The Taichung Branch of the Taiwan High Court rendered the 106-Shang-Yi-272 Civil Decision of September 27, 2017 (hereinafter, the “Decision”), holding that if the obligor of a loan agreement asserts that no loan was obtained while issuing a promissory note as the collateral for the loan, such obligor is certainly required to assume the burden of proof for the defense against the negotiable instrument obligation.
According to the fact underlying this Decision, the Appellee asserted that the Appellant had successively borrowed money from him and had issued the promissory note at issue to guarantee the repayment of the loan. However, the Appellant did not repay the debt even after repeated collection efforts. Therefore, a complaint was filed to request the return of the loan based on the legal relationship of a consumption loan. The original trial court subsequently ruled in favor of the Appellee. Dissatisfied with the original decision, the Appellant appealed.
According to the Decision, the validity of a consumption loan requires not only delivery of money but also delivery based on an intent of borrowing since multiple reasons for delivery of money exist. However, if the creditor can substantiate the delivery of money and the evidence produced by the creditor can also prove that the parties have no motive for the delivery of money other than the intent of borrowing, which results in the delivery of the money at issue, while the debtor cannot substantiate the legal reasons for receiving and keeping the money, the debtor is certainly required to assume the burden of proof for the defense against the creditor’s claims. In addition, when a negotiable instrument obligor asserts a defense against the negotiable instrument claim by raising the existence of the reasons between the obligator and the bearer of the negotiable instrument, if the reasons for the defense do exist, the negotiable instrument obligor is still required to assume the burden of proof. Therefore, if the obligor of a loan agreement asserts that no loan was obtained while issuing a promissory note as the collateral for the loan, such obligor is certainly required to assume the burden of proof for the defense against the negotiable instrument obligation.
It was further concluded in this Decision based on witness testimonies that the promissory note at issue was not issued until the Appellee had sought to collect the loan from the Appellant and the Appellant issued the promissory note at issue with a value equivalent to the amount of borrowing in a venue accessible to the public. This was sufficient to conclude that there had indeed been a borrowing agreement between the parties. Therefore, the Appellant’s appeal was dismissed.