Related Article: Signatories Kept In The Dark Weak Victimized as Loan Guarantors (The Japan Times, August 1, 2000)
Two of Japan's largest banks, Dai-Ichi Kangyo Bank and Sanwa Bank, have brought suit against Mr. Y. K., an elderly deaf man (totally deaf from birth), demanding that he pay off a loan in default he had co-signed.
Mr. K's major means of communication is sign language. He is a nearly illiterate individual incapable of effective communication through reading and writing.
Even though informed of Mr. K's deafness, the bank did not provide a sign language interpreter. Consequently, the bank presented forms establishing Mr. K as the co-signer (guarantor) for a loan. Unable to read or even comprehend the concepts of "guarantor", "collateral", et al, Mr. K proceeded to sign his name and apply his seal as directed.
Since the bank did not provide a sign language interpreter nor any explanation at all of the contract, Mr. K signed his name to and applied his seal to a contract he was incapable of understanding. It is all too clear that he was not agreeing to a contract giving his house and land away in case of non-payment. His defense is that he had absolutely no intention of guaranteeing a loan where his house and property would be taken in the event of nonppayment. The intention of the bank's contract and Mr. K's intention at the time of signing were not the same.
The Issues
When a deaf individual is a party to an important contract, such as becoming the guarantor of a loan, it is clear that the bank will have to extend greater effort to make sure the details of the contract are explained clearly and are fully understood before finalizing the loan.
For the fully literate deaf, contracts can be read and comprehension is possible (although having a sign language interpreter present is still desirable for users of sign language.) In the case of even semi-literate deaf, it would be difficult to grasp the exact and thorough meaning of a contract in the absence of a sign language interpreter.
Concerning this case, the bank contends that Mr. K had taken on the role of guarantor because he had signed his name and applied his seal, even though there was no sign language interpreter nor any explanation given. The bank has informed Mr. K of the following: "If the money is not repaid by the borrower (the borrower being a relative by marriage who consequently has disappeared without a trace), the house and land of the guarantor Mr. K will be sold to pay off the loan." Put in another way, Mr. K was told to vacate his house.
Banks make money by charging interest on the loans they give. To ensure that the money loaned will indeed be recovered they insist on collateral; for example the mortgage on the borrower's house. But in the case where an individual is putting up his property as collateral for another person's loan, it is the bank's duty to be especially clear in explaining the details and consequences of the contract. Now if deafness is thrown in the mix on top of that, what kind of extra effort and time must be employed to ensure that the details and consequences of the contract are made clear to said deaf guarantor?
In Mr. K's case, the bank did not bring along a sign language interpreter. The transaction was carried out by pointing and speaking loudly and slowly.
Since Mr. K has absolutely no sense of hearing, speaking loudly was completely meaningless. Even by speaking slowly, Mr. K would only be able to catch the simplest common words. He could only catch words like "name", "write", "address", and "please". Mr. K is nearly Illiterate. So even if he were shown a contract, it's sad to say, he would not understand its content.So, in this case where the bank was wanting to secure Mr. K as the guarantor of a loan, it was imperative of them to:-
1. provide a sign language interpreter
2. explain properly and exactly the terms totally unfamiliar and even incomprehensible to Mr. K at that time -- concepts like "guarantor", and "collateral", et al
3. state clearly "You are promising to give up your house and property to us if the loan is not repaid."
We are of the position that by denying responsibility for explaining the terms of its contract, and then subsequently ordering Mr. K from his house the bank has acted in an impermissable manner.
This action must not be permitted because there is a large number of individuals in the deaf communicty who are unable to effectively communicate through the written word. They are able to freely communicate through sign language, but in actuality, many, many of them are incapable of reading a legal contract, understanding it, and entering into the contract unassisted.
Our perseverance in this matter is unyielding. The outcome of this case will determine whether banks will secure sign language interpretation and adequate explanation when involving the deaf in contracts. It is also important for all banks and society in general to become aware of this situation.
The Specifics of Mr. K's Case
◆Mr. K's Personal Backgroud
Born in 1925, he is now 75 years old. He was born totally deaf.
He entered a deaf school, Nihon Rowa Gakko, at the age of 11. After graduating from that deaf school at the age of 24, he worked as an assistant teaching tailoring there for nine years. After that he began working at home with his wife (also deaf) doing alterations and mending. He lives with his wife in Mitaka, Tokyo. They are childless.◆The Case from the Beginning
Mr. K and his wife were living a tranquil quiet life, supplementing their meager income by doing alterations and mending clothes. That tranquility was shattered upon the sudden arraival of two registered mail letters in February of 1996 from The Dai-Ichi Kangyo Bank and Sanwa Bank. The letters both stated that since he had become the guarantor of "T" Koki Corporation, Mr. K was nos responsible for fulfilling the terms of his contract.
"T" Koki Corporation was a company run by Mr. K's brother-in-law, T. Y. Just previous to the arrival of the letters, "T" Koki corporation had gone bankrupt and T.Y.'s whereabouts became unknown as he fled his creditors. Since Mr. K had no recollection of ever being involved with "T" Koki Corporation, let alone becoming its guarantor, he was very surprised and he contacted a lawyer. The lawyer immediately sent off letters to the banks stating that the contracts of guarantorship were invalid, as were the arrangements concerning collateral.
A year later, Dai-Ichi Kangyo Bank and Sanwa Bank initiated trial proceedings against Mr. K.
That is how the suit against Mr. K began.◆Dai-Ichi Kangyo Bank's Interpretation of Events
１．Parties Concerned
Plaintiff - Dai-Ichi Kangyo Bank, Ltd.
Defendant - Mr. K（Deaf）
Defendant - Mr. T. Y. (Mr. K's brother-in-law, Hearing)
Defendant - "T" Koki Corporation (a company run by T.Y.)２．The Court of Justice
Tokyo District Court Civil Division No. 33
Presiding Judge: Mr. K. Tsukuda
Judge: Mr. T. Ishii
Judge: Mr. O. Nishimura３．Dai-Ichi Kangyo Bank's Suit Objectives
1) The repayment of "T" Koki's 80,602,157 yen loan is demanded.
2) The recognition of the validity of the contract stating that the house and land of Mr. K will be sold in the event of nonpayment of "T" Koki's 80,602,157 yen loan.
3) The payment of 16,320,000 yen by Mr. T.Y. and Mr. K as guarantors.
４．Dai-Ichi Kangyo Bank's Line of Reasoning
Dai-Ichi Kangyo Bank was aware of Mr. K's deafness from the start. Mr. T.Y. said he could explain the contract to Mr. K by himself. The bank's agent reasoned that he would show the contract to Mr. K and that Mr. T.Y. would explain it. With that in mind, the bank's agent and Mr. T.Y. visited Mr K's house on April 5, 1993.
Mr. T.Y. used gestures and hand movements to explain to Mr. K, while the bank's agent explained slowly in a loud voice. Mr. K nodded in response. The bank's agent showed Mr. K the contract and pointed to the place where a signature was required. Mr. K signed his name and applied his seal. The personal seal stamp used was provided by Mr. K himself. Therefore, Mr. K signed his name and applied his seal knowing the meaning of "guarantor". The above is Dai-Ichi Kangyo Bank's argument.
◆Sanwa Bank's Case
１．Parties Concerned
Plaintiff - Sanwa Bank, Ltd.
Defendant - Mr. K（Deaf）２．The Court of Justice
Tokyo District Court Civil Division No. 33
Presiding Judge: Mr. K. Tsukuda
Judge: Mr. T. Ishii
Judge: Mr. O. Nishimura
(This case was to be held at the Tokyo District Court in Hachioji, but was combined with the Dai-Ichi Kangyo Bank case.)３．Sanwa Bank's Suit Objectives
1) As the guarantor of "T" Koki corporation, Mr. K is to pay 3,634,789 yen.
2) The recognition of the validity of the contract stating that the house and land of Mr. K will be sold, and the consequent sale of said house and property.
４．Sanwa Bank's Line of Reasoning
The same as Dai-Ichi Kangyo Bank's.
◆The Opposing Argument of the Mr. K's Legal Team
Banks must explain contracts in a clear and thorough manner to the average person, who has little or no experience in such matters.
In the case of an individual putting up their own house and property as collateral for someone else's loan, the bank has an even heavier obligation to confirm the intentions of the potential guarantor by thoroughly and prudently explaining the terms of the contract.
Mr. K was born deaf and received little education. He is consequently nearly illiterate. He did not know such terms as "guarantor", "collateral", and "mortgage". If the bank had brought along a sign language interpreter to explain the contract, Mr. K would have been able to understand its contents. But the bank did not provide a sign language interpreter. The bank also did not confirm what T. Y. was indeed communicating to Mr. K. Nevertheless, the bank's agent got his contract signed and a seal applied simply by pointing.
Mr. K signed his name without knowing what it was he was signing, and he had absolutely no intention of guaranteeing a loan, and he had absolutely no intention of putting up his house and land as collateral. Thus, the contracts are invalid. This is the position of Mr. K's legal team.(translated by Lesly Deuel)
