[1] The meaning of "those accumulated in a mutual aid sector account" under Article 2 (1) of the Addenda to the Act on the Structural Improvement of Agricultural Cooperatives ( March 11, 2014)

[2] The case holding that in a case where the National Agricultural Cooperative Federation transferred to the Korea Deposit Insurance Corporation only the remaining amount after deducting a certain amount from the reserve fund in the sector of mutual aid projects in accordance with the retroactive application of the bad amount of fund accounts for the cooperative economic activities, as a follow-up measure following the amendment of the Act on the Structural Improvement of Agricultural Cooperatives and Agricultural Cooperatives, the reserve fund in the sector of mutual aid projects accumulated and managed by the National Agricultural Cooperative Federation was transferred to the Korea Deposit Insurance Corporation; and the National Agricultural Cooperative Federation transferred the amount of the bad amount of fund for the cooperative economic activities by the resolution of the Fund Management Committee to the Korea Deposit Insurance Corporation after deducting from the reserve fund in the sector of mutual aid projects, the Korea Deposit Insurance Corporation's claim against the National Agricultural Cooperative Federation for the performance of the obligation to transfer the reserve fund specifically confirmed in accordance with the "Standards for Transfer of Reserve Fund in

[1] The purpose of Article 2(1) of the former Act on the Structural Improvement of Agricultural Cooperatives (amended by Act No. 14481, Dec. 27, 2016; hereinafter the same shall apply) (amended by Act No. 10684, May 19, 201; hereinafter the same shall apply) is to transfer to the deposit insurance fund of the Korea Deposit Insurance Corporation the assets and rights and obligations of the mutual aid fund accounts of the mutual aid fund under the premise that the accounts for the property and the rights and obligations of the mutual aid fund account are properly handled. Therefore, as a matter of principle, it is reasonable to interpret that the “mutual aid account was accumulated in the mutual aid fund account” under Article 2(1) of the former Act on the Structural Improvement of Agricultural Cooperatives (amended by Act No. 14481, Mar. 11, 2014) includes the pertinent property and the obligation to manage the accounts as of March 2, 2012.

If the transfer of “a mutual aid sector account” without examining whether the accounts are lawful, then the National Agricultural Cooperative Federation’s arbitrary accounting performance may lead to changes in “a deposit in a mutual aid sector account.” As such, the Korea Deposit Insurance Corporation, which is transferred, is subject to the situation where the payment of insurance proceeds is to be made without securing sufficient reserves. This goes against the purport of the former Agricultural Cooperatives Act and the former Act on the Structural Improvement of Agricultural Cooperatives, which provides for the change of the entity to whom the depositor protection affairs belong from the National Agricultural Cooperative Federation to the Korea Deposit Insurance Corporation for the smooth implementation of depositor protection functions.

[2] The case holding that, in a case where the National Agricultural Cooperative Federation transferred to the Korea Deposit Insurance Corporation only the amount remaining after deducting a certain amount from the reserves in the sector of mutual aid projects in accordance with the retroactive application of the bad amount of accounts for the cooperative economic activities, as a follow-up measure following the amendment of the Act on the Structural Improvement of Agricultural Cooperatives and Agricultural Cooperatives, the reserves in the sector of mutual aid projects accumulated and managed by the National Agricultural Cooperative Federation were transferred to the Korea Deposit Insurance Corporation, and the National Agricultural Cooperative Federation transferred the amount of the bad amount of accounts for the cooperative economic activities to the Korea Deposit Insurance Corporation by the resolution of the Fund Management Committee, the Korea Deposit Insurance Corporation's claim against the National Agricultural Cooperative Federation for the performance of the obligations to transfer the reserves specifically determined in accordance with the "Standards for Transfer of Reserves in the sector of mutual aid projects" as prescribed by the Ordinance of the Ministry of Agriculture, Food and Rural Affairs is not affected by the public law elements included in the reserves itself and the occurrence of the obligations to transfer the accounts to the sector of mutual aid projects, and thus the resolution of the Fund Management Committee should be included in the reserves in the sector of mutual aid projects.

[1] Article 2(1) of the former Act on the Structural Improvement of Agricultural Cooperatives (Amended by Act No. 14481, Dec. 27, 2016) (Amended by Act No. 1481, Mar. 11, 2014) / [2] Article 134-5 (see current Article 161-12) of the former Agricultural Cooperatives Act (Amended by Act No. 10684, May 19, 201); Article 15(5) of the Addenda (Amended by Act No. 10522, Mar. 31, 201); Article 11 of the former Act on the Structural Improvement of Agricultural Cooperatives (Amended by Act No. 10522, Mar. 31, 201); Article 2(1) of the former Act on the Structural Improvement of Agricultural Cooperatives (Amended by Act No. 1481, Dec. 27, 2016) (Amended by Act No. 12514, Mar. 11, 2014>

[1] Supreme Court Decision 2008Da49363 decided July 15, 2010 (Gong2010Ha, 1561)

Korea Deposit Insurance Corporation (LLC, Attorneys Shin Young-chul et al., Counsel for the plaintiff-appellant)

National Agricultural Cooperative Federation (Law Firm Han-soo et al., Counsel for the defendant-appellant)

Seoul High Court Decision 2015Na2071724 decided October 11, 2016

All appeals are dismissed. The costs of appeal by the Plaintiff are assessed against the Plaintiff, and the costs of appeal by the Defendant are assessed against the Defendant.

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

1. Case summary

According to the reasoning of the lower judgment and the record, the following circumstances are revealed.

A. Transfer discussion on the defendant's account reserve funds in the mutual aid sector

Before the enforcement of the former Agricultural Cooperatives Act (amended by Act No. 10522, Mar. 31, 2011; hereinafter “former Agricultural Cooperatives Act”), unit cooperatives and the Defendant engaged in mutual-aid projects similar to insurance business without being subject to the Insurance Business Act. The Defendant established and operated mutual-aid depositors protection funds pursuant to Article 11 of the former Act on the Structural Improvement of Agricultural Cooperatives (amended by Act No. 10522, Mar. 31, 201) in order to cope with the situation in which the unit cooperatives or the Defendant is unable to pay claims, such as deposits, due to bankruptcy, etc., and the said funds were separated from the credit business account and the mutual-aid business sector account.

However, on December 16, 2009, the legislative bill on the amended Agricultural Cooperatives Act was submitted to the National Assembly, and was discussed as the main contents such as the conversion of the mutual aid project operated by the defendant to the insurance business, and the disposal of the reserve fund for the mutual aid project when the Agricultural Cooperatives was newly established. On April 20, 2010, the National Assembly conducted a detailed examination on the legislative bill that transfers the defendant's mutual aid sector account deposit funds to the plaintiff's deposit insurance fund, such as the plaintiff's assertion of objection and the problem.

(b) Resolution and transfer of reserves by the Defendant Fund Management Committee;

On December 21, 2010, the Defendant passed a resolution on “the allocation plan for each account for the accounts of the insolvent amount of the cooperative’s economic business” at the 9th Fund Management Committee (hereinafter “the instant resolution”). The main contents are as follows: (a) applying mutatis mutandis Article 64 of the Mutual Finance Depositor Protection Fund Regulation, “the allocation standards for each account for the accounts of the management institution’s operating expenses”; (b) 30% of the insolvent amount of the economic business shall be shared equally by the credit business account and the mutual aid business sector account; (c) the remainder of 70% shall be shared by the proportion of the credit premiums and the mutual aid premium imported in the previous year; and (d) the amount of 578,439,000,000 won which has already occurred from the date of the instant resolution after 202 to the date of the instant resolution; (d) applying such retroactive allocation standards to the credit business account from the mutual aid sector to the credit business account. From 2002, the entire amount of the economic business was in violation of equity.

The Defendant transferred the share of KRW 134,346,00,000 (hereinafter “transfer amount”) retroactively applied according to the instant resolution from the mutual aid sector account to the credit business account (hereinafter “transfer of the instant accounts”), and the financial statements account as “electric error adjustment loss”.

(c) amendment to the Agricultural Cooperatives Act and the Agricultural Cooperatives Act;

The amended Agricultural Cooperatives Act separated the agricultural cooperative's mutual aid business from agricultural life insurance and agricultural cooperative damage insurance (hereinafter referred to as "agricultural cooperative insurance") and applied the Insurance Business Act to agricultural cooperative insurance (Article 134-5). The amended Agricultural Cooperatives Act also included the mutual aid contract concluded between the defendant and unit cooperative prior to the enforcement of the amended Agricultural Cooperatives Act as an insurance contract under the Insurance Business Act (Article 15 (5) of the Addenda).

The amended Agricultural Cooperatives Act did not explicitly provide for the reversion, transfer, etc. of the Defendant’s account in the mutual aid sector. However, Article 2(1) of the former Act on the Structural Improvement of Agricultural Cooperatives (amended by Act No. 12413, Mar. 11, 2014; hereinafter “amended Act”) provides that the reserves of the account in the mutual aid sector accumulated and managed by the Defendant by the day before March 2, 2012, the enforcement date of the amended Agricultural Cooperatives Act, shall be transferred to the Plaintiff’s deposit insurance fund by September 10, 2014, which is within six months from March 11, 2014, the enforcement date of the amended Agricultural Cooperatives Act, shall be subject to the standards and methods determined by the Minister of Agriculture, Food and Rural Affairs after consultation with the Chairperson of the Financial Services Commission.

D. Transfer of reserves from the defendant's account of mutual aid sector;

In accordance with delegation under Article 2 (2) of the Addenda of the instant case, the Minister of Agriculture, Food and Rural Affairs, on September 3, 2014, determined the “Standards for Transfer of Reserve Funds to Mutual Finance Depositor Protection Fund Account (hereinafter “Standards for Transfer”) and notified the Plaintiff and the Defendant.

On September 5, 2014, the Defendant transferred KRW 161,764,490,757 (hereinafter “the instant reserve”) out of the reserve funds in the mutual aid sector which were held by the Defendant as of the time of the transfer of this case, ① operating expenses of the mutual aid sector account in the year 2012, 2013, and 2014, ② operating expenses of the mutual aid sector account in the mutual aid sector account in the year 2012, 2013, and 2014 (hereinafter “instant operating expenses”); ③ subsidies of the unit association subject to additional settlement (hereinafter “the instant additional support amount”).

2. Judgment on the Defendant’s grounds of appeal

A. Whether it violates jurisdiction

In previous cases, while the Defendant engaged in the business of protecting depositors against Nonghyup Mutual Aid or Nonghyup Insurance, the Plaintiff had the Plaintiff perform the business of protecting depositors against Nonghyup Insurance. The amended Agricultural Cooperatives Act and the amended Agricultural Cooperatives Structural Improvement Act intended to ensure the stability of the mutual aid system or the insurance system by paying the mutual aid money or insurance money to depositors when the failure of the Defendant or the unit cooperative occurred. While the State was originally able to perform its business directly, the State entrusted the Defendant or the Plaintiff to perform its business. Until now, transferring the deposit of the account in the mutual aid sector accumulated and managed by the Defendant to the Plaintiff on September 5, 2014 constitutes a follow-up measure following the amendment of the Agricultural Cooperatives Act and the Agricultural Cooperatives Structural Improvement Act with the content that the principal agent of the business of protecting depositors shall transfer the deposit to the Plaintiff from the Defendant to the Plaintiff, which constitutes a change in the legal relationship in accordance with the decision of the legislators provided for in Article 2(1) of the Addenda of the instant case. Accordingly, it can be seen

However, the instant lawsuit is not a dispute as to the existence of the obligation to transfer the reserves under Article 2(1) of the Addenda of the instant case, but rather, seeking the performance of the obligation to transfer the reserves specifically determined in accordance with the “instant transfer criteria.” As such, the instant lawsuit is not affected by the reserve itself of the account in the mutual aid sector and by the elements of public law included in the occurrence of the obligation to transfer,

On the premise that the instant lawsuit falls under the subject of civil litigation, the lower court deliberated and judged on the amount of the obligation to transfer the reserves specifically determined pursuant to the “Criteria for Transfer of this case”. In so determining, the lower court did not err by misapprehending the legal doctrine on jurisdiction, etc., as otherwise alleged in the

B. Whether the resolution of this case and the transfer of accounting are unlawful

The purport of Article 2(1) of the Addenda of this case is to transfer to the Plaintiff’s deposit insurance fund the property belonging to the mutual aid fund sector account and the rights and obligations of the mutual aid fund on the premise that the accounts for the property belonging to the mutual aid fund sector account are legally processed on the enforcement date of the amended Agricultural Cooperatives Act. Therefore, the term “the property accumulated in the mutual aid sector account” under Article 2(1) of the Addenda of this case refers to the property and rights and obligations treated as belonging to the pertinent account as of March 2, 2012, in principle, on the basis of the preceding day of March 2, 2012, and it is reasonable to interpret that if the accounting is illegal because it violates relevant Acts and subordinate statutes, it refers to the property and rights and obligations which should be treated as belonging to the mutual aid sector account (see, e.g., Supreme Court Decision 5738, Feb. 1, 199; 200, Mar. 28, 201).

If the transfer of “the amount accumulated in the mutual aid sector account” according to the actual accounting process without examining the legitimacy of the accounting process, the Defendant’s arbitrary accounting process may result in a change in “the amount accumulated in the mutual aid sector account” and the Plaintiff transferred as it is may be subject to the situation where the Plaintiff is obliged to pay the insurance money without securing sufficient reserves. This goes against the purport of the amended Agricultural Cooperatives Act and the amended Agricultural Cooperatives Act, providing that the subject of ownership of the depositor protection business should be changed from the Defendant to the Plaintiff for smooth implementation of the depositor protection function.

The lower court determined as follows. The instant resolution is unlawful as it retroactively changed the accounting that was continuously conducted for several years according to the resolution of the former Defendant Fund Management Committee without reasonable grounds when the transfer of the account of the mutual aid sector is anticipated. The transfer of the instant accounting carried out according to such a resolution is also illegal and invalid. If a legitimate accounting was carried out, the transfer amount is deemed to belong to the account of the mutual aid sector, and is deemed to belong to the account of the mutual aid sector, and should be included

Examining the reasoning of the lower judgment in light of the aforementioned legal doctrine and the record, the lower judgment did not err by misapprehending the legal doctrine regarding interpretation and illegality of accounting under Article 2 of the Addenda of the instant case, or by failing to exhaust all necessary deliberations, thereby exceeding the bounds of the principle of free evaluation of evidence in violation

C. Whether the validity of the amount of the reserve is recognized for the Plaintiff’s failure to raise an objection while receiving the reserve of this case

On September 5, 2014, the lower court determined that it was difficult to view the Plaintiff’s certificate of receipt prepared by the Defendant to mean “the fact that the Plaintiff received the corresponding amount,” and that it was “a reasonable amount,” and that it was also deemed to mean “a reasonable amount.” For that reason, even if the Plaintiff did not separately indicate that the Plaintiff received the instant reserve funds from the Defendant and prepared a certificate of receipt and did not express his/her intent to reserved the objection, the lower court clearly delivered his/her opinion that the Defendant was unable to consent to the calculation of the amount of the instant reserve on two occasions prior to the receipt of the instant reserve on July 16, 2014 and September 3, 2014.

Examining the reasoning of the lower judgment in light of the relevant legal principles and records, the lower judgment did not err by misapprehending the legal doctrine regarding the interpretation of expression of intent, or by exceeding the bounds of the principle of free evaluation of evidence.

D. The time when the transfer amount of the instant case occurred due to the delay of performance

The lower court determined that the Defendant is liable for delay of performance since Article 2(1) of the Addenda provides that the account in the mutual aid sector shall be transferred to the deposit insurance fund within six months from the enforcement date of the amended Agricultural Cooperatives Structural Improvement Act. In light of relevant provisions and records, the lower court did not err by misapprehending the legal doctrine on delay of performance, etc., as otherwise alleged in the grounds of appeal.

E. Other grounds of appeal

The Defendant asserts that if the resolution of this case is unlawful, the amount of transfer should have been claimed based on tort liability. However, apart from whether tort liability is established, the lawsuit of this case differs from the claim for the performance of the obligation to transfer the reserve funds specifically incurred in accordance with Article 2 of the Addenda of this case and the transfer criteria of this case, and thus, the above assertion is without merit.

Although the Defendant asserts that Article 2 of the Addenda of this case does not grant the Plaintiff the right to claim the transfer of the reserve fund, it cannot be accepted as a non-founded assertion.

3. Judgment on the Plaintiff’s grounds of appeal

A. Whether Articles 6 and 7 of the criteria for the transfer of this case exceeded the bounds of delegated legislation

Pursuant to delegation under Article 2(2) of the Addenda of the instant case, the transfer criteria of this case may be deducted from the reserve funds subject to transfer for expenses related to the operation of the defendant's mutual aid reserve from March 2, 2012 to the base date for transfer (Article 6). If it is necessary to additionally support the mutual aid reserve funds for the cooperative pursuant to the amended Agricultural Cooperatives Structural Improvement Act, the amount may be reserved from the transfer subject to transfer (Article 7(1)). If all losses of claims subject to additional settlement are finalized and there is a balance after settlement, the transfer should be made to the plaintiff and the documents and details related to financial support should be provided (Article 7(2))

The lower court determined that Articles 6 and 7 of the transfer criteria of this case embodyed the “evaluation of assets and liabilities for transfer, and other standards and methods for the confirmation of rights and obligations” delegated under Article 2(2) of the Addenda of this case, and that they cannot be deemed to have exceeded the bounds of delegated legislation.

Examining the reasoning of the lower judgment in light of the relevant legal principles and records, the lower court did not err by misapprehending the legal doctrine on the limitation of delegated legislation.

B. Whether the operating expenses of the instant case and the deduction of the amount of additional support are legitimate

For the following reasons, the lower court determined that the Defendant’s deduction of the instant operating expenses from the mutual aid sector account reserve was justifiable. Although the Defendant’s account was closed on March 2, 2012, the Defendant spent considerable expenses for the management of the mutual aid sector account by the time of actual transfer even after the date of closure in light of the Defendant’s organization in charge of each account and the personnel operation status, etc.

In addition, the lower court determined that the Defendant’s deduction of the instant additional subsidy from the mutual aid sector account reserve was justifiable. For that reason, it is difficult to view that the issue of whether to provide a unit cooperative’s economic insolvency in the mutual aid sector account is determined by the resolution of the Defendant Fund Management Committee, depending on when the accident of the unit association occurred, and it is difficult to view that the Defendant’s calculation of subsidies to be additionally settled is illegal accounting contrary to the current accounting

Examining the reasoning of the lower judgment in light of the relevant legal principles and records, the lower judgment did not err by misapprehending the legal doctrine regarding the interpretation of the transfer standard of this case or by failing to exhaust all necessary deliberations, thereby exceeding the bounds of the principle of free evaluation of evidence.

4. Conclusion

The appeal by the Plaintiff and the Defendant is dismissed in entirety as it is without merit. The costs of appeal by the Plaintiff are assessed against the Plaintiff, and the costs of appeal by the Defendant are assessed against the Defendant. It is so decided as per Disposition by the assent of all participating Justices.

Justices Lee Dong-won (Presiding Justice)