In cases where a title truster, in violation of the Act on the Registration of Real Estate under Actual Titleholder’s Name with respect to real estate acquired by the title truster, registered a title trust with the donor immediately and completed the registration of ownership transfer under the name of the title trustee, whether the title trustee is a person who keeps the property of the title truster (negative) and whether embezzlement is established in relation to the title truster, if the title trustee disposes of the real estate entrusted to him/her

Article 35(1) of the Criminal Act, Articles 1, 3(1), 4, and 7(1)1 and (2) of the Act on the Registration of Real Estate under Actual Titleholder’s Name

Supreme Court en banc Decision 2014Do6992 Decided May 19, 2016 (Gong2016Sang, 817)

Defendant

Defendant

Law Firm Hun-Ga, Attorney Seo-sik et al.

Busan District Court Decision 2014No2480 Decided December 12, 2014

The judgment of the court below is reversed, and the case is remanded to Busan District Court Panel Division.

1. The grounds of appeal are examined.

According to the reasoning of the judgment below, the court below held that the title trust of this case constitutes a title trust under the so-called middle omission registration, recognizing that the victim donated approximately 9,059 square meters (excluding approximately 290 square meters, 958 square meters, which are owned by the defendant; hereinafter “the forest of this case”) among 10,017 square meters of forest land in Jeonnam-gun ( Address omitted) to Nonindicted Party 1, the owner of the forest, and that the victim and the defendant completed the title trustee registration pursuant to the title trust agreement entered into between the victim and the defendant.

Examining the relevant legal principles and the evidence duly adopted and examined by the first instance court, the lower court’s aforementioned recognition and determination is justifiable. In so doing, the lower court did not err by exceeding the bounds of the principle of free evaluation of evidence against logical and empirical rules, or by misapprehending the legal doctrine on title trust.

2. The decision shall be made ex officio;

(1) The principal agent of embezzlement under Article 355(1) of the Criminal Act refers to a person who keeps another’s property. Whether a person is not another’s property shall be determined by the Civil Act, the Commercial Act, or any other substantive law (see, e.g., Supreme Court Decisions 2003Do3516, Oct. 10, 2003; 2009Do1373, May 13, 2010). Inasmuch as custody in the crime of embezzlement refers to possession of property through a consignment relationship, the principal agent of embezzlement should have legal or de facto fiduciary relationship between the custodian of the property and the owner of the property (or other principal agent) (see, e.g., Supreme Court Decisions 2003Do4828, Sept. 9, 2005; 2009Do9242, Jun. 24, 2010).

However, in cases where a title truster, who received a donation of real estate, completed the registration of transfer of ownership without intermediate omission from the donor pursuant to a title trust agreement entered into with the title trustee without completing the registration of transfer under his/her own name, the registration of transfer of ownership under the name of the title trustee is null and void pursuant to the main sentence of Article 4(2) of the Act on the Registration of Real Estate under Actual Titleholder’s Name (hereinafter “Real Estate Real Name Act”) and the ownership of the trusted real estate is owned by the donor. Therefore, the title truster only has the right to claim the registration of transfer of ownership against the donor, and the title trustee does not have the right to directly transfer the ownership of the trusted real estate, and the title trustee does not assume the obligation to directly transfer the ownership of the trusted real estate to the title truster. As such, in relation to the title truster, not the owner of the trusted real estate, the title truster cannot be deemed to have the status of “the person who keeps another’s property” as referred to in the crime of embezzlement. However, the title truster cannot be deemed to have been deemed as the owner of real estate protected by embezzlement, contrary to the Civil Act.

In addition, in light of the legislative purport of the Real Estate Real Name Act, which aims to prevent any anti-social act, such as speculation, evasion, and evasion of laws, which abuse the real estate registration system, and to contribute to the sound development of the national economy by promoting normalization of real estate transactions and stabilization of real estate prices, by having the ownership of real estate and other real rights thereto registered under the name of the actual right holder so as to coincide with the substantive legal relationship, as well as the legislative purport of the Real Estate Real Name Act, which is to contribute to the sound development of the national economy. In addition, in light of the content and attitude of the regulation on the title trust relationship under the Real Estate Real Name Act, which prohibits the registration under the name of the title trustee under a title trust agreement and imposes criminal punishment on both the title truster and the title trustee who violated it, the title truster and the title trustee cannot be deemed to have a trust relationship based on the administrative management, customs, cooking, and faith for the establishment of the crime of embezzlement, even though the title trust agreement or any other delegation agreement incidental thereto is null and void.

Therefore, in cases where a title truster under a title trust agreement entered into with a donor in violation of the Real Estate Real Name Act, and completed the registration of ownership transfer under the name of the donor immediately, the title truster does not have ownership of real estate held in the trust, and the title truster and the title trustee cannot be recognized as a trust relationship between the title truster and the title trustee. Therefore, even if the title trustee disposes of the real estate acquired in the trust, it does not constitute embezzlement in relation to the title truster even if the title trustee arbitrarily disposes of the real estate held in the trust (see Supreme Court en banc Decision 2014Do692, May 19, 2016).

(2) According to the reasoning of the lower judgment, the lower court found the Defendant guilty of the instant facts charged on the ground that the act of the Defendant, the title trustee, arbitrarily selling the instant forest to Nonindicted 2, a third party in the title trust relationship with the intermediate omission registration type, constitutes embezzlement against the victim, who is the title truster.

However, examining the facts acknowledged by the court below in light of the aforementioned legal principles, the ownership transfer registration completed in the name of the Defendant, the trustee of title in the middle omission registration type title trust between the victim and the Defendant is null and void, and Nonindicted Party 1, the donor, holds ownership as it is. As such, ownership of the forest of this case does not belong to the truster of title, nor does the truster of title and the Defendant, the trustee of title. Accordingly, the Defendant, the trustee of title, is not in the position of “a person who takes custody of another’s property” as stated in the crime of embezzlement

Nevertheless, the lower court found the Defendant as the title trustee in a title trust without intermediate omission registration, on the premise that the Defendant was in the position of a person in charge of custody of the instant forest against the victim, who is the title truster. Therefore, the lower court erred by misapprehending the legal doctrine on the scope of “a person who keeps another’s property” in the crime of embezzlement

3. Therefore, the lower judgment is reversed, and the case is remanded to the lower court for further proceedings consistent with this Opinion. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Lee Sang-hoon (Presiding Justice)