1994(O) No.698

Date of the judgment	1998.6.30.
Case number	1994(O) No.698
Reporter	Minshu Vol. 52, No. 4, at 1125
Title	Judgment concerning the permissibility of raising an affirmative defense of setoff with the rest of the claim being demanded in another action as an active claim
Case name	Case to seek return of unjust enrichment
Result	Judgment of the Third Petty Bench, quashed and remanded
Court of the Second Instance	Tokyo High Court, Judgment of December 22, 1993
Summary of the judgment	In such case that an action is brought by clarifying that a judgment is sought only for a part of a claim, it is permissible to raise an affirmative defense of setoff with the rest of the relevant claim as an active claim in another lawsuit, unless there exist such specific circumstances as that the division of a claim is regarded as an abuse of one's rights in litigation. (There is a concurring opinion.)
References	Article 505 of the Civil Code, Article 114 and Article 142 of the Code of Civil Procedure Article 505 of the Civil Code (1) In cases where two persons mutually owe to the other any obligation with the same kind of purpose, if both obligations are due, each obligor may be relieved from his/her own obligation by setting off each value thereof against the corresponding amount of the obligation of the other obligor; provided, however, that, this shall not apply to the cases where the nature of the obligation does not permit such set-off. (2) The provisions of the preceding paragraph shall not apply in cases where the relevant party manifests his/her intention to the contrary; provided, however, that such manifestation of intention may not be asserted against a third party without knowledge. Article 114 of the Code of Civil Procedure (1) A judgment that has become final and binding has the effect of res judicata only concerning the matters contained in the main text. (2) An adjudication upon the validity or invalidity of a claim asserted for setoff has the effect of res judicata with regard to the amount pleaded by such setoff. Article 142 of the Code of Civil Procedure No party shall file a suit concerning a matter presently pending before a court.
Main text of the judgment	Of the judgment of prior instance, the part for which the appellant lost the case shall be quashed. In regard to the part specified in the preceding paragraph, this case shall be remanded to the Tokyo High Court.
Reasons	Regarding reason 1 for final appeal argued by appeal counsel KASHIWAZAKI Shoichi In light of the facts established by the court of second instance, the ruling of the court of second instance that the appellant benefited from the property of the appellee without legal cause, in respect of the amount of inheritance tax to be declared and paid by him/herself, is upheld sufficient in its conclusion. The appellant's argument cannot be accepted. Regarding reason 2-1 for final appeal argued by appeal counsel KASHIWAZAKI Shoichi It is appropriate to construe that a deposit claim and other monetary claims should be divided inevitably under law upon commencement of inheritance so that each heir succeeds to rights according to his/her share of inheritance (see Case 1952 (O) No. 119, Judgment of the First Petty Bench of the Supreme Court of April 8, 1954, Minshu Vol. 8, No. 4, at 819). On the other hand, it is construed that money is not something dividable at once upon commencement of inheritance and an heir may not demand payment of money corresponding to his/her share of inheritance until partition of estate, from another heir who has kept the money existing at the time of commencement of inheritance as inherited property (see Case 1989 (O) No. 433, No. 602, Judgment of the Second Petty Bench of the Supreme Court of April 10, 1992, Saibanshu-Minji No. 164, at 285). The appellant, stating that the appellee has kept deposit and cash that is an estate from his deceased father A, asserts a setoff with a claim to payment of the amount of money corresponding to his/her legal share thereof, but, as mentioned above, with regard to the deposit, it would suffice for him/her to apply to a bank for a refund of the amount of money corresponding to his/her share of an inheritance, and with regard to the cash, so long as the partition of estate has not been agreed upon among the heirs, the appellant may not demand the payment thereof from the appellee. Thus, the said assertion for a setoff is pointless in either way. Hence, the ruling of the court of second instance arriving at the same conclusion is upheld proper while the argument over immature decision lacks a premise to be based on. Regarding reason 2-2 for final appeal argued by appeal counsel KASHIWAZAKI Shoichi I. According to the record, this suit has developed in the following chronological order: 1. The appellant, on June 6, 1990, stating that he had no choice but to dispose by sale of his/her share, 1/2 respectively in the land and building in question for a lower price than the price quoted in ordinary transaction due to an unlawful provisional disposition requested by the appellee and as a result, incurred damages amounting to 252,600,000 yen as the difference, brought another action to demand a down payment at 40,000,000 yen from the appellee on the ground of a tort (Case 1994 (O) No. 697 of the Supreme Court, case to seek damages). 2. On the other hand, the appellee, on August 27, 1990, filed this lawsuit to demand the appellant to return unjust enrichment of more than 12,960,000 yen, stating that he had paid inheritance tax, property tax, water charges and so on payable by the appellee. 3. In the first instance of this suit, the appellant challenged the existence of the obligation to return unjust enrichment in respect of the inheritance tax paid on his behalf (see reason 1 for final appeal) and conjunctively asserted a setoff with the portion in excess of 40,000,000 yen of the right to claim damages due to the aforesaid unlawful provisional disposition as an active claim. 4. In the second instance of this suit, the appellant, in addition to the assertion of a setoff as described in I-3 above, asserted a setoff with the right to demand payment of the deposit and cash as an active claim (see reason 2-1 for final appeal) and also asserted a setoff with the right to claim damages totaling 24,780,000 yen, that is, 20,000,000 yen paid as a attorney's fee in relation to the procedure to appeal against the aforesaid unlawful provisional disposition and delay damages thereon as an active claim. II. The court of second instance, judging from the aforesaid development of the facts, in light of the purport of Case 1987 (O) No. 1385, Judgment of the Third Petty Bench of the Supreme Court of December 17, 1991, Minshu Vol. 45, No. 9, at 1435 ruling that it is not permissible to raise affirmative defense of setoff with a claim, the subject of another pending action, as an active claim in a different lawsuit, ruled that it not permissible in both cases (1) to assert a setoff with the portion in excess of 40,000,000 yen of the right to claim damages due to the depreciation of a sale price caused by the aforesaid unlawful provisional disposition as an active claim and (2) to assert a setoff with the right to claim damages corresponding to a attorney's fee as an active claim. III. However, the determination of the court of second instance cannot be affirmed for the following reasons: 1. Article 142 of the Code of Civil Procedure (Article 231 of the old Code of Civil Procedure) prohibits any party from further filing a suit concerning a matter presently pending before court, because it intends to avoid redundancy in proceedings as well as prevent different judgments given to the same claim giving rise to conflict to res judicata. In this respect, any ruling whether or not an active claim is established should inevitably extend its purport to a matter of raising an affirmative defense of setoff having res judicata as to the amount challenged by the setoff, and it is as held by the court of second instance that it is not permissible in a lawsuit to raise an affirmative defense of setoff with a claim which is the subject matter in another pending lawsuit (see the aforesaid Judgment of the Third Petty Bench of the Supreme Court of December 17, 1991). 2. On the other hand, however, even if it is a part of a claim, when action is brought with clear mention of it, the subject matter should be nothing but the relevant part of the said claim, and the effect of res judicata of the final and binding judgment thereon should arise only in respect of the said part but not extend to the rest of the claim, which is along with the precedent of this Court (Case 1960 (O) No. 359, Judgment of the Second Petty Bench of the Supreme Court of August 10, 1962, Minshu Vol. 16, No. 8, at 1720). This reasoning is true for raising an affirmative defense of setoff as well, so that asserting a setoff with a part of a claim should be reasonably permissible in itself. 3. Yet, when a claim is divided and exercised in litigation, as these involve the substantial point in dispute in common, some redundancy in proceedings is hardly avoidable, which would impose a burden on the defendant required to enter an appearance as well as the court to no small extent, and moreover, the possibility cannot be ruled out that different judgments are given between a part of the claim and the rest of the claim giving rise to conflicts between actual rulings. If so, once allowing an action to be brought with an assertion of setoff in respect of a part of a claim as in III-2 above, it is necessary to consider separately whether or not it is justifiable to file an action in respect of the rest of the claim or to assert a setoff with such against other claims, hence, we are of the opinion that filing an action in respect of the rest of the claim is not unconditionally allowed as a matter of course. However, when it comes to raising an affirmative defense for setoff, unlike filing an action, it is raised as the means for defense as a result of a lawsuit instituted by the other party and it is instrumental in seeking simple, prompt and safe settlement in relation to the claim sought by the other party, it is appropriate to construe that asserting a setoff with the rest of a claim against other claims is allowable as the due exercise of the right of defense, in light of the cause of the claim, the developments up to filing an action partially, the progress of proceedings thereafter and so on, unless there exist such specific circumstances as that the division of a claim is regarded as an abuse of one's rights in litigation. Therefore, it is appropriate to construe that when an action is filed with a clear indication of the purpose of seeking adjudication upon a part of a claim, raising an affirmative defense of setoff with the rest of the relevant claim as an active claim in a different lawsuit is permissible, unless there exist such specific circumstances as that the division of a claim is regarded as an abuse of one's rights in litigation. 4. Then, considering whether or not there exist such specific circumstances for this case, as described above, the appellant raised an affirmative defense of setoff in this lawsuit with the rest of the claim, part of which is the subject matter of another pending lawsuit as an active claim. As such, the right to claim damages corresponding to the attorney's fee as an active claim for the setoff asserted in the aforesaid II (2) pointed out in the argument, constitutes a part of the same claim, namely, the right to claim damages arising from the unlawful provisional disposition, just as the claim sought in another lawsuit does, but it is not merely a quantitative part but can be regarded as substantial damage of a different kind incurred due to a different cause. Besides, as there exist no such specific circumstances as that asserting a setoff with the right to claim damages corresponding to the said attorney's fee as an active claim constitutes an abuse of one's rights in litigation, it is appropriate to hold that it is permissible to raise an affirmative defense of the said setoff. Hence, the ruling of the court of second instance rejecting the appellant's defense for the said setoff as against the purpose of preventing double prosecution is found erroneous in applying/construing the laws or regulations, which obviously affects the conclusion of the judgment of prior instance. The argument contending against immature decision with regard to the affirmative defense for the said setoff is understood to be based on the abovementioned purpose as a premise, therefore, it is found well-grounded, so that of the judgment of prior instance, the part for which the appellant lost the case shall inevitably be quashed. Furthermore, this case shall be remanded to the court of second instance because it is required to examine thoroughly whether it is allowable or not to raise the affirmative defense of the said setoff. Therefore, with a concurring opinion given by Justice SONOBE Itsuo, the Justices rule unanimously on the case as rendered in the main text of the Judgment. Justice SONOBE Itsuo gives a concurring opinion as follows: I agree with the court opinion but I would like to make a comment regarding the permissibility of asserting a setoff in respect of the lower sale price above-described in II (1) which is not referred to in the argument as well as the practical handling of similar cases. 1. First, I would like to address whether it is permissible or not to assert a setoff with the portion in excess of 40,000,000 yen of the right to claim damages due to the lower sale price caused by the aforesaid unlawful provisional disposition as an active claim. As described above, the appellant, stating that he/she had no choice but to dispose by sale of his/her share, 1/2 respectively in the land and building in question for a lower price than the price quoted in ordinary transaction due to an unlawful provisional disposition requested by the appellee and as a result, incurred damages amounting to 252,600,000 yen as the difference, filed another lawsuit to demand a down payment of 40,000,000 yen from the appellee due to a tort and in this lawsuit, asserts a setoff with the portion in excess of 40,000,000 yen of the said right to claim damages as an active claim. According to the generalities cited by the court opinion, the said assertion of setoff can be allowed unless there exist such specific circumstances as that the division of a claim is regarded as an abuse of one's rights in litigation, but in this case, for different technical reasons, this leaves no room for examining and ruling on whether or not the said affirmative defense of setoff is justifiable under the court this case is remanded to. In short, it is appropriate to hold that it is not permissible for the plaintiff who lost his/her case in a lawsuit demanding a quantitative part of a monetary claim to file an action for the rest of the relevant claim because it is against the principle of faith and trust (see Case 1997 (O) No. 849, Judgment of the Second Petty Bench of the Supreme Court of June 12, 1998). Considering this case in this context, the Judgment to dismiss the final appeal was given in the other lawsuit under this Court on the same day as the day of the Judgment given in this lawsuit, so that the Judgment to dismiss the action to demand a quantitative part of the said right to claim damages (40,000,000 yen) became final and binding. As its consequence to this case where no specific circumstances exist, the appellant may no longer file an action in respect of the remaining claim and accordingly, the assertion of setoff with this as an active claim has inevitably become unjustifiable by law. 2. Second is concerned with the practical handling of similar cases. As described above, in this case, after the appellant filed another lawsuit on June 5, 1990, the appellee filed this lawsuit on August 27, 1990, against which the appellant made out the assertion of setoff. Since then, the other lawsuit and this lawsuit proceeded before different court bodies. With regard to the right to claim damages on the ground of the lower sale price, the judgment of the first instance in the other lawsuit did not rule for it, while the judgment of the first instance in this lawsuit ruled for a part thereof, dismissing the action by the appellee, thus, different judicial rulings were handed down in practice. As discussed in the court opinion, when an action is filed with regard to a part of a claim and a setoff with the rest of the claim was asserted, these are not regarded as a double prosecution in principle, but ideally for civil proceedings, it is strongly desirable for the court to try both cases jointly whenever possible, or at least try both cases in parallel under the same court body. Thereby, redundancy in proceedings and conflict of rulings could be avoided and also burdens on the parties as well as the court could be lessened. In practice, however, for various reasons, related cases are not re-allocated among court bodies and in not a few cases, like this case, these proceed under separate court bodies. In reality, such practice results in redundancy in proceedings and conflict of rulings, or affects the efficiency of court administration. Whenever deemed necessary, it is recommended to take appropriate judicial/administrative measures for the smooth re-allocation of related cases, and it particularly calls for a drastic solution to the problem exemplified by this case.
Presiding Judge	Justice SONOBE Itsuo Justice CHIKUSA Hideo Justice OZAKI Yukinobu Justice MOTOHARA Toshifumi Justice KANATANI Toshihiro

(This translation is provisional and subject to revision.)
(* Translated by Judicial Research Foundation)