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1988 (O) 717

1990.03.20
1988 (O) 717
Minshu Vol. 44, No. 2
Judgment concerning whether or not the payment for a bankruptcy claim, which is made through the compulsory execution carried out during the period after an order of discontinuance of bankruptcy proceedings made simultaneously with the declaration of bankruptcy becomes final and binding before an order of discharge becomes final and binding, should be returned as unjust enrichment
Case of opposition to execution
Judgment of the Third Petty Bench, quashed and decided by the Supreme Court
Hiroshima High Court, Matsue Branch, Judgment of March 25, 1988
Even if an order to discharge the bankrupt becomes final and binding after an order of discontinuance of bankruptcy proceedings made simultaneously with the declaration of bankruptcy becomes final and binding, and payment is made for a bankruptcy claim through the compulsory execution procedure based on that claim, the legal cause for the payment for the bankruptcy claim would not be lost.
Article 703 of the Civil Code, and Article 366-12 of the Bankruptcy Act



Civil Code

Article 703

A person who has benefited from the property or labor of others without legal cause and has thereby caused loss to others shall assume an obligation to return that benefit, to the extent the benefit exists.



Bankruptcy Act

Article 366-12

A bankrupt who has been granted a discharge is discharged from his/her liabilities for all obligations to bankruptcy creditors, except for a liquidating distribution through bankruptcy proceedings; provided, however, that this does not apply to the following claims:

(i) a claim for tax;

(ii) a claim for compensation for loss or damage due to a tort that the bankrupt has committed in bad faith;

(iii) an employee's claim for salary, limited to the part secured by a general statutory lien;

(iv) an employee's claim for deposits including fidelity guarantee deposit;

(v) a claim that the bankrupt has not stated in the list of holders of dischargeable claims while being aware of it, except when the holder of such claim knows that the declaration of bankruptcy has been made; and

(vi) a claim for a fine, petty fine, court costs for a criminal case, collection of equivalent value, and civil fine.
The judgment in prior instance is quashed, and the judgment in first instance is revoked.

The claim made by the appellee of final appeal is dismissed.

The total court costs shall be borne by the appellee.
Concerning the reasons for a final appeal stated by the counsel for final appeal, MAEDA Osamu

I. The court of prior instance lawfully determined the following facts. (1) The appellant held a claim against the appellee, which could later fall within the scope of bankruptcy claims, for payment of 4,672,065 yen with an amount of money calculated thereon at the rate of 6% per annum for the period from December 4, 1984, until the completion of payment. (2) On August 21, 1985, at 10:00 a.m., at the Tottori District Court, the appellee was declared bankrupt and was simultaneously given an order of discontinuance of bankruptcy proceedings, which then became final and binding. (3) On August 28, 1985, the appellee filed a petition for discharge with the same court, and was given an order of discharge on July 4, 1986. This order became final and binding when August 8, 1986, passed. (4) At the Tottori District Court, based on the title of obligation regarding the abovementioned claim for payment, the appellant obtained an attachment order on April 7, 1986, with regard to the claim for compensation for loss or damage that the appellee had acquired against OSHITA Takashi (who is not a party to the case) after receiving the declaration of bankruptcy and order of discontinuance of bankruptcy proceedings, and on July16, 1986, the appellant received 5,080,646 yen delivered as payment money to satisfy the abovementioned claim for payment. Based on these facts, the court of prior instance determined as follows. Even during the proceedings to examine the bankrupt's petition for a discharge, a bankruptcy creditor may carry out compulsory execution against the bankrupt based on the bankruptcy claim. However, in light of the provisions of the main clause of Article 366-12 of the Bankruptcy Act (hereinafter referred to as the "Act") and the purpose of the Act under which the discharge system is designed to economically rehabilitate an honest bankrupt and guarantee such bankrupt the right to live a humane life, when an order of discharge becomes final and binding, a bankruptcy creditor loses the legal cause to retain the payment money that the creditor has gained through the compulsory execution, even though the Act does not provide that the discharge is effective retrospectively as of the time of the order of discontinuance of bankruptcy proceedings. Determining as such, the court of prior instance ordered the appellant to pay the appellee the amount of the payment money delivered as mentioned above, with delay damages accrued thereon at the rate of 5% per annum under the Civil Code for the period from the day following the date of claim for return until the completion of payment.

II. However, the determination of the court of prior instance mentioned above cannot be upheld for the following reasons.

It is reasonable to consider that if an order of discontinuance of bankruptcy proceedings is made simultaneously with the declaration of bankruptcy, and this order becomes final and binding, a bankruptcy creditor may lawfully carry out compulsory execution based on the bankruptcy claim, and even if an order to discharge the bankrupt becomes final and binding after payment is made for the bankruptcy claim by implementing the liquidating distribution, etc. through the compulsory execution, the legal cause for the payment through the compulsory execution would not be lost.

The bankruptcy proceedings are closed when an order of discontinuance of bankruptcy proceedings becomes final and binding, and in such case, even if a petition for discharge has been filed, the restriction on a bankruptcy claim imposed by the declaration of bankruptcy ceases to exist in the future and the creditor is now able to lawfully carry out compulsory execution based on the bankruptcy claim because there is no such provision that could be the legal basis for the continued existence of the restriction on the bankruptcy claim imposed by the declaration of bankruptcy. If an order of discharge for the bankrupt becomes final and binding after payment is made for the bankruptcy claim by implementing the liquidating distribution, etc. through the compulsory execution, the bankrupt is discharged from his/her liabilities for all bankruptcy claims except for a liquidating distribution through bankruptcy proceedings (the main clause of Article 366-12 of the Act). Since there is no such provision that can be understood as allowing that order of discharge to be effective retrospectively, there is no reason to consider that the legal cause for the payment for the bankruptcy claim would be lost.

If there is not enough time to carry out compulsory execution during the period after the bankruptcy proceedings are closed before the order of discharge becomes final and binding, such as in the case where an order of termination of bankruptcy proceedings is made after a liquidating distribution is made through bankruptcy proceedings and a decision as to whether or not to grant a discharge is promptly made, a bankruptcy claim may be enforced only through bankruptcy proceedings (Article 16 of the Act), and any property that the bankrupt acquires after being declared bankrupt (hereinafter referred to as "newly acquired property") cannot be the subject of compulsory execution carried out based on a bankruptcy claim, and as a result, the bankrupt who is granted a discharge is able to retain the newly acquired property. However, this is because the scope of the bankruptcy estate, which is reserved to pay the bankruptcy claims, is limited to cover only property held by the bankrupt at the time of the declaration of bankruptcy in order to clarify the bankruptcy proceedings (Article 6, paragraph (1) of the Act). When the bankrupt will be declared bankrupt, or in other words, whether a certain property falls within the scope of bankruptcy estate or the scope of newly acquired property, does not depend only on the bankrupt's intention. Therefore, it is difficult to find the reason to consider that the discharge system is also intended to allow the bankrupt to retain such property that has come to fall within the scope of newly acquired property in this manner. Hence, it is also impossible to consider that it is contrary to the purpose of the discharge system to affirm the validity of any payment made through compulsory execution during the proceedings to examine the bankrupt's petition for [a] discharge if an order of discharge later becomes final and binding.

III. In that case, the judgment in first instance which upheld the appellee's claim based on the determination that the appellant gained unjust enrichment by receiving the payment money in question, and ordered the appellant to return the payment money, as well as the judgment in prior instance that upheld the judgment in first instance, are illegal due to the erroneous interpretation and application of the provisions concerning a discharge and Article 703 of the Civil Code, and such illegality obviously affects the judgment. Therefore, the counsel's arguments are well-grounded, and the judgment in prior instance should inevitably be quashed and the judgment in first instance should be revoked. In light of the explanation given above, the appellee's claim should be dismissed.

Accordingly, in accordance with Articles 408, 396, 386, 96, and 89 of the Code of Civil Procedure, the Court unanimously decides as set forth in the main text of the judgment.
Justice TEIKA Katsumi

Justice YASUOKA Mitsuhiko

Justice SAKAUE Toshio

Justice SONOBE Itsuo
(This translation is provisional and subject to revision.)