Hiroshima High Court, 昭和36(ネ)90, Sept. 11, 1964


Disposition

  1. Appellant to pay to Appellee the sum of 25,650 yen,
  2. Other claims of Appellee dismissed.
  3. Costs of trial and appeal proceedings assessed 1/4 to Appellant, 3/4 to Appellee.

Facts

  1. Counsel for Appellant pleas for "Quashing of the judgment below and rejection of claims of Appellee, with costs to be born by Appellee." Counsel for Appellee pleas for "Dismissal of this appeal, with costs of the appeal to Appellant."

    Statements, submissions, assertions, admissions and denials of the parties in respect of the facts in this case are referenced below to the trial record, with indication of amendments where relevant.

    1. Amendment to the trial judgment

      At the 11th line of the second page, change "the price of the motorbike in this case" to read "the price of the motorbike and trade-in vehicle in this case." At the 3rd line of the fourth page, change "from the plaintiff" to read "from the defendant."

    2. Claims and evidence in this proceeding

      1. Counsel for Appellee asserts that, "This is a claim for damages for interference with a property interest, and as such the measure of damages should be the value of the property, without regard to any terms of dealing between Appellee and non-party A. The sum of 131,120 yen entered into evidence [reference elided] included costs of parts and repair of the motorbike, but the contract as a whole was for purchase of the new vehicle. Appellee denies the Appellant's assertion below of a payment obligation of 20,000 yen." Appellee's assertion is supported by the testimony of B.
      2. Counsel for Appellant asserts that "Even assuming that Appellant is liable in tort for damages, the motorbike in this case can be seen as secured to Appellee by non-party A under a title-transfer security arrangement, in which case the unpaid amount of A's account is the limit of damages to Appellee. Following from the first proceeding, monies owed are 20,000 yen as of January 1960.

Holding

In connection with its pawnbroking business, Appellant accepted one Honda Dream motorbike on pledge in August of 1959 as security for a loan to non-party A. In December of that year, payment not being forthcoming, Appellant sold the motorbike to a third party. These facts are undisputed.

We now consider whether, at the point of the pledge and of the subsequent disposition, Appellee was owner of the motorbike.

Taken together, statements at trial and in this proceeding by A and B, confirmed submissions [reference elided], and oral argument tell of the following scenario. On May 29, 1959, Appellee entered into a sales agreement with A for the motorbike in this case at a price of 185,000 yen, of which 135,000 yen was covered by the assessed value in trade-in of a motorbike previously purchased by A from Appellee. The obligation on an outstanding balance against the trade-in vehicle of 69,000 yen was carried over, and the additional balance of 50,000 yen was to be paid down in eight installments from June 1959 to January 1960, due on the 10th of each month (the first two installments to be of 7,000 yen, and 6,000 yen for the remainder), with a late-payment penalty of 0.20 yen per day. Title to the new motorbike was to be retained by seller until full payment of the obligation of 119,000 yen in respect of the trade-in and new vehicles and any sums due for late payment in respect of the new vehicle. A as purchaser was given immediate possession of the motorbike, on condition that it not be sold or pledged to others, with an undertaking to exercise due care in its maintenance, to bear responsibility for loss or destruction, and to be responsible for repairs. At the time of the pledge to Appellant, A had not completed payment of the price and late-payment penalties under the contract [reference elided]. Therefore, and consistent with all evidence in the case, ownership of the motorbike lay in Appellee.

We now turn to consider whether Appellant breached the rights of Appellee by intent or negligence in taking the motorbike in pledge from non-party A and in subsequently disposing of the asset.

Appellant is on record with an admission that it received the vehicle license issued by the prefectural government at the time of the pledge transaction (see Vehicle Registration Act [道路運送車輌法] secs. 57-3 & 105(2)). Appellant subsequently sought to retract its admission, but there is no contrary evidence in the record, and the admission cannot be retracted. Non-party A testified unequivocally at trial that he had delivered the license documents to Appellant, while Appellant and its office staffer C testified that they demanded only the liability insurance policy to confirm A's ownership (from undisputed testimony [reference elided]), and that they did not ask to see the vehicle registration; but as the very purpose of the vehicle registration is to prove ownership, this would be an extremely unusual circumstance, and setting the testimony of A against that of Appellant, this assertion by the latter lacks credibility.

At trial, non-party A testified that he indicated to Appellant that the motorbike was owned by Appellee. Further, that both the insurance policy and vehicle registration were delivered is undisputed [sic], and at trial both B and A testified that the vehicle registration had the form of a sample form submitted in evidence [reference elided], and it is clear that it had the content of an undisputed document in evidence [reference elided], according to which the name of Appellee was shown as the owner (according to separate evidence [reference elided], a vehicle insurance policy shows the name of the policy holder, but does not contain a record of the vehicle owner). In any case, the motorbike was owned by Appellee, and Appellant either knew this fact, or failed to discover it through negligence. Testimony to the contrary at trial by C and the cross-examination of Appellee at trial lacks credibility, and there is no other opposing evidence. Under these circumstances, it cannot be said that Appellant took good title to the motorbike. Appellant acted beyond its authority in disposing of the motorbike to a third party, and we must say that this was either through intention or through negligence. Of course, if Appellant did not itself take a pledge of good title, the onward analysis is the same. The third-party purchaser would not take good title from Appellant, and the ownership interest of Appellee would still be intact and could be asserted (although such an assertion would not affect this proceeding). By the testimony of C and the cross-examination of Appellant at trial, the motorbike was sold to a buyer from Hino County of Tottori Prefecture, but also that specific identity of the purchaser is not known. Recovery of the vehicle seems not possible, and even if Appellee retains a formal right of ownership, there was an interference with that right, and a claim for damages resulting from interference with that right stands.

We now turn to the question of damages.

The installment sale with reservation of title in this case can be characterized legally as a transfer of title under a suspensive condition. Viewed in practical terms, ownership moves to the purchaser, but the purchased item secures payment under the sale contract. Therefore, when Appellant as a third party to the sale disposes of the asset before payment is complete, damages suffered by Appellee are measured just as in a case of damage to the property itself: the value of the motorbike at the time of disposition, or the outstanding balance of the debt secured, whichever is less (calculated without reference to other assets of the purchaser that may be available). At trial, the motorbike was valued by licensed appraiser D, and according to his testimony the value of the motorbike in this case at the time of its disposal would have been approximately 120,000 yen.

It is established my undisputed documentary evidence [reference elided], testimony at trial by E, testimony at trial and in this proceeding by B and A, and by exchanges at oral argument that the account of non-party A with Appellee at the end of December 1959, as calculated at the beginning of January 1960, stood at 131,120 yen, inclusive of the outstanding balance on the new motorbike, the trade-in, late-payment charges on the new motorbike, and parts and labor for repairs on the new motorbike. Appellee having waived late-payment fees after that date, setting those charges aside the payments on the new motorbike under Appellee's ownership, the trade-in, and currently due late-payment charges amounts to approximately 90,000 yen. Non-party A has made payments in some 13 installments of 64,350 yen (Appellant's assertion of an additional payment of 20,000 yen is not accepted). These payments can be read as made against the account on the new motorbike and the trade-in, and not against parts and labor charges for repair. Without payment of these charges, ownership would not be transferred. Stated differently, the debt incurred over the trade-in, the new motorbike, and late-payment fees that are secured by the new motorbike is 90,000 yen less 64,350 yen, or a sum uf 25,650 yen. For this there is no evidence to the contrary.

Thus calculated, the damages incurred by Appellee by Appellant's disposition of the new motorbike is the secured amount of 25,650 yen (a fixed sum, as further late payment fees do not enter the calculus). Appellant posits an offset for comparative negligence, but on the record of the case, negligence by Appellee cannot be sustained. Although consent was given for non-party A to take out a policy as the vehicle's custodian under the Vehicular Insurance Law, it does not follow that Appellee was negligent.

Accordingly, we hold that Appellant must pay 25,650 yen to Appellee, and we amend the judgment below in part to that effect under Civil Procedure Act secs. 384(1), 386, 96, 92, & 89, according to the disposition recited above.