[1] In a case where Gap corporation, which was a company conducting new construction and sale of officetels operated by the defendant, agreed to promote its business through mutual cooperation with Eul corporation as a contractor Eul corporation and a joint business proprietor, the case affirming the judgment below holding that Gap corporation formed Eul corporation's partnership with Eul corporation and formed it, and thus, it is in the status of keeping profits from its business relations for Eul corporation

[2] In a case where Gap corporation and Eul corporation, a company conducting new construction and sale of officetels, etc., formed a partnership upon entering into a partnership agreement, and the defendant, the representative director of Gap corporation, paid the value-added tax related to the partnership's business and did not deposit the refund money to the joint management account, the case holding that if the defendant arbitrarily used the refund money of value-added tax for the individual purpose, he shall be liable for the crime of embezzlement

[3] The meaning of "illegal acquisition intent" in the crime of embezzlement, and whether the person who keeps another's property disposes of it for the benefit of the owner

[4] In a case where Gap corporation and Eul corporation, a company in charge of the construction and sale of officetels, entered into a partnership agreement and formed a partnership, and the defendant, the representative director of Gap corporation, was prosecuted for arbitrarily using Gap corporation's operating funds, etc. without devolving the value-added tax refund, etc. related to the partnership's business in the partnership's property, the case holding that the court below erred in the misapprehension of legal principles and incomplete hearing in holding that even if the defendant paid the above money for expenses directly or indirectly related to the partnership's business

[1] In a case where Gap corporation, a company implementing new construction and sales business, such as officetels operated by the defendant, agreed to promote business in cooperation with Eul corporation and joint business operators, the case affirming the judgment below holding that Gap corporation and Eul corporation constituted a partnership by entering into a partnership business agreement stipulating that Gap corporation shall invest considerable economic benefits and labor through a joint project implementation agreement, etc. and jointly operate the above business, and thus the profits accrued from the partnership business relationship constitutes a partnership business property belonging to the partnership, and Gap corporation is in the status of keeping them for Eul corporation

[2] In a case where Gap corporation and Eul corporation, a company conducting new construction and sale of officetels, entered into a partnership agreement and formed a partnership, and the defendant, the representative director of Gap corporation, paid the value-added tax related to the partnership's business and did not deposit the refunded refund in the joint management account, the case holding that since the above value-added tax refund is the business property of the partnership, if the defendant used it for personal purposes at will, the defendant is liable for embezzlement regardless of the ratio of profit distribution between Gap corporation and Eul corporation

[3] In the crime of embezzlement, an unlawful acquisition intent refers to the intent of a person who keeps another’s property without authority to dispose of it by himself/herself (including refusal of return) against the purpose of entrustment. Thus, in cases where a custodian disposes of it for the benefit of the owner, not for his/her own or a third party’s own interest, barring any special circumstance, the intent of unlawful acquisition cannot be recognized. However, in cases where a custodian disposes of it for the benefit of the owner, barring any special circumstance, the use of funds for purposes other than for a limited purpose upon entrustment of a limited amount of funds by a third person would result in realizing the intent of unlawful acquisition as an act of use even if the person entrusted the funds. However, if it does not fall under such a case, it is difficult to recognize the existence of the intention of unlawful acquisition, and if there are materials corresponding thereto, it cannot be recognized that the Defendant embezzled the money entrusted without permission as an intent of unlawful acquisition, barring special circumstances.

[4] In a case where Gap corporation and Eul corporation, a company in charge of the construction and sale of officetels, entered into a partnership agreement and formed a partnership, and the defendant, the representative director of Gap corporation, was prosecuted for arbitrarily using Gap corporation's operating funds, etc. without devolving the value-added tax refund, etc. related to the partnership's business in the partnership's property, the case holding that the court below erred in the misapprehension of legal principles as to the approval of unlawful acquisition intent of embezzlement and incomplete deliberation, even if the defendant paid the above money to the association's business expenses directly or indirectly related to Gap's business

[1] Articles 703 and 704 of the Civil Code / [2] Articles 355 (1) and 356 of the Criminal Code, Article 3 (1) of the Act on the Aggravated Punishment, etc. of Specific Economic Crimes / [3] Article 355 (1) of the Criminal Code / [4] Articles 355 (1) and 356 of the Criminal Code, Article 3 (1) of the Act on the Aggravated Punishment, etc. of Specific Economic Crimes

[3] Supreme Court Decision 81Do3009 delivered on March 9, 1982 (Gong1982, 451), Supreme Court Decision 96Do8 delivered on April 22, 1997 (Gong1997Sang, 1677), Supreme Court Decision 98Do408 delivered on July 9, 199 (Gong1999Ha, 1671), Supreme Court Decision 2005Do3929 Delivered on September 28, 2005 (Gong2005Ha, 1731), Supreme Court Decision 2006Do3272 Delivered on August 24, 2006, Supreme Court Decision 2007Do9755 delivered on February 29, 2008, Supreme Court Decision 2008Do42939 delivered on May 24, 2009)

Defendant

Defendant

Law Firm LLC et al.

Seoul High Court Decision 2010No1812 decided January 27, 2011

The conviction part of the judgment below is reversed, and that part of the case is remanded to the Seoul High Court.

The grounds of appeal are examined (to the extent of supplement in case of supplemental appellate briefs not timely filed).

1. Regarding ground of appeal No. 1

According to the reasoning of the judgment below, the court below held that the non-indicted 1 and the non-indicted 2 corporation constitute an association by entering into a partnership agreement under the Civil Act stipulating that two or more persons shall jointly invest in the business and jointly operate the business of this case, and that, in carrying out the business of constructing and selling officetels, commercial buildings, etc. on Gangnam-gu Seoul (hereinafter referred to as "the business of this case"), the non-indicted 1 corporation operated by the defendant shall carry out the business of constructing and selling officetels, commercial buildings, etc. on the part of Gangnam-gu Seoul (hereinafter referred to as "the business of this case"), it shall be decided in accordance with the specific contents of the agreement entered into between the non-indicted 1 corporation and the non-indicted 2 corporation in relation to the business of this case, after taking into account the circumstances in its reasoning, the non-indicted 1 corporation and the non-indicted 2 corporation constituted an association by entering into a joint business execution agreement and the P/F business agreement stipulating that they jointly operate the business of this case.

Examining the judgment of the court below and the evidence duly adopted by the court below in light of the records, the above fact-finding and judgment of the court below are justified.

The court below did not err in the misapprehension of legal principles as to the establishment of the partnership agreement as otherwise alleged in the ground of appeal.

The ground of appeal on this part is without merit.

2. Regarding ground of appeal No. 2

According to the reasoning of the lower judgment, the lower court determined that Nonindicted Co. 1 was the business property of Nonindicted Co. 1 and Nonindicted Co. 2, taking into account the following circumstances: (a) Nonindicted Co. 1 paid value-added tax in its own name but it was actually paid in relation to the instant business; (b) Nonindicted Co. 1 paid value-added tax in the joint operation account with Nonindicted Co. 2; and (c) the refund should be deposited in the joint operation account; and (d) in the instant P/F business agreement, it clearly states that the value-added tax refund should be deposited in the joint operation account as revenue related to the instant business; and (e) Nonindicted Co. 1’s total amount of value-added tax refund amounting to KRW 4,756,788,240

The argument in the grounds of appeal on this part is that since the non-indicted 1 corporation paid the value-added tax as a taxpayer, the refund money cannot be viewed as a partnership business property of the non-indicted 1 corporation, or at least the non-indicted 1 corporation's profit distribution ratio of the non-indicted 1 corporation between the non-indicted 1 corporation and the non-indicted 2 corporation cannot be established for embezzlement. However, as long as the non-indicted 1 corporation and the non-indicted 2 corporation agreed to pay value-added tax at the joint operating account and transfer the refund money to the joint operating account as a business property, the value-added tax refund cannot be deemed as not being levied on the non-indicted 1 corporation, and if the defendant arbitrarily used the refund money for personal purposes, he bears the responsibility for embezzlement against the full amount regardless of the profit distribution ratio of the non-indicted 1 corporation.

The court below did not err in the misapprehension of legal principles as to the establishment of embezzlement against the refund of value-added tax as otherwise alleged in the ground of appeal.

This part of the grounds of appeal is without merit.

3. As to the third ground for appeal

In full view of the various circumstances in its holding, the lower court rejected the Defendant’s assertion that the funds received from Nonindicted Co. 1 was not the sales price of officetels but the funds borrowed from Nonindicted Co. 1’s operating capital. The lower court determined that the Defendant’s funds received from Nonindicted Co. 3, KRW 221.5 million received from Nonindicted Co. 3, KRW 2220 million received from Nonindicted Co. 4, KRW 312 million received from Nonindicted Co. 5, KRW 314 million received from Nonindicted Co. 6, KRW 50 million received from Nonindicted Co. 7, and KRW 38 million received from Nonindicted Co. 1 and Nonindicted Co. 2 as the sales price for the instant project.

Examining the judgment of the court below and the evidence duly adopted by the court below in light of the records, this judgment of the court below is just and acceptable.

The court below did not err by misapprehending the legal nature of the sale price and the legal principles as to the establishment of embezzlement, as otherwise alleged in the ground of appeal.

This part of the grounds of appeal is without merit.

4. As to the fourth ground for appeal

According to the reasoning of the judgment below, the court below held that the act of arbitrarily using the instant money by the defendant, in violation of the procedure and purpose of the use of the funds, constitutes embezzlement as it constitutes an act of realizing the intention of unlawful acquisition, and it cannot be deemed that the defendant did not have any intention of unlawful acquisition solely on the ground that the use of the funds was attributable to the personal purpose, and that the act of using the funds directly or indirectly related to the business of this case, such as operating expenses of the non-indicted 1 corporation, even though the use of the funds itself is exempted from the personal purpose, and thus, it was established as an act of realizing the intention of unlawful acquisition, even though it was agreed that the use of the funds in this case should be strictly restricted between the partners.

However, the intent of unlawful acquisition in the crime of embezzlement refers to the intent of a person who keeps another's property without authority to dispose of it (including rejection of return) without his/her own interest against the entrusted purpose. Thus, in cases where the custodian disposes of it for the benefit of its owner, not for his/her own interest or a third party, the intent of unlawful acquisition cannot be recognized unless there are special circumstances (see, e.g., Supreme Court Decisions 81Do3009, Mar. 9, 1982; 2009Do495, Apr. 23, 2009). However, if it is difficult for a person to use funds for purposes other than the limited purpose upon being entrusted with the execution of funds with strict limited purpose, even if it is for the entrusted principal, it is deemed that the act of use itself realizes the intention of unlawful acquisition, but it does not constitute embezzlement (see, e.g., Supreme Court Decisions 200Do9689, Apr. 22, 197; 2008Do395, Jul. 29, 2098.

Examining the reasoning of the judgment below in light of the records, the defendant alleged that he did not deposit the instant money into a joint operating account from the investigative agency to the court of the court below, and that he used the instant money for the business of the court below, and submitted explanatory materials to the investigative agency (Article 1371 to 1494 of the Investigation Record). Among them, there are materials that the non-indicted 1 corporation entered into the instant P/F business agreement on July 30, 2003 and paid interest on loans in relation to the instant business (Article 1482 to 1494 of the Investigation Record), including interest on loans in 2.5 billion won borrowed from the new bank (Article 382 to 1494 of the Investigation Record), the non-indicted 1, the non-indicted 2, and the P/F business agreement concluded between the new bank, deposit all revenues related to the instant business into a joint operating account; ① the funds, such as fees related to loans, public charges, registration expenses, etc.; ② the interest on the principal of the new bank or 2.

As above, since interest on loans to the new banks of Nonindicted Co. 1 and Nonindicted Co. 2 within the scope of the purpose prescribed to be disbursed from their business property for the operation of joint business, the payment of such interest constitutes grounds for which it is difficult to recognize the existence of an intention of unlawful acquisition, barring any special circumstances, unlike the use of funds for purposes other than the purpose of use, and the defendant also submits materials corresponding thereto. Thus, the court below should have determined that the amount of the interest paid as interest on loans related to the business of this case after examining how the interest was paid by the above interest, what the source of the funds was paid, and what amount the interest was paid from the account of Nonindicted Co. 1, which was paid from the account of this case, cannot be recognized.

Nevertheless, the court below held that even if the defendant paid the funds of this case directly or indirectly with the business of this case, he shall be liable for the crime of embezzlement. In this case, the court below erred by misapprehending the legal principles on the recognition of the intention of illegal acquisition in embezzlement, which affected the conclusion of the judgment by failing to exhaust all necessary deliberations.

The ground of appeal pointing this out is with merit.

5. Scope of reversal

As seen earlier, there exists a ground for reversal of part of the facts charged in the instant case against the Defendant, and the remaining facts charged that the lower court found guilty should be sentenced to a single sentence in relation to a single comprehensive crime or concurrent crime under the former part of Article 37 of the Criminal Act. As such, the part of the lower judgment’s conviction in the lower judgment

6. Conclusion

Therefore, the guilty portion of the judgment below is reversed, and that part of the case is remanded to the court below for a new trial and determination. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Yang Chang-soo (Presiding Justice)