Property Law

Supreme Court Decision of July 19, 1993, 46 Kagestu 5-23, 1525 Hanji 61. In this case, A, a joint successor designated an inheritance amount pursuant to a will which was less than the statutory inheritance amount, using the fact that the registration of the inheritance regarding the real property included in the estate corresponded to the statutory inheritance amount, transferred the joint ownership interest corresponding to the statutory inheritance amount to third party B. Upon registration of the transfer of the joint ownership interest, the excess portion was registered without rights. The Court determined that as the registration had no public reliability, B's ownership was limited to the portion corresponding to A's designated inheritance portion.

Supreme Court Third Petty Bench Decision of June 7, 1994, 1422 Kinho 32. The Court affirmed a lower court's dismissal of the plaintiff's claims by application of the principles of Civil Code Article 478. Without permission, the plaintiff's daughter had obtained a loan from a financial institution secured by the plaintiff's time deposit account. Upon the plaintiff's failure to repay, the financial institution had executed upon the account for repayment of the loan and had remitted the balance to the plaintiff's daughter. The Court acknowledged that as plaintiff's daughter had acted as the plaintiff's apparent agent and because the financial institution's actions were taken in good faith, its performance of the loan agreement was effective under Civil Code Article 478, and the plaintiff was not entitled to return of the time deposit account funds.

Supreme Court Third Petty Bench Decision of December 20, 1994, 48 Minshu 8-1470, 1519 Hanji 84, 873 Hanta 84. The Court determined that joint owners of a building could not assert a legally imputed right of superfices (hotei chijouken) against a third party purchasing the underlying property upon foreclosure where one of the building's joint owners had been the defaulting landowner. Prior to foreclosure, A, together with his wife and child, B and C, had jointly owned the underlying property, while A and D, a group of eight persons (in which B and C were not included) jointly owned the building located on the property. While a building owner is imputed to have a right of superfices with respect to purchasers buying underlying property in foreclosure, the Court refused to impute such a benefit to the defaulting party.

Supreme Court Third Petty Bench Decision of January 24, 1995, 1523 Hanji 81, 874 Hanta 130. The Court determined that an heir's transfer of title registration in specific property received pursuant to a will was sufficient to effectuate the terms of the will. The will purported to state that upon the heir's receipt of ownership of the subject property at the death of the testator, he could "independently undertake" the procedure for transferring title registration in the property and that the personal representative had no obligation to effect the change in registration. Based on prior case law, (Supreme Court Second Petty Bench Decision of April 19, 1991, 45 Minshu 4-477), wills purporting to transfer specific property indicated a division of assets rather than a gift and that as a matter of principle "upon the death of testator the divided property is immediately recognized and transferred to the heir." Accordingly, the heir could independently transfer registration, and a joint request of the heir and the personal representative, as is required for a gift, was not necessary.

Supreme Court Third Petty Bench Decision of October 29, 1996, 50 Minshu 9-2506, 1609 Hanji 108. The Court dismissed in part and reversed and remanded in part a lower court judgment regarding the fraudulent sale of property. The plaintiff had purchased property for use as a road, but had failed to register either the transfer in title to the property or the 1983 municipal authorization for the property’s development as a road as part of the title registration. In 1982, after the plaintiff had purchased the property but before municipal authorization had been received, the original owner sold the same property to an intermediary party, who purchased the property in an attempt to defraud the plaintiff. The intermediary subsequently resold the property to the defendant for residential development. The transfer of title was registered in both cases. The lower court had granted declaratory relief in favor of the plaintiff confirming (1) the plaintiff’s ownership of the property and (2) the right to develop the property as a road pursuant to the municipal authorization. While affirming the lower court judgment with respect to the development of the property as a road, the Court reversed and remanded the issue of ownership of the property. Under Civil Code Article 177, a party is estopped from asserting the acquisition or modification of a real property right against a third person unless such right has been properly registered. However, while the intermediate purchaser may be interpreted to have obtained some property rights as a result of the registration, the plaintiff would not be estopped from asserting a claim of superior property rights against the intermediate purchaser, as the intermediary’s fraudulent intent excludes it from the definition of a "third party" under Civil Code Article 177. Whether or not the defendant is similarly excluded from the definition of "third party" under Article 177 must be based upon examination of the circumstances of the defendant’s acquisition. Plaintiff cannot dispute the title registration of the defendant, nor seek to invalidate the purchase of the intermediary, and therefore the defendant, but can assert that had the title registration not occurred, its rights are superior to those of the defendant, and that because the intermediary is excluded from the meaning of a "third party" under Article 177, it would be unconscionable to allow a party purchasing from such a person to assert estoppel under Article 177.

Supreme Court First Petty Bench Decision of October 31, 1996, 50 Minshu 9-2563, 1592 Hanji 51. The Court reversed and remanded a lower court determination granting partition of jointly owned real property. Pursuant to Civil Code Article 258(2), the plaintiff joint owners had asked the court to compel auction sale of the property and division of the purchase price. The lower court, however, had sided with the defendant minority joint owner, who had for many years resided and operated a pharmacy on the property and had offered to compensate the plaintiffs for their allocable share of the fair market value of the property. Civil Code Article 258(2) allows for the auction sale of real property where actual partition would result in a significant depreciation of the property value. Although reversing the decision below, the Court acknowledged that available methods of partition under Article 258(2) were not limited to actual partition or auction sale but instead permitted partition by any means which the court considers reasonable in consideration of the nature and use of the jointly held property, the number of joint owners, and economic impact associated with its partition, the intentions of the joint owners. In such circumstances, the court may order compensation by one joint owner of other joint owners where such an outcome is deemed appropriate, the price is considered fair, the compensating joint owner is considered to have the requisite financial wherewithal to make such compensation, and there are no circumstances which would interfere with public order. While agreeing that, under the circumstances, the lower court’s determination of the method of partition was not inappropriate, the Court remanded for an assessment of whether the defendant joint owner had the requisite financial wherewithal to make such compensation.