The Japanese devil guarding the city gate said, "No one who passes by here every day does not say that he is not a good citizen." Is there any mistake in this grammar?

This is a triple negation, which is equivalent to the overall negation.

"Everyone says it" means "everyone says it", that is, everyone says that he is not a good citizen, which means the opposite according to the context. If it is changed to a double negative, for example, no one says he is not a good citizen, or no one says he is a good citizen.