In cases where a purchaser of a real estate in an auction procedure loses ownership due to such reasons as the right to the subject matter of sale belongs to another person or the security right established on the subject matter of sale is exercised after having acquired the ownership after having acquired the ownership in the proceeds of sale, whether it constitutes a ground for revocation of the auction procedure as provided in Articles 268 and 96(1) of the Civil Execution Act

Article 96(1) applicable mutatis mutandis to the auction procedure to exercise a security right under Article 268 of the Civil Execution Act provides, “When the circumstances under which a right cannot be transferred have become clear due to the loss of real estate or the sale, etc., the court shall revoke the procedure for compulsory auction.” However, the grounds for revocation of the auction procedure under the above provision shall have occurred prior to the payment of the sale price.”

If a purchaser acquired the ownership of the real estate at the auction procedure after obtaining the decision to permit the sale of the real estate, the transfer of the ownership is not impossible due to the sale of the real estate, etc., even if the right to the subsequent sale belongs to another person or the ownership is lost due to the exercise of a security right established in the real estate which was the object of the sale. Therefore, such a reason does not constitute the reason for revocation of the auction procedure as prescribed in Articles 268 and 96(1

In such a case, the buyer may apply or analogically apply the provisions of the Civil Act concerning the seller's warranty liability to the seller, and such warranty liability is a principle that the buyer makes the buyer a separate suit against the debtor or the creditor outside the auction procedure. However, if dividends are not yet made, the buyer has made the payment out of the auction procedure, and it is harsh that the buyer makes the buyer a separate suit to pay the warranty liability outside the auction procedure. Therefore, the buyer may pay the warranty liability by applying Article 96 of the Civil Execution Act by analogy to the executing court and claiming the return of the paid proceeds.

Articles 96(1) and 268 of the Civil Execution Act, Articles 569, 570, 576, and 578 of the Civil Act

[Plaintiff-Appellant] 11 November 1997 (Gong1997Ha, 3747)

Special Appellants

Suwon District Court Order 2016Ma168 dated November 18, 2016

The special appeal is dismissed.

The grounds for special appeal are examined.

1. The record reveals the following facts.

A. Non-applicant 1: (a) filed a registration of ownership preservation on forest land of 12,91 square meters (hereinafter “instant land”) in Pyeongtaek-si ( Address omitted); (b) completed the registration of ownership transfer on November 29, 1946 in the future.

B. After the death of Nonparty 1, his heir filed a lawsuit against Suwon District Court for the performance of the registration of cancellation of the registration of the ownership transfer of the instant clan. On January 18, 2012, Nonparty 2, the representative of the instant clan, who filed a lawsuit, recognized all of the heir’s claims, and completed a protocol of recognition of such content. On June 19, 2012, Nonparty 1’s heir, who was based on the above recognition protocol, filed an application for the said recognition protocol, completed the registration of ownership transfer as to the portion of the instant land to Nonparty 3, who was the heir, and Nonparty 1, who was the heir, on June 19, 2012. On July 12, 2012, Nonparty 1 completed the registration of ownership transfer as to the share of the instant land owned by Nonparty 3, the applicant and Nonparty 5 completed the registration of ownership transfer as to the share of the instant land as KRW 163.56/2142 (hereinafter “instant share”).

C. On June 5, 2013, when the non-applicant 5 applied for an auction to exercise a security right based on the above collateral security, the Suwon District Court Sejong District Court rendered a decision to permit the sale to a special appellant on June 9, 2014, following the auction procedure (hereinafter “instant auction procedure”) with respect to the instant shares as to June 5, 2013. The special appellant paid the proceeds of the sale on September 26, 2014.

D. Meanwhile, the instant clan filed a lawsuit for quasi-deliberation (hereinafter “the lawsuit for quasi-deliberation”) against the non-applicant 1’s inheritors on the ground that “the representative of the instant clan was admitted to Nonparty 1’s claims without any special authorization.” ① The first instance court rendered a judgment ordering cancellation of the protocol of recognition and recognition on March 28, 2013, but the said protocol of recognition and recognition was handed down (the Suwon District Court Decision 2012 Gau13), ② the appellate court rendered a judgment dismissing the first instance judgment and the lawsuit for quasi-adjudication on January 16, 2014 on the ground that the lawsuit for quasi-adjudication was filed after the period of quasi-adjudication was expired (the Seoul High Court Decision 2013Na27932), ③ the appellate court rendered a judgment dismissing the first instance judgment on the ground that the lawsuit for quasi-deliberation was filed after the period of time (the first instance court’s judgment was remanded to the Seoul High Court 2012Da320416, Oct. 13, 2016).

E. Upon designating the date of distribution on October 14, 2016 by the Suwon District Court member, the special appellant filed an objection to the enforcement of the instant auction procedure, asserting that the instant auction procedure should be revoked, on November 11, 2016, on the ground that the judgment of reversal was rendered in a lawsuit for quasi-adjudication of this case, and that there was a cause falling under “when the circumstances making it clearly impossible to transfer the ownership of real estate” as stipulated in Article 96(1) of the Civil Execution Act.

F. On November 18, 2016, the said court concluded the distribution by granting the distribution on the date of distribution, and dismissed the objection on the same day.

2. Article 96(1) applicable mutatis mutandis to the auction procedure for exercising a security right under Article 268 of the Civil Execution Act provides that “When the circumstances under which a right cannot be transferred have become clear due to the loss of real estate or the sale of real estate, etc., the court shall revoke the procedure for compulsory auction.” However, the grounds for revocation of the auction procedure under the above provision should have occurred prior to the payment of the proceeds for the sale

If a purchaser has received the decision to permit the sale of real estate in the auction procedure and acquired the ownership thereof, even if the right to the subject matter of the subsequent sale belongs to another person or the ownership is lost due to the exercise of a security right established in the real estate which was the subject matter of the sale, etc., the transfer of ownership is not impossible due to the sale of real estate. Therefore, such a reason does not constitute a cause for revocation of the auction procedure as prescribed in Articles 268 and 96(1)

In such a case, the buyer may apply or analogically apply the provisions of the Civil Act concerning the seller's warranty liability to the seller, and such warranty liability is a principle that the buyer makes the buyer a separate suit against the debtor or the creditor outside the auction procedure. However, if dividends are not yet made, the buyer has made the payment out of the auction procedure, and it is harsh that the buyer should pay the provisional suit outside the auction procedure. Thus, the buyer may pay the warranty liability by applying Article 96 of the Civil Execution Act to the executing court by cancelling the sales contract by auction and claiming the return of the paid proceeds (see Supreme Court Order 96Da64 delivered on November 11, 1997).

3. As seen earlier, the special appellant received the decision to permit the sale of the instant shares at the instant auction procedure, and acquired ownership. After which the lawsuit for the quasi-deliberation of the instant shares was instituted, and the judgment of winning the instant clan became final and conclusive, even if the ownership acquired by the special appellant was lost, it is not impossible to transfer the instant shares in the auction procedure. Thus, the grounds for revoking the auction procedure prescribed in Articles 268 and 96(1) of the Civil Execution Act cannot be deemed to have occurred (in addition, even if the judgment of winning the instant clan was rendered in the final appeal, it is not final and conclusive, since the judgment of winning the instant clan was not final and conclusive.)

If the judgment in favor of the clan of this case was rendered and the judgment becomes final and conclusive, and the special appellant loses ownership of the share of this case, it constitutes a case where the right which became the object of the sale belongs to another person and thus becomes unusable for the buyer by acquiring such right. In such a case, the special appellant is only entitled to claim the refund of all or part of the purchase price against the debtor who is the seller, in accordance with Articles 578 and 570 of the Civil Act, if the seller cancels the sale contract by auction and the seller is liable for damages or the debtor is unable to do so.

4. The grounds for special appeal are without merit and thus dismissed. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Park Poe-young (Presiding Justice)