100 Selected Civil Law Cases I [9th Edition] No.73
Monetary Ownership
(Supreme Court, January 24, 1964)
This time, we have a case on "monetary ownership."
"Monetary ownership"... ?
What kind of argument is this?
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photo credit: byb64 "Les anémones", ca 1912, Odilon Redon (1840-1916, Musée des Beaux-Arts, Hambourg, Allemagne. via photopin (license)
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"Possession = Ownership" Theory
For example,
There is a person whose money was stolen and a thief who stole the money.
In this case, can the person whose money was stolen demand the return of the money based on the ownership of the money (demand for the return of real rights) from the thief?
"Yes, right..." You might think so.
But the legal precedents say No!
The prevailing academic theory also says No!
In other words,
The person whose money was stolen cannot demand the return of the stolen money based on the ownership of the money.
The person whose money was stolen lost the ownership of the money at the time it was stolen, so they cannot demand the return of the stolen money "based on the ownership of the money".
So who is the owner of the money? Well,
When the money is stolen, the ownership of the money is attributed to the thief.
This is the position of legal precedents and the prevailing academic position, the "possession = ownership" theory.
In other words, this theory is that "possessor of money = owner of money."
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Money is also movable property.
If it were movable property, the above treatment would feel very strange.
With normal movable property, it is common for "possessor of movable property ≠ owner of movable property."
In other words, a situation where there is possession but no ownership. Or, a situation where there is no possession but ownership.
In such a case, with normal movable property, the owner of the movable property who has lost possession can naturally demand the return of the movable property based on the ownership against a thief who possesses the movable property without reason.
This is a real right to demand the return of the movable property.
With normal movable property, this is possible.
However, in the case of money, even though it is movable property, this is not possible.
It is said that if it is stolen, the ownership of the money is also lost.
It is said that the ownership of the money will be attributed to the thief.
You may be wondering, "What?!" but I think what they're saying is that "money has special characteristics that make it different from other movable property."
What are those special characteristics?
Let's take a look at the judgment.
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Judgment
"Money, except in special cases, does not have the individuality of an object, and should be considered as mere value itself. Since value is associated with the location of money, the owner of money should be understood to be the same as the possessor unless there are special circumstances," and "A person who actually controls and possesses money should be considered the person to whom the value belongs, that is, the owner of the money, regardless of the reason for acquiring it or whether or not he has the right to justify the possession."
In this case... when the 110,000 yen was delivered by X, and the 60,000 yen was embezzled, it should be said that A's ownership was transferred to A, and X lost ownership.
In this case, X was the victim who was deceived, and A was the perpetrator of fraud and embezzlement.
The judgment states the following about the "special nature of money."
Except in special cases, money does not have the individuality of an object, and should be considered as simply value itself.
And
since value accompanies the location of money, the owner of money should be understood to be the same as the possessor, unless there are special circumstances.
Money is value itself, and value accompanies the location of money, so it should be understood that "possessor of money = owner of money".
I get it... but I don't... it's difficult. .
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So why can't "possessor of money ≠ owner of money"? Let's think about it.
In fact, precedents used to treat money the same as ordinary movable property.
In other words, even if possession of money is taken, the ownership of the money remains with the original owner (the victim of the theft), and the original owner (the victim of the theft) can demand the return of the money from the thief who is possessing the money (and the transferee) based on the ownership of the money.
However, this position was criticized because people would be afraid of a claim for return from an unknown original owner and would no longer be able to receive money with confidence, destroying the function of money as a means of exchange and payment.
It was also pointed out that, in order for an object to be the subject of ownership, specificity must be ensured, but if money is mixed with the possessor's other money, it is difficult to identify it as "money owned by the original owner."
In response to such criticism and suggestions, postwar precedents have adopted the theory of "possession = ownership" regarding money, that is, the theory that "possessor of money = owner of money" (Supreme Court decision of January 8, 1953), which remains the case to this day.
The judgment goes on to say that
A person who actually controls and possesses money should be considered the person to whom value belongs, that is, the owner of money, regardless of the reason for acquiring it or whether or not he has the right to justify his possession.
He says that even if possession is acquired by theft or fraud, the person who actually controls and possesses the money should be considered the owner of the money, regardless of the reason for the acquisition or the existence of the authority to possess it.
If we do not think in this way, we will not be able to receive money with peace of mind, and money's function as a means of exchange and payment will be destroyed.
And in conclusion,
In this case...when A received the 110,000 yen from X, and when he embezzled the 60,000 yen, it should be said that A lost ownership of it.
He concludes that the fraud and embezzlement perpetrator A acquires ownership of the money, and the victim X loses ownership of the money.
When A received the 110,000 yen from the deceived victim X, and when he embezzled the 60,000 yen from victim X, the 110,000 yen and 60,000 yen respectively became the property of the perpetrator A, and the original owner X lost ownership of the money when he lost possession of it.
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I feel sorry for the victim...
I can't say, "Give me my money back!"
No, that's not the case, is it?
Of course, you can request the return of the money.
So, on what basis can you request the return of the money? Well, in this case, the victim can request the return of the profits unjustly obtained by the possessor through a claim for the return of unjust enrichment as stipulated in Articles 703 and 704 of the Civil Code.
(Obligation to return unjust enrichment)
Article 703: A person who has received a profit from the property or labor of another person without legal cause and has caused loss to that person (hereinafter referred to as the "beneficiary" in this chapter) is obligated to return the profit to the extent that it exists.
(Obligation of a beneficiary in bad faith to return the profit, etc.)
Article 704: A beneficiary in bad faith must return the profits he or she received with interest. In this case, if there is still damage, he or she is liable for compensation.
When thieves and fraudsters have possession of your money
First, when a thief or fraudster has possession of money, the thief or fraudster is a "malicious beneficiary" and must return the stolen or defrauded amount with interest (Article 704).
The victim can demand the return of the stolen or defrauded amount with interest.
When a third party who received the money from the thief or fraudster has possession of the money
On the other hand, what about when a third party who received the money from the thief or fraudster has possession of the money?
For example, if fraudster A defrauds victim X out of money and uses that money to repay a debt to his creditor Y, can victim X claim for the return of unjust enrichment against Y be recognized? (Case of payment of fraudulent money)
In this case, Y, in his capacity as a creditor, received money from debtor A as payment, and formally, it can be said that the money was legitimately acquired based on "legal cause".
In other words, it does not constitute "benefiting from another person's property without legal cause", and the victim's claim for return of unjust enrichment will not be recognized.
However, even if creditor Y knew that the money he received as payment was fraudulent money, and even if creditor Y himself instigated fraud or theft by saying, "If you can't pay it back, make the money even if you have to deceive someone!" or "Steal it!", I still feel some resistance to the argument that since he received payment as a creditor, it was legitimately acquired based on "legal cause".
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The basis of the unjust enrichment system is said to be the principle of justice and fairness.
From the perspective of justice and fairness, it seems that there is no need to legally protect creditor Y in relation to victim X.
Now, this is where the Supreme Court has made a precedent decision.
How did the precedent decide?
"Generally, the system of unjust enrichment is one in which, when a person's financial gain lacks a legal cause or justifiable reason, the law imposes an obligation on the person who gained the gain, based on the concept of fairness, to return the gain." However, when considering whether B's claim for return of unjust enrichment against C is allowed in the case where A defrauds or embezzles money from B and uses that money to repay his debt to creditor C, it should not be said that there is a causal relationship between B's loss and C's gain only when the defrauded or embezzled money remains in A's hands until the ownership is transferred to C, but rather when A uses the defrauded or embezzled money directly in C's possession. Whether the money is used for profit, or mixed with one's own money, exchanged, deposited in a bank, or spent for other purposes and then used for C by reimbursing the amount spent with money obtained separately, "if there is a connection that is socially acceptable to the extent that B's money is deemed to have benefited C, then it should be deemed that there is a causal relationship necessary for the establishment of unjust enrichment," and "if C receives the money from A with bad faith or gross negligence, then C's acquisition of the money has no legal cause in relation to B, the person who was defrauded or embezzled, and is therefore unjust enrichment." (Supreme Court ruling, September 26, 1974)
The ruling states, first, that "the basis of the unjust enrichment system is the idea of fairness."
On top of that, the court has relaxed the directness of the causal relationship, which is a requirement for unjust enrichment, from the perspective of fairness, stating that a "socially accepted connection" is sufficient, and that the causal relationship is not directly required for unjust enrichment.
The court's opinion states that "Whether the defrauded or embezzled money is mixed with one's own money, exchanged, deposited in a bank, or used and then replaced, if there is a connection that is deemed to have benefited (creditor) C with (victim) B's money according to social standards, then it should be deemed that there is a causal relationship necessary for unjust enrichment to exist."
And regarding the other requirement, "there must be no legal cause," the court says, "If (creditor) C accepts the money from (defrauder/embezzler) A with malice or gross negligence, then C's acquisition of the money should be deemed to be unjust enrichment without a legal cause in relation to the defrauded or embezzled person B."
Formally, the creditor has received payment and at first glance it appears to be a legitimate acquisition, but from the perspective of fairness, if the creditor has acted in bad faith or with gross negligence, there is no substantial reason to consider the gain legitimate in relation to the victim.
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Let's go back to the main point of this ruling.
Because value is related to the location of money, the owner of the money should be understood to be the same as the person who possesses it, unless there are special circumstances.
"Unless there are special circumstances," the possessor of the money should be understood to be the owner of the money.
In other words, the position is that exceptions are allowed when there are "special circumstances."
One example of an exceptional case where there are "special circumstances" is the Supreme Court ruling of April 10, 1992, which ruled that "money possessed by a specific heir as inherited property is the shared property of the co-heirs."
In other words, this is a precedent that recognizes "unpossessed ownership of money (shared interest)" for co-heirs other than the specific heir who possesses the money.
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It is understood that, of the inherited property, "money claims" are divided and inherited according to the inheritance shares of each co-heir.
In contrast, it is understood that money is not divided automatically, but is shared by the co-heirs. Co-heirs other than the specific heir who has possession (custody) of the money have unpossessed ownership of the money (shared interest).
This difference is said to be because money is extremely useful as a means of adjusting any substantial imbalances that may arise during the later division of the estate.
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Summary
Due to its special nature, money is treated differently from other movable property.
The position of precedents regarding money has been that, in principle, "possession = ownership," in other words, "possessor of money = owner of money."
However, exceptions are allowed, "unless there are special circumstances."
As an example of an exception when there are "special circumstances," the Supreme Court ruling of April 10, 1992 ruled that "money possessed by a specific heir as inherited property is the joint property of the co-heirs," i.e., that co-heirs other than the specific heir who possesses the money have "unpossessed ownership of money (co-ownership rights)."
Note that precedents also treat deposits in cases of erroneous transfers in the same way as money.
In other words, there is a precedent that states that the recipient acquires a deposit claim in the amount of the erroneous transfer, and the person who made the transfer only has a right to claim the return of unjust enrichment from the recipient (Supreme Court ruling of April 26, 1996).
Ownership of money...
It seems simple, but it's surprisingly deep, that's the impression I got.
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That's all for today.