2. The costs of appeal are assessed against the Defendants.

A. Defendant 1 and 2 shall pay to the Plaintiff 357,486,680 won and 355,580,010 won, jointly and severally with Co-Defendant KS Co-Defendant 2 of the first instance trial and jointly with Co-Defendant 2 of the first instance trial, 11% per annum for the period from November 5, 2008 to the date of final delivery of the complaint of this case and 20% per annum for the period from the next day to the date of full payment.

B. As to the real estate listed in the attached list No. 1, the termination of the mortgage contract concluded on April 2, 2008 between Defendant 1 and Defendant 3, and the mortgage contract concluded on November 17, 2008 between Defendant 1 and Defendant 4, respectively, and Defendant 1, Defendant 3, Defendant 3, Seoul Southern District Court’s registration and the registration procedure for cancellation of the registration of the establishment of a neighboring mortgage completed on April 3, 2008, and Defendant 4, Defendant 6, the Seoul Southern District Court’s registration and the registration procedure for cancellation of the registration of the establishment of a neighboring mortgage completed on November 17, 2008, respectively.

C. As to the real estate listed in the attached list 2, the gift contract concluded on August 8, 2008 between Defendant 2 and Defendant 5 shall be revoked, and Defendant 5 shall implement the procedure for the registration of transfer of ownership as to the registration of transfer of ownership, which was completed by the District Court No. 11309 on August 8, 2008, with Defendant 2.

2. Purport of appeal

The part against the Defendants in the judgment of the first instance is revoked, and all of the Plaintiff’s claims against the Defendants corresponding thereto are dismissed.

(a) Facts of recognition;

[Grounds for Recognition: Each entry of Gap 1 through 9, 12, 14 through 17 (including paper numbers), each order of the court of first instance to submit financial information to the Korea Exchange Bank Co., Ltd., the result of each order of the court of first instance to submit financial information, the testimony of the non-party witness and the purport of all pleadings]

(i) entering into a credit guarantee agreement and joint and several sureties agreement;

A) On March 26, 2007 and September 12, 2007, and March 24, 2008, the Co-Defendant C&C Co., Ltd. (hereinafter “Nonindicted Co-Defendant C&C Co., Ltd”) concluded a credit guarantee agreement with the Plaintiff on three occasions as follows. When the Plaintiff fulfilled the guaranteed obligation, the Nonparty Co-Defendant C&C agreed to pay the Plaintiff the amount of the Plaintiff’s repayment, damages for delay, and expenses incurred in compensating the Plaintiff’s claim.

B) Defendant 1 jointly and severally guaranteed the obligation to be borne by the non-party company to the Plaintiff according to the credit guarantee agreement dated March 26, 2007 and September 12, 2009 with the co-defendant 2 (the representative director of the non-party company) of the first instance trial. Defendant 2 jointly and severally guaranteed the obligation to be borne by the non-party company to the Plaintiff according to the credit guarantee agreement dated March 24, 2008 with the co-defendant 2 of the first instance trial.

C) On March 26, 2007, the Plaintiff entered into an export credit guarantee agreement with the non-party company with a guarantee period of KRW 350 million from March 26, 2007 to March 26, 2008, setting the guarantee method as a revolving guarantee. Accordingly, the Plaintiff issued the same credit guarantee certificate with the guarantee amount and the guarantee period to the company bank on the same day, and the non-party company received loans from the company bank around that time.

D) Around September 2007, upon the Plaintiff’s approval, the non-party company entered into an export credit guarantee agreement with the non-party company (hereinafter “the non-party company’s bank”) to Korea Exchange Bank (hereinafter “Korea Exchange Bank”). Accordingly, on September 12, 2007, the Plaintiff newly entered into an export credit guarantee agreement with the non-party company (hereinafter “the non-party company’s credit guarantee agreement”). Accordingly, on the same day, the Plaintiff issued the same credit guarantee agreement with the foreign Exchange Bank (hereinafter “the first credit guarantee agreement”). The non-party company entered into the trade bill loan agreement with the foreign exchange bank as of March 26, 2008, with the payment period of KRW 750,000,000,000 as of March 26, 2008, the non-party company deposited the above credit guarantee agreement with the non-party company as of March 26, 2008, with the payment period of KRW 500,000,000 from the above trading bill loan account.

E) On March 10, 2008, Nonparty Company was extended the due date for the said loan from a foreign exchange bank until August 26, 2008.

F) On March 24, 2008, the non-party company again concluded an export credit guarantee agreement with the non-party company as a guarantee method from March 27, 2008 to March 27, 2009 (hereinafter “the second credit guarantee agreement”) with the maturity of the credit guarantee period and the credit transaction period at multilateral, and the Plaintiff and the foreign exchange bank. In order to clarify that the renewal guarantee is renewed, the non-party company again concluded a credit guarantee agreement with the same credit guarantee term (hereinafter “the second credit guarantee agreement”) with the credit guarantee term at the same date, which stated that “the credit guarantee limit under this agreement shall include the balance of the guarantee issued by the old guarantee number as of September 12, 2007, including the balance of the guarantee under the former guarantee agreement, which was set forth in the credit guarantee agreement with the non-party company as the total amount of KRW 300 million from March 27, 2008 to March 27, 2009.”

G) The column of joint and several sureties of the 2nd credit guarantee is the name and resident registration number of the joint and several sureties, and the phrase “1. new 2.0 replacement” is printed, and any indication is not indicated at that place.

2) The plaintiff's subrogation

A) On August 26, 2008, the maturity date of the above loan, the non-party company failed to repay the loan principal, and the foreign exchange bank filed a claim with the Plaintiff to discharge a guarantee obligation on the loan principal amounting to KRW 315 million and interest in accordance with the second guarantee agreement on October 13, 2008. The foreign exchange bank filed a claim again with the Plaintiff to discharge a guarantee obligation on the loan principal and interest pursuant to the first guarantee agreement on November 5, 2008.

B) The Plaintiff paid to the foreign exchange bank the principal and interest of KRW 320,022,014 [the loan principal of KRW 315,000,000 + interest KRW 5,022,014 (the interest rate of KRW 71,00,000 from August 26, 2008 to November 14, 2008)]; however, on November 5, 2008, the Plaintiff paid the loan principal of KRW 35,580,010,000 in total with interest KRW 5,580,010 to the foreign exchange bank on behalf of the Plaintiff pursuant to the first guarantee form. The foreign exchange bank prepared a certificate of subrogation that it received the said money by means of the first credit guarantee form on the same day.

C) The Plaintiff spent 1,906,670 won in total as expenses to preserve the claim for reimbursement of this case. The Plaintiff’s interest rate of delay damages determined by the Plaintiff is 11% per annum.

B. Whether Defendant 1 and 2 are liable for the payment of indemnity

1) Defendant 1’s responsibility

In a case where individual credit guarantee provided by a credit guarantee agency was conducted within the original limit and amount set in the credit guarantee transaction, and where an obligation to be borne at the end of the guarantee period is finalized, regardless of whether such individual credit guarantee continues to be part of the guarantee period, a guarantor who guarantees indemnity claims of a credit guarantee agency shall be liable to guarantee indemnity claims of a credit guarantee agency which has performed the obligation under the credit guarantee agreement with respect to the established principal obligation. Such a legal principle is the same as in a case where a guarantee contract is terminated upon the termination of the guarantee contract due to the termination of the guarantee contract as the extension of the guarantee period between the creditor and the principal obligor, although the transaction period between the principal obligor was extended in the principal contract, but the guarantee period has not been extended between the guarantor and the principal obligor (see Supreme Court Decisions 2003Da21872, Nov. 14, 2003; 9Da26481, Aug. 24, 199).

In this case, the first credit guarantee is stated as "revolving guarantee", and the non-party company entered into a trade bill loan agreement with the foreign exchange bank as of September 12, 2007 with the limit of 750 million won and the agreed term of the agreement until March 26, 2008 and received a loan of 750 million won from the foreign exchange bank from the foreign exchange bank as above. However, on the other hand, the credit transaction between the non-party company and the foreign exchange bank based on the first credit guarantee agreement issued by the plaintiff to the foreign exchange bank as of September 12, 2007 is limited to the above trade bill loan as of March 26, 2008, regardless of the form of the first credit guarantee agreement, the credit guarantee agreement between the plaintiff and the non-party company, regardless of the form of the first credit guarantee agreement, shall be deemed to be an individual guarantee obligation with respect to the specific debt and the fixed term of payment (see Supreme Court Decision 2006Da74775, Mar. 4, 2006).

As such, even if Defendant 1’s joint and several liability period has expired on March 26, 2008, even if Defendant 1’s joint and several liability period expired on the part of March 26, 2008, Defendant 1, a guarantor, should bear the guarantee liability (see, e.g., Supreme Court Decision 2003Da21872, supra).

In this regard, Defendant 1 asserts to the effect that, between March 26, 2008, the guarantee period of the first credit guarantee agreement, Defendant 1 is only responsible for the payment of indemnity to the Plaintiff, only if the Plaintiff subrogated within that period.

However, in light of the purport of setting a guarantee period in a continuous guarantee, it is reasonable to view that, in principle, a guarantee liability arises regardless of whether the debt is specified at the time when the guarantee period has expired. In this case, the Plaintiff issued a guarantee period to a foreign exchange bank as set by March 26, 2008, and the Plaintiff incurred a debt to a non-party company’s foreign exchange bank within the guarantee period, and the debt was specified at the time of the expiration of the guarantee period, and thus, the Plaintiff is liable to guarantee the above specific debt, and contrary to this, it is difficult to find grounds to interpret that the Plaintiff bears the guarantee liability only when the repayment period has arrived or the credit guarantee accident has actually occurred.

Furthermore, in the event that the Plaintiff fulfilled the guaranteed obligation based on the first credit guarantee agreement, Defendant 1 agreed to pay the amount of reimbursement, etc. to the Plaintiff jointly with the non-party company, etc., and thereafter, in this case where the Plaintiff actually performed the guaranteed obligation, Defendant 1 cannot be deemed to bear the liability for reimbursement only when the Plaintiff subrogated within the guarantee period.

Defendant 1’s above assertion cannot be accepted.

2) As to Defendant 1’s assertion that the status of joint and several sureties was lost

Defendant 1 asserted to the effect that Defendant 1’s status as a joint and several surety was lost following the replacement of the said joint and several surety in the first instance court’s joint and several surety at the time of the initial credit guarantee agreement, but the joint and several surety was replaced from Defendant 1 to Defendant 2 in the second credit guarantee agreement.

In order to replace the guarantor at the request of the principal obligor and accordingly lose the status of the former guarantor as the guarantor, the application of the principal obligor and the consent thereto shall be required (see Supreme Court Decision 85Meu1004, Jun. 24, 1986). The circumstance that Defendant 2, not Defendant 1, was the joint and several surety under the 2 credit guarantee agreement, merely because Defendant 1 lost the status of the existing joint and several surety, or the Plaintiff renounced the claim for indemnity against Defendant 1 under the 1 credit guarantee agreement, or gave up the claim for indemnity against Defendant 1 under the 1 credit guarantee agreement, and there is no other evidence to deem otherwise.

The above assertion by Defendant 1 cannot be accepted.

3) Defendant 2’s responsibility

The Plaintiff concluded a second credit guarantee agreement to extend the guarantee period of the first credit guarantee agreement, and the second credit guarantee agreement based on the second credit guarantee agreement also stipulates that “the limit of the second credit guarantee agreement under this letter shall be included in the balance of the former guarantee number issued as of September 12, 2007, and shall be operated.” Thus, the second credit guarantee agreement constitutes the so-called renewal guarantee extending the guarantee period of the first credit guarantee agreement.

Such renewal guarantee is merely an extension of the guarantee period of the former guarantee in substance, and therefore, the existing debt remaining at the time of issuance of the renewal guarantee is also guaranteed by the renewal guarantee (see, e.g., Supreme Court Decisions 2004Da28849, Sept. 28, 2005; 2002Da56253, Dec. 10, 2002); and Defendant 2 also is liable to pay the indemnity to the Plaintiff who subrogated for the existing debt remaining at the time of issuance of the renewal guarantee certificate of the second credit guarantee certificate, which is the renewal guarantee certificate.

4) As to Defendant 2’s assertion on revocation of guarantee agreement

Defendant 2: (a) although the co-defendant 2 of the first instance trial had no intent to entrust the operation of the ○○○ Factory located in Macheon-si to Defendant 2, Defendant 2 conspireded Defendant 2 to take charge of the operation of the factory; and (b) Defendant 2 signed the second credit guarantee agreement by deceiving Co-Defendant 2 of the first instance trial, and signed the said agreement on the second credit guarantee agreement by deceiving Co-Defendant 2 of the first instance trial; (c) accordingly, Defendant 2 asserts to the effect that the said agreement on the guarantee was revoked

However, each statement in Eul's evidence Nos. 1 through 6 alone is insufficient to acknowledge the above assertion by defendant 2 as to the deception by co-defendant 2 of the first instance trial, and there is no other evidence to acknowledge it otherwise. Even if co-defendant 2 of the first instance trial accused by deceit as alleged by the defendant 2, Article 110 (2) of the Civil Act provides that "where a third party makes a fraudulent or duress with respect to the declaration of intention to the other party, such declaration of intention may be revoked only when the other party knew or could have known such fact," and there is no evidence to acknowledge that the other party, having known or could have known such fact.

Defendant 2’s above assertion cannot be accepted.

C. Scope of defendant 1 and 2's obligation to pay indemnity amount

1) The second credit guarantee agreement is a guarantee for the renewal of the first credit guarantee agreement, and the credit guarantee limit has been reduced to KRW 315 million from March 27, 2008 pursuant to the second credit guarantee agreement, and the limit of the principal of the loan to be borne by the Plaintiff is KRW 320,022,014,000 based on the second credit guarantee agreement. Therefore, the Plaintiff is obligated to pay to the Plaintiff the amount of KRW 320,022,014 [the principal of the guaranteed loan + the interest of KRW 315,00,000 + the interest of KRW 5,02,014 (71,00 from August 26, 2008 to November 4, 2008; and the annual interest rate of August 196, 2008]; Defendant 1, 2,020,020,014, and damages for delay in the repayment of claims against the Plaintiff shall be paid to the Plaintiff.

2) Accordingly, Defendant 1 and 2 are jointly and severally liable to jointly and severally pay to the Plaintiff KRW 321,928,684 [the principal of the guaranteed obligation + KRW 315 million + interest of KRW 5,022,014 + expenses for preserving claims + KRW 1,906,670] as well as KRW 320,02,014, which is the date of subrogation, to the Plaintiff, for the existence or scope of the guaranteed obligation from November 5, 2008 to December 4, 2009, the first instance judgment, which is deemed reasonable to dispute over the existence or scope of the guaranteed obligation of the said Defendants, is 11% per annum under a credit guarantee agreement and damages for delay calculated by 20% per annum as stipulated in the Act on Special Cases concerning the Promotion, etc. of Legal Proceedings from the following day until the date of full payment.

2. As to the revocation of the fraudulent act

The reasoning for this part of the judgment of the court of first instance is the same as the corresponding part of the reasoning of the judgment of the court of first instance.

3. Conclusion

The plaintiff's claim for reimbursement against the defendant 1 and 2 and the claim for the cancellation of the fraudulent act against the defendant 3, 4, and 5 are justified, and the plaintiff's remaining claim for reimbursement against the defendant 1 and 2 is dismissed as it is without merit. The judgment of the court of first instance is just in conclusion, and the defendants' appeal is dismissed in its entirety.

[Attachment]

Judges Lee Il-man (Presiding Judge)