[1] Whether the garnishee in a creditor subrogation lawsuit may invoke the defense of extinctive prescription against the obligee by the obligor (negative in principle)

[2] In a case where a creditor files a creditor subrogation lawsuit against a debtor while a creditor files a lawsuit seeking the performance of a preserved claim against the debtor, and where the debtor has invoked the defense of the completion of the extinctive prescription in the said lawsuit, whether such a ground should be examined and determined whether the extinctive prescription of the preserved claim has expired in the creditor subrogation lawsuit

[1] Articles 162 and 404 of the Civil Code / [2] Articles 162 and 404 of the Civil Code, Article 52 of the Civil Procedure Act

[1] Supreme Court Decision 97Da5749 delivered on July 22, 1997 (Gong1997Ha, 2641) Supreme Court Decision 97Da31472 delivered on December 8, 1998 (Gong1999Sang, 93) Supreme Court Decision 2001Da10151 Delivered on February 12, 2004 (Gong2004Sang, 436) / [2] Supreme Court Decision 98Da40695 Delivered on May 26, 200

Plaintiff

Defendant (Law Firm Gyeong & Yang, Attorneys Kim Yong-ju et al., Counsel for the defendant-appellant)

Seoul High Court Decision 2005Na111436 decided August 30, 2007

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

We examine the grounds of appeal.

1. Regarding ground of appeal No. 1

According to the reasoning of the judgment below, the court below rejected the defendant's assertion that the debt of KRW 500 million based on the agreement of July 24, 1995 was extinguished by the non-party 1 realizing the right by selling the Seocho-dong real estate at KRW 1 billion, on the premise that the debt of KRW 500 million is about the amount not settled among the separate business funds received between the non-party 1 and the non-party 2, regardless of the successful bid price of the Seocho-dong real estate, and on the premise that the debt of KRW 500 million is about the amount not settled among the separate business funds received between the non-party 1 and the non-party 2, the debtor, regardless of the successful bid price of the Seocho-dong real estate, and in light of the records, the above judgment of the court below is just

2. Regarding ground of appeal No. 2

The court below rejected the defendant's assertion on the grounds that the defendant, who is the third obligor in the creditor subrogation lawsuit, cannot invoke the obligor's defense of extinctive prescription.

In a claim against a third party by exercising a creditor's subrogation right, the third party obligor cannot set up against the obligee any defense against the obligee, and in principle, the person entitled to invoke it when the extinctive prescription of the claim has been completed is only the person directly receiving the benefit of prescription, and the third party obligor in the creditor subrogation lawsuit cannot exercise it (see Supreme Court Decision 2001Da10151, Feb. 12, 2004, etc.). However, in a case where the obligee files a lawsuit against the third party obligor to demand performance based on the obligor's claim against the third party obligor to preserve the obligor, while the obligee files a lawsuit to demand performance based on the preserved claim against the obligor, the obligor has set up a defense to invoke the extinctive prescription in the lawsuit, and as a result, the obligee has no authority to subrogate the obligor if the extinctive prescription of the preserved claim is completed legally (see Supreme Court Decision 98Da40695, May 26, 200).

Upon examining the records in light of the above legal principles, the plaintiff filed a lawsuit by subrogation against the defendant, who is the debtor, the third debtor of the non-party 2, for the preservation of the claim for the amount of the transfer money against the non-party 2, and filed a separate lawsuit against the non-party 2, the debtor, and the non-party 2, the debtor, invoked the defense that the plaintiff's claim for the transfer money was extinguished by the lapse of the ten-year extinctive prescription period in the lawsuit claiming the transfer money. Thus, if the plaintiff's transfer money claim is extinguished by the expiration of the prescription period, the plaintiff is no longer entitled to exercise the right against the defendant, who is the third debtor of the non-party 2, the debtor, and the plaintiff's subrogation lawsuit by subrogation has to be dismissed by unlawful means. Thus, the court below should have deliberated and judged whether the extinctive prescription of the transfer money claim has expired legally.

Nevertheless, the court below rejected the defendant's assertion only as a simple use of the statute of limitations, and without deciding whether the statute of limitations has expired. Thus, the court below erred by misapprehending the legal principles on the status of the third obligor in a creditor subrogation lawsuit, which affected the conclusion of the judgment. The ground of appeal pointing this out has merit.

3. Conclusion

Therefore, 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 all participating Justices on the bench.

Justices Ahn Dai-hee (Presiding Justice)