Whether the act of transferring the trusted real estate to the title truster or his/her designated person under the proviso of Article 4(2) of the Act on the Registration of Real Estate under Actual Titleholder’s Name constitutes a fraudulent act by the title trustee of the so-called contract title trust agreement, which acquired the ownership of the trusted real estate

In cases where the main sentence of Article 4(2) of the Act on the Registration of Real Estate under Actual Titleholder’s Name applies to real estate, and the registration of transfer of ownership in the name of an obligor under the name of the title trustee is null and void, such real estate is not owned by the obligor, and thus, it cannot be deemed that the obligor’s joint collateral is the obligor’s property. Even if the obligor concluded a sales contract with a third party on the said real estate and completed the registration of transfer of ownership with that third party, it cannot be deemed that the obligor’s decrease in the obligor’s responsible property; thus, it cannot be deemed a fraudulent act detrimental to the obligor’s general creditors. However, where the title truster and the title trustee concluded the so-called contract title trust agreement with the owner of real estate and completed the registration of transfer of ownership in the name of the title trustee under the said sales contract with the owner of the real estate without knowledge that the title trustee was a party to the contract and completed the registration of transfer of ownership in the name of the obligee under the proviso of Article 4(2) of the Act on the Registration of Real Estate under Actual Titleholder’s Name.

Article 406 of the Civil Act, Article 4(2) of the Act on the Registration of Real Estate under Actual Titleholder’s Name

Supreme Court Decision 99Da5069 delivered on March 10, 2000 (Gong2000Sang, 932) Supreme Court Decision 2002Da66922 Delivered on January 28, 2005 (Gong2005Sang, 393) Supreme Court Decision 2005Da54104 Delivered on December 27, 2007

(Attorney Jeong-jin, Counsel for defendant-appellee)

Defendant (Attorney Yang Jae-soo, Counsel for the defendant-appellant)

Seoul Central District Court Decision 2005Na1581 Decided August 23, 2007

The appeal is dismissed. The costs of appeal are assessed against the defendant.

The grounds of appeal are examined.

1. The court below accepted the judgment of the court of first instance and recognized the facts as stated in its holding, and determined that the non-party 1 entered into a contract under the so-called contract title trust agreement (hereinafter "title trust agreement of this case") between the non-party 1 and the non-party 2 with the second modern collective housing association (hereinafter "the association of this case") with the non-party 2, who obtained the consent of the non-party 2, in the name of Dongcheon-dong Village 2, Dongcheon-dong, Dongcheon-dong, Hyundai Home Complex (Dong, lake omitted), and the sale price was fully paid, and it is confirmed that the registration of ownership was completed in the name of the contracting party, and it was confirmed that the non-party 1 and the non-party 2 entered into the contract of this case with the non-party 2 as a party to the contract of this case without knowledge of the existence of the title trust agreement of this case.

Examining the evidence submitted in light of the records, the above fact-finding and judgment of the court below are justified, and there is no violation of the rules of evidence as otherwise alleged in the ground of appeal.

2. Where the main sentence of Article 4(2) of the Act on the Registration of Real Estate under Actual Titleholder’s Name applies to real estate, and the registration of transfer of ownership in the name of an obligor who is the title trustee is null and void, such real estate is not owned by the obligor, and thus, it cannot be deemed that the obligor’s joint collateral is liable property. Even if the obligor concludes a sales contract with a third party on the said real estate and completes the registration of transfer of ownership, it cannot be deemed that the obligor’s decrease in the obligor’s responsible property. Thus, it cannot be deemed a fraudulent act detrimental to the obligor’s general creditors. (See Supreme Court Decisions 9Da55069 delivered on March 10, 200, Supreme Court Decisions 2005Da54104 delivered on December 27, 207, where the title truster and the title trustee did not know that the agreement was concluded between the title truster and the title trustee and the title trustee, and thus, the title truster’s acquisition of real estate becomes null and void in the name of the title truster’s.

The allegation in the grounds of appeal in this part is with the purport that the transfer of the apartment of this case to the defendant designated by the non-party 1 by the non-party 2 is not a fraudulent act because the non-party 2 did not acquire the ownership of the apartment of this case and was obligated to return it to the non-party 1 who subrogated to the association of this case or the above association. However, as seen earlier, inasmuch as the association of this case entered into a contract with the non-party 2 with the non-party 2 without knowledge of the existence of the title trust agreement of this case as seen earlier, regardless of the invalidity of the title trust agreement of this case by Article 4 (1) of the Act on the Registration of Real Estate under Actual Titleholder's Name, the non-party 2, the title trustee, pursuant to the proviso of Article 4 (2) of the same Act, acquired the ownership of the apartment of this case, regardless of the invalidity of the title trust agreement of this case by Article 4 (2) of the Act on the Registration of Real Estate under Actual Titleholder's Name.

The judgment of the court below to the same purport is just, and there is no error in the misapprehension of legal principles as to the cancellation of fraudulent act, return of unjust enrichment, and registration of real estate under the name of the actual right holder as otherwise alleged in the ground of appeal

The Supreme Court precedents pointed out in the grounds of appeal are inappropriate to be invoked in the instant case with the different issues in this case.

3. Therefore, the appeal is dismissed, and the costs of appeal are assessed against the losing party. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Kim Ji-hyung (Presiding Justice)