[1] The meaning of and standard for determining "related to the performance of affairs", which is an element for establishing employer liability

[2] In a case where the victim knew or did not know by gross negligence that an employee's act does not constitute an employer's act of performing business affairs, whether the employer's liability is recognized (negative)

[3] The case holding that in a case where a securities company is liable for employer's liability against a securities company on the ground that the victim suffered loss equivalent to the amount of investment money remitted to employees of the securities company, the case holding that it does not immediately constitute "the victim himself or herself was aware of the fact that the victim's act does not constitute the employer's act of performing his duties or was not aware of it due to gross negligence, on the ground that the securities company did not use the securities transaction account of

[1] Article 756 of the Civil Act / [2] Article 756 of the Civil Act / [3] Article 756 of the Civil Act

[1] Supreme Court Decision 98Da39930 delivered on January 26, 199 (Gong1999Sang, 355) Supreme Court Decision 2004Da53203 Delivered on September 14, 2006 / [2] Supreme Court Decision 94Da29850 Delivered on April 26, 1996 (Gong196Sang, 162), Supreme Court Decision 95Da17595 Delivered on December 10, 1996 (Gong197Sang, 293) / [3] Supreme Court Decision 97Da19687 Delivered on March 27, 1998 (Gong198Sang, 1169)

Plaintiff 1 and two others (Attorney Kim Byung-jin, Counsel for the plaintiff-appellant)

Plaintiff 4 and one other (Attorney Yoon Young-young, Counsel for the plaintiff-appellant)

Plaintiff 6 (Law Firm, Kim & Lee LLC, Attorneys Kang Han-soo et al., Counsel for the plaintiff-appellant)

Defendant (Attorney Lee Im-soo et al., Counsel for the defendant-appellant)

Seoul High Court Decision 2005Na85582 decided August 16, 2007

All appeals by Plaintiffs 6, Defendant’s respective appeals and supplementary appeals by Plaintiffs 1, 2, and 3 are dismissed. The costs of appeal and supplementary appeals shall be borne by each party.

The grounds of appeal and incidental grounds of appeal are examined.

1. Judgment on the defendant's appeal

A. As to the assertion of misapprehension of the legal principle as to employer liability

(1) The phrase "in relation to the performance of affairs," which is an element for an employer's liability under Article 756 of the Civil Act, means that if an employee's unlawful act objectively appears to be objectively related to the employee's business activity, performance of affairs, or performance of affairs, such act shall be deemed to have been performed without considering the offender's subjective circumstances. Whether it is objectively related to the employee's performance of affairs should be determined by considering the degree of the employee's inherent duty and tort and the degree of the employee's occurrence of damage and the degree of the employee's responsibility for failing to take preventive measures (see, e.g., Supreme Court Decisions 98Da39930, Jan. 26, 199; 2004Da53203, Sept. 14, 2006).

After finding the facts, the court below acknowledged the following facts: (a) the plaintiffs made an investment in the shares, bonds, or the shares of the non-party company in accordance with the non-party's investment recommendation; (b) the non-party and the defendant's employees are included in the defendant's business; (c) shares, bonds, or financial product investments are equal to or related to the plaintiffs' above investment items; (d) the transactions between the non-party and the plaintiffs are mainly made within the defendant's business hours in the office provided to the non-party; (e) the non-party's method of receiving investment funds from some securities companies was used as a law of some securities companies; (e) the defendant allowed the non-party to use the position at the time of investment consultation office; and (e) the non-party's employee was mistaken for the defendant's employee at the securities industry; and (e) the defendant was already employed as an investment adviser; and (e) the non-party's act of the non-party's employer or the non-party's act of operating the business at the defendant's branch constitutes an employer's unlawful act.

(2) Even in cases where an employee's tort appears to fall under the scope of the employer's execution of business affairs in appearance, the employer cannot be held liable if the victim himself knew, or was unaware of the fact that the employee's act does not fall under the employer's execution of business affairs by gross negligence (see, e.g., Supreme Court Decisions 94Da29850, Apr. 26, 1996; 95Da17595, Dec. 10, 196). However, as in the case of this case, the plaintiffs did not have opened a securities transaction account at the defendant's branch or used the securities transaction account already established without using the securities transaction account, the plaintiffs should invest and manage the money separately with the non-party's individual non-party, and they did not know, or did not know, that the plaintiffs' above act did not constitute the Defendant's execution of business affairs by gross negligence (see, e.g., Supreme Court Decision 97Da1987, Jul. 17, 1997).

The court below is just in holding that there is no evidence to support that the plaintiffs paid the investment money as a personal monetary transaction with the non-party, or that there is no evidence to support the fact that the plaintiffs did not have any legitimate transaction with the defendant at the time of the payment of the above money and that there is no need to protect the plaintiffs from the perspective of fairness. The court below did not err in the misapprehension of legal principles as to the requirements for exemption from the employer's liability.

(3) In addition, the court below rejected the defendant's defense of exemption from liability related to the appointment and supervision of the non-party, on the ground that there is no evidence to support that the non-party had fulfilled his duty of care in appointing and supervising the non-party as the defendant's investment counselor, and on the basis of the facts in its ruling, the defendant has already employed the non-party who had been punished twice as a violation of the Securities and Exchange Act as the defendant's investment adviser, and thereafter, the non-party was negligent in appointing and supervising the non-party as an investment adviser because he did not actively correct the non-party's transaction behavior even though he had become aware of the non-party's employment as an investment adviser at the defendant's branch office. In light of the records, the judgment of the court below is just, and there is no error of law such as misunderstanding of legal principles as to the appointment and supervision of the non-party as the exemption requirement

B. As to the misapprehension of legal principles as to the calculation of damages

Based on the facts found in its reasoning, the court below held that the damages suffered by the plaintiffs due to the non-party's illegal acts shall be the amount equivalent to the amount that the plaintiffs remitted to the non-party or had the non-party manage as investment funds. Such recognition and determination by the court below are just and there is no error of law such as misunderstanding of legal principles as to

In addition, the argument in the grounds of appeal on offsetting profits and losses that the plaintiffs received from the non-party should also be deducted from the amount of damages is asserted only after the defendant reaches the conclusion of the judgment of the court below and the final appeal. Thus, this cannot be a legitimate ground of appeal against the judgment below.

2. The defendant's appeal (the plaintiff's ground for misunderstanding legal principles as to comparative negligence) and the appeal by plaintiff 6, and the appeal by plaintiff 1, 2, and 3

In light of all the circumstances indicated in the records, the court below's finding of facts as to the degree of negligence of the parties involved in tort and determining the rate thereof are the exclusive jurisdiction of the fact-finding court unless it is deemed that it is considerably unreasonable in light of the principle of equity (see, e.g., Supreme Court Decisions 2000Da34426, Jan. 10, 2003; 2004Da53203, Sept. 14, 2006). In light of all the circumstances indicated in the records, it is not erroneous in the misapprehension of the legal principles as to comparative negligence. The court below's finding of the negligence of plaintiffs 1, 2, and 3 as 50%, 70%, 5, and 60% of the negligence of plaintiffs 4 as 70%, and 60% of the negligence of plaintiffs 5 and 6, respectively, are not recognized to be remarkably unreasonable in light

3. Conclusion

Therefore, all appeals by Plaintiffs 6, Defendant, and incidental appeals by Plaintiffs 1, 2, and 3 are dismissed, and the costs of appeal and incidental appeals are assessed against each losing party. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Ahn Dai-hee (Presiding Justice)