[1] The scope of application of the main sentence of Article 16 of the Private International Act which provides for the governing law of the corporation / Where a member of the corporation bears the liability to the creditor of the corporation, the applicable law of the corporation’s establishment shall be applied to the extent of where the scope

[2] Whether a creditor of an agricultural partnership under the former Act on Fostering and Supporting Agricultural and Fisheries Enterprises may claim for the performance of an obligation against each partner at the time of the occurrence of the obligation (affirmative in principle)

[3] In a case where Gap farming association formed a contract with Eul for the vicarious execution of sale and public relations for the purpose of sale in lots and invitation of members of Eul, while promoting the development project of Gap's villa, the case holding that Byung et al. is jointly and severally liable to pay Eul a contract amount under the law of the Republic of Korea, which is the applicable law to the establishment of Gap corporation, in case where Eul corporation sought payment of the contract amount under the contract against Byung et al

[1] The main sentence of Article 16 of the Private International Act provides that “a juristic person or an organization shall be governed by the applicable law of its establishment.” In principle, the applicable law of the juristic person shall be determined on the basis of the applicable law of its establishment. There is no provision restricting the applicable provisions. The applicable scope shall be deemed to include all the issues concerning the juristic person, including the establishment and extinguishment of the juristic person, internal relations with the organization, rights and obligations of the organization and members, and legal capacity. Therefore, if a member of the juristic person bears liability to a creditor of the juristic person, the scope

[2] Article 16(3) of the former Act on Fostering and Supporting Agricultural and Fisheries Enterprises (amended by Act No. 12961, Jan. 6, 2015; hereinafter “former Act on Agricultural and Fisheries Enterprises”) considers the substance of an agricultural partnership as a partnership under the Civil Act and grants special legal personality to an incorporated association that meets certain requirements to promote the improvement of agricultural productivity through collaborative agricultural management (Article 16(3)). Except as otherwise provided in the former Act on Agricultural and Fisheries Enterprises, the provisions concerning partnerships under the Civil Act shall apply mutatis mutandis to agricultural partnership unless otherwise stipulated in relevant Acts and subordinate statutes, such as the former Act on Agricultural and Fisheries Enterprises (Article 16(7)).

In cases where a creditor of an agricultural partnership exercises his/her rights against a member, it does not specifically provide for the former Agricultural and Fisheries Business Act, etc. Therefore, a creditor of an agricultural partnership, in principle, may demand the performance of the relevant obligation to each member at the time when the claim is created, in accordance with Article 712 of the Civil Act, in proportion to his/her equity ratio or equal shares, pursuant to Article 712 of the Civil Act on the exercise of creditor's rights against the member. Provided, That if an obligation is borne by an act that is conducted as a commercial activity for all members, the joint and several liability of

[3] In a case where Gap farming association formed a contract with Eul for sale and public relations activities for the purpose of sale in lots and invitation of members of Gap corporation while promoting a development project of a villa, the case holding that Gap corporation is jointly and severally liable to pay the agreed amount under Article 57 (1) of the Commercial Act, since Eul corporation was established under the former Act on Fostering and Supporting Agricultural and Fisheries Enterprises of the Republic of Korea (amended by Act No. 12961, Jan. 6, 2015; hereinafter "former Agricultural and Fisheries Enterprises Act"), since Eul corporation was established under the former Act on Fostering and Supporting Agricultural and Fisheries Enterprises of the Republic of Korea (amended by Act No. 12961, Jan. 6, 2015; hereinafter "former Agricultural and Fisheries Enterprises Act"), Gap corporation's member Byung et al., a partner of Eul corporation under the former Agricultural and Fisheries Enterprises Act, is the applicable law of the Republic of Korea as to whether Gap corporation is jointly and severally liable to pay Eul corporation's debt owed by the corporation under Article 712 of the Civil Act

[1] Article 16 of the Private International Act / [2] Article 16 of the former Act on Fostering and Supporting Agricultural and Fisheries Enterprises (Amended by Act No. 12961, Jan. 6, 2015); Article 16(1), (3), and (7) (see current Article 16(8)); Article 712 of the Civil Act; Article 57(1) of the Commercial Act / [3] Article 16 of the Private International Act; Article 16(1), (3), and (7) of the former Act on Fostering and Supporting Agricultural and Fisheries Enterprises (Amended by Act No. 12961, Jan. 6, 2015); Article 3 of the Addenda to the Act on Fostering and Supporting Agricultural and Fisheries Enterprises (Amended by Act No. 12961, Jan. 6, 2015); Article 712 of the Civil Act; Article 57(1) of the Commercial Act

[2] Supreme Court Decision 97Da6919 Decided March 13, 1998 (Gong1998Sang, 1006) Supreme Court Decision 2016Da39897 Decided April 12, 2018 (Gong2018Sang, 872)

1. The term “the term “the term “the term” means “the term “the term” means “the term “the term” means “the term “the term” means “the term “the term” means “the term “the term “the term” means “the term “the term”

Defendant 1 and three others (Attorney Choi Han-soo et al., Counsel for the plaintiff-appellant)

Seoul High Court Decision 2016Na2024152 decided June 29, 2017

The judgment below is reversed and the case is remanded to Seoul High Court.

The grounds of appeal are examined.

1. A. The Plaintiff is a legal entity incorporated under the laws of California of the United States, and the Defendants are members of the “agricultural partnership wind (hereinafter “instant legal entity”) established under the former Act on Fostering and Supporting Agricultural and Fisheries Enterprises (amended by Act No. 12961, Jan. 6, 2015; hereinafter “former Agricultural and Fisheries Business Entities Act”) that is a legal entity of the Republic of Korea. The Plaintiff is the holder of the contractual deposit claims against the instant legal entity and is jointly and severally liable to the Defendants. Since the instant legal entity has foreign elements, the applicable law should be determined under the Private International Act.

The main text of Article 16 of the Private International Act provides that “a juristic person or an organization shall be governed by the applicable law of its establishment.” In principle, the applicable law of the juristic person shall be determined on the basis of the applicable law of its establishment. There is no provision that restricts the application of this provision. The applicable scope shall include all the issues concerning the juristic person, such as the establishment and extinguishment of the juristic person, internal relations with the organization, rights and obligations of the organization and members, and legal capacity. Therefore, if a member of the juristic person bears liability to a creditor of the juristic person,

Since the corporation of this case was established under the former Agricultural and Fisheries Business Act of the Republic of Korea, the law of the Republic of Korea, which is the governing law of the establishment of the corporation of this case, shall be the governing law of this case where the defendants, a member of the corporation of this case, are jointly and severally liable for

B. The former Agricultural and Fisheries Business Act considers the substance of an agricultural partnership as a partnership under the Civil Act and gives special legal personality to an association meeting certain requirements in order to improve agricultural productivity through collaborative agricultural management (Article 16(3)). Except as otherwise provided in relevant Acts and subordinate statutes, such as the former Agricultural and Fisheries Business Act, the provisions concerning partnerships under the Civil Act shall apply mutatis mutandis to an agricultural partnership unless otherwise stipulated in the former Agricultural and Fisheries Business Act (Article 16(7)).

A creditor of an agricultural partnership does not specifically provide for the former Agricultural and Fisheries Business Act, etc. In principle, a creditor of an agricultural partnership may, in accordance with Article 712 of the Civil Act regarding the exercise of a creditor’s right against a partner, claim the performance of the pertinent obligation against each partner at the time when the claim is created, in proportion to the equity ratio or equal shares (see Supreme Court Decision 2016Da39897, Apr. 12, 2018). However, if a partnership’s obligation is borne by all partners as a commercial act for all members, a joint and several liability should be recognized by applying Article 57(1) of the Commercial Act (see, e.g., Supreme Court Decision 97Da6919, Mar. 13, 198). This legal doctrine also applies where a creditor of an agricultural partnership exercises his/her right.

2. A. The reasoning of the lower judgment and the evidence duly admitted reveal the following.

(1) On December 1, 2011, the instant corporation concluded a contract on vicarious execution of sales and public relations affairs with the Plaintiff for sale and invitation of members for the purpose of sale in lots and invitation of members of the instant transport (hereinafter “the instant primary contract”) with the Plaintiff on December 1, 201, by promoting the development project of the instant villa ○○○○○○○○○○○○○○○○○ (hereinafter “instant instant transport”).

(2) After the conclusion of the instant first contract, the representative director of the instant corporation was dismissed as embezzlement of business funds, and the Nonparty was appointed as a new representative director. The Plaintiff expressed his/her intent to terminate the instant first contract and suspended his/her business on the grounds that the Plaintiff cannot trust the instant corporation.

(3) The instant corporation, seeking to continue the development project, paid US$ 45,000 to the Plaintiff out of the expenses already paid by the Plaintiff pursuant to the instant first contract, and entered into an agency contract for sale and public relations for the purpose of selling the instant transport and inviting members again with the Plaintiff on September 10, 2012 (hereinafter “instant second contract”).

(4) According to the instant secondary contract, the instant corporation paid USD 32,159, out of USD 92,159 paid by the Plaintiff, by the end of December 2, 2012, and USD 60,000 on the completion of the development project, on the condition that even if the development project is revoked or delayed, all of the aforementioned money was paid until March 31, 2013.

B. The lower court, on the following grounds, determined that the Defendants, a partner, were not jointly and severally liable with the instant corporation to repay the agreed amount.

(1) The Plaintiff’s claim against the Defendants is not a claim based on a contract between the Plaintiff and the Defendants, but a statutory claim, which is stipulated in the Private International Act, and may apply mutatis mutandis to the management of affairs, unjust enrichment, and tort claims.

(2) The provisions of the Private International Act on claims due to administrative management provide that the law of the place of action shall be applied. The claims asserted by the Plaintiff are based on the instant secondary contract concluded between the Plaintiff and the instant corporation in California, and its governing law is California law.

(3) The Plaintiff and the Defendant did not submit data on California law, which is the governing law, and thus, cannot be confirmed. Thus, they are determined by applying cooking, etc.

(4) The Defendants, a partner of the instant case, should jointly and severally perform the obligations under the instant secondary contract with the instant corporation, barring special circumstances in light of cooking, etc., as a general legal principle, separate the responsibilities of a corporation and its constituent members.

C. However, examining the above facts in light of the legal principles as seen earlier, the following conclusions can be derived.

In the instant case where Article 17(3) of the amended Act on Fostering and Supporting Agricultural and Fisheries Enterprises (amended on January 6, 2015) does not apply to the Plaintiff, pursuant to the instant secondary contract, the instant corporation is obligated to pay USD 92,159 and delay damages therefor to the Plaintiff. In accordance with Article 3 of the Addenda to the Act on Fostering and Supporting Agricultural and Fisheries Enterprises, which was amended on or before July 7, 2015, the date of enforcement thereof, the Defendants, who are members of the instant corporation, are liable to pay the obligations owed by the said corporation to the Defendants, who are members of the instant corporation, are generally liable to pay the obligations owed by the said corporation in accordance with Article 712 of the Civil Act. However, the instant corporation bears the obligation to pay the agreed amount to the Plaintiff jointly and severally pursuant to Article 57(1) of the Commercial Act.

D. Therefore, the lower court erred by misapprehending the legal doctrine on the governing law, thereby adversely affecting the conclusion of the judgment. The Plaintiff’s ground of appeal assigning this error is with merit.

3. The Plaintiff’s appeal is with merit, and without further proceeding to decide on the remaining grounds of appeal, 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

Justices Min You-sook (Presiding Justice)