[1] In the so-called bilateral title trust where a real estate owner transfers his/her registered title to a trustee after the enforcement of the "Act on the Registration of Real Estate under Actual Titleholder's Name", whether such legal act of a truster may constitute a fraudulent act in cases where a truster who is a debtor is a substantial party to the trusted real estate (affirmative)

[2] In a case where: (a) the real estate owner Gap entrusted the title of real estate under Eul's name according to the bilateral title trust agreement with Eul; and (b) the real estate owner Byung established the right of collateral in the future Byung; (c) the creditor Gap established the right of collateral security to collateral security with Byung in excess of his debt; and (d) sought cancellation of the right of collateral security agreement and restitution to the original state, the case holding that the court below dismissed the part of the claim for revocation of the fraudulent act on the contrary grounds that the debtor Gap could seek revocation of the fraudulent act on the part of selling real estate to Byung as the actual party Eul

[1] After the enforcement of the "Act on the Registration of Real Estate under Actual Titleholder's Name", in the case of bilateral title trust, where the owner of a real estate transfers the title of registration to the trustee, the registration of transfer of ownership in the name of the trustee made pursuant to the title trust agreement shall be cancelled as the cause invalidation. The real estate still becomes the property held by the truster and provided to the general creditors as joint security by the truster. Therefore, in the case where the truster, who is the debtor, directly executes a sales contract with a third party in his/her name or under the name of the trustee, directly engages in a legal act, such as entering into a sales contract with a third party, etc., if the truster, who is the debtor, directly becomes a party to the trust property, such legal act by the truster may constitute a fraudulent act as detrimental to the general creditors of the truster. In this case, the subject of revocation of a fraudulent act shall be a legal act between the truster and the third party, and restitution shall be made by the third party to implement the procedure for cancellation registration.

[2] In a case where the real estate owner Gap entrusted the title of real estate under Eul's name according to the bilateral title trust agreement with Eul, and thereafter, Eul established the right of collateral security in the future Byung, but Gap's creditor Gap's act of establishing the right of collateral security to Byung with debt excess constitutes a fraudulent act which causes damage to the joint security of general creditors, including the circumstances, and Eul sought revocation and restitution of the right of collateral security agreement with Byung, the case holding that the court below dismissed the part of the right of claim for revocation of fraudulent act on the premise that Gap's act of disposing of real estate to Byung as a substantial party Eul can seek revocation of fraudulent act, on the contrary to the premise that Eul's act of seeking revocation of fraudulent act can only be seen as the object of revocation of fraudulent act without confirming which act was done by Eul, on the ground that the court below dismissed the part of the right of claim for revocation of fraudulent act.

[1] Article 406 of the Civil Code / [2] Article 406 of the Civil Code

Plaintiff (Law Firm Completion, Attorneys Park Jae-soo et al., Counsel for the plaintiff-appellant)

Defendant (Law Firmcheon, Attorneys Shin Young-soo et al., Counsel for the defendant-appellant)

Seoul Central District Court Decision 2011Na13127 Decided November 10, 2011

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

The grounds of appeal are examined.

1. The obligee's right of revocation is a right to revoke the obligor's disposal of his/her property by a fraudulent act and to return to the obligor for recovery. Thus, an act detrimental to the obligee who is the object of obligee's right of revocation is "a juristic act by the obligor for the purpose of property right" and thus means an act by which the obligor's passive property exceeds the obligor's active property or lacks the obligor's status of excess of his/her obligation, and it is required that the obligor conduct the above legal act knowing that it would prejudice the obligee.

Meanwhile, in the case of bilateral title trust, where the owner of real estate transfers his/her name to the trustee after the enforcement of the "Act on the Registration of Real Estate under Actual Titleholder's Name", the registration of transfer of ownership in the name of the trustee under the title trust agreement shall be cancelled as a cause invalidation. The real estate is still owned by the truster and is still a responsible property provided to the joint security of the general creditors

Therefore, in cases where a truster, who is a debtor, directly executes a contract with a third party in his/her name or in the name of the trustee for a legal act with respect to a trust real estate, which is a property held by the general creditors of the truster, which is a responsible property provided for joint security of the general creditors, becomes a substantial party to the legal act, such legal act of the truster may constitute a fraudulent act as an act detrimental to the general creditors of the truster, if the truster exceeds active property or exceeds the debts, and the truster was aware of such a fact. In such cases, the subject of revocation of a fraudulent act shall be a legal act between the truster and the third party, and restitution to the original state shall be made by a third party to

2. In this case, the Plaintiff is a creditor against Nonparty 1, and Nonparty 1, the debtor, entrusted the title of registration under the name of Nonparty 2 pursuant to a bilateral title trust agreement with Nonparty 2, and the act of establishing a collateral security to the Defendant with excess of the debt constitutes a fraudulent act that undermines the joint security of ordinary creditors including the Plaintiff. Thus, Nonparty 2 and the Defendant sought to implement the procedure for cancelling the registration of cancellation of the collateral security agreement between Nonparty 2 as to the instant real estate and the Defendant and its restitution.

As to this, the lower court dismissed the Plaintiff’s claim for revocation of fraudulent act among the instant lawsuit on the ground that the mortgage contract seeking revocation is a legal act between Nonparty 2 and the Defendant, the trustee of the instant real estate, and that the Plaintiff, the obligee of Nonparty 1, could not seek revocation thereof, and dismissed the part of claim for restitution that is sought on the premise of revocation of fraudulent act.

3. According to the records, the Plaintiff asserted that Nonparty 1 sought revocation of the act of establishing the right to collateral security against the Defendant regarding the instant real estate in which Nonparty 1 trusted the title of registration in the name of Nonparty 2, and the Defendant also did not dispute the fact that Nonparty 1 caused the establishment of the right to collateral security to collateral security to the Defendant. Therefore, according to the legal principles as seen earlier, the Plaintiff may seek revocation of the act of disposing of the instant real estate to the Defendant as a substantial party.

Therefore, the court below should have tried to examine whether the plaintiff's act of seeking revocation of a fraudulent act was confirmed (see, e.g., Supreme Court Decision 2009Da83599, Feb. 11, 2010). However, on the premise that the legal act between the non-party 2 and the defendant is subject to revocation of a fraudulent act without taking such measures, the part of the claim for revocation of a fraudulent act in the lawsuit in this case in this case is unlawful, and the part of the claim for restitution as a premise of revocation of a fraudulent act is dismissed on the ground that it is without merit. In so doing, the court below erred by misapprehending the legal principles on the "legal act done by the debtor" subject to revocation of a fraudulent act and failing to perform its duty of explanation, which affected the conclusion of the judgment.

4. 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 Kim Chang-suk (Presiding Justice)