articles 11 to 20);
(ii) maturity (Articles 33 to 37);
(iii) payment (Articles 38 to 42);
(iv) recourse due to refusal of payment (Articles 43 to 50 and Articles 52 to 54);
(v) payment by intervention (Article 55 and Articles 59 to 63);
(vi) transcript (Articles 67 and 68);
(vii) alteration (Article 69);
(viii) prescription (Articles 70 and 71); and
(ix) holidays, calculation of the period, and prohibition of days of grace (Articles 72 to 74).
(2) The provisions on bills of exchange that should be paid at a third party's location or a location that is not the domicile of the payer (Articles 4 and 27), agreement on interest (Article 5), difference in statements concerning the amount of payment (Article 6), effect of a signature given under the conditions provided in Article 7 and effect of a signature of a person who gave the signature without or beyond his/her authority (Article 8), and blank bills of exchange (Article 10) also apply mutatis mutandis to promissory notes.
(3) The provisions on guarantee (Articles 30 to 32) also apply mutatis mutandis to promissory notes. In the case referred to in the last paragraph of Article 31, where a person for which guarantee is provided is not indicated, it is deemed that the guarantee is provided for the drawer of a promissory note.

Code of Civil Procedure
Article 185 In reaching a judgment, the court decides whether to find allegations of fact to be true based on its freedom of personal conviction, in light of the entire import of oral arguments and the results of the examination of evidence.
Of the judgment in prior instance, the part that dismissed the alternative claim made by the appellant of final appeal in prior instance is dismissed, and this case is remanded to the Osaka High Court with respect to the aforementioned part.
Other parts of the final appeal filed by the appellant are dismissed.
The costs of the final appeal concerning the preceding paragraph shall be borne by the appellant.
Reason II-1 for a final appeal stated by the counsel for final appeal, NISHIZAKA Kiyotaka

The findings and determination of the court of prior instance regarding the counsel's arguments are legitimate and can be accepted in light of the evidence indicated in the judgment in prior instance, and the process thereof contains no illegality as argued by the counsel. The arguments are, in the end, only criticizing the selection of evidence and findings of facts made by the court of prior instance under its exclusive power, and thus are not acceptable.

Reasons I and II-2 for a final appeal stated by the same counsel for final appeal

I. The facts determined by the court of prior instance are as follows.

1. The appellee was requested by E (hereinafter referred to as "E"), who is the representative of Non-Party Commercial Stock Company D (hereinafter referred to as the "Non-Party Company"), with which the appellee had previously had a deal, to introduce a loaner and introduced the appellant, whom the appellee had known for some time. Around September 1984, when the appellant loaned 5,000,000 yen to the Non-Party Company with the due date set to one month later and the interest set to 5% per month, the appellee met the appellant in the company of E, and upon the appellant's request, the appellee endorsed a promissory note drawn by the Non-Party Company for the purpose of securing the aforementioned loan, whose amount is the amount of the loan and which matures on the due date, and issued it to the appellant. Around October 1984, the appellee also accompanied E when the Non-Party Company repaid the aforementioned loan to the appellant and received return of the aforementioned promissory note.

2. Around December 1984, the appellee also accompanied E when the appellant loaned 5,000,000 yen to the Non-Party Company with the due date set to one month later and the interest set to 10% per month, and upon the appellant's request, the appellee endorsed a promissory note drawn by the Non-Party Company for the purpose of securing the aforementioned loan, whose amount is the amount of the loan and which matures on the due date, and issued it to the appellant.

3. The Non-Party Company could not repay the aforementioned loan on the due date and decided to increase the total loan amount by paying interest. Around January 15, 1985, the Non-Party Company borrowed 7,000,000 yen from the appellant based on the agreement that the due date would be one month later and the interest rate would be 5% per month (hereinafter this loan is referred to as the "Loan"). At that time, the appellee also met the appellant in the company of E, and upon the appellant's request, endorsed a promissory note drawn by the Non-Party Company for the purpose of securing the Loan (hereinafter referred to as the "Note"), whose amount is the amount of the loan and which matures on the due date, and issued it to the appellant.

4. The Non-party Company went bankrupt around the end of January 1985 and refused to pay the Note, and received an adjudication of bankruptcy around March 1985. Therefore, the appellee apologized to the appellant for causing it trouble, and upon the appellant's strong request, the appellee made various efforts with respect to the method of repayment, etc. of the Loan. However, the repayment was not made in the end.

II. The appellant alleged as the alternative claim in first instance that the appellee indicated its intention to provide the appellant with guarantee for the loan obligation in question (the "Loan Obligation") by endorsing the Note, and demanded the appellee repay the aforementioned loan of 7,000,000 yen and delay damages accrued thereon at the rate of 3% per annum for the period from February 16, 1985, which is the following day of the due date, to the date of completion of the payment. In response to this, based on the facts indicated above, the court of prior instance ruled as follows: Apart from intention with which the appellant requested the aforementioned endorsement, the appellee only had, as an intermediate, the intention to assume the obligation on negotiable instrument by providing endorsement for guarantee purposes, and it is hard to presumptively recognize that beyond such intention, the appellee also had the intention to guarantee the underlying obligation, which is clearly more disadvantageous than the aforementioned obligation on negotiable instrument in terms of the interest rate, the period of prescription, etc.; there are no other arguments and proof regarding the indication of the appellee's intention. Based on this ruling, the court of prior instance determined that the appellant's alternative claim should be dismissed.

III. However, the aforementioned determination of the court of prior instance cannot be easily upheld for the following reasons.

Whether a person who endorsed a promissory note, which a borrower drew on the lender for security purposes when borrowing money, for guarantee purposes assumed only the obligation on said note to the lender or provided further guarantee for the obligation on a loan for consumption that underlay the drawing of said note is to be determined based on the interpretation of the intentions of the parties in the specific case. Based on the facts as indicated above, the Loan is the third one out of the monetary loans for consumption between the appellant and the Non-Party Company that started through intermediary by the appellee, who had known the appellant, and it is clear that the appellee directly met the appellant in the company of E, who is the representative of the Non-Party Company, at the time of each of the aforementioned borrowings and, upon the appellant's request, endorsed a promissory note drawn by the Non-Party Company for guarantee purposes and issued it to the appellant on site, and took actions in complying with the appellant's strong demand for repayment of the Loan after the Non-Party Company refused to make the repayment. In addition, according to the case records, no IOU, etc. was exchanged between the appellant and the Non-Party Company, separately from the aforementioned notes, and the same seems to be true between the appellant and the appellee. Based on the facts as stated above, it should be said that there is sufficient room to presumptively know that the appellant had put special emphasis on the appellee's credibility from the very beginning and had the intention to request the appellee to guarantee the Loan Obligation that underlay the drawing of the Note when it requested endorsement of the Note and that the appellee also accepted the endorsement of the Note with an awareness of such intention of the appellant and the content of the aforementioned obligation. In that case, it is reasonable to presumptively recognize that a guarantee contract under the Civil Code was established between the appellant and the appellee with respect to the Loan Obligation unless there are other special circumstances. The judgment of the Third Petty Bench of the Supreme Court, November 15, 1977, 1976 (O) No. 1187, Minshu, Vol. 31, No. 6, at 900 that is cited in the judgment in prior instance is related to the case where, when borrowing money, the borrower is requested by the lender to obtain an endorsement of a promissory note, which the borrower draws, from any reliable guarantor and a person requested by the borrower accepts the endorsement of the aforementioned note without any direct contact with the lender. Therefore, the judgment is irrelevant in this case because it addressed a different type of facts. Consequently, the judgment in prior instance should be considered to contain illegality of the violation of laws and regulations, and insufficient examination and inadequate reasons, and the counsel's arguments are to this effect and are well-grounded.

Of the judgment in prior instance, the part that dismissed the alternative claim made by the appellant in prior instance is quashed, and this case is remanded to the court of prior instance to be further examined in relation to the aforementioned part. Other parts of the final appeal filed by the appellant are dismissed because they are groundless. Accordingly, in accordance with Articles 407, 396, 384, 95, and 89 of the Code of Civil Procedure, the Court unanimously decides as set forth in the main text.
Justice YOTSUYA Iwao

Justice TSUNODA Reijiro

Justice OUCHI Tsuneo

Justice OHORI Seiichi

Justice HASHIMOTO Shirohei
(This translation is provisional and subject to revision.)