1999.01.21

1998 (Ju) 5

Minshu Vol. 53, No. 1, at 128

Judgment concerning whether or not it is allowable for the creditor of the decedent for whom the decedent established a mortgage before death to request the juridical person of the inherited property to perform the procedure to register the establishment of the mortgage

Case to seek performance of the definitive registration of the establishment of a revolving mortgage based on a provisional registration

Judgment of the First Petty Bench, quashed and decided by the Supreme Court

Osaka High Court, Judgment of February 25, 1998

The inheritance obligee for whom the decedent established a mortgage before death may not request the juridical person of the inherited property to perform the procedure to register the establishment of the mortgage unless a provisional registration has been completed by the time of the decedent's death.

Articles 929, 951, and 957 of the Civil Code

Article 929 of the Civil Code
After the expiration of the period in para.1 of the Article 927, a person who has made qualified acceptance shall use the inherited property to make performance to inheritance obligees who have made the application of the same paragraph within the period prescribed, and any other known inheritance obligees, proportionally according to the amount of each claim; provided that this may not prejudice the rights of an obligee with priority rights.

Article 951 of the Civil Code
If it is not evident whether an heir exists, an estate that would be inherited shall be as a juridical person.

Article 957 of the Civil Code
(1) If the existence of an heir has not become evident within two months of the public notice of para.2 of Article 952, an administrator of inherited property shall, without delay, give public notice to all inheritance obligees and donees to the effect that a claim for performance should be made within a specified period; provided, however, that such period shall be not less than two months.
(2) The provisions of paras.2 and 3 of Article 927 and Articles 928 to 935 shall apply mutatis mutandis to the case referred to in the preceding paragraph; provided, however, that this shall not apply to the proviso of Article 932.

The judgment of prior instance shall be quashed.
The appeal to the court of second instance filed by the appellee of final appeal shall be dismissed.
The appellee of final appeal shall bear the cost of the appeal to the court of second instance and the cost of the final appeal.

Concerning the reasons for petition for acceptance of final appeal argued by the appellant of final appeal
I. The outline of the facts legally determined by the court of second instance is as follows.
1. On September 25, 1989, A established a revolving mortgage on the real estate indicated in the list of articles attached to the judgment of prior instance, at the maximum amount of 440 million yen to secure his/her debts of 400 million yen owed to the appellee of final appeal, but failed to perform the procedure to register the establishment of the mortgage (this mortgage shall hereinafter be referred to as the "Revolving Mortgage").
2. A died on January 30, 1995.
3. Having obtained an order of provisional disposition on provisional registration, on March 20, 1995, the appellee completed a provisional registration of the establishment of revolving mortgage by reason of the establishment as of September 25, 1989 (hereinafter referred to as the "Provisional Registration").
4. Subsequently, all legal heirs of A renounced their inheritance, and on April 15, 1996, upon petition of the appellee, B was appointed as administrator of A's inherited property (the appellant of final appeal).

II. In this case, the appellee requests the appellant to perform the procedure to complete a definitive registration of the establishment of the Revolving Mortgage based on the Provisional Registration. The court of second instance upheld the appellee's claim by revoking the judgment of the first instance that dismissed the appellee's claim. The holdings of the court of second instance can be summarized as follows.
A juridical person of inherited property has the same status as that of an heir who has taken over the decedent's rights and obligations. The appellee's claim is well-grounded because of the existence of the contract on establishment of revolving mortgage between the appellee and the late A. The term "an obligee with priority rights" set forth in the proviso of Article 929 of the Civil Code, which applies mutatis mutandis under Article 957, para.2, should be construed to mean obligees who have satisfied the requirement to duly assert against third parties by the time of commencement of inheritance. Therefore, it may be possible to construe that it is without practical benefit for the appellee, who does not fall within the scope of such obligee with priority rights, to seek performance of the registration procedure. However, such construction is acceptable only as long as the juridical person of inherited property exists and the proviso is applicable. What is more, the mortgagee is necessarily allowed to exercise the right to request the mortgagor to perform the procedure to register the establishment of the mortgage.

III. However, the determination of the court of second instance mentioned above cannot be affirmed, on the following grounds.
1. In cases where there is no heir (including cases where all legal heirs have renounced their inheritance), the administrator of the inherited property who is appointed upon petition of an interested person shall liquidate the inherited property. The administrator shall, having given public notice on the period during which claims should be presented (Article 957, para.1 of the Civil Code), make payment to obligees from the inherited property, in proportion to the amount of their respective claims (the main clause of Article 929 to be applied mutatis mutandis under Article 957, para.2). However, this may not prejudice the rights of an obligee with priority rights (proviso of Article 929). It is appropriate to construe that in order to be regarded as such an obligee with priority rights, an obligee is required to have satisfied the requirement to assert against third parties by the time of the decedent's death with respect to the rights for which such requirement must be satisfied, because the rank among the inheritance obligees should naturally be determined as of the time of commencement of inheritance or the time of the decedent's death. This reasoning was presented in the judgment cited by the appellant (1938 (O) No. 2385, judgment of the former Supreme Court of December 21, 1939, Minshu No. 18, 1621) as the construction on the provision of Article 1031 of the old Civil Code, which corresponds to Article 929 of the current Civil Code, in the case of qualified acceptance. No reason can be found to distinguish this case and the case where there is no heir.
Consequently, in the absence of an heir (or in the case of qualified acceptance), an inheritance obligees for whom the decedent established a mortgage before death may not assert his/her priority based on the mortgage against other creditors of the decedent and donees unless the establishment of the mortgage has been registered by the time of the decedent's death. Even if registration is completed after the decedent's death, this shall not give priority to the obligee (excluding the case where a definitive registration is completed after the decedent's death based on a provisional registration that was completed before the decedent's death).
2. Since the administrator of the inherited property shall make payment in accordance with law for the benefit of all inheritance obligees and donnes, he/she shall not be allowed, when making payment, to acknowledge priority of a mortgage held by an inheritance obligee that may not be asserted against other inheritance obligees and donees. If the establishment of such a mortgage of which priority is not acknowledged is registered, it is obvious that the registration will become an obstacle to conversion of the inherited property into money (the main clause of Article 932 of the Civil Code to be applied mutatis mutandis under Article 952, para.2) and cause significant hindrance to the administrator's liquidation of the inherited property. Therefore, the administrator may refuse the request of the person for whom the decedent established a mortgage before death to perform the procedure to register the establishment of the mortgage, and shall assume the responsibility to refuse such requests for the benefit of other inheritance obligees and donees.
For the reasons stated above, it is appropriate to construe that the inheritance obligee for whom the decedent established a mortgage before death may not request the juridical person of the inherited property to perform the procedure to register the establishment of the mortgage unless a provisional registration has been completed by the time of the decedent's death. The same shall apply where the qualified acceptor is requested to perform the procedure to register the establishment of a mortgage (See the judgment of the former Supreme Court mentioned above). The precedent judgment cited in the judgment of prior instance (1952 (O) No. 519, judgment of the Second Petty Bench of the Supreme Court of September 10, 1954, Saibanshu Minji No. 15, at 513) addresses a different type of facts and is not inconsistent with our reasoning mentioned above.
3. Consequently, it should be concluded that the appellee does not have the right to request the appellant to perform the procedure to complete a definitive registration of the Revolving Mortgage based on the Provisional Registration.

IV. For the reasons stated above, the judgment of second instance that upheld the appellee's claim is illegal due to erroneous construction and application of laws and regulations, and this illegality has apparently affected the judgment. The appellant's argument is well-grounded, and the judgment of prior instance should inevitably be quashed. According to the facts found by the court of second instance, the judgment of the first instance that dismissed the appellee's claim should be affirmed as justifiable, and the appeal to the court of second instance filed by the appellee of final appeal should be dismissed.

Therefore, the judgment was rendered in the form of the main text by the unanimous consent of the Justices.

Justice IJIMA Kazutomo
Justice ONO Motoo
Justice ENDO Mitsuo
Justice FUJII Masao
Justice ODE Takao