2001(Ju)No.1032, 1033

Date of the judgment	2003.07.18
Case number	2001(Ju)No.1032, 1033
Reporter	Minshu Vol.57, No.7, at 895
Title	Judgment upon the case where guarantee fee and paper work fee received by a credit guarantee company were regarded as deemed interest under Article 3 of the Interest Rate Restriction Law which applies to money lenders.
Case name	Case to seek return of unjust enrichment
Result	Judgment of the Second Petty Bench, partially dismissed and partially quashed and remanded
Court of the Second Instance	Tokyo High Court, Judgment of April 9, 2001
Summary of the judgment	1. Based on the following given facts, the guarantee fee to be received by Y credit guarantee company is regarded as deemed interest to be received by the moneylender X under Article 3 of the Interest Rate Restriction Law: when the total of the interest, research fee, and collection fee to be received by X and the guarantee fee and paper work fee to be received by Y, which was a 100% subsidiary of X, exceeds the interest that was calculated by a restrictive interest rate under the Interest Rate Restriction Law, the proportion of the guarantee fee to be received by Y is extremely large compared to the proportion of guarantee fee to be received by an affiliated credit guarantee company of banks; the total proportion of guarantee fee to be received by Y and that of interest to be received by X was almost the same as that of interest received by X before the establishment of Y; Y has guaranteed only the loan by X and in a case where a person receives loan on a bill from X, a guarantee by Y is required; Y entrusted X with the tasks of concluding a guarantee consignment contract, collection of guarantee fee, credit research, and decision-making on whether the guarantee is approved or not; and X has been considerably active in collecting debt on behalf of Y. 2. In a loan for consumption having money for its subject, when money lending is conducted repeatedly and continuously under the basic contract between the same creditor and debtor, if the creditor voluntarily pays interest for one obligation that exceeds the limit under the Interest Rate Restriction Law, and even after the portion in excess is appropriated to the principal, when an overpayment remains, under Article 489 and Article 491 of the Civil Code, the overpayment shall be appropriated to the other obligations that exist at the time of performance without special circumstances to recognize a special agreement between the parties on appropriation. When the rate of interest of the other obligations exceeds the limit under the Interest Rate Restriction Law, the creditor shall not obtain the interest on the principal to be appropriated until the agreed time.
References	(Concerning 1) Article 3 of the Interest Rate Restriction Law Article 3 For the purpose of application of the provisions of the preceding two Articles, moneys other than the principal that the creditor receives in connection with the loan for consumption having money for its subject shall be deemed to be the interest, regardless of whether they are taken as a fee, discount charge, commission, or investigation charge, or otherwise whatever name they may be charged; provided however, that this shall not apply to the expenses of concluding the contract or of performing obligations. (Concerning 2) Article 136(2), Article 488, Article 489, and Article 491 of the Civil Code, and Article 1(1) and Article 2 of the Interest Rate Restriction Law Article 136(2) of the Civil Code The benefit of time may be waved; however, the interests of the other party may not be prejudiced thereby. Article 488 of the Civil Code If, where an obligor owes to the same obligee several obligations whose subjects are of the same kind, the act of performance tendered by way of discharge is insufficient to satisfy them all, the person effecting performance may, at the time of the person's performance, designate the obligation to which it shall be appropriated. 2. If the person effecting performance makes no such designation as mentioned in the preceding paragraph, the person accepting the performance may at the time of acceptance decide the manner of appropriation; however, this shall not apply if the person effecting performance immediately objects to such appropriation. 3. In the cases mentioned in the preceding two paragraphs, the appropriation of performance shall be effected by a declaration of intention made to the other party. Article 489 of the Civil Code If the parties make no appropriation of performance, it shall be done in the following manner: (1) Where some of the obligations are due and others are not, the former shall be preferred; (2) Where all the obligations are due or all are not due, those the discharge of which is most advantageous to the obligor shall be preferred; (3) If the advantage to the obligator is equal, those which first fell due or will fall due shall be preferred; (4) The performance of obligations that are equal in respect of the particulars mentioned in the preceding two items shall be appropriated in proportion to the amount of each obligation. Article 491 of the Civil Code Where, in respect of one or more obligations, the obligor is liable to pay interest and expenses in addition to the principal and the performance that has been tendered is insufficient to satisfy the entire obligation, is shall be appropriated in the order of the expenses, the interest, and the principal. 2. The provisions of Article 489 shall apply mutatis mutandis in the case mentioned in the preceding paragraph. Article 1(1) of the Interest Rate Restriction Law If the interest on a loan for consumption having money for its subject exceeds the sum calculated at the rate of interest mentioned below, the agreement on interest shall be null and void with respect to the portion that is in excess: Where the principal is less than one hundred thousand yen twenty percent per annum Where the principal is one hundred thousand yen or more but less than one million yen eighteen percent per annum Where the principal is one million yen or more fifteen percent per annum Article 2 of the Interest Rate Restriction Law In a case where the interest has been knocked off the amount of loan, if, assuming that the sum received by the debtor is to be the principal, and the sum knocked off is in excess of the amount calculated at the rates of interest prescribed in paragraph 1 of the preceding Article, the proportion in excess shall be deemed to have been appropriated to the payment of principal.
Main text of the judgment	1.The jokoku appeal by the jokoku appellant of 2001(Ju)No.1032 shall be dismissed. 2. The part where the jokoku appellants of 2001(Ju)No.1033 lost in the judgment of the second instance court shall be quashed and with respect to this part, this case shall be remanded to the Tokyo High Court . 3. The cost of jokoku appeal concerning Item 1 shall be owed by the jokoku appellant of 2001(Ju)No.1032.
Reasons	No.1 Outline of the case 1. The following are the facts determined by the Second Instance Court. (1) Company C concluded the following continuous loan contract (hereinafter referred to as the "loan contract of this case") with the jokoku appellant of 2001(Ju)No.1032, concurrently the jokoku appellee of 2001(Ju)No.1033, who has been conducting the business of lending money to small and medium-sized enterprises (hereinafter referred to as the "defendant of the first instance court") under an agreement on loans on bills dated June 11, 1993, and under a basic agreement on business dated June 14, 1993. 1 Maximal amount of principal 30,000,000 yen 2 Special agreement In a case where Company C issues a bad draft, Company C shall lose the benefit of time with respect to all obligations against the defendant of the first instance court. (2) On August 5, 1997, "A", the jokoku appellee of 2001(Ju)No.1032, concurrently the jokoku appellant of 2001(Ju)No.1033 (hereinafter referred to as the "plaintiff A of the first instance court"), and on June 21, 1994, "B", the jokoku appellee of 2001(Ju)No.1032, concurrently the jokoku appellant of 2001(Ju)No.1033 (hereinafter referred to as the "plaintiff B of the first instance court"), assumed an obligation owed by Company C against the defendant of the first instance court jointly and severally for the defendant of the first instance court under the loan contract of this case to the limit of 4,000,000 yen respectively. (3) The defendant of the first instance court has been lending money to Company C repeatedly and continuously as described in Attached Form 1 of the judgment of the first instance court under the loan contract of this case from June 11, 1993, until March 24, 1998, by means of a loan on bill at a rate of interest exceeding the maximum rates of interest under Article 1(1) of the Interest Rate Restriction Law (hereinafter referred to a the "Law"), and then the defendant of the first instance court was repaid (hereinafter the above series of transactions is to be referred to as the "transaction of this case"). In the column of "Amount of Repayment" on the "Date of Loan," written on the Attached Form, the total amount of the following items has been declared: interest, research fee, and collection fee deducted from the amount of loan for the defendant of the first instance court as described on the attached form, and the guarantee fee and paper work fee for Credit Guarantee Company D (hereinafter referred to as "guarantee fee"). (4) The research fee and collection fee to be received by the defendant of the first instance court is regarded as the deemed interest under Article 3 of the Law (hereinafter interest and deemed interest collectively are to be referred to as the "interest"). (5) Company C issued a bad draft at the end of March 1998. (6) Plaintiff A of the first instance court paid the defendant of the first instance court 2,000,000 yen on 9 and 17 of April 1998, respectively, as a performance of the above joint and several suretyship obligation. (7) Plaintiff B of the first instance court paid the defendant of the first instance court 500,000 yen on 10, 14, 23 and 28 of April 1998, respectively, and 2,000,000 yen on May 7, 1998, as a performance of the above joint and several suretyship obligation. (8) Credit Guarantee Company D is a 100% subsidiary of the defendant of the first instance court, which was established in May 1991 in order to guarantee credit of the debtor of the loan transaction with the defendant of the first instance court and it can be said that the profit of the Credit Guarantee Company D belongs to the defendant of the first instance court in the end. Credit Guarantee Company D has guaranteed only the loan by the defendant of the first instance court and in a case where a person receives a loan on bill from the defendant of the first instance court, a guarantee by Credit Guarantee Company D is required. The proportion of the guarantee fee to be received by Credit Guarantee Company D is extremely large compared to the proportion of guarantee fee to be received by an affiliated credit guarantee company of banks. After Credit Guarantee Company D had been established, the defendant of the first instance court has reduced the rate of loan interest, however, the total proportion of guarantee fee to be received by Credit Guarantee Company D and that of interest to be received by the defendant of the first instance court was almost the same as that of the interest received by the defendant of the first instance court before the establishment of Credit Guarantee Company D. Credit Guarantee Company D has been entrusted the defendant of the first instance court with the task of concluding a guarantee consignment contract with the debtor of the defendant of the first instance court and the task of collecting the guarantee fee. D also entrusted the defendant of the first instance court with the task of credit research and the task of making a decision in substance as to whether the guarantee is to be approved or not. The principal purpose of guaranteeing an obligation by a credit guarantee company, which was owed by a debtor of a loan transaction, is to conduct the business of collecting indemnification from a debtor after performance of subrogation by the credit guarantee company for a creditor when the creditor did not repay. However, the defendant of the first instance court has been considerably active in conducting the business of debt collection on behalf of Credit Guarantee Company D. A system for conducting the above business by itself has not been established in Credit Guarantee Company D. 2. This is a case where the plaintiffs of the first instance court claimed against the defendant of the first instance court for return of overpayment based on the right of demanding the return of unjust enrichment on the ground that an overpayment had arisen when the sum, the portion of paid interest exceeding the statutory maximum rate with respect to the transaction of this case, was appropriated to the principal. No.2 Concerning the grounds for the motion for acceptance of jokoku appeal by jokoku appeal attorney TAKITA Yutaka and jokoku appeal attorney KAWATO Junichiro of 2001(Ju) No.1032 Considering the facts that the total sum of interest to be received by the defendant of the first instance court and the guarantee fee to be received by Credit Guarantee Company D exceeds the interest calculated by the statutory maximum rate of interest, the history of establishment of Credit Guarantee Company D as described by the above No.1, 1(8), the proportion of the guarantee fee, the content and the actual condition of business, and the system of the organization, the defendant of the first instance court can be regarded as having deviated from laws, made Credit Guarantee Company D, a 100% subsidiary, collect the guarantee fee, and made the debtor entrust D with a guarantee for the purpose of receiving the guarantee fee through dividends on stocks to be paid back by D in the end. Therefore, the guarantee fee to be received by Credit Guarantee Company D is to be regarded as deemed interest under Article 3 of the Law. The decision of the second instance court claiming to the same effect can be accepted because it is justifiable. The line of argument cannot be accepted. No.3 Concerning the grounds for motion for acceptance of jokoku appeal by jokoku appeal attorney MATSUYAMA Mitsuyoshi of 2001(Ju)No.1033 1. The second instance court decided that the defendant of the first instance court and Company C has set up a basic business agreement and an agreement of loans on bills and conducted a business of multiple money-lending under the agreements side by side. Therefore, when Company C paid interest exceeding the statutory limit with respect to one of the above loan obligations and appropriated the portion in excess of the principal, and as a result of this, an overpayment arose, it is reasonable to estimate that the intention of the defendant of the first instance court and Company C is as follows: the overpayment should be appropriated to the other loan obligations while protecting the benefit of time for the defendant of the first instance court as a creditor, and the defendant of the first instance court can obtain the interest by the date on the agreement on the principal of the loan to be appropriated by the overpayment. 2. Among the above decisions of the second instance court, the decision that the overpayment is to be appropriated to the other loan obligations can be accepted; however, the other decision that the defendant of the first instance court in this case can obtain the interest on the principal of the loan by the date on the agreement to be appropriated by the overpayment cannot be accepted. The following is the reason for my opinion. In a loan for consumption having money for its subject, when money lending is conducted repeatedly and continuously under the basic contract between the same creditor and debtor, it is common to estimate that the debtor wants to reduce the total amount of the loan but does not want a situation where a plurality of rights and obligations arises. Therefore, when the loan obligation is paid up as a result of appropriating the sum exceeding the maximum rates of the interest and the designation of performance for the obligation loses its meaning, without special circumstances, it can be estimated that it has designated a performance for the other loan obligations that exist at the time of performance. It is to be understood that the stipulations of Article 1(1) and Article 2 of the Law approve a creditor under a loan for consumption having money for its subject to receive only the interest within the statutory limit based on the available sum of loan for a debtor and the term for its use. So long as each of the above stipulations applies, it should be understood that the application of Article 136(2) proviso of the Civil Code shall be abated; therefore, a creditor's benefit of time cannot be protected with respect to the other loan obligations to which an overpayment is to be appropriated and an interest on the principal to be appropriated by the time should not be approved to arise. Consequently, in a loan for consumption having money for its subject, when money- lending is conducted repeatedly and continuously under the basic contract between the same creditor and debtor, if the creditor voluntarily pays interest for one obligation that exceeds the limit under the Law, and even after the portion in excess is appropriated to the principal, when an overpayment remains, under Article 489 and Article 491 of the Civil Code, the overpayment shall be appropriated to the other obligations that exist at the time of performance without special circumstances to recognize a special agreement between the parties on appropriation. When the rate of interest of the other obligations exceeds the maximum rate under the Law, it is reasonable to understand that the creditor shall not obtain the interest on the principal to be appropriated until the agreed time. In the end, in the decision of the second instance court, which has decided differently, an apparent violation of laws can be seen which has affected the judgment. Therefore, the part of the judgment where the plaintiff of the first instance court has lost should be quashed. The line of argument can be approved. No.4 Conclusion From all of the above, the jokoku appeal by the defendant of the first instance court shall be dismissed and the part of the judgment where the plaintiffs of the first instance court has lost shall be quashed based on the jokoku appeal by them. In order to examine this quashed part further, this case shall be remanded to the second instance court. In conclusion, a judgment was rendered in the form of the main text by the unanimous consent of the Justices.
Presiding Judge	Justice TAKII Shigeo Justice FUKUDA Hiroshi Justice KITAGAWA Hiroharu Justice KAMEYAMA Tsugio Justice KAJITANI Gen

(This translation is provisional and subject to revision.)